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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">UNITED
  STATES</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">SECURITIES
  AND EXCHANGE COMMISSION</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Washington,
  D.C. 20549</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font id="TAB1" style="MARGIN-LEFT: 108pt"></font><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman">FORM
  10-Q</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-FAMILY: wingdings">x</font></font></div>
              </td>
              <td align="left" valign="top" width="75%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">QUARTERLY
        REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For the
  quarterly period ended June 30, 2008</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">OR</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="4%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: wingdings">&#168;</font></div>
              </td>
              <td align="left" valign="top" width="75%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TRANSITION
        REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For the
  transition period from <font style="DISPLAY: inline; TEXT-DECORATION: underline">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font>
  to <font style="DISPLAY: inline; TEXT-DECORATION: underline">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Commission
  File Number 001-33503</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 24pt; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
  name of registrant as specified in its charter)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td valign="middle" width="38%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td colspan="2" valign="middle" width="46%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
            </tr>
            <tr>
              <td valign="top" width="38%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Delaware</font></div>
              </td>
              <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="top" width="38%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">20-8536826</font></div>
              </td>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
            </tr>
            <tr>
              <td valign="top" width="38%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(State
        or other jurisdiction of</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">incorporation
        or organization)</font></div>
              </td>
              <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="top" width="38%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(IRS
        Employer</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Identification
        No.)</font></div>
              </td>
              <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Two
  Warren Place</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6120
  South Yale Avenue, Suite 500</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Tulsa,
  Oklahoma 74136</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
  of principal executive offices, zip code)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Registrant&#8217;s
  telephone number, including area code: (918)&#160;524-5500</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Indicate
  by check mark whether the registrant: (1)&#160;has filed all reports required to
  be filed by Section&#160;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)&#160;has been subject to such filing
  requirements for the past 90 days.&#160;&#160;&#160;&#160;Yes&#160;&#160; <font style="DISPLAY: inline;" face="Wingdings">&#168;</font>
  &#160;&#160;&#160;&#160;No&#160;&#160; <font style="DISPLAY: inline;" face="Wingdings">x</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Indicate
  by check mark whether the registrant is a large accelerated filer, an
  accelerated filer, a non-accelerated filer, or a smaller reporting company. See
  the definitions of &#8220;large accelerated filer&#8221;, &#8220;accelerated filer&#8221;, and &#8220;smaller
  reporting company&#8221; in Rule 12b-2 of the Exchange Act. (Check one):</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Large
  accelerated filer&#160;&#160; <font style="DISPLAY: inline;" face="Wingdings">&#168;</font>
  &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Accelerated
  filer&#160;&#160; <font style="DISPLAY: inline;" face="Wingdings">&#168;</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Non-accelerated
  filer&#160;&#160; <font style="DISPLAY: inline;" face="Wingdings">x</font>&#160;&#160;(Do not
  check if a smaller reporting
  company)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Smaller
  reporting company&#160;&#160; <font style="DISPLAY: inline;" face="Wingdings">&#168;</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Indicate
  by check mark whether the registrant is a shell company (as defined in Rule
  12b-2 of the Exchange Act).&#160;&#160;&#160;&#160;Yes&#160;&#160; <font style="DISPLAY: inline;" face="Wingdings">&#168;</font>
  &#160;&#160;&#160;&#160;No&#160;&#160; <font style="DISPLAY: inline;" face="Wingdings">x</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
  of&#160;March&#160;13,&#160;2009, there were 21,557,309 common units and
  12,570,504 subordinated units outstanding.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div>
        <hr style="MARGIN-TOP: -5px; COLOR: #000000" noshade size="1">
        <hr style="MARGIN-TOP: -13px; COLOR: #000000" noshade size="4">
      </div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
          </div>
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160;
  </font></div>
        </div>
        <div id="HDR">&#160;</div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div>
        <div align="left">
          <div align="left">
            <div align="left">
              <div align="left">
                <table cellpadding="0" cellspacing="0" width="100%">
                    <tr>
                      <td valign="middle" width="13%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION: underline"><a name="toc">Table</a> of Contents</font></td>
                      <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="middle" width="79%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="middle" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td align="left" valign="bottom" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td align="left" valign="bottom" width="2%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                      </td>
                      <td align="left" valign="bottom" width="79%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td align="left" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Page</font></font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td align="left" colspan="3" valign="top" width="94%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 2.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#part1">PART I - FINANCIAL INFORMATION</a></font></div>
                      </td>
                      <td align="left" valign="bottom" width="5%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td valign="middle" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="62%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td align="left" valign="top" width="13%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item&#160;I.</font></div>
                      </td>
                      <td align="left" valign="bottom" width="2%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                      </td>
                      <td align="left" valign="bottom" width="79%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#bs">Financial Statements</a></font></div>
                      </td>
                      <td align="right" valign="bottom" width="5%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.7pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1</font></font></font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td colspan="3" valign="middle" width="94%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                    <tr>
                      <td colspan="3" valign="middle" width="94%">
                        <div style="MARGIN-LEFT: 54pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">SemGroup
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                      </td>
                      <td colspan="2" valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td colspan="3" valign="middle" width="94%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr>
                      <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td align="left" valign="bottom" width="2%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                      </td>
                      <td align="left" valign="bottom" width="79%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#bs">Consolidated Balance Sheets as of December 31, 2007 and June
        30, 2008</a></font></div>
                      </td>
                      <td align="right" valign="bottom" width="5%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.7pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1</font></font></font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td valign="middle" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="62%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td align="left" valign="bottom" width="2%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                      </td>
                      <td align="left" valign="bottom" width="79%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#is">Consolidated Statements of Operations for the three and six
        months ended June 30, 2007 and 2008</a></font></div>
                      </td>
                      <td align="right" valign="bottom" width="5%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.7pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2</font></font></font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td valign="middle" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="62%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td align="left" valign="bottom" width="2%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                      </td>
                      <td align="left" valign="bottom" width="79%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#equity">Consolidated Statements of Changes in Partners&#8217; Capital for
        the six months ended June 30, 2008</a></font></div>
                      </td>
                      <td align="right" valign="bottom" width="5%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.7pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3</font></font></font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td valign="middle" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="62%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td align="left" valign="bottom" width="2%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                      </td>
                      <td align="left" valign="bottom" width="79%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#cf">Consolidated Statements of Cash Flows for the six months ended
        June 30, 2007 and 2008</a></font></div>
                      </td>
                      <td align="right" valign="bottom" width="5%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.7pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4</font></font></font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td valign="middle" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="62%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td align="left" valign="bottom" width="2%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                      </td>
                      <td align="left" valign="bottom" width="79%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#notes">Notes to the Consolidated Financial
        Statements</a></font></div>
                      </td>
                      <td align="right" valign="bottom" width="5%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.7pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5</font></font></font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td valign="middle" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="62%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td align="left" valign="top" width="13%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item&#160;2.</font></div>
                      </td>
                      <td align="left" valign="bottom" width="2%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                      </td>
                      <td align="left" valign="bottom" width="79%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#mda">Management&#8217;s Discussion and Analysis of Financial Condition
        and Results of Operations</a></font></div>
                      </td>
                      <td align="right" valign="bottom" width="5%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">32</font></font></font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td valign="middle" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="62%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td align="left" valign="top" width="13%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item&#160;3.</font></div>
                      </td>
                      <td align="left" valign="bottom" width="2%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                      </td>
                      <td align="left" valign="bottom" width="79%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#quant">Quantitative and Qualitative Disclosures about Market
        Risk</a></font></div>
                      </td>
                      <td align="right" valign="bottom" width="5%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font size="+0"><font style="DISPLAY: inline">&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">54</font></font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td valign="middle" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="62%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td align="left" valign="top" width="13%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item&#160;4T.</font></div>
                      </td>
                      <td align="left" valign="bottom" width="2%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                      </td>
                      <td align="left" valign="bottom" width="79%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#controls">Controls and Procedures</a></font></div>
                      </td>
                      <td align="right" valign="bottom" width="5%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;<font style="FONT-WEIGHT: normal">54</font></font></font></font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td colspan="3" valign="middle" width="94%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td align="left" colspan="3" valign="top" width="94%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 2.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#part2">PART II. OTHER INFORMATION</a></font></div>
                      </td>
                      <td align="right" valign="bottom" width="5%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font size="+0"><font style="DISPLAY: inline">&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-WEIGHT: normal">55</font></font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td valign="middle" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="62%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td align="left" valign="top" width="13%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item&#160;1.</font></div>
                      </td>
                      <td align="left" valign="bottom" width="2%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                      </td>
                      <td align="left" valign="bottom" width="79%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#legal">Legal Proceedings</a></font></div>
                      </td>
                      <td align="right" valign="bottom" width="5%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font size="+0"><font style="DISPLAY: inline">&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-WEIGHT: normal">55</font></font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td valign="middle" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="62%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td align="left" valign="top" width="13%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item
        1A.</font></div>
                      </td>
                      <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td align="left" valign="bottom" width="79%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#risk">Risk Factors</a></font></div>
                      </td>
                      <td align="right" valign="bottom" width="5%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font size="+0"><font style="DISPLAY: inline">&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-WEIGHT: normal">57</font></font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="79%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td align="left" valign="top" width="13%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item
        3.</font></div>
                      </td>
                      <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td align="left" valign="bottom" width="79%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#defaults">Defaults Upon Senior Securities</a></font></div>
                      </td>
                      <td align="right" valign="bottom" width="5%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font size="+0"><font style="DISPLAY: inline">&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-WEIGHT: normal">86</font></font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="79%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr>
                      <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item
        5.<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></td>
                      <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="79%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<a href="#item5">Other Information</a></font></td>
                      <td valign="bottom" width="5%" style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font size="+0">&#160;<font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">87</font></font></font></td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr>
                      <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="79%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td align="left" valign="top" width="13%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item&#160;6.</font></div>
                      </td>
                      <td align="left" valign="bottom" width="2%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                      </td>
                      <td align="left" valign="bottom" width="79%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#exhibits">Exhibits</a></font></div>
                      </td>
                      <td align="right" valign="bottom" width="5%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font size="+0"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></font><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">87</font></font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td valign="middle" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="62%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td align="left" valign="top" width="13%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#signatures">SIGNATURES</a></font></div>
                      </td>
                      <td align="left" valign="bottom" width="2%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                      </td>
                      <td valign="bottom" width="79%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td align="left" valign="bottom" width="5%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td colspan="3" valign="middle" width="94%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td align="left" colspan="3" valign="top" width="94%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 2.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">CERTIFICATIONS</font></div>
                      </td>
                      <td align="left" valign="bottom" width="5%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                      </td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td colspan="3" valign="middle" width="94%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td colspan="2" valign="middle" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                    <tr>
                      <td colspan="3" valign="top" width="94%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                    </tr>
                </table>
              </div>
            </div>
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
          </div>
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160;
  </font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="Part1">PART I &#8211; FINANCIAL INFORMATION</a></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Item&#160;1.</font></div>
              </td>
              <td align="left" valign="top" width="77%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Financial
        Statements</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="BS">SEMGROUP</a> ENERGY PARTNERS, L.P.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CONSOLIDATED
  BALANCE SHEETS</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(in
  thousands, except units)</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
        <div>
          <div align="left">
            <div align="center">
              <div align="center">
                <div align="center">
                  <div align="center">
                    <div align="center">
                      <div align="center">
                        <div align="center">
                          <div align="center">
                            <div align="center">
                              <div align="center">
                                <div align="center">
                                  <div align="center">
                                    <div align="center">
                                      <div align="center">
                                        <table cellpadding="0" cellspacing="0" width="100%">
                                            <tr>
                                              <td align="left" valign="bottom" width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td colspan="2" valign="bottom" width="9%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">As
        of December 31,</font></div>
                                              </td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td colspan="2" valign="bottom" width="9%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">As
        of June 30,</font></div>
                                              </td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="40%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td colspan="2" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                                              </td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td colspan="2" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                                              </td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td colspan="6" valign="bottom" width="20%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(unaudited)</font></div>
                                              </td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION: underline"><font style="DISPLAY: inline; FONT-WEIGHT: bold">ASSETS</font></font></div>
                                              </td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" colspan="2" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" colspan="2" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr>
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
        assets:</font></div>
                                              </td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" colspan="2" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" colspan="2" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Cash
        and cash equivalents</font></div>
                                              </td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">416</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">758</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Accounts
        receivable, net of allowance for doubtful accounts of $0 and
        $357</font></div>
                                              </td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;at
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                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,666</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,081</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Receivables
        from related parties, net of allowance for doubtful accounts
        of</font></div>
                                              </td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$0
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                                              </td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,665</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,971</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Prepaid
        insurance</font></div>
                                              </td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">797</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,091</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Debt
        issuance costs</font></div>
                                              </td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,776</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interest
        rate swaps asset</font></div>
                                              </td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,998</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other
        current assets</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">442</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">506</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        current assets</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">13,986</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12,181</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Property,
        plant and equipment, net of accumulated depreciation of $40,222 and
        $69,277</font></div>
                                              </td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">at
        December 31, 2007 and June 30, 2008, respectively</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">102,239</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">293,681</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Goodwill</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,340</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,340</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other
        assets, net</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,917</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,976</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%" style="PADDING-BOTTOM: 4px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        assets</font></div>
                                              </td>
                                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">125,482</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">314,178</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION: underline"><font style="DISPLAY: inline">LIABILITIES AND PARTNERS' CAPITAL
        (DEFICIT)</font></font></div>
                                              </td>
                                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
        liabilities:</font></div>
                                              </td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Accounts
        payable</font></div>
                                              </td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,045</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,941</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Payables
        to related parties</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10,227</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,915</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Accrued
        interest payable</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">449</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,921</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Accrued
        property taxes</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,183</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Unearned
        revenue</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">968</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other
        accrued liabilities</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">340</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">290</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
        portion of capital lease obligations</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,236</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,116</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interest
        rate swaps liability</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,502</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
        portion of long term debt</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">421,900</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        current liabilities</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">15,297</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">443,736</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Long-term
        debt</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">89,600</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Long-term
        capital lease obligations</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,123</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">587</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interest
        rate swaps liability</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,233</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Commitments
        and contingencies (Notes 4, 10 and 13)</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Partners'
        capital (deficit):</font></div>
                                              </td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Common
        unitholders (14,375,000 and 21,275,000 units issued and outstanding
        at</font></div>
                                              </td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
        31, 2007 and June 30, 2008, respectively)</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">317,004</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">479,253</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Subordinated
        unitholders (12,570,504 units issued and outstanding for both
        dates)</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(287,210</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(285,469</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">General
        partner interest (2.0% interest with 549,908 and 690,725 general partner
        units</font></div>
                                              </td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">outstanding
        at December 31, 2007 and June 30, 2008, respectively)</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(12,565</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(323,929</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                            </tr>
                                            <tr bgcolor="#cceeff">
                                              <td align="left" valign="bottom" width="40%" style="PADDING-BOTTOM: 2px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        Partners' capital (deficit)</font></div>
                                              </td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17,229</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(130,145</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                            </tr>
                                            <tr bgcolor="white">
                                              <td align="left" valign="bottom" width="40%" style="PADDING-BOTTOM: 4px">
                                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        liabilities and Partners' capital (deficit)</font></div>
                                              </td>
                                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">125,482</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                              <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">314,178</font></td>
                                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                            </tr>
                                        </table>
                                      </div>
                                    </div>
                                  </div>
                                </div>
                              </div>
                            </div>
                          </div>
                        </div>
                      </div>
                    </div>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">See
  accompanying notes to unaudited financial statements.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  </font></div>
          </div>
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="IS">SEMGROUP</a> ENERGY PARTNERS, L.P.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CONSOLIDATED
  STATEMENTS OF OPERATIONS</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(<font style="DISPLAY: inline; FONT-WEIGHT: bold">in thousands, except per unit
  data)</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
        <div>
          <div align="left">
            <div align="center">
              <div align="center">
                <div align="center">
                  <div align="center">
                    <div align="center">
                      <div align="center">
                        <table cellpadding="0" cellspacing="0" width="100%">
                            <tr>
                              <td align="left" valign="bottom" width="45%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="6" valign="bottom" width="14%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
        Months Ended</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="6" valign="bottom" width="14%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Six
        Months Ended</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr>
                              <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="6" valign="bottom" width="14%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">June
        30,</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="6" valign="bottom" width="14%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">June
        30,</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr>
                              <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr>
                              <td align="left" valign="bottom" width="45%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="14" valign="bottom" width="30%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(unaudited)</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr>
                              <td align="left" valign="bottom" width="45%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a name="range_a8:b27">Service revenue:</a></font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="45%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Third
        party revenue</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10,464</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,027</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18,975</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10,651</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Related
        party revenue</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">49,249</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">123</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">84,839</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        revenue</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10,464</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">55,276</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">19,098</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">95,490</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="45%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Expenses:</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="45%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18,041</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">29,505</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">34,158</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">51,771</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="45%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Allowance
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                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,266</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,266</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">General
        and administrative</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,118</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,057</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8,490</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,067</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        expenses</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">22,159</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">33,828</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">42,648</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">59,104</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
        income (loss)</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(11,695</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">21,448</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(23,550</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">36,386</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="45%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other
        expenses:</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interest
        (income) expense</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">516</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(225</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">945</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,864</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Income
        (loss) before income taxes</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(12,211</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">21,673</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(24,495</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31,522</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Provision
        for income taxes</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">77</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">168</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 4px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
        income (loss)</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(12,211</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">21,596</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(24,495</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31,354</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="45%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Allocation
        of net income to limited and subordinated partners:</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="45%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">General
        partner interest in net income</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,410</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,605</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="45%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
        income allocable to limited and subordinated partners</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18,186</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">27,749</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="45%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="45%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Basic
        and diluted net income per common unit</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.53</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.84</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="45%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Basic
        and diluted net income per subordinated unit</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.53</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.84</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="45%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="45%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Weighted
        average common units outstanding - basic and diluted</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">21,275</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">19,310</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="45%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Weighted
        average subordinated partners' units outstanding - basic and
        diluted</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12,571</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12,571</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                        </table>
                      </div>
                    </div>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">See
  accompanying notes to unaudited financial statements.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  </font></div>
          </div>
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="equity">SEMGROUP</a> ENERGY PARTNERS, L.P.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CONSOLIDATED
  STATEMENTS OF CHANGES IN PARTNERS&#8217; CAPITAL (DEFICIT)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(in
  thousands)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 45pt; MARGIN-RIGHT: 0pt" align="center">
        <div>
          <div align="left">
            <div align="center">
              <div align="center">
                <div align="center">
                  <div align="center">
                    <div align="center">
                      <div align="center">
                        <div align="center">
                          <div align="center">
                            <table cellpadding="0" cellspacing="0" width="100%">
                                <tr>
                                  <td valign="bottom" width="45%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="6%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">General</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="6%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr>
                                  <td valign="bottom" width="45%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="6%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Common</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="6%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Subordinated</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="6%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Partner</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="6%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Partners'</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr>
                                  <td valign="bottom" width="45%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                  <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Unitholders</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Unitholders</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interest</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Capital
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                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr>
                                  <td align="left" valign="bottom" width="45%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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                                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="14" valign="bottom" width="30%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(unaudited)</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="#cceeff">
                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Balance,
        December 31, 2007</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">317,004</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(287,210</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(12,565</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17,229</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="white">
                                  <td align="left" valign="bottom" width="45%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
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                                  </td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17,296</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10,453</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,605</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31,354</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="#cceeff">
                                  <td align="left" valign="bottom" width="45%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Equity-based
        compensation</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">849</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">559</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">29</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,437</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="white">
                                  <td align="left" valign="bottom" width="45%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Distributions
        paid</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(13,719</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(9,271</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(727</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(23,717</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                </tr>
                                <tr bgcolor="#cceeff">
                                  <td align="left" valign="bottom" width="45%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Proceeds
        from sale of 6,900,000 common units, net of underwriters' discount
        and</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="white">
                                  <td align="left" valign="bottom" width="45%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">offering
        expenses of $7.1 million</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">157,823</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">157,823</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="#cceeff">
                                  <td align="left" valign="bottom" width="45%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Proceeds
        from issuance of 140,817 general partner units</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,365</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,365</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="white">
                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Consideration
        paid in excess of historical cost of assets acquired from Private
        Company</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(317,636</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(317,636</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                </tr>
                                <tr bgcolor="#cceeff">
                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 4px">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Balance,
        June 30, 2008</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">479,253</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(285,469</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(323,929</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(130,145</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                </tr>
                            </table>
                          </div>
                        </div>
                      </div>
                    </div>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">See
  accompanying notes to unaudited financial statements.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  </font></div>
          </div>
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="cf">SEMGROUP</a> ENERGY PARTNERS, L.P.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CONSOLIDATED
  STATEMENTS OF CASH FLOWS</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(in
  thousands)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">
        <div>
          <div align="left">
            <div align="center">
              <div align="center">
                <div align="center">
                  <div align="center">
                    <div align="center">
                      <div align="center">
                        <table cellpadding="0" cellspacing="0" width="100%">
                            <tr>
                              <td align="left" valign="bottom" width="60%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="6" valign="bottom" width="14%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Six
        Months Ended</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr>
                              <td valign="bottom" width="60%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="6" valign="bottom" width="14%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">June
        30,</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr>
                              <td valign="bottom" width="60%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr>
                              <td valign="bottom" width="60%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="6" valign="bottom" width="14%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(unaudited)</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr>
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a name="range_a6:a46"><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Cash
        flows from operating activities</font>:</a></font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
        income (loss)</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(24,495</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31,354</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Adjustments
        to reconcile net income (loss) to net cash provided by (used in) operating
        activities:</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Provision
        for uncollectible receivables from third parties</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">357</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Provision
        for uncollectible receivables from related parties</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">900</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Depreciation
        and amortization</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,387</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,772</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amortization
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                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">262</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Unrealized
        gain related to interest rate swaps</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2,729</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Gain)
        loss on sale of assets</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">52</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(46</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Equity-based
        incentive compensation expense</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,437</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td valign="bottom" width="60%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Changes
        in assets and liabilities:</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Decrease
        (increase) in accounts receivable</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(1,269</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">228</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Decrease
        in receivables from related parties</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,794</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Increase
        in prepaid insurance</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(399</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(294</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Increase
        in other current assets</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(105</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(369</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Decrease
        (increase) in other assets</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">70</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(152</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Increase
        (decrease) in accounts payable</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(747</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">242</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Decrease
        in payables to related parties</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(312</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Increase
        in accrued interest payable</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,472</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Increase
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                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,183</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Increase
        in unearned revenue</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">968</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%" style="PADDING-BOTTOM: 2px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Increase
        (decrease) in accrued liabilities</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">605</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(50</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%" style="PADDING-BOTTOM: 2px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
        cash provided by (used in) operating activities</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(21,901</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">51,017</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Cash
        flows from investing activities:</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Acquisition
        of assets from Private Company</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(514,643</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Capital
        expenditures</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(15,265</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(3,485</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%" style="PADDING-BOTTOM: 2px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Proceeds
        from sale of assets</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">331</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">372</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%" style="PADDING-BOTTOM: 2px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
        cash used in investing activities</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(14,934</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(517,756</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font size="+0"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font size="+0" style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font size="+0" style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Cash flows from financing
        activities</font>:</font></font></font></font></font></font></font></font></font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Debt
        issuance costs</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2,094</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Payments
        on capital lease obligations</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(992</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(646</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Borrowings
        under credit facility</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">492,400</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Payments
        under credit facility</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(160,100</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Proceeds
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                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">161,238</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Distributions
        paid</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(23,717</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%" style="PADDING-BOTTOM: 2px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Contributions
        from Parent</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">37,827</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%" style="PADDING-BOTTOM: 2px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
        cash provided by financing activities</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">36,835</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">467,081</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
        increase in cash and cash equivalents</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">342</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%" style="PADDING-BOTTOM: 2px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Cash
        and cash equivalents at beginning of period</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">416</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%" style="PADDING-BOTTOM: 4px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Cash
        and cash equivalents at end of period</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">758</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Supplemental
        disclosure of cash flow information:</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="60%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Increase
        (decrease) in accounts payable related to purchases of property, plant and
        equipment</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(421</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">654</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                        </table>
                      </div>
                    </div>
                  </div>
                  <div align="center">&#160;</div>
                </div>
              </div>
            </div>
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">See
  accompanying notes to unaudited financial statements.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<br></font>
  
        <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
          <div id="FTR">
            <div id="GLFTR" style="WIDTH: 100%" align="center">
            </div>
          </div>
          <div id="PN" style="PAGE-BREAK-AFTER: always">
            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160;
  4</font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
              <hr style="COLOR: black" noshade size="2">
            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
            <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
            <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
          </div>
        </div><br>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.
  ORGANIZATION AND NATURE OF BUSINESS</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SemGroup
  Energy Partners, L.P. and subsidiaries (the &#8220;Partnership&#8221;) is a publicly traded
  master limited partnership with operations in twenty-three states. The
  Partnership provides integrated terminalling, storage, gathering and
  transportation services for companies engaged in the production, distribution
  and marketing of crude oil and liquid asphalt cement. The Partnership manages
  its operations through two operating segments: (i)&#160;terminalling and storage
  services and (ii)&#160;gathering and transportation services. The Partnership
  was formed in February 2007 as a Delaware master limited partnership initially
  to own, operate and develop a diversified portfolio of complementary midstream
  energy assets.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
  July&#160;20, 2007, the Partnership issued 12,500,000 common units, representing
  limited partner interests in the Partnership, and 12,570,504 subordinated units,
  representing additional limited partner interests in the Partnership, to
  SemGroup Holdings, L.P. (&#8220;SemGroup Holdings&#8221;) and 549,908 general partner units
  representing a 2.0% general partner interest in the Partnership to SemGroup
  Energy Partners G.P., L.L.C.&#160;&#160;SemGroup Holdings subsequently offered
  12,500,000 common units pursuant to a public offering at a price of $22 per
  unit. In addition, the Partnership issued an additional 1,875,000 common units
  to the public pursuant to the underwriters&#8217; exercise of their over-allotment
  option. The initial public offering closed on July&#160;23, 2007.&#160;&#160;In
  connection with its initial public offering, the Partnership entered into a
  Throughput Agreement (the &#8220;Throughput Agreement&#8221;) with SemGroup, L.P.
  (collectively, with its subsidiaries other than the Partnership and the
  Partnership&#8217;s general partner, the &#8220;Private Company&#8221;) under which the
  Partnership provides crude oil gathering and transportation and terminalling and
  storage services to the Private Company.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
  February&#160;20, 2008, the Partnership purchased land, receiving
  infrastructure, machinery, pumps and piping and 46 liquid asphalt cement and
  residual fuel oil terminalling and storage facilities (the &#8220;Acquired Asphalt
  Assets&#8221;) from the Private Company for aggregate consideration of $379.5 million,
  including $0.7 million of acquisition-related costs. For accounting purposes,
  the acquisition has been reflected as a purchase of assets, with the Acquired
  Asphalt Assets recorded at the historical cost of the Private Company, which was
  approximately $145.5 million, with the additional purchase price of $234.0
  million reflected in the statement of changes in partners&#8217; capital as a
  distribution to the Private Company.&#160;&#160;In conjunction with the purchase
  of the Acquired Asphalt Assets, the Partnership amended its existing credit
  facility, increasing its borrowing capacity to $600 million. Concurrently, the
  Partnership issued 6,000,000 common units, receiving proceeds, net of
  underwriting discounts and offering-related costs, of $137.2 million. The
  Partnership&#8217;s general partner also made a capital contribution of $2.9 million
  to maintain its 2.0% general partner interest in the Partnership. On
  March&#160;5, 2008, the Partnership issued an additional 900,000 common units,
  receiving proceeds, net of underwriting discounts, of $20.6 million, in
  connection with the underwriters&#8217; exercise of their over-allotment option in
  full. The Partnership&#8217;s general partner made a corresponding capital
  contribution of $0.4 million to maintain its 2.0% general partner interest in
  the Partnership.&#160;&#160;In connection with the acquisition of the Acquired
  Asphalt Assets, the Partnership entered into a Terminalling and Storage
  Agreement (the &#8220;Terminalling Agreement&#8221;) with the Private Company and certain of
  its subsidiaries under which the Partnership provides liquid asphalt cement
  terminalling and storage and throughput services to the Private Company and the
  Private Company has agreed to use the Partnership&#8217;s services at certain minimum
  levels.&#160;&#160;The board of directors of the Partnership&#8217;s general partner
  (the &#8220;Board&#8221;) approved the acquisition of the Acquired Asphalt Assets as well as
  the terms of the related agreements based on a recommendation from its conflicts
  committee, which consisted entirely of independent directors. The conflicts
  committee retained independent legal and financial advisors to assist it in
  evaluating the transaction and considered a number of factors in approving the
  acquisition, including an opinion from the committee&#8217;s independent financial
  advisor that the consideration paid for the Acquired Asphalt Assets was fair,
  from a financial point of view, to the Partnership.</font></div>
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            <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">5&#160;
  </font></div>
            <div style="WIDTH: 100%; TEXT-ALIGN: center">
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          <div id="HDR">
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            <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
            <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
          </div>
        </div><br><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On May 12, 2008, the
  Partnership purchased the Eagle North Pipeline System, a 130-mile, 8-inch
  pipeline that originates in Ardmore, Oklahoma and terminates in Drumright,
  Oklahoma (the &#8220;Acquired Pipeline Assets&#8221;) from the Private Company for aggregate
  consideration of $45.1 million, including $0.1 million of acquisition-related
  costs.&#160;&#160;For accounting purposes, the acquisition has been reflected as
  a purchase of assets, with the Acquired Pipeline Assets recorded at the
  historical cost of the Private Company, which was approximately $35.1 million,
  with the additional purchase price of $10.0 million reflected in the statement
  of changes in partners&#8217; capital as a distribution to the Private
  Company.&#160;&#160;The acquisition was funded with borrowings under the
  Partnership&#8217;s existing revolving credit facility.&#160;&#160;The Board approved
  the acquisition of the Acquired Pipeline Assets based on a recommendation from
  its conflicts committee, which consisted entirely of independent directors. The
  conflicts committee retained independent legal and financial advisors to assist
  it in evaluating the transaction and considered a number of factors in approving
  the acquisition, including an opinion from the committee&#8217;s independent financial
  advisor that the consideration paid for the Acquired Pipeline Assets was fair,
  from a financial point of view, to the Partnership.</font></div>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On May
  30, 2008, the Partnership purchased eight recently constructed crude oil storage
  tanks located at the Cushing Interchange from the Private Company and the
  Private Company&#160;assigned a take-or-pay, fee-based agreement to the
  Partnership that commits substantially all of the 2.0 million barrels of new
  storage to a third-party customer through&#160;August 2010 (the &#8220;Acquired
  Storage Assets&#8221;) for aggregate consideration of $90.2 million, including $0.2
  million of acquisition-related costs.&#160; For accounting purposes, the
  acquisition has been reflected as a purchase of assets, with the Acquired
  Storage Assets recorded at the historical cost of the Private Company, which was
  approximately $16.6 million, with the additional purchase price of $73.6 million
  reflected in the statement of changes in partners&#8217; capital as a distribution to
  the Private Company.&#160;&#160;The acquisition was funded with borrowings under
  the Partnership&#8217;s existing revolving credit facility.&#160;&#160;The Board
  approved the acquisition of the Acquired Storage Assets based on a
  recommendation from its conflicts committee, which consisted entirely of
  independent directors. The conflicts committee retained independent legal and
  financial advisors to assist it in evaluating the transaction and considered a
  number of factors in approving the acquisition, including an opinion from the
  committee&#8217;s independent financial advisor that the consideration paid for the
  Acquired Storage Assets was fair, from a financial point of view, to the
  Partnership.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For the
  six months ended June 30, 2008 and the year ended&#160;December 31,&#160;2008,
  the Partnership derived approximately <font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">88%
  and approximately 73<font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">%</font></font></font>,
  respectively</font>, of its revenues, excluding fuel surcharge revenues related
  to fuel and power consumed to operate its liquid asphalt cement storage tanks,
  from services it provided to the Private Company.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July
  22, 2008, the Private Company and certain of its subsidiaries filed voluntary
  petitions (the &#8220;Bankruptcy Filings&#8221;) for reorganization under Chapter 11 of the
  Bankruptcy Code in the United States Bankruptcy Court for the District of
  Delaware (the &#8220;Bankruptcy Court&#8221;), Case No. 08-11547-BLS.&#160;&#160; The
  Private Company and its subsidiaries continue to operate their businesses and
  own and manage their properties as debtors-in-possession under the jurisdiction
  of the Bankruptcy Court and in accordance with the applicable provisions of the
  Bankruptcy Code.&#160;None of the Partnership, its general partner, the
  subsidiaries of the Partnership nor the subsidiaries of the general partner were
  party to the Bankruptcy Filings.&#160;&#160;See Notes 4 and 13 for a discussion
  of the impact of the Bankruptcy Filings and related events upon the
  Partnership.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.
  BASIS OF PRESENTATION</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  accompanying financial statements have been prepared assuming that the
  Partnership will continue as a going concern.&#160;&#160;As discussed in Notes 4
  and 13 to the financial statements, events of default have occurred and are
  continuing under the Partnership&#8217;s credit agreement resulting in the
  classification of $421.9 million of debt as a current liability and a working
  capital deficiency of $431.6 million.&#160;&#160;The Partnership is operating on
  cash flows received from operations and from a $25.0 million borrowing
  under&#160;its credit facility on July 8, 2008 prior to the occurrence of the
  events of default. If&#160;the Partnership is unable to sustain&#160;its sources
  of revenue generation and reestablish&#160;its relationships within the credit
  markets, this cash position will not be sufficient to operate&#160;its business
  over the long-term.&#160;&#160;As of March 13, 2009,&#160;the Partnership has
  approximately $33.9 million of cash that it is using to operate&#160;its
  business.&#160; Additionally, the Partnership earned 88% of its revenues,
  excluding fuel surcharge revenues related to fuel and power consumed to operate
  its liquid asphalt cement storage tanks, for the six months ended June 30, 2008
  from the Private Company, which made the Bankruptcy Filings in July 2008, the
  effects of which are more fully disclosed in Note 13.&#160;&#160;These factors
  raise substantial doubt about the Partnership&#8217;s ability to continue as a going
  concern.&#160;&#160;Management&#8217;s plans in regard to these matters are also
  discussed in Note 13.&#160;&#160;The accompanying financial statements do not
  include any adjustments that might result from the outcome of this
  uncertainty.</font></div>
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  </font></div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  accompanying consolidated financial statements and related notes include the
  accounts of the Partnership, and prior to July&#160;20, 2007, the operations
  contributed to the Partnership by the Private Company in connection with the
  Partnership&#8217;s initial public offering. The financial statements have been
  prepared in accordance with accounting principles and practices generally
  accepted in the United States of America (&#8220;GAAP&#8221;).</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  accompanying financial statements include the results of operations of crude oil
  terminalling and storage and gathering and transportation operations that were
  contributed to the Partnership prior to the closing of the Partnership&#8217;s initial
  public offering on a carve-out basis and are referred to herein as the
  &#8220;Predecessor.&#8221;&#160;&#160;Both the Partnership and the Predecessor had common
  ownership and, in accordance with Emerging Issues Task Force Issue
  No.&#160;87-21, &#8220;Change of Accounting Basis in Master Limited Partnership
  Transactions,&#8221; the assets and liabilities transferred were carried forward to
  the Partnership at their historical amounts.&#160;&#160;Additionally, due to the
  common control of the Private Company and the Partnership, subsequent
  acquisitions of fixed assets from the Private Company are recorded at the
  historical cost of the Private Company.&#160;&#160;All significant intercompany
  accounts and transactions have been eliminated in the preparation of the
  accompanying financial statements.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Through
  the date of the initial public offering, the Private Company provided cash
  management services to the Predecessor through a centralized treasury system. As
  a result, all of the Predecessor&#8217;s charges and cost allocations covered by the
  centralized treasury system were deemed to have been paid to the Private Company
  in cash during the period in which the cost was recorded in the financial
  statements. In addition, cash advances by the Private Company in excess of cash
  earned by the Predecessor are reflected as contributions from the Private
  Company in the statements of cash flows.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Historically,
  the Predecessor was a part of the integrated operations of the Private Company,
  and neither the Private Company nor the Predecessor recorded revenue associated
  with the terminalling and storage and gathering and transportation services
  provided on an intercompany basis. The Private Company and the Predecessor
  recognized only the costs associated with providing such services. Accordingly,
  revenues reflected in these financial statements for all periods prior to the
  contribution of the assets, liabilities and operations to the Partnership by the
  Private Company on July&#160;20, 2007 relate to services provided to third
  parties. Prior to the close of its initial public offering in July 2007, the
  Partnership entered into a Throughput Agreement with the Private Company under
  which the Partnership provides crude oil gathering and transportation and
  terminalling and storage services to the Private Company.&#160;&#160;In
  connection with its February 2008 purchase of the Acquired Asphalt Assets, the
  Partnership entered into a Terminalling Agreement with the Private Company under
  which the Partnership provides liquid asphalt cement terminalling and storage
  and throughput services to the Private Company (See Note&#160;8).</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  accompanying financial statements include allocated general and administrative
  charges from the Private Company for indirect corporate overhead to cover costs
  of functions such as legal, accounting, treasury, environmental safety,
  information technology and other corporate services. General and administrative
  charges allocated by the Private Company prior to the contribution of the
  assets, liabilities and operations to the Partnership by the Private Company
  were $2.7 million for the six months ended June 30, 2007. Management believes
  that the allocated general and administrative expense is representative of the
  costs and expenses incurred by the Private Company for the Predecessor. Prior to
  the close of its initial public offering in July 2007, the Partnership entered
  into an Omnibus Agreement with the Private Company under which the Partnership
  reimburses the Private Company for the provision of various general and
  administrative services for the Partnership&#8217;s benefit.&#160;&#160;The Omnibus
  Agreement was amended in conjunction with the purchase of the Acquired Asphalt
  Assets in February 2008 (See Note&#160;8).&#160;&#160;The events related to the
  Bankruptcy Filings have terminated the Private Company&#8217;s obligations to provide
  services to the Partnership under the Omnibus Agreement.&#160;&#160;Pursuant to
  an order entered by the Bankruptcy Court, the Private Company agreed to continue
  providing such services until November 30, 2008.&#160;&#160;Although the Private
  Company is not required to continue providing these services pursuant to the
  Omnibus Agreement or the order of the Bankruptcy Court, the Private Company has
  continued to provide these services to the Partnership as of the date of the
  filing of this report (See Note 13).&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement (as defined below), the Private Company will reject
  the Amended Omnibus Agreement as part of the Bankruptcy Cases (as defined below)
  and the Partnership and the Private Company will enter into a shared services
  agreement pursuant to which the Private Company will provide certain operational
  services for the Partnership.&#160;&#160;There can be no assurance <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated </font>(see Note
  13).</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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  </font></div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  statements of operations for the three and six months ended June 30, 2007 and
  2008 and the statements of cash flows for the six months ended June 30, 2007 and
  2008 are unaudited. In the opinion of management, the unaudited interim
  financial statements have been prepared on the same bases as the audited
  financial statements and include all adjustments necessary to present fairly the
  financial position and results of operations for the respective interim periods.
  &#160;These consolidated financial statements and notes should be read in
  conjunction with the consolidated financial statements and notes thereto
  included in the Partnership&#8217;s annual report on Form 10-K for the year ended
  December&#160;31, 2007 filed with the Securities and Exchange Commission (the
  &#8220;SEC&#8221;) on March&#160;6, 2008.&#160; Interim financial results are not
  necessarily indicative of the results to be expected for an annual period. The
  year-end balance sheet data was derived from audited financial statements, but
  does not include all disclosures required by accounting principles generally
  accepted in the United States of America.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.
  PROPERTY, PLANT AND EQUIPMENT</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Property,
  plant and equipment, net is stated at cost and consisted of the following (in
  thousands):</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">
        <div>
          <div align="left">
            <div align="center">
              <div align="center">
                <div align="center">
                  <div align="center">
                    <table cellpadding="0" cellspacing="0" width="100%">
                        <tr>
                          <td valign="bottom" width="30%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="6%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Estimated</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                          <td colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                        </tr>
                        <tr>
                          <td valign="bottom" width="30%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="6%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Useful</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="6%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
        31,</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="6%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">June
        30,</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                        <tr>
                          <td valign="bottom" width="30%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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                          <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Lives
        (Years)</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                        <tr bgcolor="#cceeff">
                          <td align="left" valign="bottom" width="30%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Land</font></div>
                          </td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">309</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">15,065</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                        <tr bgcolor="white">
                          <td align="left" valign="bottom" width="30%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Land
        improvements</font></div>
                          </td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10-20</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5,179</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                        <tr bgcolor="#cceeff">
                          <td align="left" valign="bottom" width="30%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Pipelines
        and facilities</font></div>
                          </td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5-31</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">34,626</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">94,177</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                        <tr bgcolor="white">
                          <td align="left" valign="bottom" width="30%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Storage
        and terminal facilities</font></div>
                          </td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10-35</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">71,873</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">166,625</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                        <tr bgcolor="#cceeff">
                          <td align="left" valign="bottom" width="30%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Transportation
        equipment</font></div>
                          </td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3-10</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">25,133</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">24,996</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                        <tr bgcolor="white">
                          <td align="left" valign="bottom" width="30%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Office
        property and equipment and other</font></div>
                          </td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3-31</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8,505</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">19,973</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                        <tr bgcolor="#cceeff">
                          <td align="left" valign="bottom" width="30%" style="PADDING-BOTTOM: 2px">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Construction-in-progress</font></div>
                          </td>
                          <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,015</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">36,943</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                        <tr bgcolor="white">
                          <td align="left" valign="bottom" width="30%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Property,
        plant and equipment, gross</font></div>
                          </td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">142,461</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">362,958</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                        <tr bgcolor="#cceeff">
                          <td align="left" valign="bottom" width="30%" style="PADDING-BOTTOM: 2px">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Accumulated
        depreciation</font></div>
                          </td>
                          <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(40,222</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                          <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(69,277</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                        </tr>
                        <tr bgcolor="white">
                          <td align="left" valign="bottom" width="30%" style="PADDING-BOTTOM: 4px">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Property,
        plant and equipment, net</font></div>
                          </td>
                          <td valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                          <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">102,239</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                          <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">293,681</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                    </table>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Property,
  plant and equipment includes assets under capital leases of $2.4 million and
  $1.7 million, net of accumulated depreciation of $4.2 million and $4.7 million
  at December&#160;31, 2007 and June 30, 2008, respectively. All capital leases
  relate to the transportation equipment asset category.&#160;&#160;At June 30,
  2008, $35.5 million of construction-in-progress consists of the Eagle North
  Pipeline System, a 130-mile, 8-inch pipeline that was acquired by the
  Partnership from the Private Company on May 12, 2008.&#160; The Partnership has
  suspended capital expenditures on this pipeline due to the Bankruptcy Filings
  (See Note 13).&#160; Management currently intends to put the asset into service
  by late 2009 or early 2010 and is exploring various alternatives to complete the
  project.&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Depreciation
  expense for the six months ended June 30, 2007 and June 30, 2008 was $4.2
  million and $9.6 million, respectively.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.
  LONG TERM DEBT</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
  July&#160;20, 2007, the Partnership entered into a $250.0 million five-year
  credit facility with a syndicate of financial institutions. The Partnership
  borrowed approximately $137.5&#160;million prior to the closing of the initial
  public offering. The Partnership distributed $136.5&#160;million, net of debt
  issuance costs of $1.0 million, advanced under the credit agreement to SemGroup
  Holdings. On July&#160;23, 2007, the Partnership repaid approximately $38.7
  million under the credit facility with the proceeds it received in connection
  with the exercise of the underwriters&#8217; over-allotment option in the
  Partnership&#8217;s initial public offering.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  connection with its purchase of the Acquired Asphalt Assets, the Partnership
  amended this credit facility to increase the total borrowing capacity to $600.0
  million.&#160;&#160;The credit facility will mature on July 20,
  2012.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
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            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  </font></div>
          </div>
          <div id="GLFTR" style="WIDTH: 100%" align="center">
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        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Events of
  default have occurred and are continuing under the Partnership&#8217;s credit
  agreement.&#160;&#160;In addition, the Private Company&#8217;s actions related to the
  Bankruptcy Filings as well as the Private Company&#8217;s liquidity issues and any
  corresponding impact upon the Partnership may result in additional events of
  default under the Partnership&#8217;s credit agreement (See Note 13).&#160;&#160;No
  cure periods are applicable to these existing events of
  default.&#160;&#160;These events of default have not been waived and are
  continuing under the Partnership&#8217;s credit agreement.&#160;&#160;Due to the
  existing events of default under the Partnership&#8217;s credit agreement, the
  Partnership is not able to borrow under its credit facility to fund working
  capital needs or for other purposes (See Note 13).</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due to
  the events of default, upon the expiration or termination of any applicable
  forbearance period, the lenders may, among other remedies, declare all
  outstanding amounts under the credit agreement immediately due and payable and
  exercise all other rights and remedies available to the lenders under the credit
  agreement and related loan documents.&#160;&#160;A vote of lenders having more
  than 50% of the sum of (i) the aggregate revolver commitments and (ii) the
  outstanding term loan are required to exercise such a remedy.&#160;&#160;If the
  lenders exercise such a remedy,&#160;the Partnership&#160;may be forced to make
  a bankruptcy filing or take other actions.&#160;&#160;The Partnership is also
  prohibited from making cash distributions to its unitholders while the events of
  default exist.&#160;&#160;Certain lenders under&#160;the
  Partnership's&#160;credit facility are also lenders under the Private Company&#8217;s
  credit facility.&#160;&#160;The progress of the Private Company&#8217;s bankruptcy
  proceedings may influence the decisions of these lenders relating to the
  Partnership's credit facility.</font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
  on September 18, 2008, the Partnership and the requisite lenders under its
  credit facility entered into a Forbearance Agreement and Amendment to Credit
  Agreement (the &#8220;Forbearance Agreement&#8221;) under which the lenders agreed, subject
  to specified limitations and conditions, to forbear from exercising their rights
  and remedies arising from the Partnership&#8217;s events of default described above
  and other defaults or events of default described therein for the period
  commencing on September 18, 2008 and ending on the earliest of (i) December 11,
  2008, (ii) the occurrence of any default or event of default under the credit
  agreement other than certain defaults and events of default indicated in the
  Forbearance Agreement,&#160;or (iii) the failure of the Partnership to comply
  with any of the terms of the Forbearance Agreement (the &#8220;Forbearance
  Period&#8221;).&#160;&#160;On December 11, 2008, the lenders agreed to extend the
  Forbearance Period until December 18, 2008 pursuant to a First Amendment to
  Forbearance Agreement and Amendment to Credit Agreement (the &#8220;First Amendment&#8221;),
  and on December 18, 2008, the lenders agreed to extend the Forbearance Period
  until March 18, 2009 pursuant to a Second Amendment to Forbearance Agreement and
  Amendment to Credit Agreement (the "Second Amendment").</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;On March 18,
  2009, the Partnership and the requisite lenders entered into the Third Amendment
  to Forbearance Agreement and Amendment to Credit Agreement (the &#8220;Third
  Amendment&#8221;), dated as of March 17, 2009.&#160;&#160;The Third Amendment extends
  the Forbearance Period until the earliest of (i) April 8, 2009, (ii) the
  occurrence of any default or event of default under the credit agreement other
  than certain defaults and events of default indicated in the Forbearance
  Agreement, as amended by the First Amendment, the Second Amendment and the Third
  Amendment,&#160;or (iii) the failure of the Partnership to comply with any of
  the terms of the Forbearance Agreement, as amended by the First Amendment, the
  Second Amendment and the Third Amendment (the &#8220;Extended Forbearance
  Period&#8221;).&#160;&#160;The Partnership is working with its lenders to obtain a
  waiver of the events of default under its credit agreement in connection with
  the transactions related to the Settlement Agreement (as defined below);
  however, there can be no assurance that such a waiver will be
  obtained.&#160;&#160;&#160;&#160;</font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Prior to the
  execution of the Forbearance Agreement, the credit agreement was comprised of a
  $350 million revolving credit facility and a $250 million term loan
  facility.&#160;&#160;The Forbearance Agreement permanently reduced the
  Partnership&#8217;s revolving credit facility under the credit agreement from $350
  million to $300 million and prohibited the Partnership from borrowing additional
  funds under its revolving credit facility during the Forbearance
  Period.&#160;&#160;&#160;Under the Forbearance Agreement, the Partnership agreed
  to pay the lenders executing the Forbearance Agreement a fee equal to 0.25% of
  the aggregate commitments under the credit agreement after giving effect to the
  above described commitment reduction.&#160;&#160;The Second Amendment further
  permanently reduced the Partnership&#8217;s revolving credit facility under the credit
  agreement from $300 million to $220 million.&#160;&#160;The Third
  Amendment&#160;prohibits the Partnership from borrowing additional funds under
  its revolving credit facility during the Extended Forbearance
  Period.&#160;&#160;In addition, under the Second Amendment, the Partnership
  agreed to pay the lenders executing the Second Amendment a fee equal to 0.375%
  of the aggregate commitments under the credit agreement after the above
  described commitment reduction.&#160;&#160;As of March 13, 2009, the Partnership
  had $448.1 million in outstanding borrowings under its credit facility
  (including $198.1 million under its revolving credit facility and $250 million
  under its term loan facility) with an aggregate unused credit availability of
  approximately $21.9 million under its credit facility.&#160;&#160;As described
  above, the Partnership is prohibited from borrowing additional funds under its
  credit agreement during the Extended Forbearance Period.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  </font></div>
          </div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior to
  the events of default, indebtedness under the credit agreement bore interest at
  the Partnership&#8217;s option, at either (i)&#160;the higher of the administrative
  agent&#8217;s prime rate or the federal funds rate plus 0.5%, plus an applicable
  margin that ranges from 0.50% to 1.75%, depending on the Partnership&#8217;s total
  leverage ratio and senior secured leverage ratio, or (ii)&#160;LIBOR plus an
  applicable margin that ranges from 1.50% to 2.75%, depending upon the
  Partnership&#8217;s total leverage ratio and senior secured leverage
  ratio.&#160;&#160;During the Forbearance Period indebtedness under the credit
  agreement bore interest at the Partnership&#8217;s option, at either (i)&#160;the
  administrative agent&#8217;s prime rate or the federal funds rate plus 0.50%, plus an
  applicable margin that ranges from 2.75% to 3.75%, depending upon the
  Partnership&#8217;s total leverage ratio, or (ii)&#160;LIBOR plus an applicable margin
  that ranges from 4.25% to 5.25%, depending upon the Partnership&#8217;s total leverage
  ratio.&#160;&#160;Pursuant to the Second Amendment, commencing on December 12,
  2008, indebtedness under the credit agreement bears interest at the
  Partnership&#8217;s option, at either (i)&#160;the administrative agent&#8217;s prime rate
  or the federal funds rate plus 5.0% per annum, with a prime rate or federal
  funds rate floor of 4.0% per annum, or (ii)&#160;LIBOR plus 6.0% per annum, with
  a LIBOR floor of 3.0% per annum.&#160; During the three months ended June 30,
  2008, the weighted average interest rate incurred by the Partnership was 4.62%
  resulting in interest expense of approximately $4.3 million.&#160;&#160;During
  the three months ended December 31, 2008, the weighted average interest rate
  incurred by the Partnership was&#160;7.72% resulting in interest expense of
  approximately $8.9 million.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under the
  Forbearance Agreement, as amended by the First Amendment, the Second Amendment,
  and the Third Amendment, the lender&#8217;s forbearance is subject to certain
  conditions as described therein, including, among other items, periodic
  deliverables and minimum liquidity, minimum receipts and maximum disbursement
  requirements.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under the
  credit agreement, the Partnership is subject to certain limitations, including
  limitations on its ability to grant liens, incur additional indebtedness, engage
  in a merger, consolidation or dissolution, enter into transactions with
  affiliates, sell or otherwise dispose of its assets, businesses and operations,
  materially alter the character of its business, and make acquisitions,
  investments and capital expenditures. Under the terms of the Forbearance
  Agreement, as amended by the First Amendment, the Second Amendment, and the
  Third Amendment, and due to the current events of default that exist under the
  credit agreement, the Partnership is prohibited from making distributions of
  available cash to its unitholders and will continue to be prohibited from making
  any such distributions as long as any such events of default
  exist.&#160;&#160;The credit agreement requires the Partnership to maintain a
  leverage ratio (the ratio of its consolidated funded indebtedness to its
  consolidated adjusted EBITDA, in each case as defined in the credit agreement),
  determined as of the last day of each<font style="DISPLAY: inline; FONT-SIZE: 10pt">&#160;</font>quarter for the
  four-quarter period ending on the date of determination, of not more than 5.00
  to 1.00 and, on a temporary basis, from the date of the consummation of certain
  acquisitions until the last day of the third consecutive fiscal quarter
  following such acquisitions, not more than 5.50 to 1.00; provided, that after
  the issuance of senior unsecured notes, the leverage ratio limitation will be
  modified by a requirement that the Partnership maintain a senior secured
  leverage ratio of not more than 4.00 to 1.00 and a total leverage ratio of not
  more than 5.50 to 1.00, subject to temporary increases of the senior secured
  leverage ratio to not more than 4.50 to 1.00 and the total leverage ratio of not
  more than 6.00 to 1.00 following the consummation of certain acquisitions as
  described above. As of June 30, 2008 and&#160;December 31,&#160;2008, the
  Partnership&#8217;s leverage ratio was 3.97 to 1.00 and 4.82 to 1.00,
  respectively.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt">The credit agreement also requires the
  Partnership to maintain an interest coverage ratio (the ratio of its
  consolidated EBITDA to its consolidated interest expense, in each case as
  defined in the credit agreement) of not less than 2.75 to 1.00 determined as of
  the last day of each</font> <font style="DISPLAY: inline; FONT-SIZE: 10pt">quarter for the four-quarter period
  ending on the date of determination. As of June 30, 2008 and&#160;December
  31,&#160;2008, the Partnership&#8217;s interest coverage ratio was </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">6.49</font><font style="DISPLAY: inline; FONT-SIZE: 10pt"> to 1.00 and 3.61 to 1.00,
  respectively.</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  credit agreement specifies a number of events of default (many of which are
  subject to applicable cure periods), including, among others, failure to pay any
  principal when due or any interest or fees within three business days of the due
  date, failure to perform or otherwise comply with the covenants in the credit
  agreement, failure of any representation or warranty to be true and correct in
  any material respect, failure to pay debt, a change of control of the
  Partnership, the Partnership&#8217;s general partner or the Private Company, and other
  customary defaults.&#160;&#160;Because events of default exist under the credit
  agreement, the lenders are able to accelerate the maturity of the credit
  agreement and exercise other rights and remedies, including taking available
  cash in&#160;the Partnership's&#160;bank accounts.&#160;&#160;The lenders have
  agreed to forbear from exercising such rights during the Extended Forbearance
  Period subject to certain limitations and conditions contained in the
  Forbearance Agreement, as amended by the First Amendment, the Second Amendment,
  and the Third Amendment.&#160;&#160;If the Partnership is unable to obtain
  further forbearance from its lenders or a permanent waiver of the events of
  default under its credit agreement, it may be forced to sell assets, make a
  bankruptcy filing or take other action that could have a material adverse effect
  on its business, the price of its common units and its results of
  operations.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  </font></div>
          </div>
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership is exposed to market risk for changes in interest rates related to
  its credit facility. Interest rate swap agreements are used to manage a portion
  of the exposure related to changing interest rates by converting floating-rate
  debt to fixed-rate debt. In August 2007 the Partnership entered into interest
  rate swap agreements with an aggregate notional value of $80.0 million that
  mature on August&#160;20, 2010. Under the terms of the interest rate swap
  agreements, the Partnership will pay fixed rates of 4.9% and will receive
  three-month LIBOR with quarterly settlement. The fair market value of the August
  2007 interest rate swaps at June 30, 2008 was a liability of $2.5
  million.&#160;&#160;In March 2008 the Partnership entered into interest rate
  swap agreements with an aggregate notional value of $100.0 million that mature
  on March 31, 2011.&#160;&#160;Under the terms of the interest rate swap
  agreements, the Partnership will pay fixed rates of 2.6% to 2.7% and will
  receive three-month LIBOR with quarterly settlement.&#160;&#160;The fair market
  value of the March 2008 interest rate swaps at June 30, 2008 was a net asset of
  $3.0 million.&#160;&#160;The interest rate swaps do not receive hedge accounting
  treatment under Statement of Financial Accounting Standard (&#8220;SFAS&#8221;) SFAS No.
  133, &#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for
  Derivative Instruments and Hedging Activities</font>&#8221; (&#8220;SFAS 133&#8221;). Changes in
  the fair value of the interest rate swaps are recorded in interest expense in
  the statements of operations.&#160;&#160;In addition, the interest rate swap
  agreements contain cross-default provisions to events of default under the
  credit agreement.&#160;&#160;Due to events related to the Bankruptcy Filings,
  all of these interest rate swap positions were&#160;terminated in the third
  quarter of 2008, and the Partnership has recorded a $1.5 million liability as of
  September 30, 2008 with respect to these positions.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.
  FAIR VALUE MEASUREMENTS</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership adopted SFAS No.&#160;157, &#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Fair Value Measurements</font>,&#8221;
  effective January&#160;1, 2008 for financial assets and liabilities measured on
  a recurring basis. SFAS No.&#160;157 applies to all financial assets and
  financial liabilities that are being measured and reported on a fair value
  basis. In February 2008, the FASB issued FSP No. 157-2, which delayed the
  effective date of SFAS No. 157 by one year for nonfinancial assets and
  liabilities except those that are recognized and recorded in the financial
  statements at fair value on a recurring basis. As defined in SFAS No. 157, fair
  value is the price that would be received to sell an asset or paid to transfer a
  liability in an orderly transaction between market participants at the
  measurement date (exit price). SFAS No.&#160;157 requires disclosure that
  establishes a framework for measuring fair value and expands disclosure about
  fair value measurements. The statement requires fair value measurements be
  classified and disclosed in one of the following categories:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="7%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Level
        1:</font></div>
              </td>
              <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="top" width="68%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Unadjusted
        quoted prices in active markets that are accessible at the measurement
        date for identical, unrestricted assets or liabilities. The Partnership
        considers active markets as those in which transactions for the assets or
        liabilities occur in sufficient frequency and volume to provide pricing
        information on an ongoing basis.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="top" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="7%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Level
        2:</font></div>
              </td>
              <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="top" width="68%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Quoted
        prices in markets that are not active, or inputs which are observable,
        either directly or indirectly, for substantially the full term of the
        asset or liability.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="top" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="7%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Level
        3:</font></div>
              </td>
              <td align="left" valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="top" width="68%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Measured
        based on prices or valuation models that require inputs that are both
        significant to the fair value measurement and less observable from
        objective sources (i.e., supported by little or no market activity). The
        Partnership&#8217;s Level 3 instruments are comprised of interest rate
        swaps.&#160;&#160;Although the Partnership utilizes third party broker
        quotes to assess the reasonableness of its prices and valuation, the
        Partnership does not have sufficient corroborating market evidence to
        support classifying these assets and liabilities as Level
      2.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;As required
  by SFAS No.&#160;157, financial assets and liabilities are classified based on
  the lowest level of input that is significant to the fair value measurement. The
  Partnership&#8217;s assessment of the significance of a particular input to the fair
  value measurement requires judgment, and may affect the valuation of the fair
  value of assets and liabilities and their placement within the fair value
  hierarchy levels. The following table summarizes the valuation of the
  Partnership&#8217;s investments and financial instruments by SFAS No.&#160;157 pricing
  levels as of June 30, 2008 (in thousands):</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  </font></div>
          </div>
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">
        <div>
          <div align="left">
            <div align="center">
              <div align="center">
                <div align="center">
                  <div align="center">
                    <table cellpadding="0" cellspacing="0" width="100%">
                        <tr>
                          <td align="left" valign="bottom" width="15%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                          <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="14" valign="bottom" width="39%" style="BORDER-BOTTOM: black 2px solid">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Fair
        Value Measurements at Reporting Date Using</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="bottom" width="15%">
                            <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></div>
                          </td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="9%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Quoted
        Prices in Active</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="9%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Significant
        Other</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="9%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Significant</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="9%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Markets
        for Identical</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="9%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Observable</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="9%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Unobservable</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="bottom" width="15%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="9%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Assets</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="9%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Inputs</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="9%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Inputs</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                        <tr>
                          <td align="left" valign="bottom" width="15%" style="BORDER-BOTTOM: black 2px solid">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Description</font></div>
                          </td>
                          <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">June
        30, 2008</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Level
        1)</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Level
        2)</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td colspan="2" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Level
        3)</font></div>
                          </td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                        <tr bgcolor="#cceeff">
                          <td align="left" valign="bottom" width="15%">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interest
        rate swap assets</font></div>
                          </td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                          <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,998</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                          <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                          <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                          <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,998</font></td>
                          <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                        <tr bgcolor="white">
                          <td align="left" valign="bottom" width="15%" style="PADDING-BOTTOM: 2px">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interest
        rate swap liabilities</font></div>
                          </td>
                          <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2,502</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                          <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2,502</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                        </tr>
                        <tr bgcolor="#cceeff">
                          <td align="left" valign="bottom" width="15%" style="PADDING-BOTTOM: 4px">
                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;Total</font></div>
                          </td>
                          <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                          <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">496</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                          <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                          <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                          <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                          <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">496</font></td>
                          <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                        </tr>
                    </table>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;The following
  table sets forth a reconciliation of changes in the fair value of the
  Partnership&#8217;s net financial liabilities classified as level 3 in the fair value
  hierarchy (in thousands):</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
        <div>
          <div align="left">
            <div align="center">
              <div align="center">
                <div align="center">
                  <div align="center">
                    <div align="center">
                      <div align="center">
                        <div align="center">
                          <div align="center">
                            <table cellpadding="0" cellspacing="0" width="100%">
                                <tr>
                                  <td align="left" valign="bottom" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="6" valign="bottom" width="20%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Fair
        Value Measurements Using</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr>
                                  <td align="left" valign="bottom" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="6" valign="bottom" width="20%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Significant
        Unobservable Inputs</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr>
                                  <td align="left" valign="bottom" width="35%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                  <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="6" valign="bottom" width="20%" style="BORDER-BOTTOM: black 2px solid">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Level
        3)</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr>
                                  <td align="left" valign="bottom" width="35%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                  <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
        Months Ended June 30, 2008</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Six
        Months Ended June 30, 2008</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="#cceeff">
                                  <td align="left" valign="bottom" width="35%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Beginning
        balance</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(4,390</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2,233</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                </tr>
                                <tr bgcolor="white">
                                  <td align="left" valign="bottom" width="35%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        gains or losses (realized/unrealized)</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="#cceeff">
                                  <td align="left" valign="bottom" width="35%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Included
        in earnings (1)</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,720</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,569</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="white">
                                  <td align="left" valign="bottom" width="35%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Included
        in other comprehensive income</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="#cceeff">
                                  <td align="left" valign="bottom" width="35%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Purchases,
        issuances, and settlements</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">166</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">160</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="white">
                                  <td align="left" valign="bottom" width="35%" style="PADDING-BOTTOM: 2px">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Transfers
        in and/or out of Level 3</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="#cceeff">
                                  <td align="left" valign="bottom" width="35%" style="PADDING-BOTTOM: 4px">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Ending
        balance, June 30, 2008</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">496</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">496</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="white">
                                  <td align="left" valign="bottom" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="#cceeff">
                                  <td align="left" valign="bottom" width="35%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
        amount of total gains for the period included</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="white">
                                  <td align="left" valign="bottom" width="35%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">in
        earnings attributable to the change in the unrealized</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="#cceeff">
                                  <td align="left" valign="bottom" width="35%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">gains
        or losses relating to assets and liabilities still</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="white">
                                  <td align="left" valign="bottom" width="35%" style="PADDING-BOTTOM: 4px">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">held
        at the reporting date</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,886</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,729</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="#cceeff">
                                  <td align="left" valign="bottom" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="white">
                                  <td align="left" colspan="8" valign="bottom" width="56%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(1)
        Amounts reported as included in earnings are reported as interest (income)
        expense on the statements of operations.</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                            </table>
                          </div>
                        </div>
                      </div>
                    </div>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.
  NET INCOME PER LIMITED PARTNER UNIT</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Subject
  to applicability of Emerging Issues Task Force Issue No.&#160;03-06 (&#8220;EITF
  03-06&#8221;), &#8220;Participating Securities and the Two-Class Method under Financial
  Accounting Standards Board (&#8220;FASB&#8221;) Statement No.&#160;128,&#8221; as discussed below,
  Partnership income is allocated to the limited partners, including the holders
  of subordinated units, and to the general partner after consideration of its
  incentive distribution rights.&#160;&#160;Income allocable to the limited
  partners is first allocated to the common unitholders up to the quarterly
  minimum distribution of $0.3125 per unit, with remaining income allocated to the
  subordinated unitholders up to the minimum distribution amount. Basic and
  diluted net income per common and subordinated partner unit is determined by
  dividing net income attributable to common and subordinated partners by the
  weighted average number of outstanding common and subordinated partner units
  during the period.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">EITF
  03-06 addresses the computation of earnings per share by entities that have
  issued securities other than common stock that contractually entitle the holder
  to participate in dividends and earnings of the entity when, and if, it declares
  dividends on its common stock (or partnership distributions to unitholders).
  Under EITF 03-06, in accounting periods where the Partnership&#8217;s aggregate net
  income exceeds aggregate dividends declared in the period, the Partnership is
  required to present earnings per unit as if all of the earnings for the periods
  were distributed.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  following sets forth the computation of basic and diluted net income per common
  and subordinated unit (in thousands, except per unit data):</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  </font></div>
          </div>
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
        <div>
          <div align="left">
            <div align="center">
              <div align="center">
                <div align="center">
                  <div align="center">
                    <div align="center">
                      <div align="center">
                        <table cellpadding="0" cellspacing="0" width="100%">
                            <tr>
                              <td valign="bottom" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
        Months</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
        Months</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Six
        Months</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Six
        Months</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr>
                              <td valign="bottom" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Ended</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Ended</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Ended</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Ended</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr>
                              <td align="left" valign="bottom" width="25%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">June
        30, 2007</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">June
        30, 2008</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">June
        30, 2007</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">June
        30, 2008</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="25%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
        income (loss)</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(12,211</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">21,596</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(24,495</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31,354</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="25%" style="PADDING-BOTTOM: 2px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Less:
        General partner interest in net income</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,410</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,605</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" colspan="4" valign="bottom" width="32%" style="PADDING-BOTTOM: 4px">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
        income available to limited and subordinated partners</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18,186</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">27,749</font></td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="25%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Basic
        and diluted weighted average number of units:</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="25%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Common
        units</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">21,275</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">19,310</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="25%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Subordinated
        units</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12,571</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12,571</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="25%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Restricted
        and phantom units</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">530</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">508</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="25%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Basic
        and diluted net income per common unit</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.53</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.84</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="25%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Basic
        and diluted net income per subordinated unit</font></div>
                              </td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.53</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.84</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                        </table>
                      </div>
                    </div>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7.
  PARTNERS&#8217; CAPITAL AND DISTRIBUTIONS</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership has not made a distribution to its common unitholders, subordinated
  unitholders or general partner since May 15, 2008 due to the existing events of
  default under its credit agreement and the uncertainty of its future cash flows
  relating to the Bankruptcy Filings.&#160;&#160;The Partnership&#8217;s unitholders
  will be required to pay taxes on their share of the Partnership&#8217;s taxable income
  even though they did not receive a distribution for the quarters ended June 30,
  2008, September 30, 2008 or December 31, 2008.&#160;&#160;In addition, the
  Partnership does not currently expect to make a distribution relating to
  operations during the&#160;first quarter of 2009.&#160;&#160;If the events of
  default under the Partnership&#8217;s credit agreement are not waived by its lenders
  or the Partnership&#8217;s business operations and prospects do not improve, the
  Partnership may not make quarterly distributions to its unitholders in the
  future (See Note 13).&#160;&#160;The Partnership&#8217;s partnership agreement
  provides that, during the subordination period, which the Partnership is
  currently in, the Partnership&#8217;s common units will have the right to receive
  distributions of available cash from operating surplus in an amount equal to the
  minimum quarterly distribution of $0.3125 per common unit per quarter, plus any
  arrearages in the payment of the minimum quarterly distribution on the common
  units from prior quarters, before any distributions of available cash from
  operating surplus may be made on the subordinated units.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On April
  24, 2008, the Partnership declared a cash distribution of $0.40 per unit on its
  outstanding units for the three month period ended March 31,
  2008.&#160;&#160;The distribution was paid on May 15, 2008 to unitholders of
  record on May 5, 2008. The total distribution paid was approximately $14.3
  million, with approximately $8.5 million, $5.0 million, and $0.6 million paid to
  the Partnership&#8217;s common unitholders, subordinated unitholders and general
  partner, respectively, and $0.2 million paid to phantom and restricted
  unitholders pursuant to awards granted under the Partnership&#8217;s long-term
  incentive plan.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
  February&#160;20, 2008, the Partnership purchased the Acquired Asphalt Assets
  from the Private Company for aggregate consideration of $379.5 million,
  including $0.7 million of acquisition-related costs. For accounting purposes,
  the acquisition has been reflected as a purchase of assets, with the Acquired
  Asphalt Assets recorded at the historical cost of the Private Company, which was
  approximately $145.5 million, and with the additional purchase price of $234.0
  million reflected in the statement of changes in partners&#8217; capital as a
  distribution to the Private Company.&#160;&#160;The Board approved the
  acquisition of the Acquired Asphalt Assets as well as the terms of the related
  agreements based on a recommendation from its conflicts committee, which
  consisted entirely of independent directors. The conflicts committee retained
  independent legal and financial advisors to assist it in evaluating the
  transaction and considered a number of factors in approving the acquisition,
  including an opinion from the committee&#8217;s independent financial advisor that the
  consideration paid for the Acquired Asphalt Assets was fair, from a financial
  point of view, to the Partnership.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  </font></div>
          </div>
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">13</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On May
  12, 2008, the Partnership purchased the Acquired Pipeline Assets from the
  Private Company for aggregate consideration of $45.1 million, including $0.1
  million of acquisition-related costs. For accounting purposes, the acquisition
  has been reflected as a purchase of assets, with the Acquired Pipeline Assets
  recorded at the historical cost of the Private Company, which was approximately
  $35.1 million, and with the additional purchase price of $10.0 million reflected
  in the statement of changes in partners&#8217; capital as a distribution to the
  Private Company.&#160;&#160;The Board approved the acquisition of the Acquired
  Pipeline Assets based on a recommendation from its conflicts committee, which
  consisted entirely of independent directors. The conflicts committee retained
  independent legal and financial advisors to assist it in evaluating the
  transaction and considered a number of factors in approving the acquisition,
  including an opinion from the committee&#8217;s independent financial advisor that the
  consideration paid for the Acquired Pipeline Assets was fair, from a financial
  point of view, to the Partnership.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On May
  30, 2008, the Partnership purchased the Acquired Storage Assets from the Private
  Company for aggregate consideration of $90.2 million, including $0.2 million of
  acquisition-related costs. For accounting purposes, the acquisition has been
  reflected as a purchase of assets, with the Acquired Storage Assets recorded at
  the historical cost of the Private Company, which was approximately $16.6
  million, and with the additional purchase price of $73.6 million reflected in
  the statement of changes in partners&#8217; capital as a distribution to the Private
  Company.&#160;&#160;The Board approved the acquisition of the Acquired Storage
  Assets based on a recommendation from its conflicts committee, which consisted
  entirely of independent directors. The conflicts committee retained independent
  legal and financial advisors to assist it in evaluating the transaction and
  considered a number of factors in approving the acquisition, including an
  opinion from the committee&#8217;s independent financial advisor that the
  consideration paid for the Acquired Storage Assets was fair, from a financial
  point of view, to the Partnership.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As a
  result of the Private Company&#8217;s control of the Partnership&#8217;s general partner,
  consideration paid in excess of the historical cost of the Acquired Asphalt
  Assets, Acquired Pipeline Assets, and Acquired Storage Assets were treated as
  distributions to the Private Company.&#160; This resulted in an aggregate
  reduction in Partners&#8217; Capital of $317.6 million and negative Partners&#8217; Capital
  of $130.2 million as of June 30, 2008. &#160;As discussed in the Partnership&#8217;s
  Annual Report on Form 10-K for the year ended December 31, 2007, as a result of
  the Private Company&#8217;s control of the Partnership&#8217;s general partner, the
  Partnership was subject to the risk that the Private Company may favor its own
  interest in proposing the terms of any acquisition (or drop downs) the
  Partnership makes from the Private Company and such terms may not be as
  favorable as those received from an unrelated third party.&#160; The Board
  approved the acquisition of the Acquired Asphalt Assets, the Acquired Pipeline
  Assets, and Acquired Storage Assets, as well as the terms of the related
  agreements based on a recommendation from its conflicts committee, which
  consisted entirely of independent directors. The conflicts committee retained
  independent legal and financial advisors to assist it in evaluating these
  transactions and considered a number of factors in approving the acquisitions,
  including opinions from the committee&#8217;s independent financial advisor that the
  consideration paid for the Acquired Asphalt Assets, the Acquired Pipeline
  Assets, and the Acquired Storage Assets was fair, from a financial point of
  view, to the Partnership.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8.
  RELATED PARTY TRANSACTIONS</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior to
  the close of its initial public offering in July 2007, the Partnership entered
  into the Throughput Agreement with the Private Company. For the six months ended
  June 30, 2008, the Partnership recognized revenue of $56.2 million under the
  Throughput Agreement.<font style="DISPLAY: inline; FONT-SIZE: 10pt">&#160;</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  conjunction with the purchase of the Acquired Asphalt Assets in February 2008,
  the Partnership entered into a Terminalling Agreement with the Private Company.
  For the six months ended June 30, 2008, the Partnership recognized revenue of
  $28.2 million under the Terminalling Agreement, including fuel surcharge
  revenues related to fuel and power consumed to operate its liquid asphalt cement
  storage tanks.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Based on
  the minimum requirements under the Throughput Agreement and the Terminalling
  Agreement, the Private Company is obligated to pay the Partnership an aggregate
  minimum monthly fee totaling $135 million annually for the Partnership&#8217;s
  gathering and transportation services and the Partnership&#8217;s terminalling and
  storage services.&#160;&#160;Pursuant to an order of the Bankruptcy Court
  entered on September 9, 2008, the Private Company is no longer making such
  minimum payments under the Throughput Agreement but instead is paying a market
  rate based upon the Private Company&#8217;s actual usage.&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to&#160;the Settlement Agreement (as defined&#160;below), the Private Company
  will reject the Throughput Agreement as part of the Bankruptcy Cases (as defined
  below) and the Partnership and the Private Company will enter into a new
  throughput agreement pursuant to which the Partnership will provide certain
  crude oil gathering, transportation, terminalling and storage services to the
  Private Company.&#160;&#160;There can be no assurance <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated</font>&#160;(see
  Note 13).&#160; </font>The revenues under the Terminalling Agreement have been
  and will continue to be adversely affected by the Bankruptcy Filings (See Note
  13).</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership does not take title to, or marketing responsibility for, the crude
  oil or liquid asphalt cement that it gathers, transports, terminals and stores.
  The Throughput Agreement and the Terminalling Agreement contain a Consumer Price
  Index adjustment that may offset a portion of any increased costs that the
  Partnership incurs. If new laws or regulations that affect these services
  provided under the Throughput Agreement or the Terminalling Agreement generally
  are enacted that require the Partnership to make substantial and unanticipated
  capital expenditures, the Partnership has the right pursuant to the terms of
  such agreements to negotiate an upfront payment or monthly surcharge to be paid
  by the Private Company for the use of the Partnership&#8217;s services to cover the
  Private Company&#8217;s pro rata portion of the cost of complying with these laws or
  regulations, after the Partnership has made efforts to mitigate their effect.
  The Partnership and the Private Company are obligated to negotiate in good faith
  to agree on the level of the monthly surcharge. The surcharge will not apply in
  respect of routine capital expenditures.</font></div><br>
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          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Private Company&#8217;s obligations under the Throughput Agreement and the
  Terminalling Agreement may be temporarily suspended during the occurrence of a
  force majeure event that renders performance of services impossible with respect
  to an asset for at least 30 consecutive days. If a force majeure event results
  in a diminution in the services the Partnership is able to provide to the
  Private Company pursuant to the Throughput Agreement or the Terminalling
  Agreement, the Private Company&#8217;s minimum service usage commitment would be
  reduced proportionately for the duration of the force majeure event. If such a
  force majeure event continues for twelve consecutive months or more, the
  Partnership and the Private Company will each have the right to terminate the
  rights and obligations with respect to the affected services under the
  Throughput Agreement or the Terminalling Agreement.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Throughput Agreement and the Terminalling Agreement have initial terms that
  expire on December&#160;31, 2014 with additional automatic one-year renewals
  unless either party terminates the agreement upon one year&#8217;s prior
  notice.&#160;&#160;The Private Company may reject or attempt to modify these
  contracts in the Bankruptcy Cases (as defined below) (See Note 13). The
  Throughput Agreement and the Terminalling Agreement may be assigned by the
  Private Company only with the Partnership&#8217;s consent; provided, however, that the
  Bankruptcy Court may approve an assignment of these agreements despite the
  Partnership&#8217;s objections.&#160;&#160;On February 6, 2009, the Private Company
  filed a motion in the Bankruptcy Court requesting approval of the sale of the
  Private Company&#8217;s asphalt related assets, or in the event of an unsuccessful
  auction, the rejection of the Terminalling Agreement and the winding down of its
  asphalt business (See Note 13).</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Throughput Agreement and the Terminalling Agreement do not apply to any services
  the Partnership may provide to customers other than the Private
  Company.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Pursuant
  to&#160;the Settlement Agreement (as defined below), the Private Company will
  reject the Terminalling Agreement and the Throughput Agreement as part of the
  Bankruptcy Cases (as defined below) and the Partnership will&#160;receive the
  Private Company&#8217;s asphalt assets that are connected to the Partnership&#8217;s asphalt
  assets.&#160;&#160;In addition, pursuant to the Settlement Agreement, the
  Partnership and the Private Company will enter into a new throughput agreement
  pursuant to which the Partnership will provide certain crude oil gathering,
  transportation, terminalling and storage services to the Private
  Company.&#160;&#160;There can be no assurance&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated</font> (see Note
  13).</font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
  December&#160;31, 2007 and June 30, 2008, the Partnership had $9.7&#160;million
  and $2.0 million<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>in
  receivables from the Private Company and its subsidiaries, net of allowance for
  doubtful accounts of $0 and $0.9 million, respectively.&#160;&#160;The $0.9
  million allowance for doubtful accounts relates to amounts that were due from
  the Private Company as of June 30, 2008 and are considered prepetition debt in
  the Bankruptcy Cases.&#160;&#160;These amounts have been reserved due to the
  uncertainty of collecting prepetition amounts from the Private Company in the
  Bankruptcy Cases (See Note 13).</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt">Under the Partnership&#8217;s partnership
  agreement and the Omnibus Agreement with the Private Company, the Partnership
  reimburses the Private Company for the provision of various general and
  administrative services for the Partnership&#8217;s benefit. As of June 30, 2008, the
  Partnership paid the Private Company a fixed administrative fee for providing
  general and administrative services to the Partnership.&#160;&#160;This fixed
  administrative fee was initially fixed at $5.0 million per year through
  July&#160;2010.&#160;&#160;Concurrently with the closing of the purchase of the
  Acquired Asphalt Assets, the Partnership amended and restated the Omnibus
  Agreement, increasing the fixed administrative fee the Partnership pays the
  Private Company for providing general and administrative services to the
  Partnership from $5.0 million per year to $7.0 million per year through February
  2011, subject to annual increases based on increases in the Consumer Price Index
  and subject to further increases in connection with expansions of the
  Partnership&#8217;s operations through the acquisition or construction of new assets
  or businesses with the concurrence of the Partnership&#8217;s conflicts
  committee.</font>&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt">After February 2011, the general and
  administrative expenses will be allocated to the Partnership only in accordance
  with the partnership agreement. For the six months ended June 30, 2008, the
  Partnership paid the Private Company $</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">3</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">.2</font><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt">million for the services provided under
  the Omnibus Agreement.&#160;&#160;The obligation for the Private Company to
  provide services under the Omnibus Agreement and the corresponding
  administrative fee payable by the Partnership were terminated in connection with
  the events related to the change of control of the Partnership&#8217;s General
  Partner.&#160;&#160;The Private Company agreed to provide these services until
  at least November 30, 2008 pursuant to an Agreed Order approved by the
  Bankruptcy Court and, as of the date of filing this report, has continued to
  provide these services (See Note 13).&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to&#160;the Settlement Agreement (as defined below), the Private Company will
  reject the Amended Omnibus Agreement as part of the Bankruptcy Cases (as defined
  below) and the Partnership and the Private Company will enter into a shared
  services agreement pursuant to which the Private Company will provide certain
  operational services for the Partnership.&#160;&#160;There can be no assurance
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated </font>(see Note
  13).</font></font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership also reimburses the Private Company for direct operating payroll and
  payroll-related costs and other operating costs associated with services the
  Private Company&#8217;s employees provide to the Partnership. For the six months ended
  June 30, 2008, the Partnership recorded $14.3 million in compensation costs and
  $1.6 million in other operating costs related to services provided by the
  Private Company&#8217;s employees which are reflected as operating expenses in the
  accompanying statement of operations. As of December&#160;31, 2007 and June 30,
  2008, the Partnership had $10.2&#160;million and $9.9 million<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>in payables to the
  Private Company and its subsidiaries. As of the date of the filing of this
  report, the Partnership has not paid the $9.9 million payable to the Private
  Company prior to the Bankruptcy Filings.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement (as defined below), these pre-petition claims by the
  Private Company will be netted against pre-petition claims by&#160;the
  Partnership&#160;and waived.&#160;&#160;There can be no assurance that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated (see Note
  13).</font></font></div><br>
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        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership has acquired various assets, including the Acquired Asphalt Assets,
  the Acquired Pipeline Assets and the Acquired Storage Assets, from the Private
  Company.&#160;&#160;See Notes 1 and 7 for a description of these
  acquisitions.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
  the six months ended June 30, 2008, the Partnership made payments of
  $1.0&#160;million to a third party entity on whose board of directors a former
  member of the Board serves in connection with leased transport trucks and
  trailers utilized in the Partnership&#8217;s gathering and transportation services
  segment.&#160;At June 30, 2008 the Partnership had future commitments to this
  entity totaling $8.5 million.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
  June 30, 2008, the Partnership had a banking relationship with a third party
  banking entity on whose board of directors a former member of the Board
  served.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">9.
  LONG-TERM INCENTIVE PLAN</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In July
  2007, the Partnership&#8217;s general partner adopted the SemGroup Energy Partners
  G.P., L.L.C. Long-Term Incentive Plan (the &#8220;Plan&#8221;). The compensation committee
  of the Board administers the Plan. The Plan authorizes the grant of an aggregate
  of 1.25&#160;million common units deliverable upon vesting. Although other types
  of awards are contemplated under the Plan, currently outstanding awards include
  &#8220;phantom&#8221; units, which convey the right to receive common units upon vesting,
  and &#8220;restricted&#8221; units, which are grants of common units restricted until the
  time of vesting. The phantom unit awards also include distribution equivalent
  rights (&#8220;DERs&#8221;).</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Subject
  to applicable earning criteria, a DER entitles the grantee to a cash payment
  equal to the cash distribution paid on an outstanding common unit prior to the
  vesting date of the underlying award. Recipients of restricted units are
  entitled to receive cash distributions paid on common units during the vesting
  period which distributions are reflected initially as a reduction of partners&#8217;
  capital. Distributions paid on units which ultimately do not vest are
  reclassified as compensation expense.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In July
  2007, 475,000 phantom common units and 5,000 restricted common units were
  granted which vest ratably over periods of four and three years, respectively.
  In October 2007, 5,000 restricted common units were granted which vest ratably
  over three years. In June 2008, 375,000 phantom common units were granted which
  vest ratably over three years.&#160;&#160;These grants are equity awards under
  SFAS 123(R), &#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Share-Based
  Payment</font>&#8221; and, accordingly, the fair value of the awards as of the grant
  date is expensed over the vesting period. The weighted average grant date
  fair-value of the awards is $23.86 per unit. The value of these award grants was
  approximately $10.5&#160;million, $0.1 million, $0.1&#160;million and $9.8
  million on their grant dates, respectively, and the unrecognized estimated
  compensation cost at June 30, 2008 was $18.0&#160;million, which will be
  recognized over the remaining vesting periods. As of June 30, 2008, all
  outstanding awards were expected to fully vest.&#160;&#160;Due to the change of
  control of the Partnership&#8217;s general partner related to the Private Company&#8217;s
  liquidity issues, all outstanding awards vested on July 18, 2008.&#160;&#160;On
  August 14, 2008, 282,309 common units were issued in connection with the vesting
  of certain of the outstanding awards.&#160;&#160;In addition, in December 2008
  the Plan was amended to provide for the delivery of subordinated units in
  addition to common units upon vesting and 3,333 restricted common units and
  1,667 restricted subordinated units were awarded under the Plan (See Note
  13).</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership&#8217;s equity-based incentive compensation expense for the six months
  ended June 30, 2007 and 2008 was $0 and $1.4 million, respectively.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.
  COMMITMENTS AND CONTINGENCIES</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership is from time to time subject to various legal actions and claims
  incidental to its business, including those arising out of environmental-related
  matters. Management believes that these routine legal proceedings will not have
  a material adverse effect on the financial position, results of operations or
  cash flows of the Partnership. Once management determines that information
  pertaining to a legal proceeding indicates that it is probable that a liability
  has been incurred and the amount of such liability can be reasonably estimated,
  an accrual is established equal to its estimate of the likely exposure. The
  Partnership did not have an accrual for legal settlements as of
  December&#160;31, 2007 or June 30, 2008.&#160;&#160;The Partnership is subject
  to securities class actions lawsuits, an SEC investigation and a Grand Jury
  investigation due to events related to the Bankruptcy Filings (See Note
  13).&#160;&#160;An unfavorable outcome in any of these matters may have a
  material adverse effect on the Partnership&#8217;s business, financial condition,
  results of operations, cash flows, ability to make distributions to its
  unitholders and the trading price of the Partnership&#8217;s common
  units.</font></div><br>
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            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  </font></div>
          </div>
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        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">16</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership has contractual obligations to perform dismantlement and removal
  activities in the event that some of its liquid asphalt cement and residual fuel
  oil terminalling and storage assets are abandoned. These obligations include
  varying levels of activity including completely removing the assets and
  returning the land to its original state. The Partnership has determined that
  the settlement dates related to the retirement obligations are indeterminate.
  The assets with indeterminate settlement dates have been in existence for many
  years and with regular maintenance will continue to be in service for many years
  to come. Also, it is not possible to predict when demands for the Partnership&#8217;s
  terminalling and storage services will cease, and the Partnership does not
  believe that such demand will cease for the foreseeable
  future.&#160;&#160;Accordingly, the Partnership believes the date when these
  assets will be abandoned is indeterminate. With no reasonably determinable
  abandonment date, the Partnership cannot reasonably estimate the fair value of
  the associated asset retirement obligations.&#160;&#160;Management believes that
  if the Partnership&#8217;s asset retirement obligations were settled in the
  foreseeable future the potential cash flows that would be required to settle the
  obligations based on current costs are not material.&#160;&#160;The Partnership
  will record asset retirement obligations for these assets in the period in which
  sufficient information becomes available for it to reasonably determine the
  settlement dates.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In the
  Amended Omnibus Agreement and other agreements with the Private Company, the
  Private Company has agreed to indemnify the Partnership for certain
  environmental and other claims relating to the crude oil and liquid asphalt
  cement assets that have been contributed to the Partnership.&#160;&#160;Due to
  the Bankruptcy Filings the Partnership may not be able to collect any amounts
  that would otherwise be payable under these indemnification provisions if such
  events were to occur.&#160;&#160;Pursuant to the Settlement Agreement (as
  defined below), the Private Company will reject the Amended Omnibus Agreement
  including the indemnification provisions therein.&#160; </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If&#160;the&#160;Partnership&#160;experiences
  an environmental or other loss and the Private Company fails to honor its
  indemnification obligations,&#160;it would experience increased losses which may
  have a material adverse effect on its business, financial condition, results of
  operations, cash flows, ability to make distributions to&#160;its unitholders,
  the trading price of&#160;its common units and&#160;the ability to
  conduct&#160;its business.</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11.
  OPERATING SEGMENTS</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership&#8217;s operations consist of two operating segments:
  (i)&#160;terminalling and storage services and (ii)&#160;gathering and
  transportation services.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">TERMINALLING AND STORAGE
  SERVICES</font> &#8212;The Partnership provides crude oil and liquid asphalt cement
  terminalling and storage services at its terminalling and storage facilities
  located in twenty-three states.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">GATHERING AND TRANSPORTATION
  SERVICES</font> &#8212;The Partnership owns and operates two pipeline systems, the
  Mid-Continent system and the Longview system, that gather crude oil purchased by
  the Private Company and its other customers and transports it to refiners, to
  common carrier pipelines for ultimate delivery to refiners or to terminalling
  and storage facilities owned by the Partnership and others. The Partnership
  refers to its gathering and transportation system located in Oklahoma and the
  Texas Panhandle as the Mid-Continent system. It refers to its second gathering
  and transportation system, which is located in Texas, as the Longview system. In
  addition to its pipelines, the Partnership uses its owned and leased tanker
  trucks to gather crude oil for the Private Company and its other customers at
  remote wellhead locations generally not covered by pipeline and gathering
  systems and to transport the crude oil to aggregation points and storage
  facilities located along pipeline gathering and transportation systems. In
  connection with its gathering services, the Partnership also provides a number
  of producer field services, ranging from gathering condensates from natural gas
  companies to hauling produced water to disposal wells.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership&#8217;s management evaluates performance based upon segment operating
  margin, which includes revenues from related parties and external customers and
  operating expenses excluding depreciation and amortization. The non-GAAP measure
  of operating margin (in the aggregate and by segment) is presented in the
  following table. The Partnership computes the components of operating margin by
  using amounts that are determined in accordance with GAAP. A reconciliation of
  operating margin to income (loss) before income tax, which is its nearest
  comparable GAAP financial measure, is included in the following table. The
  Partnership believes that investors benefit from having access to the same
  financial measures being utilized by management. Operating margin is an
  important measure of the economic performance of the Partnership&#8217;s core
  operations. This measure forms the basis of the Partnership&#8217;s internal financial
  reporting and is used by its management in deciding how to allocate capital
  resources between segments.&#160;&#160;Income (loss) before income tax,
  alternatively, includes expense items, such as depreciation and amortization,
  general and administrative expenses and interest expense, which management does
  not consider when evaluating the core profitability of an
  operation.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  following table reflects certain financial data for each segment for the periods
  indicated:</font></div><br>
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  </font></div>
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        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left">
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                                                                <tr>
                                                                  <td valign="bottom" width="45%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                                                  <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Terminalling
        and Storage</font></div>
                                                                  </td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Gathering
        and Transportation</font></div>
                                                                  </td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                                                                  </td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr>
                                                                  <td valign="bottom" width="45%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                                                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td colspan="10" valign="bottom" width="22%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(in&#160;thousands)</font></div>
                                                                  </td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr>
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
        Months Ended June 30, 2007</font></div>
                                                                  </td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr>
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Service
        revenue</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" colspan="2" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="#cceeff">
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Third
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                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,409</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,055</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10,464</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="white">
                                                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Related
        party revenue</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="#cceeff">
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        revenue for reportable segments</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,409</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,055</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10,464</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(1</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                                                </tr>
                                                                <tr bgcolor="white">
                                                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
        expenses (excluding depreciation and amortization)</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">606</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">15,248</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">15,854</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="#cceeff">
                                                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
        margin (excluding depreciation and amortization)</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,803</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(9,193</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(5,390</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                                                  <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                                                </tr>
                                                                <tr bgcolor="white">
                                                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        assets (end of period)</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">66,148</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">50,476</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">116,624</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="#cceeff">
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
        Months Ended June 30, 2008</font></div>
                                                                  </td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="white">
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Service
        revenue</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="#cceeff">
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Third
        party revenue</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">982</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5,045</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,027</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="white">
                                                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Related
        party revenue</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">30,299</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18,950</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">49,249</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="#cceeff">
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        revenue for reportable segments</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31,281</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">23,995</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">55,276</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="white">
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
        expenses (excluding depreciation and amortization)</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8,151</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">15,595</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">23,746</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="#cceeff">
                                                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Allowance
        for doubtful accounts</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">817</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">449</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,266</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="white">
                                                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
        margin (excluding depreciation and amortization)</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">22,313</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7,951</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">30,264</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                                                </tr>
                                                                <tr bgcolor="#cceeff">
                                                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        assets (end of period)</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">227,255</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">86,923</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">314,178</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="white">
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Six
        Months Ended June 30, 2007</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="#cceeff">
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Service
        revenue</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="white">
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Third
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                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7,145</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">11,830</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18,975</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="#cceeff">
                                                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Related
        party revenue</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">123</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">123</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="white">
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        revenue for reportable segments</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7,145</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">11,953</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">19,098</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(1</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                                                </tr>
                                                                <tr bgcolor="#cceeff">
                                                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
        expenses (excluding depreciation and amortization)</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,156</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">28,615</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">29,771</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="white">
                                                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
        margin (excluding depreciation and amortization)</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5,989</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(16,662</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(10,673</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                                                  <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                                                </tr>
                                                                <tr bgcolor="#cceeff">
                                                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        assets (end of period)</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">66,148</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">50,476</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">116,624</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="white">
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Six
        Months Ended June 30, 2008</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="#cceeff">
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Service
        revenue</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="white">
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Third
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                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,013</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,638</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10,651</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="#cceeff">
                                                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Related
        party revenue</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">47,879</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">36,960</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">84,839</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="white">
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        revenue for reportable segments</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">48,892</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">46,598</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">95,490</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="#cceeff">
                                                                  <td align="left" valign="bottom" width="45%">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
        expenses (excluding depreciation and amortization)</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10,970</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31,029</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">41,999</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="white">
                                                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Allowance
        for doubtful accounts</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">817</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">449</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,266</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                                <tr bgcolor="#cceeff">
                                                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
        margin (excluding depreciation and amortization)</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">37,105</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">15,120</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">52,225</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                                                </tr>
                                                                <tr bgcolor="white">
                                                                  <td align="left" valign="bottom" width="45%" style="PADDING-BOTTOM: 2px">
                                                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        assets (end of period)</font></div>
                                                                  </td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">227,255</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">86,923</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">314,178</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="right" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                                                </tr>
                                                            </table>
                                                          </div>
                                                        </div>
                                                      </div>
                                                    </div>
                                                  </div>
                                                </div>
                                              </div>
                                            </div>
                                          </div>
                                        </div>
                                      </div>
                                    </div>
                                  </div>
                                </div>
                              </div>
                            </div>
                          </div>
                        </div>
                      </div>
                    </div>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      </div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="3%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(1)</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Historically,
        the Predecessor was a part of the integrated operations of the Private
        Company, and neither the Private Company nor the Predecessor recorded
        revenue associated with the terminalling and storage and gathering and
        transportation services provided on an intercompany basis. Accordingly,
        revenues reflected for all periods prior to the contribution of the
        assets, liabilities and operations to the Partnership by the Private
        Company on July&#160;20, 2007 are substantially services provided to third
        parties.</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="3%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2)</font></div>
              </td>
              <td align="left" valign="top" width="65%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
        following table reconciles segment operating margin (excluding
        depreciation and amortization) to income (loss) before income
        taxes:</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div>
          <div align="left">
            <div align="center">
              <div align="center">
                <div align="center">
                  <div align="center">
                    <div align="center">
                      <div align="center">
                        <div align="center">
                          <div align="center">
                            <table cellpadding="0" cellspacing="0" width="100%">
                                <tr>
                                  <td align="left" valign="bottom" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="6" valign="bottom" width="14%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
        Months Ended June 30,</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="6" valign="bottom" width="14%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Six
        Months Ended June 30,</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr>
                                  <td align="left" valign="bottom" width="25%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                  <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="2" valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr>
                                  <td align="left" valign="bottom" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                  <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td colspan="14" valign="bottom" width="30%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(in
        thousands)</font></div>
                                  </td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="#cceeff">
                                  <td align="left" valign="bottom" width="25%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
        margin (excluding depreciation and amortization)</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(5,390</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">30,264</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(10,673</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">52,225</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="white">
                                  <td align="left" valign="bottom" width="25%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Depreciation
        and amortization</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,187</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5,759</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,387</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,772</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="#cceeff">
                                  <td align="left" valign="bottom" width="25%">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">General
        and administrative expenses</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,118</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,057</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8,490</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,067</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="white">
                                  <td align="left" valign="bottom" width="25%" style="PADDING-BOTTOM: 2px">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interest
        (income) expense</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">516</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(225</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">945</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,864</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                                <tr bgcolor="#cceeff">
                                  <td align="left" valign="bottom" width="25%" style="PADDING-BOTTOM: 4px">
                                    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Income
        (loss) before income taxes</font></div>
                                  </td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(12,211</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">21,673</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(24,495</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                                  <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                  <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                                  <td align="right" valign="bottom" width="5%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31,522</font></td>
                                  <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                </tr>
                            </table>
                          </div>
                        </div>
                      </div>
                    </div>
                  </div>
                </div>
              </div>
            </div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
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  </font></div>
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            <div style="WIDTH: 100%; TEXT-ALIGN: center">
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            </div>
          </div>
          <div id="HDR">
            <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
            <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
            <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
          </div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">12.
  RECENTLY ISSUED ACCOUNTING STANDARDS</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  June&#160;2008, the Emerging Issues Task Force (&#8220;EITF&#8221;) issued Issue
  No.&#160;03-6-1, &#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Determining
  Whether Instruments Granted in Share-Based Payment Transactions Are
  Participating Securities </font>&#8221; (&#8220;EITF 03-6-1&#8221;).&#160; EITF 03-6-1 addresses
  whether instruments granted in share-based payment transactions are
  participating securities prior to vesting and, therefore, need to be included in
  the earnings allocation in computing earnings per share (&#8220;EPS&#8221;) under the
  two-class method.&#160; EITF 03-6-1 will be effective for financial statements
  issued for fiscal years beginning after December&#160;15, 2008, and interim
  periods within those years.&#160; All prior-period EPS data presented will be
  adjusted retrospectively to conform with the provisions of EITF 03-6-1. The
  Partnership is evaluating the expected impact of adoption of EITF
  03-6-1.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  April&#160;2008, the Financial Accounting Standards Board (&#8220;FASB&#8221;) issued FASB
  Staff Position (&#8220;FSP&#8221;) No.&#160;FAS 142-3 &#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Determination of the Useful Life of
  Intangible Assets </font>&#8221; (&#8220;FSP No.&#160;FAS 142-3&#8221;).&#160; FSP No.&#160;FAS
  142-3 amends the factors that should be considered in developing renewal or
  extension assumptions used to determine the useful life of a recognized
  intangible asset under SFAS No.&#160;142, &#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Goodwill and Other Intangible Assets
  </font>&#8221; (&#8220;SFAS&#160;142&#8221;).&#160; The intent of this FSP is to improve the
  consistency between the useful life of a recognized intangible asset under
  SFAS&#160;142 and the period of expected cash flows used to measure the fair
  value of the asset under SFAS No.&#160;141 (revised 2007), &#8220;<font style="DISPLAY: inline; FONT-STYLE: italic">Business Combinations</font>,&#8221; and
  other GAAP.&#160; This FSP will be effective for financial statements issued for
  fiscal years beginning after December&#160;15, 2008, and interim periods within
  those fiscal years.&#160; The Partnership is evaluating the expected impact;
  however, it believes adoption will not impact the Partnership&#8217;s financial
  position, results of operations or cash flows.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  March&#160;2008, the FASB issued SFAS&#160;No.&#160;161, &#8220;Disclosures about
  Derivative Instruments and Hedging Activities-an amendment of FASB Statement No.
  133&#8221; (&#8220;SFAS No. 161&#8221;). This Statement requires enhanced disclosures about the
  Partnership&#8217;s derivative and hedging activities. This statement is effective for
  financial statements issued for fiscal years and interim periods beginning after
  November&#160;15, 2008. The Partnership will adopt SFAS No.&#160;161 beginning
  January&#160;1, 2009. With the adoption of this statement, the Partnership does
  not expect any significant impact on its financial position, results of
  operations or cash flows.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In March
  2008, the Emerging Issues Task Force (&#8220;EITF&#8221;) of the FASB reached a final
  consensus on Issue No.&#160;07-4, &#8220;Application of the Two-Class Method under
  FASB Statement No.&#160;128, Earnings per Share, to Master Limited Partnerships&#8221;
  (&#8220;Issue No.&#160;07-4&#8221;). This conclusion reached by the EITF affects how a
  master limited partnership (&#8220;MLP&#8221;) allocates income between its general partner,
  which typically holds incentive distribution rights (&#8220;IDRs&#8221;) along with the
  general partner interest, and the limited partners. It is not uncommon for MLPs
  to experience timing differences between the recognition of income and
  partnership distributions. The amount of incentive distribution is typically
  calculated based on the amount of distributions paid to the MLP&#8217;s partners. The
  issue is whether current period earnings of an MLP should be allocated to the
  holders of IDRs as well as the holders of the general and limited partnership
  interests when applying the two-class method under SFAS No. 128, &#8220;Earnings Per
  Share.&#8221;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  conclusion reached by the EITF in Issue No.&#160;07-4 is that when current
  period earnings are in excess of cash distributions, the undistributed earnings
  should be allocated to the holders of the general partner interest, the holders
  of the limited partner interest and incentive distribution rights holders based
  upon the terms of the partnership agreement. Under this model, contractual
  limitations on distributions to incentive distribution rights holders would be
  considered when determining the amount of earnings to allocate to them. That is,
  undistributed earnings would not be considered available cash for purposes of
  allocating earnings to incentive distribution rights holders. Conversely, when
  cash distributions are in excess of earnings, net income (or loss) should be
  reduced (increased) by the distributions made to the holders of the general
  partner interest, the holders of the limited partner interest and incentive
  distribution rights holders. The resulting net loss would then be allocated to
  the holders of the general partner interest and the holders of the limited
  partner interest based on their respective sharing of the losses based upon the
  terms of the partnership agreement.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Issue
  No.&#160;07-4 is effective for fiscal years beginning after December&#160;15,
  2008 and interim periods within those fiscal years. The accounting treatment is
  effective for all financial statements presented. The Partnership is currently
  considering the impact of the adoption of Issue&#160;07-4 on its presentation of
  earnings per unit.</font></div><br>
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  </font></div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">19</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  December 2007, the FASB issued SFAS No.&#160;141(R), &#8220;Business
  Combinations.&#8221;&#160;&#160;This statement requires assets acquired and
  liabilities assumed to be measured at fair value as of the acquisition date,
  acquisition related costs incurred prior to the acquisition to be expensed and
  contractual contingencies to be recognized at fair value as of the acquisition
  date. This statement is effective for financial statements issued for fiscal
  years beginning after December&#160;15, 2008. The Partnership is currently
  assessing the impact, if any, the adoption of this statement will have on its
  financial position, results of operations or cash flows.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">13.
  SUBSEQUENT EVENTS</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due to
  the events related to the Bankruptcy Filings described herein, including the
  uncertainty relating to future cash flows and the existing events of default
  under the Partnership&#8217;s credit facility, the Partnership faces substantial doubt
  as to its ability to continue as a going concern.&#160;&#160;While it is not
  feasible to predict the ultimate outcome of the events surrounding the
  Bankruptcy Cases, the Partnership has been and could continue to be materially
  and adversely affected by such events and it may be forced to make a bankruptcy
  filing or take other action that could have a material adverse effect on its
  business, the price of its common units and its results of
  operations.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Bankruptcy
  Filings</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July
  17, 2008, the Partnership issued a press release announcing that the Private
  Company was experiencing liquidity issues and was exploring various
  alternatives, including raising additional equity, debt capital or the filing of
  a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code
  to address these issues.&#160;&#160;The Partnership filed this press release in
  a Current Report on Form 8-K filed with the SEC on July 18, 2008.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July
  22, 2008 and thereafter, the Private Company and certain of its subsidiaries
  made the Bankruptcy Filings.&#160; The Private Company and its subsidiaries
  continue to operate their businesses and own and manage their properties as
  debtors-in-possession under the jurisdiction of the Bankruptcy Court and in
  accordance with the applicable provisions of the Bankruptcy Code (the
  &#8220;Bankruptcy Cases&#8221;).&#160;None of the Partnership, its general partner, the
  subsidiaries of the Partnership nor the subsidiaries of the general partner are
  debtors in the Bankruptcy Cases.&#160;&#160;However, because of the contractual
  relationships with the Private Company and certain of its subsidiaries, the
  Bankruptcy Filings have adversely impacted the Partnership and may in the future
  impact the Partnership in various ways, including the items discussed
  below.&#160;&#160;The Partnership&#8217;s financial results as of June 30, 2008
  reflect an allowance for doubtful accounts of $0.9 million related to amounts
  due from the Private Company as of June 30, 2008, which are considered
  prepetition debt in the Bankruptcy Cases.&#160;&#160;The Partnership&#8217;s financial
  results as of June 30, 2008 also reflect a $0.4 million allowance for doubtful
  accounts related to amounts due from third parties as of June 30,
  2008.&#160;&#160;The allowance related to amounts due from third parties was
  established as a result of certain third party customers netting amounts due
  them from the Private Company with amounts due to the
  Partnership.&#160;&#160;Other than the allowance for doubtful accounts described
  above, the&#160;results of operations&#160;for the three and six months ended
  June 30, 2008 included in this quarterly report were not affected by the
  Bankruptcy Filings and related events.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Board
  and Management Composition</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July
  9, 2008, Edward F. Kosnik was appointed as an independent member of the
  Board.&#160;&#160;Mr.&#160;Kosnik is the chairman of the compensation committee
  and also serves on the audit committee and the conflicts committee of the Board.
  Under the provisions of the Plan, Mr.&#160;Kosnik was granted an award of 5,000
  restricted common units on July 9, 2008.&#160;These restricted common units
  vested on July 18, 2008 in connection with the change of control of the
  Partnership&#8217;s general partner described below.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  </font></div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July
  18, 2008, Manchester Securities Corp. and Alerian Finance Partners, LP
  (&#8220;Manchester and Alerian&#8221;), as lenders to SemGroup Holdings, the sole member of
  the Partnership&#8217;s general partner, exercised certain rights described below
  under a Loan Agreement and a Pledge Agreement, each dated June 25, 2008 (the
  &#8220;Holdings Credit Agreements&#8221;), that were triggered by certain events of default
  under the Holdings Credit Agreements.&#160;&#160;The Holdings Credit Agreements
  are secured by the subordinated units and incentive distribution rights of the
  Partnership and the membership interests in the Partnership&#8217;s general partner
  owned by SemGroup Holdings.&#160;&#160;Manchester and Alerian have not
  foreclosed on the subordinated units of the Partnership owned by SemGroup
  Holdings or the membership interests in the Partnership&#8217;s general
  partner.&#160;&#160;Manchester and Alerian may in the future exercise other
  remedies available to them under the Holdings Credit Agreement and related loan
  documents, including taking action to foreclose on the collateral securing the
  loan, which may cause an additional event of default under&#160;the
  Partnership's&#160;credit agreement and&#160;its Forbearance Agreement.&#160;
  Neither the Partnership nor the Partnership&#8217;s general partner is a party to the
  Holdings Credit Agreements or the related loan documents.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July
  18, 2008, Manchester and Alerian exercised their right under the Holdings Credit
  Agreements to vote the membership interests of the Partnership&#8217;s general partner
  in order to reconstitute the Board (the &#8220;Change of Control&#8221;).&#160;&#160;Messrs.
  Thomas L. Kivisto, Gregory C. Wallace, Kevin L. Foxx, Michael J. Brochetti and
  W. Anderson Bishop were removed from the Board.&#160;&#160;Mr. Bishop had served
  as the chairman of the audit committee and as a member of the conflicts
  committee and compensation committee of the Board.&#160;&#160;Messrs. Sundar S.
  Srinivasan, David N. Bernfeld and Gabriel Hammond (each of
  whom&#160;is&#160;affiliated with&#160;Manchester or Alerian) were appointed to
  the Board.&#160;&#160;Mr. Srinivasan was elected as Chairman of the
  Board.&#160;&#160;Messrs. Brian F. Billings and Edward F. Kosnik remain as
  independent directors of the Board and continue to serve as members of the
  conflicts committee, audit committee and compensation committee of the
  Board.&#160;&#160;In addition, Messrs. Foxx and Alex Stallings resigned the
  positions each officer held with SemGroup, L.P. in July 2008.&#160;&#160;Mr.
  Brochetti had previously resigned from his position with SemGroup, L.P. in March
  2008.&#160;&#160;Messrs. Foxx, Brochetti and Stallings remain as officers of the
  Partnership&#8217;s general partner.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
  October 1, 2008, Dave Miller (who is an affiliate of Manchester) and Duke R.
  Ligon were appointed members of the Board. Mr.&#160;Ligon is an independent
  member of the Board and is the chairman of the audit committee and also serves
  on the compensation committee and the conflicts committee of the Board. Under
  the provisions of the Plan, Mr.&#160;Ligon was granted an award of 3,333
  restricted common units and 1,667 restricted subordinated units on December 23,
  2008 (See Note 9).&#160;These restricted common units and restricted
  subordinated units will vest in one-third increments over a three-year
  period.&#160;&#160;The Plan was amended in December 2008 to provide for the
  issuance of restricted subordinated units.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
  January 9, 2009, Mr. Srinivasan resigned his positions as Chairman of the Board
  and as a director.&#160;&#160;Mr. Ligon was subsequently elected as Chairman of
  the Board.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font size="+0"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font size="+0" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font size="+0" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As discussed in
  "Part II. Item 5. Other Information," on <font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">March 18,
  2009</font></font>,</font> the Board realigned the officers of the Partnership&#8217;s
  general partner appointing Michael J. Brochetti as Executive Vice
  President&#8212;Corporate Development and Treasurer, Alex G. Stallings as Chief
  Financial Officer and Secretary, and James R. Griffin as Chief Accounting
  Officer.&#160;&#160;Mr. Brochetti had previously served as Chief Financial
  Officer and Mr. Stallings had previously served as Chief Accounting Officer and
  Secretary.</font></font></font></font></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      </div><br>
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            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  </font></div>
          </div>
          <div id="GLFTR" style="WIDTH: 100%" align="center">
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        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">21</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Bankruptcy
  Court Order</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
  September 9, 2008, the Bankruptcy Court entered an order relating to the
  settlement of certain matters between the Partnership and the Private Company
  (the &#8220;Order&#8221;) in the Bankruptcy Cases.&#160;&#160;Among other things, the Order
  provided that (i) the Private Company shall directly pay any utility costs
  attributable to the operations of the Private Company at certain shared
  facilities, and the Private Company will pay the Partnership for past utility
  cost reimbursements that are due from the Private Company; (ii) commencing on
  September 15, 2008, payments under the Terminalling Agreement shall be netted
  against amounts due under the Amended Omnibus Agreement and shall be made on the
  15th day of each month for the prior month (with a three business-day grace
  period); (iii) the Private Company will provide the Partnership with a letter of
  credit in the amount of approximately $4.9 million to secure the Private
  Company&#8217;s postpetition obligations under the Terminalling Agreement; (iv) the
  Private Company will make payments under the Throughput Agreement for the month
  of August on September 15, 2008 (with a three business-day grace period) based
  upon the monthly contract minimums in the Throughput Agreement and netted
  against amounts due under the Amended Omnibus Agreement; (v) the Private Company
  will make payments under the Throughput Agreement for the months of September
  and October on October 15, 2008 (with a three business-day grace period) and
  November 15, 2008 (with a three business-day grace period), respectively, or
  three business days after amounts due are determined and documentation therefore
  has been provided and exchanged based upon actual volumes for each such month
  and at a rate equal to the average rate charged by the Partnership to
  third-party shippers in the same geographical area, with any such amounts netted
  against amounts due under the Amended Omnibus Agreement; (vi) the parties will
  reevaluate the Throughput Agreement and the payment terms with respect to
  services provided after October 2008; (vii) representatives of the Private
  Company and the Partnership will meet to discuss the transition to the
  Partnership of certain of the Private Company&#8217;s employees necessary to maintain
  the Partnership&#8217;s business, and pending agreement between the parties, the
  Private Company shall continue to provide services in accordance with the
  Amended Omnibus Agreement through at least November 30, 2008; (viii) the Private
  Company will consent to an order relating a third-party storage contract which
  shall provide that the Partnership is the rightful owner of the rights in and to
  a certain third-party storage agreement and the corresponding amounts due
  thereunder; and (ix) the Partnership will enter into a specified lease with the
  Private Company to permit the Private Company to construct a
  pipeline.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Since the
  time that the Order was entered, the Partnership negotiated a replacement letter
  of credit, which expires on April 7, 2009, in the amount of approximately $4.9
  million to secure the Private Company&#8217;s postpetition obligations under the
  Terminalling Agreement.&#160;&#160;Although certain provisions of the Order have
  expired, the Private Company, as of the date of filing this report, has
  continued to (i) provide services under the Amended Omnibus Agreement, (ii) make
  payments to the Partnership under the Terminalling Agreement based upon the
  monthly contract minimums (netted against amounts due under the Amended Omnibus
  Agreement) and (iii) make payments under the Throughput Agreement to the
  Partnership for actual volumes transported or stored each month at a rate equal
  to the average rate charged by the Partnership to third-party shippers in the
  same geographical area (netted against amounts due under the Amended Omnibus
  Agreement).&#160;&#160;However, there can be no assurance that the Private
  Company will continue to provide such services or make such payments in the
  future.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement (as defined below), such services and payments will
  be modified as described below under &#8220;&#8212;Settlement with the Private
  Company.&#8221;</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Settlement with
  the Private Company</font>.</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On March
  12, 2009, the Bankruptcy Court held a hearing and approved the transactions
  contemplated by a term sheet </font>relating to the settlement of certain
  matters between the Private Company and the Partnership (the &#8220;Settlement
  Agreement&#8221;).&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Bankruptcy Court entered an order approving the Settlement Agreement on March
  20, 2009.</font></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;The
  Settlement Agreement provides for the following, among other
  things:</font></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 54pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Partnership will transfer certain crude oil storage assets located in
        Kansas to the Private Company;</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 54pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Private Company will transfer ownership of 355,000 barrels of crude oil
        tank bottoms and line fill to the
  Partnership;</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 54pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Private Company will reject the Throughput Agreement as part of the
        Bankruptcy Cases;</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 54pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Partnership and its affiliates will have a $20 million unsecured claim
        against the Private Company relating to rejection of the Throughput
        Agreement;</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 54pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Partnership and the Private Company will enter into a new throughput
        agreement pursuant to which the Partnership will provide certain crude oil
        gathering, transportation, terminalling and storage services to the
        Private Company;</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 54pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Partnership will offer employment to certain crude oil
        employees;</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 54pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Private Company will transfer its asphalt assets that are connected to the
        Partnership&#8217;s asphalt assets to the Partnership or one of its affiliates
        (unless the Private Company executes a definitive agreement to sell
        substantially all of its asphalt assets or business as a going concern to
        a third-party purchaser and the Partnership enters into a terminalling and
        storage agreement with such
  purchaser);</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 54pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Private Company will reject the Terminalling Agreement as part of the
        Bankruptcy Cases;</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 54pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
        subsidiary of the Partnership will have a $35 million unsecured claim
        against the Private Company relating to rejection of the Terminalling
        Agreement;</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <div>
            <table cellpadding="0" cellspacing="0" id="list" width="100%">
                <tr valign="top">
                  <td align="right" style="WIDTH: 54pt">
                    <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                  </td>
                  <td>
                    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Partnership and the Private Company will enter into a new terminalling
        agreement pursuant to which the Partnership will provide asphalt
        terminalling and storage services for the Private Company &#8217;s remaining
        asphalt inventory on the following terms: (i) the Partnership will receive
        a monthly storage service fee equal to $0.565 per barrel multiplied by the
        total shell capacity in barrels for each tank where the Private Company
        has asphalt inventory and (ii) the Partnership will receive a throughput
        fee of $9.25 per ton for each ton of the Private Company&#8217;s asphalt
        inventory that is delivered out of or otherwise removed from the
        Partnership&#8217;s asphalt assets (unless the Private Company executes a
        definitive agreement to sell substantially all of its asphalt assets or
        business as a going concern to a third-party purchaser and the Partnership
        enters into a terminalling and storage agreement with such
        purchaser);</font></div>
                  </td>
                </tr>
            </table>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div>
            <table cellpadding="0" cellspacing="0" id="list" width="100%">
                <tr valign="top">
                  <td align="right" style="WIDTH: 54pt">
                    <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                  </td>
                  <td>
                    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Private Company will remove all of its remaining asphalt inventory from
        the Partnership&#8217;s asphalt storage facilities no later than October 31,
        2009 (unless the Private Company executes a definitive agreement to sell
        substantially all of its asphalt assets or business as a going concern to
        a third-party purchaser and the Partnership enters into a terminalling and
        storage agreement with such
  purchaser);</font></div>
                  </td>
                </tr>
            </table>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div>
            <table cellpadding="0" cellspacing="0" id="list" width="100%">
                <tr valign="top">
                  <td align="right" style="WIDTH: 54pt">
                    <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                  </td>
                  <td>
                    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Private Company will be entitled to receive 20% of the proceeds of any
        sale by the Partnership of any of the asphalt assets transferred to the
        Partnership in connection with the Settlement Agreement that occurs within
        nine months of the transfer of such assets to the Partnership (unless the
        Private Company executes a definitive agreement to sell substantially all
        of its asphalt assets or business as a going concern to a third-party
        purchaser and the Partnership enters into a terminalling and storage
        agreement with such purchaser);</font></div>
                  </td>
                </tr>
            </table>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 54pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Private Company will reject the Amended and Restated Omnibus Agreement as
        part of the Bankruptcy Cases;</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 54pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Partnership and the Private Company will enter into a shared services
        agreement pursuant to which the Private Company will provide certain
        operational services for the
  Partnership;</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 54pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">other
        than as provided above, the Partnership and the Private Company entered
        into mutual releases of claims relating to the rejection of the
        Terminalling and Storage Agreement, Throughput Agreement and Amended and
        Restated Omnibus Agreement;</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 54pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">certain
        pre-petition claims by the Private Company and the Partnership will be
        netted and waived;</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 54pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Private Company and the Partnership will resolve certain remaining issues
        related to the contribution of crude oil assets to the Partnership in
        connection with the Partnership&#8217;s initial public offering, the
        Partnership&#8217;s acquisition of the Acquired Asphalt Assets, the
        Partnership&#8217;s acquisition of the Acquired Pipeline Assets and the
        Partnership&#8217;s acquisition of the Acquired Storage Assets, including the
        release of claims relating to such acquisitions;
    and</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <table cellpadding="0" cellspacing="0" id="list" width="100%">
              <tr valign="top">
                <td align="right" style="WIDTH: 54pt">
                  <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                </td>
                <td>
                  <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Partnership and the Private Company will enter into a license agreement
        providing the Partnership with a non-exclusive, worldwide license to use
        certain trade names, including the name &#8220;SemGroup&#8221;, and the corresponding
        mark until December 31, 2009, and the Private Company will waive claims
        for infringement relating to such trade names and mark prior to the date
        of such license agreement.</font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  parties agreed to negotiate and execute definitive documentation, to be approved
  by the Bankruptcy Court,&#160;with respect to the items contained in the
  Settlement Agreement as soon as practicably possible, which will supersede the
  Settlement Agreement when so executed.&#160; </font>The Settlement Agreement is
  subject to the obtaining of a consent from the Partnership&#8217;s lenders under its
  credit agreement and a waiver of the existing defaults or events of default
  under the credit agreement.&#160;&#160;There can be no assurance that the
  Partnership&#8217;s lenders will provide the required consent to the transactions or
  waiver of existing defaults or events of default under the Partnership&#8217;s credit
  agreement or that the transactions contemplated by the Settlement Agreement will
  be consummated.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Partnership
  Revenues</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;For the six
  months ended June 30, 2008 and the year ended December 31, 2008, the Partnership
  derived <font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">approximately
  88% and <font size="+0" style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">approxi</font>mately <font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font size="+0" style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">73%</font>,</font> </font>respectively</font>, of its revenues,
  excluding fuel surcharge revenues related to fuel and power consumed to operate
  its liquid asphalt cement storage tanks, from services it provided to the
  Private Company and its subsidiaries.&#160;&#160;The Private Company is
  obligated to pay the Partnership minimum monthly fees totaling $76.1 million
  annually and $58.9 million annually in respect of the minimum commitments under
  the Throughput Agreement and the Terminalling Agreement, respectively,
  regardless of whether such services are actually utilized by the Private
  Company.&#160;&#160;As described above, the Order requires the Private Company
  to make certain payments under the Throughput Agreement and Terminalling
  Agreement.&#160;&#160;As of the date of the filing of this report, payments made
  under the Throughput Agreement for services rendered since September 2008 have
  been made based upon actual usage rather than the contractual minimum monthly
  storage amounts in such agreement.&#160;&#160;As of the date of the filing of
  this report, payments made under the Terminalling Agreement have continued to be
  made based upon the contractual minimum monthly storage amounts in such
  agreement.&#160;&#160;The Partnership has been pursuing opportunities to provide
  crude oil terminalling and storage services and crude oil gathering and
  transportation services to third parties.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  </font></div>
          </div>
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">22</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As a
  result of new crude oil third-party storage contracts, the Partnership increased
  its third-party terminalling and storage revenue (excluding fuel surcharge
  revenues related to fuel and power consumed to operate its liquid asphalt cement
  storage tanks)&#160;from approximately $1.0 million, or approximately 4% of
  total terminalling and storage revenue&#160;during the second quarter of 2008,
  to approximately $4.7 million and $8.4 million, or approximately 17% and 34% of
  total terminalling and storage revenue&#160;for the third quarter of 2008 and
  the&#160;fourth quarter of 2008, respectively.&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  addition, as a result of new third-party crude oil transportation contracts and
  reduced commitments of usage by the Private Company under the Throughput
  Agreement, the Partnership increased its third-party gathering and
  transportation revenue from approximately $5.0 million, or approximately 21% of
  total gathering and transportation revenue during the second quarter of 2008, to
  approximately $10.9 million and $13.9 million, or approximately 51% and 86% of
  total gathering and transportation revenue for the&#160;third quarter of 2008
  and the fourth quarter of 2008, respectively.&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  significant majority of the increase in third party revenues results from an
  increase in third-party crude oil services provided and a corresponding decrease
  in the Private Company&#8217;s crude oil services provided due to the termination of
  the monthly contract minimum revenues under the Throughput Agreement in
  September 2008.&#160; Average rates for the new third-party crude oil
  terminalling and storage and transportation and gathering contracts are
  comparable with those previously received from the Private Company.&#160;
  However, the volumes being terminalled, stored, transported and gathered have
  decreased as compared to periods prior to the Bankruptcy Filings, which has
  negatively impacted total revenues.&#160; As an example, fourth quarter 2008
  total revenues are approximately $9.2 million less than&#160;second
  quarter&#160;2008 total revenues, in each case excluding fuel surcharge revenues
  related to fuel and power consumed to operate its liquid asphalt cement storage
  tanks.&#160; Pursuant to the Settlement Agreement, the Partnership has agreed to
  waive the fees pursuant to the Terminalling Agreement for the month of March
  2009, and the Partnership will enter into a new terminalling agreement with the
  Private Company for periods thereafter (see "-Settlement with the Private
  Company").</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any delay
  or failure of the Private Company to make its required payments under the
  Throughput Agreement or the Terminalling Agreement, to the extent such revenues
  have not been replaced by third party revenues,&#160;will have a material
  adverse effect on the Partnership&#8217;s financial condition and results of
  operations.&#160;&#160;For example, the Partnership has reserved as a doubtful
  account the receivable balance owed by the Private Company for services provided
  to the Private Company during the first 21 days of July, totaling $9.6 million,
  as such amounts are considered prepetition debt in the Bankruptcy
  Filings.&#160;&#160;In addition, the Private Company may reject the contracts it
  has with the Partnership, including the Throughput Agreement and the
  Terminalling Agreement, as part of its bankruptcy proceedings, which ultimately
  would have the effect of breaching such contracts.&#160;&#160;Such action would
  have a material adverse effect on the Partnership&#8217;s financial condition and
  results of operations.&#160;&#160;Any transaction relating to a rejection,
  assignment or modification of the Throughput Agreement or the Terminalling
  Agreement would require approval of the Bankruptcy Court.&#160;&#160;On February
  6, 2009, the Private Company filed a motion in the Bankruptcy Court requesting
  approval of the sale of its asphalt related assets, or in the event of an
  unsuccessful auction, the rejection of the Terminalling Agreement and the
  winding down of its asphalt business (see &#8220;&#8212;Asphalt Operations&#8221; below).&#160;
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, among other items, the Private Company will reject
  the Terminalling Agreement and the Throughput Agreement as part of the
  Bankruptcy Cases.&#160;&#160;In addition, pursuant to the Settlement Agreement,
  the Partnership and the Private Company will enter into a new throughput
  agreement and a new terminalling agreement pursuant to which the Partnership
  will provide certain crude oil gathering, transportation, terminalling and
  storage services and asphalt terminalling and storage services&#160;to the
  Private Company.&#160;&#160;There can be no assurance&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated</font> (see
  &#8220;&#8212;Settlement with the Private Company&#8221;).</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership has entered into various crude oil transportation and storage
  contracts with third parties and is continuing to pursue additional contracts
  with third parties; however, there can be no assurance that any of these
  additional efforts will be successful.&#160;&#160;In addition, certain third
  parties may be less likely to enter into business transactions with the
  Partnership due to the Bankruptcy Filings.&#160;&#160;The Private Company may
  also choose to curtail its operations or liquidate its assets as part of the
  Bankruptcy Cases.&#160;&#160;As a result, unless the Partnership is able to
  generate additional third party revenues, the Partnership may experience lower
  volume in its system which could have a material adverse effect on its results
  of operations and cash flows.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div style="WIDTH: 100%" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  </font></div>
          </div>
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">23</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Asphalt
  Operations</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership provides liquid asphalt cement terminalling and storage services to
  the Private Company.&#160;&#160;The Private Company processes, distributes and
  markets liquid asphalt cement and finished asphalt products to third party
  customers.&#160;&#160;Pursuant to the Amended Omnibus Agreement, the Private
  Company has agreed, so long as the Terminalling Agreement is in effect, not to
  engage in, or acquire or invest in an entity that engages in, the business of
  terminalling and storing liquid asphalt cement within 50 miles of the
  Partnership&#8217;s liquid asphalt cement facilities and the Partnership has agreed,
  so long as the Terminalling Agreement is in effect, not to engage in, or acquire
  or invest in an entity that engages in, the business of processing, marketing
  and distributing liquid asphalt cement and finished asphalt products within 50
  miles of its liquid asphalt cement facilities.&#160;&#160;As a result, subject
  to certain exceptions, the Partnership is contractually prohibited from
  marketing or distributing liquid asphalt cement directly to third party
  customers while the Terminalling Agreement is in effect.&#160;&#160;In addition,
  the Private Company is responsible for obtaining and maintaining all
  environmental and other permits related to the Partnership&#8217;s liquid asphalt
  cement operations.&#160;&#160;The Private Company&#8217;s failure to obtain, renew or
  maintain compliance under these permits may materially adversely effect the
  Partnership&#8217;s operations.&#160;&#160;The Partnership is currently evaluating
  strategic alternatives for its asphalt operations, including the possibility of
  entering into storage contracts with third party customers and the sale of all
  or a portion of its assets.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  asphalt industry in the United States is characterized by a high degree of
  seasonality. Much of this seasonality is due to the impact that weather
  conditions have on road construction schedules, particularly in cold weather
  states. Refineries produce liquid asphalt cement year round, but the peak
  asphalt demand season is during the warm weather months when most of the road
  construction activity in the United States takes place. As a result, liquid
  asphalt cement is typically purchased from refineries at low prices in the low
  demand winter months and then processed and sold at higher prices in the peak
  summer demand season.&#160;&#160;Although there remains some liquid asphalt
  cement in the Partnership&#8217;s asphalt storage tanks that was not sold during the
  summer of 2008, the Private Company, as of the date of the filing of this
  report, has not purchased any significant volumes of additional liquid asphalt
  cement during the recent winter months.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
  February 6, 2009, the Private Company filed a motion in the Bankruptcy Court
  requesting approval of the sale of its asphalt related assets.&#160;&#160;There
  is significant uncertainty as to the Partnership&#8217;s revenues related to its
  asphalt assets and there is substantial risk that the Partnership&#8217;s asphalt
  assets may be idle during 2009 and subsequent years, which would adversely
  effect the Partnership&#8217;s financial condition and results of
  operations.&#160;&#160;Without revenues from its asphalt assets, the Partnership
  may be unable to meet the covenants, including the minimum liquidity and minimum
  receipt requirements, under its Forbearance Agreement with its senior secured
  lenders pursuant to which such lenders have agreed to forbear from exercising
  their rights and remedies arising from the Partnership&#8217;s events of default under
  its credit agreement.&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement filed for approval with the Bankruptcy Court, the
  Partnership will&#160;receive the Private Company&#8217;s asphalt assets that are
  connected to the Partnership&#8217;s asphalt assets&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(unless
  the Private Company executes a definitive agreement to sell substantially all of
  its asphalt assets or business as a going concern to a third-party purchaser and
  the Partnership enters into a terminalling and storage agreement with such
  purchaser).</font>&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The&#160;transfer
  of the Private Company&#8217;s asphalt assets in connection with the Settlement
  Agreement will provide the Partnership with outbound logistics for its existing
  asphalt assets and, therefore, will allow it to better provide asphalt
  terminalling and storage services.&#160;&#160;In addition, the Private Company
  will reject the Terminalling Agreement as part of the Bankruptcy Cases and the
  Partnership and the Private Company will enter into a new terminalling agreement
  pursuant to which the Partnership will provide asphalt terminalling and storage
  services for the Private Company&#8217;s remaining asphalt inventory.&#160;
  </font>There can be no assurance&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated</font> (see
  &#8220;&#8212;Settlement with the Private Company&#8221;).&#160;&#160;Even if the Partnership
  acquires such asphalt assets, it may not be able to enter into agreements to
  provide terminalling and storage services for such assets.&#160;&#160;In
  addition, </font>if the&#160;Private Company sells its asphalt assets to a
  third&#160;party,&#160;the Partnership&#160;will&#160;need to negotiate a new
  terminalling and storage contract with the purchaser of such assets and such
  agreement may not be on as favorable terms as the Terminalling
  Agreement.&#160;&#160;Any significant decrease in the amount of revenues that
  the Partnership receives from its liquid asphalt cement terminalling and storage
  operations could have a material adverse effect on the Partnership&#8217;s cash flows,
  financial condition and results of operations.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Operation
  and General Administration of the Partnership</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As is the
  case with many publicly traded partnerships, the Partnership does not directly
  employ any persons responsible for managing or operating the Partnership or for
  providing services relating to day-to-day business affairs.&#160;&#160;Pursuant
  to the Amended Omnibus Agreement, the Private Company operated the Partnership&#8217;s
  assets and performed other administrative services for the Partnership such as
  accounting, legal, regulatory, development, finance, land and
  engineering.&#160;&#160;Due to the Change of Control, the Private Company is no
  longer obligated to operate the Partnership&#8217;s assets or perform other
  administrative services pursuant to the Amended Omnibus
  Agreement.&#160;&#160;The Private Company agreed to continue providing such
  services until at least November 30, 2008 pursuant to the
  Order.&#160;&#160;While the Private Company has continued to provide such
  services as of the date of the filing of this report, there can be no assurance
  that it will continue to provide such services to the Partnership or that the
  Partnership could replace any of these services if the Private Company stops
  providing them.&#160;&#160;If the Private Company stops providing these
  services, the Partnership may incur increased costs to replace these services
  and its financial results may suffer.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, the Private Company will reject the Amended Omnibus
  Agreement as part of the Bankruptcy Cases and the Partnership and the Private
  Company will enter into a shared services agreement pursuant to which the
  Private Company will provide certain operational services for the
  Partnership.&#160;&#160;There can be no assurance&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated</font> (see
  &#8220;&#8212;Settlement with the Private Company&#8221;).&#160;&#160;In addition, if the terms of
  this shared services agreement are not as favorable as the terms under the
  Amended Omnibus Agreement, <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">it could
  have a material adverse effect on the Partnership&#8217;s business, financial
  condition, results of operations, cash flows, ability to make distributions to
  its unitholders, the trading price of its common units and its ability to
  conduct its business.</font></font></font></div><br>
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        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  addition, in connection with the Bankruptcy Cases, the Private Company may
  reduce a substantial number of its employees or some of the Private Company&#8217;s
  employees may choose to terminate their employment with the Private Company,
  some of whom may currently be providing general and administrative and operating
  services to the Partnership.&#160;&#160;Any reductions in critical personnel who
  provide services to the Partnership and any increased costs to replace such
  personnel could have a material adverse effect on its ability to conduct its
  business and its results of operations.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Change
  of Control of the Private Company</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
  December 15, 2008, Red Apple Group Inc. (&#8220;Red Apple&#8221;), which is chaired by John
  Catsimatidis, announced that it controls five of the nine seats on the
  management committee of the general partner of the Private Company and therefore
  effectively controls the Private Company (the &#8220;Private Company Change of
  Control&#8221;).&#160;&#160;Mr. Catsimatidis has indicated that Red Apple does not
  intend to liquidate the Private Company and that it plans on filing a new
  reorganization plan for the Private Company with the Bankruptcy
  Court.&#160;&#160;As of the date of the filing of this report, Red Apple has not
  filed a reorganization plan.&#160;&#160;There is no assurance that any
  reorganization plan will be submitted by Red Apple or that if a reorganization
  plan is submitted by Red Apple that the Bankruptcy Court will approve such plan
  or that continued performance by the Private Company under the Throughput
  Agreement or the Terminalling Agreement will be part of any such
  plan.&#160;&#160;In addition, the Private Company Change of Control may lead to
  additional uncertainty regarding the Partnership&#8217;s continued relationship with
  the Private Company.&#160;&#160;The Partnership is unsure&#160;what impact, if
  any,&#160;the Private Company Change of Control&#160;will have on&#160;the
  Partnership and its operations.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Intellectual
  Property Rights</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Amended Omnibus Agreement, the Partnership licensed the use of certain
  trade names and marks, including the name &#8220;SemGroup.&#8221;&#160;&#160;This license
  terminated automatically upon the Change of Control.&#160;&#160;The termination
  of the explicit rights to use this intellectual property under the Amended
  Omnibus Agreement may adversely effect the Partnership&#8217;s ability to operate or
  grow its business and its results of operations.&#160;&#160;In addition, the
  Partnership may be subject to claims for trademark or other intellectual
  property infringement due to its continued use of these intellectual property
  rights.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, the Partnership and the Private Company will enter
  into a license agreement pursuant to which the Partnership may use the trade
  names and mark until December 31, 2009.&#160;&#160;In addition, pursuant to the
  Settlement Agreement, the Private Company has agreed to waive all claims
  relating to infringement of the trade names and mark prior to the&#160;date of
  this license agreement.&#160;&#160;There can be no assurance <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated</font> (see
  &#8220;&#8212;Settlement with the Private Company&#8221;).</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Credit
  Facility</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
  described in Note 4, certain events of default have occurred and are continuing
  under the Partnership&#8217;s credit agreement, which prohibit the Partnership from
  borrowing under its credit facility to fund working capital needs or to pay
  distributions to its unitholders, among other things.&#160;&#160;No cure periods
  are applicable to the existing events of default.&#160;&#160;These events of
  default have not been waived and are continuing under the Partnership&#8217;s credit
  agreement.&#160;&#160;In addition, the Private Company&#8217;s action related to the
  Bankruptcy Cases as well as the Private Company&#8217;s liquidity issues and any
  corresponding impact may result in additional events of default under the
  Partnership&#8217;s credit Agreement.<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>The Partnership and the
  requisite lenders under its credit facility have entered into the Forbearance
  Agreement relating to the existing events of default under the credit
  agreement.&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Waiver of
  the existing events of default under the credit agreement is a condition
  precedent to the effectiveness of the Settlement Agreement.&#160;&#160;There can
  be no assurance that the Partnership&#8217;s lenders will provide such a waiver and
  that the transactions contemplated by the Settlement Agreement will be
  consummated.&#160; </font>See Note 4 for more information regarding the
  Partnership&#8217;s credit facility, the events of default thereunder and the
  Forbearance Agreement.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Distributions
  to Unitholders</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership did not make a distribution to its common unitholders, subordinated
  unitholders or general partner attributable to the results of operations for the
  quarters ended June 30, 2008, September 30, 2008 or December 31, 2008&#160;due
  to the existing events of default under its credit agreement and the uncertainty
  of its future cash flows relating to the Bankruptcy Filings.&#160;&#160;The
  Partnership&#8217;s unitholders will be required to pay taxes on their share of the
  Partnership&#8217;s taxable income even though they did not receive a cash
  distribution for the quarters ended June 30, 2008, September 30, 2008 or
  December 31, 2008.&#160;&#160;In addition, the Partnership does not currently
  expect to make a distribution relating to the&#160;first quarter of
  2009.&#160;&#160;The Partnership distributed approximately $14.3 million to its
  unitholders for the three months ended March 31, 2008.&#160;&#160;If the events
  of default under the Partnership&#8217;s credit agreement are not waived by its
  lenders or the Partnership&#8217;s business operations and prospects do not improve,
  the Partnership may not make quarterly distributions to its unitholders in the
  future.&#160;&#160;Pursuant to the Forbearance Agreement, as amended by the
  First Amendment, the Second Amendment, and the Third Amendment, the Partnership
  is prohibited from making distributions to its unitholders during the Extended
  Forbearance Period.</font></div>
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          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership&#8217;s partnership agreement provides that, during the subordination
  period, which the Partnership is currently in, the Partnership&#8217;s common units
  will have the right to receive distributions of available cash from operating
  surplus in an amount equal to the minimum quarterly distribution of $0.3125 per
  common unit per quarter, plus any arrearages in the payment of the minimum
  quarterly distribution on the common units from prior quarters, before any
  distributions of available cash from operating surplus may be made on the
  subordinated units.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Nasdaq
  Delisting</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
  at the opening of business on February 20, 2009, the Partnership&#8217;s common units
  were delisted from the Nasdaq Global Market (&#8220;Nasdaq&#8221;) due to the Partnership&#8217;s
  failure to timely file this Quarterly Report as well as its Quarterly Report on
  Form 10-Q for the quarter ended September 30, 2008.&#160;&#160;The Partnership&#8217;s
  common units are currently traded on the Pink Sheets, which is an
  over-the-counter securities market, under the symbol SGLP.PK.&#160;&#160;The
  fact that the Partnership&#8217;s common units are not listed on a national securities
  exchange is likely to make trading such common units more difficult for
  broker-dealers, unitholders and investors, potentially leading to further
  declines in the price of the common units.&#160;&#160;In addition, it may limit
  the number of institutional and other investors that will consider investing in
  the Partnership&#8217;s common units, which may have an adverse effect on the price of
  its common units.&#160;&#160;It may also make it more difficult for the
  Partnership to raise capital in the future.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership continues to work to become compliant with its SEC reporting
  obligations and intends to promptly seek the relisting of its common units on
  Nasdaq as soon as practicable after it has become compliant with such reporting
  obligations.&#160;&#160;However, there can be no assurances that the Partnership
  will be able to relist its common units on Nasdaq or any other national
  securities exchange and the Partnership may face a lengthy process to relist its
  common units if it is able to relist them at all.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Claims
  Against and By the Private Company&#8217;s Bankruptcy Estate</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership currently has claims against the Private Company&#8217;s bankruptcy estate
  due to amounts owed the Partnership by the Private Company prior to the
  Bankruptcy Filings.&#160;&#160;In addition, if the Private Company fails to make
  its payments under the Throughput Agreement or the Terminalling Agreement or
  otherwise fails to perform under the contracts the Partnership has with the
  Private Company, the Partnership may have additional potential claims against
  the Private Company&#8217;s bankruptcy estate.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
  claims asserted by the Partnership against the Private Company in the Bankruptcy
  Cases will be subject to the claim allowance procedure provided in the
  Bankruptcy Code and Bankruptcy Rules.&#160;&#160;If an objection is filed, the
  Bankruptcy Court will determine the extent to which any such claim that has been
  objected to is allowed and the priority of such claims.&#160;&#160;The
  Partnership is uncertain regarding the ultimate amount of damages for breaches
  of contract or other claims that it will be able to establish in the Bankruptcy
  Cases and the Partnership cannot predict the amounts, if any, that it will
  collect or the timing of any such collection, but its losses could be
  substantial and could have a material adverse effect <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">on the
  Partnership&#8217;s business, financial condition, results of operations, cash flows,
  ability to make distributions to its unitholders, the trading price of its
  common units and its ability to conduct its business</font>.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant to the Settlement
  Agreement, the Private Company will reject the Terminalling Agreement and the
  Throughput Agreement.&#160;&#160;The Partnership will have a $35 million
  unsecured claim relating to rejection of the Terminalling Agreement in the
  Bankruptcy Cases.&#160;&#160;In addition, the Partnership will have a $20
  million unsecured claim against the Private Company relating to rejection of the
  Throughput Agreement.&#160;&#160;There can be no assurance&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated</font> (see
  &#8220;&#8212;Settlement with the Private Company&#8221;).</font></font></div>
      </div>
      <div><br>&#160;</div>
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        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  addition, under bankruptcy law, a debtor-in-possession, such as the Private
  Company, may seek to avoid certain prepetition transfers if such transfers were
  to insiders and occurred within one year before the bankruptcy
  filing.&#160;&#160;For purposes of avoidance under bankruptcy law, title to real
  property that is perfected more than thirty days after the transfer is deemed to
  have been transferred as of the date of perfection.&#160;&#160;In addition, a
  debtor-in-possession, such as the Private Company, may seek to avoid prepetition
  transfers of real property that were not perfected as of the bankruptcy filing
  date against a hypothetical bona fide purchaser of such real
  property.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Through a
  series of transactions the Partnership acquired certain real property from the
  Private Company during the one-year period preceding the Bankruptcy
  Filings.&#160;&#160;Deeds to approximately 27 asphalt facilities transferred to
  the Partnership by the Private Company as part of the Acquired Asphalt Assets
  either were not recorded within thirty days of such transfer or were not
  recorded as of the Bankruptcy Filings.&#160;&#160;In addition, a deed to the
  Acquired Storage Assets was not recorded as of the Bankruptcy
  Filings.&#160;&#160;Although the Partnership has title to such properties, the
  Private Company may in the&#160;Bankruptcy Cases seek to avoid the transfers of
  these properties.&#160;&#160;The Partnership has defenses against these actions
  based upon bankruptcy law and state law and intends to vigorously defend against
  any such action.&#160;&#160;However, there can be no assurance regarding the
  outcome of any potential litigation.&#160;&#160;If the Private Company succeeds
  in such litigation, the Partnership may be required to return the affected
  properties to the Private Company or pay an amount equal to the value of such
  properties, which would have a material adverse effect on the Partnership&#8217;s
  business, financial condition, results of operations, cash flows, ability to
  make distributions to its unitholders, the trading price of the Partnership&#8217;s
  common units and its ability to conduct its business.&#160;&#160;The Partnership
  would then have unsecured claims in the Bankruptcy Court for the amounts
  originally paid for such properties.&#160;&#160;&#160;An estimate of possible
  loss, if any, or the range of loss cannot be made and therefore the Partnership
  has not accrued a loss contingency related to this matter. However, the ultimate
  resolution of this matter could have a material adverse effect on the
  Partnership&#8217;s business, financial condition, results of operations, cash flows,
  ability to make distributions to its unitholders, the trading price of the
  Partnership&#8217;s common units and its ability to conduct its business.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, the Private Company will release certain of its
  claims related to this real property including the real property claims
  discussed above&#160;(see &#8220;&#8212;Settlement with the Private Company&#8221;).&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There may
  be additional claims that are not released by the Settlement
  Agreement.&#160;&#160;In addition, t</font>here can be no assurance <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be
  consummated</font>.</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Governmental
  Investigations</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July
  21, 2008, the Partnership received a letter from the staff of the SEC giving
  notice that the SEC is conducting an inquiry relating to the Partnership and
  requesting, among other things, that the Partnership voluntarily preserve,
  retain and produce to the SEC certain documents and information relating
  primarily to the Partnership&#8217;s disclosures respecting the Private Company&#8217;s
  liquidity issues, which were the subject of the Partnership&#8217;s July 17, 2008
  press release.&#160;&#160;On October 22, 2008, the Partnership received a
  subpoena from the SEC pursuant to a formal order of investigation requesting
  certain documents relating to, among other things, the Private Company&#8217;s
  liquidity issues.&#160;&#160;The Partnership has been cooperating, and intends
  to continue cooperating, with the SEC in its investigation.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July
  23, 2008, the Partnership and its general partner each received a Grand Jury
  subpoena from the United States Attorney&#8217;s Office in Oklahoma City, Oklahoma,
  requiring, among other things, that the Partnership and its general partner
  produce financial and other records related to the Partnership&#8217;s July 17, 2008
  press release.&#160;&#160;The Partnership has been informed that the U.S.
  Attorneys&#8217; Offices for the Western District of Oklahoma and the Northern
  District of Oklahoma are in discussions regarding the subpoenas, and no date has
  been set for a response to the subpoenas.&#160;&#160;The Partnership and its
  general partner intend to cooperate fully with this investigation if and when it
  proceeds.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Securities
  Litigation</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Between
  July 21, 2008 and September 4, 2008, the following class action complaints were
  filed:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  1.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> Poelman v. SemGroup Energy
  Partners, L.P., et al</font>., Civil Action No. 08-CV-6477, in the United States
  District Court for the Southern District of New York (filed July 21,
  2008).&#160; The plaintiff voluntarily dismissed this case on August 26,
  2008;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  2.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> Carson v. SemGroup Energy Partners,
  L.P. et al</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.</font>,
  Civil Action No. 08-cv-425, in the Northern District of Oklahoma (filed July 22,
  2008);</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  3.&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> Charles D. Maurer SIMP Profit
  Sharing Plan f/b/o Charles D. Maurer v. SemGroup Energy Partners, L.P. et
  al.</font>, Civil Action No. 08-cv-6598, in the United States District Court for
  the Southern District of New York (filed July 25, 2008);</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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  </font></div>
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        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;4.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> Michael Rubin v. SemGroup Energy
  Partners, L.P. et al.</font>, Civil Action No. 08-cv-7063, in the United States
  District Court for the Southern District of New York (filed August 8,
  2008);</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  5.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> Dharam V. Jain v. SemGroup Energy
  Partners, L.P. et al.</font>, Civil Action No. 08-cv-7510, in the United States
  District Court for the Southern District of New York&#160; (filed August 25,
  2008); and</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  6.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> William L. Hickman v. SemGroup
  Energy Partners, L.P. et al.</font>, Civil Action No. 08-cv-7749, in the United
  States District Court for the Southern District of New York (filed September 4,
  2008).</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  The<font style="DISPLAY: inline; FONT-STYLE: italic"> Carson</font> case was
  filed as a putative class action on behalf of all purchasers of the
  Partnership&#8217;s common units between February 20, 2008 and July 17,
  2008.&#160;&#160;Plaintiff alleges violations of Sections 10(b) and 20(a) of the
  Securities Exchange Act of 1934 (&#8220;Exchange Act&#8221;) and SEC Rule 10b-5, resulting
  in damages to members of the putative class.&#160; Plaintiff's specific
  allegations include that, despite an obligation to do so, the Defendants failed
  to disclose between February 20, 2008 and May 8, 2008 that the Private Company
  was engaged in high-risk crude oil hedging transactions that could affect its
  ability to continue as a going concern or that the Private Company was suffering
  from liquidity problems.&#160; Plaintiff seeks class certification, damages,
  interest, fees, and costs.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  The<font style="DISPLAY: inline; FONT-STYLE: italic"> Maurer</font> case was
  filed as a putative class action on behalf of all persons who purchased the
  Partnership&#8217;s common units pursuant to or traceable to the February 12, 2008
  Registration Statement and Prospectus.&#160; Plaintiff alleges violations of
  Section 11 of the Securities Act of 1933 (&#8220;Securities Act&#8221;), resulting in
  damages to members of the putative class.&#160; Plaintiff&#8217;s specific allegations
  include that, despite an obligation to do so, the Defendants failed to disclose
  in connection with the secondary offering in February 2008 that the Private
  Company was engaged in high-risk crude oil hedging transactions that could
  affect its ability to continue as a going concern or that the Private Company
  was suffering from liquidity problems.&#160; Plaintiff seeks class
  certification, damages, interest, fees, and costs.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The<font style="DISPLAY: inline; FONT-STYLE: italic"> Rubin, Jain,</font> and<font style="DISPLAY: inline; FONT-STYLE: italic"> Hickman</font> cases were filed as
  putative class actions on behalf of all purchasers of the Partnership&#8217;s common
  units between July 17, 2007 and July 17, 2008.&#160; Plaintiffs allege
  violations of Sections 11, 12(a)(2), and 15 of the Securities Act and violations
  of Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5, resulting in
  damages to members of the putative class.&#160; Plaintiff&#8217;s specific allegations
  include that, despite an obligation to do so, the Defendants failed to disclose
  between July 17, 2007 and July 17, 2008 the adverse financial condition and lack
  of liquidity of the Private Company that was caused by the Private Company&#8217;s
  speculative and unauthorized hedging and trading in crude oil.&#160; Plaintiffs
  seek class certification, rescission of the sale of common units under Section
  12(a)(2) of the Securities Act, damages, interest, fees, and costs.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to a motion filed with the United States Judicial Panel on Multidistrict
  Litigation (&#8220;MDL Panel&#8221;), the<font style="DISPLAY: inline; FONT-STYLE: italic">
  Maurer</font> case has been transferred to the Northern District of Oklahoma and
  consolidated with the<font style="DISPLAY: inline; FONT-STYLE: italic">
  Carson</font> case.&#160; The<font style="DISPLAY: inline; FONT-STYLE: italic">
  Rubin, Jain,</font> and<font style="DISPLAY: inline; FONT-STYLE: italic">
  Hickman</font> cases have also been transferred to the Northern District of
  Oklahoma.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A hearing
  on motions for appointment as lead plaintiff was held in the<font style="DISPLAY: inline; FONT-STYLE: italic"> Carson</font> case on October 17,
  2008.&#160; At that hearing, the court granted a motion to consolidate the <font style="DISPLAY: inline; FONT-STYLE: italic">Carson</font> and <font style="DISPLAY: inline; FONT-STYLE: italic">Maurer</font> cases for pretrial
  proceedings, and the consolidated litigation is now pending as<font style="DISPLAY: inline; FONT-STYLE: italic"> In Re: SemGroup Energy Partners,
  L.P. Securities Litigation</font>, Case No. 08-CV-425-GKF-PJC. The court entered
  an order on October 27, 2008, granting the motion of Harvest Fund Advisors LLC
  to be appointed lead plaintiff in the consolidated litigation.&#160; On January
  23, 2009, the court entered a Scheduling Order providing, among other things,
  that the lead plaintiff may file a consolidated amended complaint within 70 days
  of the date of the order, and that defendants may answer or otherwise respond
  within 60 days of the date of the filing of a consolidated amended
  complaint.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership intends to vigorously defend these actions.&#160; There can be no
  assurance regarding the outcome of the litigation.&#160;&#160;An estimate of
  possible loss, if any, or the range of loss cannot be made and therefore the
  Partnership has not accrued a loss contingency related to these actions.
  However, the ultimate resolution of these actions could have a material adverse
  effect on the Partnership&#8217;s business, financial condition, results of
  operations, cash flows, ability to make distributions to its unitholders, the
  trading price of the Partnership&#8217;s common units and its ability to conduct its
  business. &#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  </font></div>
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        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership may become the subject of additional private or government actions
  regarding these matters in the future.&#160;&#160;Litigation may be
  time-consuming, expensive and disruptive to normal business operations, and the
  outcome of litigation is difficult to predict.&#160;&#160;The defense of these
  lawsuits may result in the incurrence of significant legal expense, both
  directly and as the result of the Partnership&#8217;s indemnification
  obligations.&#160;&#160;The litigation may also divert management&#8217;s attention
  from the Partnership&#8217;s operations which may cause its business to
  suffer.&#160;&#160;An unfavorable outcome in any of these matters may have a
  material adverse effect on the Partnership&#8217;s business, financial condition,
  results of operations, cash flows, ability to make distributions to its
  unitholders, the trading price of the Partnership&#8217;s common units and its ability
  to conduct its business.<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>All or a portion of the
  defense costs and any amount the Partnership may be required to pay to satisfy a
  judgment or settlement of these claims may not be covered by
  insurance.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Examiner</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On August
  12, 2008, a motion was filed by the United States Trustee asking the Bankruptcy
  Court to appoint an examiner to investigate the Private Company&#8217;s trading
  strategies as well as certain &#8220;insider transactions,&#8221; including the contribution
  of the crude oil assets to the Partnership in connection with its initial public
  offering, the sale of the Acquired Asphalt Assets to the Partnership, the sale
  of the Acquired Pipeline Assets to the Partnership, the sale of the Acquired
  Storage Assets to the Partnership, and the entering into the Holdings Credit
  Agreements by SemGroup Holdings.&#160;&#160;On September 10, 2008, the
  Bankruptcy Court approved the appointment of an examiner, and on October 14,
  2008, the United States Trustee appointed Louis J. Freeh, former director of the
  Federal Bureau of Investigation, as the examiner.&#160;&#160;The examiner is
  required to prepare and file a report summarizing the findings of his
  investigation by March 24, 2009, unless the Bankruptcy Court extends that
  deadline.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership may incur additional costs in cooperating with this
  examiner.&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  addition, in connection with the Settlement Agreement, the Partnership and the
  Private Company will release certain claims relating to the contribution of
  assets to the Partnership in connection with its initial public offering and the
  Partnership&#8217;s acquisition of the Acquired Asphalt Assets, Acquired Pipeline
  Assets and Acquired Storage Assets.&#160;&#160;However, other claims that may be
  identified by the examiner will not be released in connection with the
  Settlement Agreement.&#160; </font>If the examiner&#8217;s investigation results in an
  unfavorable outcome to the Partnership, such an investigation may prompt the
  filing of lawsuits in the Bankruptcy Cases to challenge or to seek to unwind
  transactions with the Partnership under the bankruptcy laws.&#160;&#160;Such
  litigation may be expensive and, if successful, would have a material adverse
  effect on the Partnership&#8217;s business, financial condition, results of
  operations, ability to make distributions to its unitholders and the trading
  price of the Partnership&#8217;s common units.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;</font>Internal
  Review</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
  previously announced, in July 2008 the Board created an internal review
  subcommittee of the Board comprised of directors who are independent of
  management and the Private Company to determine whether the Partnership
  participates in businesses other than as described in its filings with the SEC
  and to conduct investigations into other such specific items as are deemed to be
  appropriate by the subcommittee.&#160;&#160;The subcommittee retained
  independent legal counsel to assist it in its investigations.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline">The subcommittee has investigated a short-term financing
  transaction involving two subsidiaries of the Private Company.&#160;&#160;This
  transaction was identified as a potential source of concern in a whistleblower
  report made after the Private Company filed for bankruptcy.&#160;&#160;Although
  the transaction did not involve the Partnership or its subsidiaries, it was
  investigated because it did involve certain senior executive officers of the
  Partnership&#8217;s general partner who were also senior executive officers of the
  Private Company at the time of the transaction.&#160;&#160;Based upon its
  investigation, counsel for the subcommittee found that, subject to </font>the
  subcommittee&#8217;s lack of access to Private Company documents and electronic
  records and witnesses<font style="DISPLAY: inline">, although certain
  irregularities occurred in the transactions, the transaction did not appear to
  cause the relevant officers to understand or believe that the Private Company
  had a lack of liquidity that imperiled the Private Company&#8217;s ability to meet its
  obligations to the Partnership and that certain aspects of the documentation of
  the transaction that were out of the ordinary did not call into question the
  integrity of any of the relevant officers.</font></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  subcommittee also investigated whether certain senior executive officers of the
  Partnership&#8217;s general partner who were also senior executive officers of the
  Private Company knew and understood, beginning as early as July 2007 and at
  various times thereafter, about a lack of liquidity at the Private Company that
  imperiled the Private Company&#8217;s ability to meet its obligations to the
  Partnership.&#160;&#160;Based upon this investigation, and subject to the
  subcommittee&#8217;s lack of access to Private Company documents and electronic
  records and witnesses, counsel for the subcommittee found that each of the
  officers had access to and reviewed Private Company financial information,
  including information regarding the Private Company&#8217;s commodity trading
  activities, from which they could have developed an understanding of the nature
  and significance of the trading activities that led to liquidity problems at the
  Private Company well before they say they did.&#160;&#160;While the officers
  each stated sincerely that they did not understand the nature or extent of the
  Private Company&#8217;s trading-related problems until the first week of July 2008 or
  later, objective evidence suggests that they showed at least some indifference
  to known or easily discoverable facts and that they failed to adhere to
  procedures under the Private Company&#8217;s Risk Management Policy created expressly
  to ensure that the Private Company&#8217;s trading activities were properly
  monitored.&#160;&#160;Nonetheless, counsel for the subcommittee was not
  persuaded by the documents and other evidence it was able to access that the
  officers in fact knew and understood that the Private Company&#8217;s liquidity or
  capital needs were a significant cause for alarm until, at the earliest, the
  second quarter of 2008.&#160;&#160;Moreover, while it appeared to counsel that
  the officers developed a growing awareness of the nature and severity of the
  Private Company&#8217;s liquidity issues over the second quarter of 2008, counsel was
  unable to identify with any more precision the specific level of concern or
  understanding these individuals had prior to July 2008.&#160;&#160;<font style="DISPLAY: inline">While not within the scope of such counsel&#8217;s
  investigation, counsel was requested by the subcommittee to note any information
  that came to counsel&#8217;s attention during its investigation that suggested that
  the officers intended to deceive or mislead any third party.&#160;&#160;Subject
  to limitations described in its report,</font> no information came to counsel&#8217;s
  attention during its investigation that suggested to counsel that the officers
  intended to deceive or to mislead any third parties.&#160;&#160;In addition, in
  connection with the investigation, counsel for the subcommittee did not express
  any findings of intentional misconduct or fraud on the part of any officer or
  employee of the Partnership.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">After
  completion of the internal review, a plan was developed with the advice of the
  Audit Committee of the Board to further strengthen the processes and procedures
  at the Partnership.&#160;&#160;This plan includes, among other things,
  reevaluating executive officers and accounting and finance personnel <font style="DISPLAY: inline">(including a realignment of officers as described
  elsewhere in this report) </font>and hiring, as deemed necessary, additional
  accounting and finance personnel or consultants; reevaluating the Partnership&#8217;s
  internal audit function and determining whether to expand the duties and
  responsibilities of such group; evaluating the comprehensive training programs
  for all management personnel covering, among other things, compliance with
  controls and procedures, revising the reporting structure so that the Chief
  Financial Officer reports directly to the Audit Committee, and increasing the
  business and operational oversight role of the Audit Committee.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Equity
  Awards and Employment Agreements</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Change of Control constituted a change of control under the Plan, which resulted
  in the early vesting of all awards under the Plan.&#160;&#160;As such, the
  phantom units awarded to Messrs. Kevin L. Foxx, Michael J. Brochetti, Alex G.
  Stallings, Peter L. Schwiering and Jerry A. Parsons in the amounts of 150,000
  units, 90,000 units, 75,000 units, 45,000 units and 20,000 units, respectively,
  are fully vested.&#160;&#160;The common units underlying such awards were issued
  to such individuals in August 2008.&#160;&#160;In addition, the 5,000 restricted
  units awarded to each of Messrs. Billings, Kosnik and Bishop for their service
  as independent members of the Board fully vested.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Change of Control also resulted in a change of control under the employment
  agreements of Messrs. Foxx, Brochetti, Stallings, Schwiering and
  Parsons.&#160;&#160;If within one year after the Change of Control any such
  officer is terminated by the Partnership&#8217;s general partner without Cause (as
  defined below) or such officer terminates the agreement for Good Reason (as
  defined below), he will be entitled to payment of any unpaid base salary and
  vested benefits under any incentive plans, a lump sum payment equal to 24 months
  of base salary and continued participation in the Partnership&#8217;s general
  partner&#8217;s welfare benefit programs for one year after termination. Upon such an
  event, Messrs&#160;Foxx, Brochetti, Stallings, Schwiering and Parsons would be
  entitled to lump sum payments of $900,000, $600,000, $550,000, $500,000 and
  $500,000, respectively, in addition to continued participation in the
  Partnership&#8217;s general partner&#8217;s welfare benefit programs.&#160;&#160;As of the
  date of the filing of this report, none of these officers is entitled to these
  benefits as none of them has been terminated by the Partnership&#8217;s general
  partner without Cause or has terminated his agreement for Good
  Reason.</font></div><br>
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          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
  purposes of the employment agreements:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;Cause&#8221;
  means (i)&#160;conviction of the executive officer by a court of competent
  jurisdiction of any felony or a crime involving moral turpitude; (ii)&#160;the
  executive officer&#8217;s willful and intentional failure or willful intentional
  refusal to follow reasonable and lawful instructions of the Board;
  (iii)&#160;the executive officer&#8217;s material breach or default in the performance
  of his obligations under the employment agreement; or (iv)&#160;the executive
  officer&#8217;s act of misappropriation, embezzlement, intentional fraud or similar
  conduct involving the Partnership&#8217;s general partner.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;Good
  Reason&#8221; means (i)&#160;a material reduction in the executive officer&#8217;s base
  salary; (ii)&#160;a material diminution of the executive officer&#8217;s duties,
  authority or responsibilities as in effect immediately prior to such diminution;
  or (iii)&#160;the relocation of the named executive officer&#8217;s principal work
  location to a location more than 50 miles from its current
  location.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Insurance</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership shares some insurance policies, including its general liability
  policy, with the Private Company. These policies contain caps on the insurer&#8217;s
  maximum liability under the policy, and claims made by either the Private
  Company or the Partnership are applied against the caps and deductibles. The
  possibility exists that, in an event in which the Partnership wishes to make a
  claim under a shared insurance policy, the Partnership&#8217;s claim could be denied
  or only partially satisfied due to claims made by the Private Company against
  the policy cap. Further, where events occur that would entitle both the Private
  Company and the Partnership to benefits under these insurance policies, the full
  deductible may be borne by the first claimant under the policy. In addition,
  claims made by the Private Company could affect the Partnership&#8217;s premiums and
  its ability to obtain insurance in the future.&#160;&#160;The Bankruptcy Filings
  have had and may continue to have an adverse effect on the Partnership&#8217;s
  insurance premiums and coverage.&#160;&#160;The Partnership&#8217;s premiums and
  ability to obtain insurance in the future could also be adversely impacted by
  the Bankruptcy Filings if the Private Company fails to renew any shared policies
  and the Partnership is required to purchase its own policy, cover any premiums
  currently being paid by the Private Company or if an insurance carrier increases
  the insurance premiums due to the Bankruptcy Filings.&#160;&#160;These increased
  costs could have a material adverse effect on the Partnership&#8217;s financial
  condition and results of operations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Taxation
  as a Corporation</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  anticipated after-tax economic benefit of an investment in the Partnership&#8217;s
  common units depends largely on the Partnership being treated as a partnership
  for federal income tax purposes.&#160;&#160;If less than 90% of the gross income
  of a publicly traded partnership, such as the Partnership, for any taxable year
  is &#8220;qualifying income&#8221; from sources such as the transportation, marketing (other
  than to end users), or processing of crude oil, natural gas or products thereof,
  interest, dividends or similar sources, that partnership will be taxable as a
  corporation under Section 7704 of the Internal Revenue Code for federal income
  tax purposes for that taxable year and all subsequent years.&#160;&#160;In this
  regard, because the income the Partnership earns from the Throughput Agreement
  and the Terminalling Agreement with the Private Company is &#8220;qualifying income&#8221;
  any material reduction or elimination of that income or any amendment to the
  Throughput Agreement or the Terminalling Agreement which changes the nature of
  the services provided or the income generated thereunder, may cause the
  Partnership&#8217;s remaining &#8220;qualifying income&#8221; to constitute less than 90% of its
  gross income.&#160;&#160;As a result, the Partnership could become taxable as a
  corporation for federal income tax purposes, unless it were to transfer the
  businesses that generate non-qualifying income to one or more subsidiaries taxed
  as corporations and pay entity level income taxes on such non-qualifying
  income.&#160;&#160;The IRS has not provided any ruling to the Partnership on
  this matter.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If the
  Partnership were treated as a corporation for federal income tax purposes, then
  it would pay federal income tax on its income at the corporate tax rate, which
  is currently a maximum of 35%, and would likely pay state income tax at varying
  rates.&#160;&#160;Distributions would generally be taxed again to unitholders as
  corporate distributions and none of the Partnership&#8217;s income, gains, losses,
  deductions or credits would flow through to its unitholders.&#160;&#160;Because
  a tax would be imposed upon the Partnership as an entity, cash available for
  distribution to its unitholders would be substantially
  reduced.&#160;&#160;Treatment of the Partnership as a corporation would result
  in a material reduction in the anticipated cash flow and after-tax return to
  unitholders and thus would likely result in a substantial reduction in the value
  of the Partnership&#8217;s common units.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">SEMGROUP
  ENERGY PARTNERS, L.P.</font></div>
          <div style="WIDTH: 100%" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; COLOR: #000000; FONT-FAMILY: Times New Roman">NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Other
  Effects</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Bankruptcy Filings have had and may in the future continue to have a number of
  other impacts on the Partnership&#8217;s business and management.&#160;&#160;In the
  Amended Omnibus Agreement and other agreements with the Private Company, the
  Private Company has agreed to indemnify the Partnership for certain
  environmental and other claims relating to the crude oil and liquid asphalt
  cement assets that have been contributed to the Partnership.&#160;&#160;Due to
  the Bankruptcy Filings, the Partnership may not be able to collect any amounts
  that would otherwise be payable under these indemnification provisions if such
  events were to occur.&#160; Pursuant to the Settlement Agreement, the Private
  Company will reject the Amended Omnibus Agreement including the indemnification
  provisions therein.&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Partnership is currently pursuing various strategic alternatives for its
  business and assets including the possibility of entering into storage contracts
  with third party customers and the sale of all or a portion of its
  assets.&#160;&#160;The uncertainty relating to the Bankruptcy Filings and the
  recent global market and economic conditions may make it more difficult to
  pursue merger opportunities or enter into storage contracts with third party
  customers.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  addition, general and administrative expenses (exclusive of noncash compensation
  expense related to the vesting of the units under the Plan- See Note 9)
  increased by approximately $6.6 million and $7.4 million, or approximately 287%
  and 322%, to approximately $8.9 million for the third quarter of 2008 and $9.7
  million for the fourth quarter of 2008, respectively, compared to $2.3 million
  in the second quarter of 2008.&#160;&#160;This increase is due to increased
  costs related to legal and financial advisors as well as other related costs in
  connection with events related to the Bankruptcy Filings, the securities
  litigation and governmental investigations, and the Partnership&#8217;s efforts to
  enter into storage contracts with third party customers and pursue merger
  opportunities.&#160;&#160;The Partnership expects this increased level
  of&#160;general and administrative expenses to continue into 2009.</font></div>
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        </div>
      </div><br>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<a name="mda">Item&#160;2.</a></font></div>
              </td>
              <td align="left" valign="top" width="70%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Management&#8217;s
        Discussion and Analysis of Financial Condition and Results of
        Operations</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">As
  used in this quarterly report, unless we indicate otherwise: (1)&#160;&#8220;SemGroup
  Energy Partners,&#8221; &#8220;our,&#8221; &#8220;we,&#8221; &#8220;us&#8221; and similar terms refer to SemGroup Energy
  Partners, L.P., together with our subsidiaries, (2) the &#8220;Private Company&#8221; refers
  to SemGroup, L.P. and its subsidiaries and affiliates (other than our general
  partner and us), and (3)&#160;&#8220;Crude Oil Business&#8221; refers to the crude oil
  gathering, transportation, terminalling and storage assets that were contributed
  to us by the Private Company. The historical financial statements for periods
  prior to the contribution of the operations to us by the Private Company on
  July&#160;20, 2007 reflect the operations of our predecessor. The following
  discussion analyzes the historical financial condition and results of operations
  of the Partnership and should be read in conjunction with our predecessor&#8217;s
  financial statements and notes thereto, and Management&#8217;s Discussion and Analysis
  of Financial Condition and Results of Operations presented in our Annual Report
  on Form 10-K for the year ended December 31, 2007.&#160;&#160;The Partnership as
  used herein refers to the financial results and operations of our predecessor
  until its contribution to us, and to our financial results and operations
  thereafter.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Forward-Looking
  Statements</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
  report contains &#8220;forward-looking statements&#8221; intended to qualify for the safe
  harbors from liability established by the federal securities laws. Statements
  included in this quarterly report that are not historical facts (including any
  statements concerning plans and objectives of management for future operations
  or economic performance, the impact of the Bankruptcy Filings, or assumptions or
  forecasts related thereto), including, without limitation, the information set
  forth in Management&#8217;s Discussion and Analysis of Financial Condition and Results
  of Operations, are forward-looking statements. These statements can be
  identified by the use of forward-looking terminology including &#8220;may,&#8221; &#8220;will,&#8221;
  &#8220;should,&#8221; &#8220;believe,&#8221; &#8220;expect,&#8221; &#8220;intend,&#8221; &#8220;anticipate,&#8221; &#8220;estimate,&#8221; &#8220;continue,&#8221;
  or other similar words. These statements discuss future expectations, contain
  projections of results of operations or of financial condition, or state other
  &#8220;forward-looking&#8221; information. We and our representatives may from time to time
  make other oral or written statements that are also forward-looking
  statements.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Such
  forward-looking statements are subject to various risks and uncertainties that
  could cause actual results to differ materially from those anticipated as of the
  date of the filing of this report. Although we believe that the expectations
  reflected in these forward-looking statements are based on reasonable
  assumptions, no assurance can be given that these expectations will prove to be
  correct. Important factors that could cause our actual results to differ
  materially from the expectations reflected in these forward-looking statements
  include, among other things, those set forth in Part I, &#8220;Item 1A. Risk Factors&#8221;
  in our Annual Report on Form 10-K for the year ended December 31, 2007, which
  was filed with the Securities and Exchange Commission (the &#8220;SEC&#8221;) on March 6,
  2008 (the &#8220;2007 Form 10-K&#8221;), and those set forth in &#8220;Item 1A. Risk Factors&#8221; of
  this report.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
  forward-looking statements included in this report are based on information
  available to us on the date of this report. We undertake no obligation to
  publicly update or revise any forward-looking statement, whether as a result of
  new information, future events or otherwise. All subsequent written and oral
  forward-looking statements attributable to us or persons acting on our behalf
  are expressly qualified in their entirety by the cautionary statements contained
  throughout this report.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Overview</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are a
  publicly traded master limited partnership with operations in twenty-three
  states. We provide integrated terminalling, storage, gathering and
  transportation services for companies engaged in the production, distribution
  and marketing of crude oil and liquid asphalt cement. We manage our operations
  through two operating segments: (i)&#160;terminalling and storage services and
  (ii)&#160;gathering and transportation services. We were formed in February 2007
  as a Delaware master limited partnership initially to own, operate and develop a
  diversified portfolio of complementary midstream energy assets.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In July
  2007, we issued 12,500,000 common units, representing limited partner interests,
  and 12,570,504 subordinated units, representing additional limited partner
  interests, to SemGroup Holdings, L.P., or SemGroup Holdings, and 549,908 general
  partner units representing a 2% general partner interest to SemGroup Energy
  Partners G.P., L.L.C., our general partner. SemGroup Holdings then completed a
  public offering of 12,500,000 common units at a price of $22 per unit. In
  addition, we issued an additional 1,875,000 common units to the public pursuant
  to the underwriters&#8217; exercise of their over-allotment option. We did not receive
  any proceeds from the common units sold by SemGroup Holdings. We received net
  proceeds of approximately $38.7 million after deducting underwriting discounts
  from the sale of common units in connection with the exercise of the
  underwriters&#8217; over-allotment option. We used these net proceeds to reduce
  outstanding borrowings under our credit facility.</font></div>
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        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
  February&#160;20, 2008, we purchased land, receiving infrastructure, machinery,
  pumps and piping and 46 liquid asphalt cement and residual fuel oil terminalling
  and storage facilities (the &#8220;Acquired Asphalt Assets&#8221;) from the Private Company
  for aggregate consideration of $379.5 million, including $0.7 million of
  acquisition-related costs. For accounting purposes, the acquisition has been
  reflected as a purchase of assets, with the Acquired Asphalt Assets recorded at
  the historical cost of the Private Company, which was approximately $145.5
  million, with the additional purchase price of $234.0 million reflected in the
  statement of changes in partners&#8217; capital as a distribution to the Private
  Company.&#160;&#160;In conjunction with the purchase of the Acquired Asphalt
  Assets, we amended&#160;our existing credit facility, increasing&#160;our
  borrowing capacity to $600 million. Concurrently,&#160;we issued 6,000,000
  common units, receiving proceeds, net of underwriting discounts and
  offering-related costs, of $137.2 million.&#160;Our general partner also made a
  capital contribution of $2.9 million to maintain its 2.0% general partner
  interest in us. On March&#160;5, 2008,&#160;we issued an additional 900,000
  common units, receiving proceeds, net of underwriting discounts, of $20.6
  million, in connection with the underwriters&#8217; exercise of their over-allotment
  option in full.&#160;Our general partner made a corresponding capital
  contribution of $0.4 million to maintain its 2.0% general partner interest in
  us.&#160;&#160;In connection with the acquisition of the Acquired Asphalt
  Assets,&#160;we entered into a Terminalling and Storage Agreement (the
  &#8220;Terminalling Agreement&#8221;) with the Private Company and certain of its
  subsidiaries under which we provide liquid asphalt cement terminalling and
  storage and throughput services to the Private Company and the Private Company
  has agreed to use the&#160;our services at certain minimum
  levels.&#160;&#160;Our general partner&#8217;s Board of Directors (the &#8220;Board&#8221;)
  approved the acquisition of the Acquired Asphalt Assets as well as the terms of
  the related agreements based on a recommendation from its conflicts committee,
  which consisted entirely of independent directors. The conflicts committee
  retained independent legal and financial advisors to assist it in evaluating the
  transaction and considered a number of factors in approving the acquisition,
  including an opinion from the committee&#8217;s independent financial advisor that the
  consideration paid for the Acquired Asphalt Assets was fair, from a financial
  point of view, to us.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On May
  12, 2008, we purchased the Eagle North Pipeline System, a 130-mile, 8-inch
  pipeline that originates in Ardmore, Oklahoma and terminates in Drumright,
  Oklahoma as well as other real and personal property related to the pipeline
  (the &#8220;Acquired Pipeline Assets&#8221;) from the Private Company for aggregate
  consideration of $45.1 million, including $0.1 million of acquisition-related
  costs.&#160;&#160;The acquisition was funded with borrowings under our revolving
  credit facility.&#160;&#160;We have suspended capital expenditures on this
  pipeline due to the Bankruptcy Filings.&#160; Management currently intends to
  put the asset into service by late 2009 or early 2010 and is exploring various
  alternatives to complete the project.&#160;&#160;The Board approved the
  acquisition of the Acquired Pipeline Assets based on a recommendation from its
  conflicts committee, which consisted entirely of independent directors. The
  conflicts committee retained independent legal and financial advisors to assist
  it in evaluating the transaction and considered a number of factors in approving
  the acquisition, including an opinion from the committee&#8217;s independent financial
  advisor that the consideration paid for the Acquired Pipeline Assets was fair,
  from a financial point of view, to us.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On May
  30, 2008, we purchased certain land, crude oil storage and terminalling
  facilities with an aggregate of approximately 2.0&#160;million barrels of
  storage capacity and related assets located at the Cushing Interchange from the
  Private Company and we assumed a take-or-pay, fee-based,&#160;third party
  contract through August 2010 relating to the additional 2.0&#160;million barrels
  of storage capacity&#160;(the &#8220;Acquired Storage Assets&#8221;)&#160;for aggregate
  consideration of $90.2 million, including $0.2 million of acquisition-related
  costs.&#160;&#160;The acquisition was funded with borrowings under our revolving
  credit facility.&#160;&#160;The Board approved the acquisition of the Acquired
  Storage Assets based on a recommendation from its conflicts committee, which
  consisted entirely of independent directors. The conflicts committee retained
  independent legal and financial advisors to assist it in evaluating the
  transaction and considered a number of factors in approving the acquisition,
  including an opinion from the committee&#8217;s independent financial advisor that the
  consideration paid for the Acquired Storage Assets was fair, from a financial
  point of view, to us.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Impact
  of the Bankruptcy of the Private Company and Certain of its Subsidiaries and
  Related Events</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due to
  the events related to the Bankruptcy Filings described herein, including the
  uncertainty relating to future cash flows and the existing events of default
  under our credit facility, we face substantial doubt as to our ability to
  continue as a going concern.&#160;&#160;While it is not feasible to predict the
  ultimate outcome of the events surrounding the Bankruptcy Cases (as defined
  below), we have been and could continue to be materially and adversely affected
  by such events and we may be forced to make a bankruptcy filing or take other
  action that could have a material adverse effect on our business, the price of
  our common units and our results of operations.</font></div>
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        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Bankruptcy
  Filings</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July
  17, 2008, we issued a press release announcing that the Private Company was
  experiencing liquidity issues and was exploring various alternatives, including
  raising additional equity, debt capital or the filing of a voluntary petition
  for reorganization under Chapter 11 of the Bankruptcy Code to address these
  issues.&#160;&#160;We filed this press release in a Current Report on Form 8-K
  filed with the SEC on July 18, 2008.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July
  22, 2008, the Private Company and certain of its subsidiaries filed voluntary
  petitions (the &#8220;Bankruptcy Filings&#8221;) for reorganization under Chapter 11 of the
  Bankruptcy Code in the United States Bankruptcy Court for the District of
  Delaware (the &#8220;Bankruptcy Court&#8221;), Case No. 08-11547-BLS.&#160;&#160;The Private
  Company and its subsidiaries continue to operate their businesses and own and
  manage their properties as debtors-in-possession under the jurisdiction of the
  Bankruptcy Court and in accordance with the applicable provisions of the
  Bankruptcy Code (the &#8220;Bankruptcy Cases&#8221;).&#160;None of we, our general partner,
  our subsidiaries nor our general partner&#8217;s subsidiaries are debtors in the
  Bankruptcy Cases.&#160;&#160;However, because of our contractual relationships
  with the Private Company and certain of its subsidiaries, the Bankruptcy Filings
  have impacted us and may in the future impact us in various ways, including the
  items discussed below.&#160;&#160;Our financial results as of June 30, 2008
  reflect an allowance for doubtful accounts of $0.9 million related to amounts
  collectible from the Private Company as of June 30, 2008, which are considered
  prepetition debt in the Bankruptcy Cases.&#160;&#160;Our financial results as of
  June 30, 2008 also reflect a $0.4 million allowance for doubtful accounts
  related to amounts collectible from third parties as of June 30,
  2008.&#160;&#160;The allowance related to amounts collectible from third parties
  was established as a result of certain third party customers netting amounts due
  them from the Private Company with amounts due to us.&#160;&#160;Other than the
  allowance for doubtful accounts described above, the results of operations for
  the three and six months ended June 30, 2008 included in this quarterly report
  were not affected by the Bankruptcy Filings and related events.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Board
  and Management Composition</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July
  18, 2008, Manchester Securities Corp. and Alerian Finance Partners, LP
  (&#8220;Manchester and Alerian&#8221;), as lenders to SemGroup Holdings, the sole member of
  our general partner, exercised certain rights described below under a Loan
  Agreement and a Pledge Agreement, each dated June 25, 2008 (the &#8220;Holdings Credit
  Agreements&#8221;), that were triggered by certain events of default under the
  Holdings Credit Agreements.&#160;&#160;The Holdings Credit Agreements are
  secured by our subordinated units and incentive distribution rights and the
  membership interests in our general partner owned by SemGroup Holdings.&#160;
  Manchester and Alerian have not foreclosed on our subordinated units owned by
  SemGroup Holdings or the membership interests in our general
  partner.&#160;&#160;Manchester and Alerian may in the future exercise other
  remedies available to them under the Holdings Credit Agreement and related loan
  documents, including taking action to foreclose on the collateral securing the
  loan, which may cause an additional event of default under our credit agreement
  and Forbearance Agreement (as defined below).&#160;&#160;Neither we nor our
  general partner is a party to the Holdings Credit Agreements or the related loan
  documents.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July
  18, 2008, Manchester and Alerian exercised their right under the Holdings Credit
  Agreements to vote the membership interests of our general partner in order to
  reconstitute the Board (the &#8220;Change of Control&#8221;).&#160;&#160;Messrs. Thomas L.
  Kivisto, Gregory C. Wallace, Kevin L. Foxx, Michael J. Brochetti and W. Anderson
  Bishop were removed from the Board.&#160;&#160;Mr. Bishop had served as the
  chairman of the audit committee and as a member of the conflicts committee and
  compensation committee of the Board.&#160;&#160;Messrs. Sundar S. Srinivasan,
  David N. Bernfeld and Gabriel Hammond (each of
  whom&#160;is&#160;affiliated&#160;with&#160;Manchester or Alerian) were
  appointed as directors of the Board.&#160;&#160;Mr. Srinivasan was elected as
  Chairman of the Board.&#160;&#160;Messrs. Brian F. Billings and Edward F. Kosnik
  remain as directors of the Board and continue to serve as members of the
  conflicts committee, audit committee and compensation committee of the
  Board.&#160;&#160;In addition, Messrs. Foxx and Alex Stallings resigned the
  positions each officer held with SemGroup, L.P. in July 2008.&#160;&#160;Mr.
  Brochetti had previously resigned from his position with SemGroup, L.P. in March
  2008.&#160;&#160;Messrs. Foxx, Brochetti and Stallings remain as officers of our
  general partner.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
  October 1, 2008, Dave Miller (who is&#160;an affiliate of&#160;Manchester) and
  Duke R. Ligon were appointed members of the Board. Mr.&#160;Ligon is an
  independent member of the Board and is the chairman of the audit committee and
  also serves on the compensation committee and the conflicts committee of the
  Board. Under the provisions of the SemGroup Energy Partners G.P., L.L.C.
  Long-Term Incentive Plan (the &#8220;Plan&#8221;), Mr.&#160;Ligon was granted an award of
  3,333 restricted common units and 1,667 restricted subordinated units on
  December 23, 2008.&#160;These restricted common units and restricted
  subordinated units will vest in one-third increments over a three-year
  period.&#160;&#160;The Plan was amended in December 2008 to provide for the
  issuance of restricted subordinated units.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">34</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
  January 9, 2009, Mr. Srinivasan resigned his positions as Chairman of the Board
  and as a director.&#160;&#160;Mr. Ligon was subsequently elected as Chairman of
  the Board.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
  discussed in "Part II. Item 5. Other Information," on&#160;<font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">March 18, 2009</font>,
  the</font> Board realigned the officers of our general partner appointing
  Michael J. Brochetti as Executive Vice President&#8212;Corporate Development and
  Treasurer, Alex G. Stallings as Chief Financial Officer and Secretary, and James
  R. Griffin as Chief Accounting Officer.&#160;&#160;Mr. Brochetti had previously
  served as Chief Financial Officer, and Mr. Stallings had previously served as
  Chief Accounting Officer and Secretary.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Bankruptcy
  Court Order</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
  September 9, 2008, the Bankruptcy Court entered an order relating to the
  settlement of certain matters between us and the Private Company (the &#8220;Order&#8221;)
  in the Bankruptcy Cases.&#160;&#160;Among other things, the Order provided that
  (i) the Private Company shall directly pay any utility costs attributable to the
  operations of the Private Company at certain shared facilities, and the Private
  Company will pay us for past utility cost reimbursements that are due from the
  Private Company; (ii) commencing on September 15, 2008, payments under the
  Terminalling Agreement shall be netted against amounts due under the Amended
  Omnibus Agreement and shall be made on the 15th day of each month for the prior
  month (with a three business-day grace period); (iii) the Private Company will
  provide us with a letter of credit in the amount of approximately $4.9 million
  to secure the Private Company&#8217;s postpetition obligations under the Terminalling
  Agreement; (iv) the Private Company will make payments under the Throughput
  Agreement for the month of August on September 15, 2008 (with a three
  business-day grace period) based upon the monthly contract minimums in the
  Throughput Agreement and netted against amounts due under the Amended Omnibus
  Agreement; (v) the Private Company will make payments under the Throughput
  Agreement for the months of September and October on October 15, 2008 (with a
  three business-day grace period) and November 15, 2008 (with a three
  business-day grace period), respectively, or three business days after amounts
  due are determined and documentation therefore has been provided and exchanged
  based upon actual volumes for each such month and at a rate equal to the average
  rate charged by us to third-party shippers in the same geographical area, with
  any such amounts netted against amounts due under the Amended Omnibus Agreement;
  (vi) the parties will reevaluate the Throughput Agreement and the payment terms
  with respect to services provided after October 2008; (vii) representatives of
  the Private Company and us will meet to discuss the transition to us of certain
  of the Private Company&#8217;s employees necessary to maintain our business, and
  pending agreement between the parties, the Private Company shall continue to
  provide services in accordance with the Amended Omnibus Agreement through at
  least November 30, 2008; (viii) the Private Company will consent to an order
  relating a third-party storage contract which shall provide that we are the
  rightful owner of the rights in and to a certain third-party storage agreement
  and the corresponding amounts due thereunder; and (ix) we will enter into a
  specified lease with the Private Company to permit the Private Company to
  construct a pipeline.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Since the
  time that the Order was entered, we negotiated a replacement letter of credit,
  which expires on April 7, 2009, in the amount of approximately $4.9 million to
  secure the Private Company&#8217;s postpetition obligations under the Terminalling
  Agreement.&#160;&#160;Although certain portions of the Order have expired, the
  Private Company, as of the date of filing this report, has continued to (i)
  provide services under the Amended Omnibus Agreement, (ii) make payments to us
  under the Terminalling Agreement based upon the monthly contract minimums
  (netted against amounts due under the Amended Omnibus Agreement) and (iii) make
  payments to us under the Throughput Agreement for actual volumes transported or
  stored each month at a rate equal to the average rate charged by us to
  third-party shippers in the same geographical area (netted against amounts due
  under the Amended Omnibus Agreement).&#160;&#160;However, there can be no
  assurance that the Private Company will continue to provide such services or
  make such payments in the future.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement (as defined below), such services and payments will
  be modified as described below under &#8220;&#8212;Settlement with the Private
  Company.&#8221;</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;</font></font>Settlement with the Private
  Company</font>.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On March 12, 2009, the
  Bankruptcy Court held a hearing and approved the transactions contemplated by a
  term sheet</font></font><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;relating to the
  settlement of certain matters between us and the Private Company (the
  &#8220;Settlement Agreement&#8221;).&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Bankruptcy Court entered an order approving the Settlement Agreement on March
  20, 2009.</font></font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;The
  Settlement Agreement provides for the following, among other
  things:</font></div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div>
              <table cellpadding="0" cellspacing="0" id="list" width="100%">
                  <tr valign="top">
                    <td align="right" style="WIDTH: 54pt">
                      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                    </td>
                    <td>
                      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">we
        will transfer certain crude oil storage assets located in Kansas to the
        Private Company;</font></div>
                    </td>
                  </tr>
              </table>
            </div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div>
              <table cellpadding="0" cellspacing="0" id="list" width="100%">
                  <tr valign="top">
                    <td align="right" style="WIDTH: 54pt">
                      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                    </td>
                    <td>
                      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Private Company will transfer ownership of 355,000 barrels of crude oil
        tank bottoms and line fill to us;</font></div>
                    </td>
                  </tr>
              </table>
            </div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div>
              <table cellpadding="0" cellspacing="0" id="list" width="100%">
                  <tr valign="top">
                    <td align="right" style="WIDTH: 54pt">
                      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                    </td>
                    <td>
                      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Private Company will reject the Throughput Agreement as part of the
        Bankruptcy Cases;</font></div>
                    </td>
                  </tr>
              </table>
            </div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div>
              <table cellpadding="0" cellspacing="0" id="list" width="100%">
                  <tr valign="top">
                    <td align="right" style="WIDTH: 54pt">
                      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                    </td>
                    <td>
                      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">we
        and our affiliates will have a $20 million unsecured claim against the
        Private Company relating to rejection of the Throughput
        Agreement;</font></div>
                    </td>
                  </tr>
              </table>
            </div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div>
              <table cellpadding="0" cellspacing="0" id="list" width="100%">
                  <tr valign="top">
                    <td align="right" style="WIDTH: 54pt">
                      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                    </td>
                    <td>
                      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">we
        and the Private Company will enter into a new throughput agreement
        pursuant to which we will provide certain crude oil gathering,
        transportation, terminalling and storage services to the Private
        Company;</font></div>
                    </td>
                  </tr>
              </table>
            </div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div>
              <table cellpadding="0" cellspacing="0" id="list" width="100%">
                  <tr valign="top">
                    <td align="right" style="WIDTH: 54pt">
                      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                    </td>
                    <td>
                      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">we
        will offer employment to certain crude oil
    employees;</font></div>
                    </td>
                  </tr>
              </table>
            </div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div>
              <table cellpadding="0" cellspacing="0" id="list" width="100%">
                  <tr valign="top">
                    <td align="right" style="WIDTH: 54pt">
                      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                    </td>
                    <td>
                      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Private Company will transfer its asphalt assets that are connected to our
        asphalt assets to the us or one of our affiliates (unless the Private
        Company executes a definitive agreement to sell substantially all of its
        asphalt assets or business as a going concern to a third-party purchaser
        and we enter into a terminalling and storage agreement with such
        purchaser);</font></div>
                    </td>
                  </tr>
              </table>
            </div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div>
              <table cellpadding="0" cellspacing="0" id="list" width="100%">
                  <tr valign="top">
                    <td align="right" style="WIDTH: 54pt">
                      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                    </td>
                    <td>
                      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Private Company will reject the Terminalling Agreement as part of the
        Bankruptcy Cases;</font></div>
                    </td>
                  </tr>
              </table>
            </div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div>
              <table cellpadding="0" cellspacing="0" id="list" width="100%">
                  <tr valign="top">
                    <td align="right" style="WIDTH: 54pt">
                      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                    </td>
                    <td>
                      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">one
        of our subsidiaries will have a $35 million unsecured claim against the
        Private Company relating to rejection of the Terminalling
        Agreement;</font></div>
                    </td>
                  </tr>
              </table>
            </div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt">
              <div>
                <table cellpadding="0" cellspacing="0" id="list" width="100%">
                    <tr valign="top">
                      <td align="right" style="WIDTH: 54pt">
                        <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                      </td>
                      <td>
                        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">we
        and the Private Company will enter into a new terminalling agreement
        pursuant to which we will provide asphalt terminalling and storage
        services for the Private Company &#8217;s remaining asphalt inventory on the
        following terms: (i) we will receive a monthly storage service fee equal
        to $0.565 per barrel multiplied by the total shell capacity in barrels for
        each tank where the Private Company has asphalt inventory and (ii) we will
        receive a throughput fee of $9.25 per ton for each ton of the Private
        Company&#8217;s asphalt inventory that is delivered out of or otherwise removed
        from our asphalt assets (unless the Private Company executes a definitive
        agreement to sell substantially all of its asphalt assets or business as a
        going concern to a third-party purchaser and we enter into a terminalling
        and storage agreement with such
  purchaser);</font></div>
                      </td>
                    </tr>
                </table>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div>
                <table cellpadding="0" cellspacing="0" id="list" width="100%">
                    <tr valign="top">
                      <td align="right" style="WIDTH: 54pt">
                        <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                      </td>
                      <td>
                        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Private Company will remove all of its remaining asphalt inventory from
        our asphalt storage facilities no later than October 31, 2009 (unless the
        Private Company executes a definitive agreement to sell substantially all
        of its asphalt assets or business as a going concern to a third-party
        purchaser and we enter into a terminalling and storage agreement with such
        purchaser);</font></div>
                      </td>
                    </tr>
                </table>
              </div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
              <div>
                <table cellpadding="0" cellspacing="0" id="list" width="100%">
                    <tr valign="top">
                      <td align="right" style="WIDTH: 54pt">
                        <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                      </td>
                      <td>
                        <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Private Company will be entitled to receive 20% of the proceeds of any
        sale by us of any of the asphalt assets transferred to us in connection
        with the Settlement Agreement that occurs within nine months of the
        transfer of such assets to us (unless the Private Company executes a
        definitive agreement to sell substantially all of its asphalt assets or
        business as a going concern to a third-party purchaser and we enter into a
        terminalling and storage agreement with such
    purchaser);</font></div>
                      </td>
                    </tr>
                </table>
              </div>
              <div>&#160;</div>
            </div>
            <div>
              <table cellpadding="0" cellspacing="0" id="list" width="100%">
                  <tr valign="top">
                    <td align="right" style="WIDTH: 54pt">
                      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                    </td>
                    <td>
                      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        Private Company will reject the Amended and Restated Omnibus Agreement as
        part of the Bankruptcy Cases;</font></div>
                    </td>
                  </tr>
              </table>
            </div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div>
              <table cellpadding="0" cellspacing="0" id="list" width="100%">
                  <tr valign="top">
                    <td align="right" style="WIDTH: 54pt">
                      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                    </td>
                    <td>
                      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">we
        and the Private Company will enter into a shared services agreement
        pursuant to which the Private Company will provide certain operational
        services for us;</font></div>
                    </td>
                  </tr>
              </table>
            </div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div>
              <table cellpadding="0" cellspacing="0" id="list" width="100%">
                  <tr valign="top">
                    <td align="right" style="WIDTH: 54pt">
                      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                    </td>
                    <td>
                      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">other
        than as provided above, we and the Private Company entered into mutual
        releases of claims relating to the rejection of the Terminalling and
        Storage Agreement, Throughput Agreement and Amended and Restated Omnibus
        Agreement;</font></div>
                    </td>
                  </tr>
              </table>
            </div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div>
              <table cellpadding="0" cellspacing="0" id="list" width="100%">
                  <tr valign="top">
                    <td align="right" style="WIDTH: 54pt">
                      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                    </td>
                    <td>
                      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">certain
        pre-petition claims by the Private Company and us will be netted and
        waived;</font></div>
                    </td>
                  </tr>
              </table>
            </div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div>
              <table cellpadding="0" cellspacing="0" id="list" width="100%">
                  <tr valign="top">
                    <td align="right" style="WIDTH: 54pt">
                      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                    </td>
                    <td>
                      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">we
        and the Private Company will resolve certain remaining issues related to
        the contribution of crude oil assets to us in connection with our initial
        public offering, our acquisition of the Acquired Asphalt Assets, our
        acquisition of the Acquired Pipeline Assets and our acquisition of the
        Acquired Storage Assets, including the release of claims relating to such
        acquisitions; and</font></div>
                    </td>
                  </tr>
              </table>
            </div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div>
              <table cellpadding="0" cellspacing="0" id="list" width="100%">
                  <tr valign="top">
                    <td align="right" style="WIDTH: 54pt">
                      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
                    </td>
                    <td>
                      <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">we
        and the Private Company will enter into a license agreement providing us
        with a non-exclusive, worldwide license to use certain trade names,
        including the name &#8220;SemGroup&#8221;, and the corresponding mark until December
        31, 2009, and the Private Company will waive claims for infringement
        relating to such trade names and mark prior to the date of such license
        agreement.</font></div>
                    </td>
                  </tr>
              </table>
            </div>
            <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The parties agreed to
  negotiate and execute definitive documentation, to be approved by the Bankruptcy
  Court,&#160;with respect to the items contained in the Settlement Agreement as
  soon as practicably possible, which will supersede the Settlement Agreement when
  so executed.&#160; </font></font><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Settlement Agreement
  is subject to the obtaining of a consent from our lenders under our credit
  agreement and a waiver of the existing defaults or events of default under the
  credit agreement.&#160;&#160;There can be no assurance that our lenders will
  provide the required consent to the transactions or waiver of existing defaults
  or events of default under our credit agreement or that the transactions
  contemplated by the Settlement Agreement will be
  consummated.</font></div>
            </div>
          </div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  Revenues</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
  provide services to the crude oil purchasing, marketing and distribution
  operations of the Private Company pursuant to a crude oil gathering,
  transportation, terminalling and storage agreement with the Private Company,
  which we refer to as the Throughput Agreement, and we provide services to the
  finished asphalt product processing and marketing operations of the Private
  Company pursuant to a terminalling and storage agreement with the Private
  Company, which we refer to as the Terminalling Agreement.&#160;&#160;For a
  detailed description of the Throughput Agreement and the Terminalling Agreement,
  please see &#8220;Item 7. Management&#8217;s Discussion and Analysis of Financial Condition
  and Results of Operation&#8221; and &#8220;Item 13. Certain Relationships and Related Party
  Transactions&#8221; in our 2007 Form 10-K.&#160;&#160;For the six months ended June
  30, 2008 and the year ended&#160;December 31,&#160;2008, we derived
  approximately 88% and approximately <font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">73%</font>,
  respectively, of our revenues, excluding fuel surcharge revenues related to fuel
  and power consumed to operate our liquid asphalt cement storage tanks, from
  services we provided to the Private Company and its subsidiaries.&#160;&#160;The
  Private Company is obligated to pay us minimum monthly fees totaling $76.1
  million annually and $58.9 million annually in respect of the minimum
  commitments under the Throughput Agreement and the Terminalling Agreement,
  respectively, regardless of whether such services are actually utilized by the
  Private Company.&#160;&#160;As described above, the Order requires the Private
  Company to make certain payments under the Throughput Agreement and Terminalling
  Agreement.&#160;&#160;As of the date of the filing of this report, payments made
  under the Throughput Agreement for services rendered since September 2008 have
  been made based upon actual usage rather than the contractual minimum monthly
  storage amounts in such agreement.&#160;&#160;As of the date of the filing of
  this report, payments made under the Terminalling Agreement have continued to be
  made based upon the contractual minimum monthly storage amounts in such
  agreement.&#160;&#160;We have been pursuing opportunities to provide crude oil
  terminalling and storage services and crude oil gathering and transportation
  services to third parties.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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          </div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As a
  result of new crude oil third-party storage contracts, we have increased our
  third-party terminalling and storage revenue (excluding fuel surcharge revenues
  related to fuel and power consumed to operate our liquid asphalt cement storage
  tanks) from approximately $1.0 million, or approximately 4% of total
  terminalling and storage revenue during the second quarter of 2008, to
  approximately $4.7 million and $8.4 million, or approximately 17% and 34% of
  total terminalling and storage revenue for the&#160;third quarter of 2008 and
  the fourth quarter of 2008, respectively.&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  addition, as a result of new third-party crude oil transportation contracts and
  reduced commitments of usage by the Private Company under the Throughput
  Agreement, we have increased our third-party gathering and transportation
  revenue from approximately $5.0 million, or approximately 21% of total gathering
  and transportation revenue during the second quarter of 2008, to approximately
  $10.9 million and $13.9 million, or approximately 51% and 86% of total gathering
  and transportation revenue for the&#160;third quarter of 2008 and the fourth
  quarter of 2008, respectively.&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  significant majority of the increase in third party revenues results from an
  increase in third-party crude oil services provided and a corresponding decrease
  in the Private Company&#8217;s crude oil services provided due to the termination of
  the monthly contract minimum revenues under the Throughput Agreement&#160;in
  September 2008.&#160; Average rates for the new third-party crude oil
  terminalling and storage and transportation and gathering contracts are
  comparable with those previously received from the Private Company.&#160;
  However, the volumes being terminalled, stored, transported and gathered have
  decreased as compared to periods prior to the Bankruptcy Filings, which has
  negatively impacted total revenues.&#160; As an example, fourth quarter total
  revenues are approximately $9.2 million less than&#160;second quarter&#160;2008
  total revenues, in each case excluding fuel surcharge revenues related to fuel
  and power consumed to operate our liquid asphalt cement storage tanks. Pursuant
  to the Settlement Agreement, we have agreed to waive the fees pursuant to the
  Terminalling Agreement for the month of March 2009, and we will enter into a new
  terminalling agreement with the Private Company for periods thereafter (see
  "-Settlement with the Private Company").</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any delay
  or failure of the Private Company to make its required payments under the
  Throughput Agreement or the Terminalling Agreement, to the extent such revenues
  have not been replaced by third party revenues,&#160;will have a material
  adverse effect on our financial condition and results of
  operations.&#160;&#160;For example, we have reserved as a doubtful account the
  receivable balance owed by the Private Company for services provided to the
  Private Company during the first 21 days of July, totaling $9.6 million, as such
  amounts are considered prepetition debt in the Bankruptcy Filings.&#160;&#160;In
  addition, the Private Company may reject the contracts it has with us, including
  the Throughput Agreement and the Terminalling Agreement, as part of its
  bankruptcy proceedings, which ultimately would have the effect of breaching such
  contracts.&#160;&#160;Such action would have a material adverse effect on our
  financial condition and results of operations.&#160;&#160;Any transaction
  relating to a rejection, assignment or modification of the Throughput Agreement
  or the Terminalling Agreement would require approval of the Bankruptcy
  Court.&#160;&#160;On February 6, 2009, the Private Company filed a motion in the
  Bankruptcy Court requesting approval of the sale of its asphalt related assets,
  or in the event of an unsuccessful auction, the rejection of the Terminalling
  Agreement and the winding down of its asphalt business (see &#8220;&#8212;Asphalt
  Operations&#8221; below).&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, among other things, the Private Company will reject
  the Terminalling Agreement and the Throughput Agreement as part of the
  Bankruptcy Cases.&#160;&#160;In addition, pursuant to the Settlement Agreement,
  we will enter into a new throughput agreement and a new terminalling agreement
  with the Private Company pursuant to which we will provide certain crude oil
  gathering, transportation, terminalling and storage services and asphalt
  terminalling and storage services to the Private Company.&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We expect
  revenues from services provided to the Private Company under this new throughput
  agreement and new terminalling agreement to be substantially less than prior
  revenues from services provided to the Private Company as the new agreements
  will be based upon actual volumes gathered, transported, terminalled and stored
  instead of certain minimum volumes and may be at reduced rates when compared to
  the Throughput Agreement and Terminalling Agreement.&#160; </font>There can be
  no assurance&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated</font> (see
  &#8220;&#8212;Settlement with the Private Company&#8221;).</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have
  entered into various crude oil transportation and storage contracts with third
  parties and are continuing to pursue additional contracts with third parties;
  however, there can be no assurance that any of these additional efforts will be
  successful.&#160;&#160;In addition, certain third parties may be less likely to
  enter into business transactions with us due to the Bankruptcy
  Filings.&#160;&#160;The Private Company may also choose to curtail its
  operations or liquidate its assets as part of the Bankruptcy
  Cases.&#160;&#160;As a result, unless we are able to generate additional third
  party revenues, we may experience lower volume in&#160;our system which could
  have a material adverse effect on&#160;our results of operations and cash
  flows.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
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          </div>
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        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Asphalt
  Operations</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
  provide liquid asphalt cement terminalling and storage services to the Private
  Company.&#160;&#160;The Private Company processes, distributes and markets
  liquid asphalt cement and finished asphalt products to third party
  customers.&#160;&#160;Pursuant to the Amended Omnibus Agreement, the Private
  Company has agreed, so long as the Terminalling Agreement is in effect, not to
  engage in, or acquire or invest in an entity that engages in, the business of
  terminalling and storing liquid asphalt cement within 50 miles of our liquid
  asphalt cement facilities and we have agreed, so long as the Terminalling
  Agreement is in effect, not to engage in, or acquire or invest in an entity that
  engages in, the business of processing, marketing and distributing liquid
  asphalt cement and finished asphalt products within 50 miles of our liquid
  asphalt cement facilities.&#160;&#160;As a result, subject to certain
  exceptions, we are contractually prohibited from marketing or distributing
  liquid asphalt cement directly to third party customers while the Terminalling
  Agreement is in effect.&#160;&#160;In addition, the Private Company is
  responsible for obtaining and maintaining all environmental and other permits
  related to our liquid asphalt cement operations.&#160;&#160;The Private
  Company&#8217;s failure to obtain, renew or maintain compliance under these permits
  may materially adversely effect our operations.&#160;&#160;We are currently
  evaluating strategic alternatives for our asphalt operations, including the
  possibility of entering into storage contracts with third party customers and
  the sale of all or a portion of our assets.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  asphalt industry in the United States is characterized by a high degree of
  seasonality. Much of this seasonality is due to the impact that weather
  conditions have on road construction schedules, particularly in cold weather
  states. Refineries produce liquid asphalt cement year round, but the peak
  asphalt demand season is during the warm weather months when most of the road
  construction activity in the United States takes place. As a result, liquid
  asphalt cement is typically purchased from refineries at low prices in the low
  demand winter months and then processed and sold at higher prices in the peak
  summer demand season.&#160;&#160;Although there remains some liquid asphalt
  cement in our asphalt storage tanks that was not sold during the summer of 2008,
  the Private Company, as of the date of the filing of this report, has not
  purchased any significant volumes of additional liquid asphalt cement during the
  recent winter months.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
  February 6, 2009, the Private Company filed a motion in the Bankruptcy Court
  requesting approval of the sale of its asphalt related assets.&#160;&#160;There
  is significant uncertainty as to our revenues related to our asphalt assets and
  there is substantial risk that our asphalt assets may be idle during 2009 and
  subsequent years, which would adversely effect our financial condition and
  results of operations.&#160;&#160;Without revenues from our asphalt assets, we
  may be unable to meet the covenants, including the minimum liquidity and minimum
  receipt requirements, under our Forbearance Agreement (as defined
  below)&#160;with our senior secured lenders pursuant to which such lenders have
  agreed to forbear from exercising their rights and remedies arising from the
  events of default under our credit agreement.&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, we will&#160;receive the Private Company&#8217;s asphalt
  assets that are connected to our asphalt assets&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(unless
  the Private Company executes a definitive agreement to sell substantially all of
  its asphalt assets or business as a going concern to a third-party purchaser and
  we enter into a terminalling and storage agreement with such
  purchaser).</font>&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The&#160;transfer
  of the Private Company&#8217;s asphalt assets in connection with the Settlement
  Agreement will provide us with outbound logistics for our existing asphalt
  assets and, therefore, will allow us to better provide asphalt terminalling and
  storage services.&#160;&#160;In addition, the Private Company will reject the
  Terminalling Agreement as part of the Bankruptcy Cases and we and the Private
  Company will enter into a new terminalling agreement pursuant to which we will
  provide asphalt terminalling and storage services for the Private Company &#8217;s
  remaining asphalt inventory.&#160; </font>There can be no assurance&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated</font> (see
  &#8220;&#8212;Settlement with the Private Company&#8221;).&#160;&#160;Even if we acquire such
  asphalt assets, we may not be able to enter into agreements to provide
  terminalling and storage services for such assets.&#160;&#160;In
  addition,</font> if the&#160;Private Company sells its asphalt assets to a third
  party, we&#160;will&#160;need to negotiate a new terminalling and storage
  contract with the purchaser of such assets and such agreement may not be on as
  favorable terms as the Terminalling Agreement.&#160;&#160;Any significant
  decrease in the amount of revenues that we receive from our liquid asphalt
  cement terminalling and storage operations could have a material adverse effect
  on our cash flows, financial condition and results of operations.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Operation
  and General Administration of the Partnership</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As is the
  case with many publicly traded partnerships, we do not directly employ any
  persons responsible for managing or operating our business or for providing
  services relating to day-to-day business affairs.&#160;&#160;Pursuant to the
  Amended Omnibus Agreement, the Private Company operated our assets and performed
  other administrative services for us such as accounting, legal, regulatory,
  development, finance, land and engineering.&#160;&#160;Due to the Change of
  Control, the Private Company is no longer obligated to operate our assets or
  perform other administrative services pursuant to the Amended Omnibus
  Agreement.&#160;&#160;The Private Company agreed to continue providing such
  services until at least November 30, 2008 pursuant to the
  Order.&#160;&#160;While the Private Company&#160;has continued to provide such
  services as of the date of the filing of this report, there can be no assurance
  that it will continue to provide such services to us or that we could replace
  any of these services if the Private Company stops providing them.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, the Private Company will reject the Amended Omnibus
  Agreement as part of the Bankruptcy Cases and we will enter into a shared
  services agreement with the Private Company pursuant to which the Private
  Company will provide certain operational services for us.&#160;&#160;There can
  be no assurance <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated </font>(see
  &#8220;&#8212;Settlement with the Private Company&#8221;).&#160;&#160;In addition, if the terms of
  this shared services agreement are not as favorable as the terms under the
  Amended Omnibus Agreement,&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">it could
  have a material adverse effect on our business, financial condition, results of
  operations, cash flows, ability to make distributions to our unitholders, the
  trading price of our common units and our ability to conduct our business.&#160;
  </font></font>If the Private Company stops providing these services,&#160;we may
  incur increased costs to replace these services and our financial results may
  suffer.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  addition, in connection with the Bankruptcy Cases, the Private Company may
  reduce a substantial number of its employees or some of the Private Company&#8217;s
  employees may choose to terminate their employment with the Private Company,
  some of whom may currently be providing general and administrative and operating
  services to us.&#160;&#160;Any reductions in critical personnel who provide
  services to us and any increased costs to replace such personnel could have a
  material adverse effect on our ability to conduct our business and our results
  of operations.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Change
  of Control of the Private Company</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
  December 15, 2008, Red Apple Group Inc. (&#8220;Red Apple&#8221;), which is chaired by John
  Catsimatidis, announced that it controls five of the nine seats on the
  management committee of the general partner of the Private Company and therefore
  effectively controls the Private Company (the &#8220;Private Company Change of
  Control&#8221;).&#160;&#160;Mr. Catsimatidis has indicated that Red Apple does not
  intend to liquidate the Private Company and that it plans on filing a new
  reorganization plan for the Private Company with the Bankruptcy
  Court.&#160;&#160;As of the date of the filing of this report, Red Apple has not
  filed a reorganization plan.&#160;&#160;There is no assurance that any
  reorganization plan will be submitted by Red Apple or that if a reorganization
  plan is submitted by Red Apple that the Bankruptcy Court will approve such plan
  or that continued performance by the Private Company under the Throughput
  Agreement or the Terminalling Agreement will be part of any such
  plan.&#160;&#160;In addition, the Private Company Change of Control may lead to
  additional uncertainty regarding our continued relationship with the Private
  Company.&#160;&#160;We are unsure&#160;what impact, if any,&#160;the Private
  Company Change of Control will have on us and our operations.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Intellectual
  Property Rights</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Amended Omnibus Agreement, we licensed the use of certain trade names and
  marks, including the name &#8220;SemGroup.&#8221;&#160;&#160;This license terminated
  automatically upon the Change of Control.&#160;&#160;The termination of the
  explicit rights to use this intellectual property under the Amended Omnibus
  Agreement may adversely effect our ability to operate or grow our business and
  our results of operations.&#160;&#160;In addition, we may be subject to claims
  for trademark or other intellectual property infringement due to our continued
  use of these intellectual property rights.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, we will enter into a license agreement with the
  Private Company pursuant to which we may use the trade names and mark until
  December 31, 2009.&#160;&#160;In addition, pursuant to the Settlement Agreement,
  the Private Company has agreed to waive all claims relating to infringement of
  the trade names and mark prior to the date of this license
  agreement.&#160;&#160;There can be no assurance <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated </font>(see
  &#8220;&#8212;Settlement with the Private Company&#8221;).</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Credit
  Facility</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
  described below under &#8220;&#8212;Liquidity and Capital Resources&#8221;, certain events of
  default have occurred and are continuing under our credit agreement, which
  prohibit us from borrowing under our credit facility to fund working capital
  needs or to pay distributions to its unitholders, among other
  things.&#160;&#160;No cure periods are applicable to the existing events of
  default.&#160;&#160;These events of default have not been waived and are
  continuing under our credit agreement.&#160;&#160;In addition, the Private
  Company&#8217;s action related to the Bankruptcy Cases as well as the Private
  Company&#8217;s liquidity issues and any corresponding impact may result in additional
  events of default under the Partnership&#8217;s credit agreement.&#160;&#160;We and
  the requisite lenders under our credit facility have entered into a Forbearance
  Agreement (as defined below) relating to the existing events of default under
  the credit agreement.&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Waiver of
  the existing events of default under our credit agreement is a condition
  precedent to the effectiveness of the Settlement Agreement.&#160;&#160;There can
  be no assurance that our lenders will provide such a waiver and that the
  transactions contemplated by the Settlement Agreement will be consummated.&#160;
  </font>See &#8220;&#8212;Liquidity and Capital Resources&#8221; for more information regarding our
  credit facility, the events of default thereunder and the Forbearance Agreement
  (as defined below).</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Distributions
  to Our Unitholders</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We did
  not make a distribution to our common unitholders, subordinated unitholders or
  general partner attributable to the results of operations for the quarters ended
  June 30, 2008, September 30, 2008, or December 31, 2008&#160;due to the existing
  events of default under our credit agreement and the uncertainty of our future
  cash flows relating to the Bankruptcy Filings.&#160;&#160;Our unitholders will
  be required to pay taxes on their share of our taxable income even though they
  did not receive a cash distribution for the quarters ended June 30, 2008,
  September 30, 2008 or December 31, 2008.&#160;&#160;In addition, we do not
  currently expect to make a distribution relating to the&#160;first quarter of
  2009.&#160;&#160;We distributed approximately $14.3 million to our unitholders
  for the three months ended March 31, 2008.&#160;&#160;If the events of default
  under our credit agreement are not waived by our lenders or our business
  operations and prospects do not improve, we may not make quarterly distributions
  to our unitholders in the future.</font></div>
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        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
  partnership agreement provides that, during the subordination period, which we
  are currently in, our common units have the right to receive distributions of
  available cash from operating surplus in an amount equal to the minimum
  quarterly distribution of $0.3125 per common unit per quarter, plus any
  arrearages in the payment of the minimum quarterly distribution on the common
  units from prior quarters, before any distributions of available cash from
  operating surplus may be made on the subordinated units.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Nasdaq
  Delisting</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
  at the opening of business on February 20, 2009, our common units were delisted
  from the Nasdaq Global Market (&#8220;Nasdaq&#8221;) due to our failure to timely file this
  Quarterly Report as well as our Quarterly Report on Form 10-Q for the quarter
  ended September 30, 2008.&#160;&#160;Our common units are currently traded on
  the Pink Sheets, which is an over-the-counter securities market, under the
  symbol SGLP.PK.&#160;&#160;The fact that our common units are not listed on a
  national securities exchange is likely to make trading such common units more
  difficult for broker-dealers, unitholders and investors, potentially leading to
  further declines in the price of our common units.&#160;&#160;In addition, it
  may limit the number of institutional and other investors that will consider
  investing in our common units, which may have an adverse effect on the price of
  our common units.&#160;&#160;It may also make it more difficult for us to raise
  capital in the future.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
  continue to work to become compliant with our SEC reporting obligations and
  intend to promptly seek the relisting of our common units on Nasdaq as soon as
  practicable after we have become compliant with such reporting
  obligations.&#160;&#160;However, there can be no assurances that we will be able
  to relist our common units on Nasdaq or any other national securities exchange
  and we may face a lengthy process to relist our common units if we are able to
  relist them at all.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Claims
  Against and By The Private Company&#8217;s Bankruptcy Estate</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
  currently have claims against the Private Company&#8217;s bankruptcy estate due to
  amounts owed us by the Private Company prior to the Bankruptcy
  Filings.&#160;&#160;In addition, if the Private Company fails to make its
  payments under the Throughput Agreement or the Terminalling Agreement or
  otherwise fails to perform under the contracts we have with the Private Company,
  we may have additional potential claims against the Private Company&#8217;s bankruptcy
  estate.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
  claims asserted by us against the Private Company in the Bankruptcy Cases will
  be subject to the claim allowance procedure provided in the Bankruptcy Code and
  Bankruptcy Rules.&#160;&#160;If an objection is filed, the Bankruptcy Court will
  determine the extent to which any such claim that has been objected to is
  allowed and the priority of such claims.&#160;&#160;We are uncertain regarding
  the ultimate amount of damages for breaches of contract or other claims that we
  will be able to establish in the Bankruptcy Cases and we cannot predict the
  amounts, if any, that we will collect or the timing of any such collection, but
  such losses could be substantial and could have a material adverse effect on the
  Partnership's ability to conduct its business and its results of
  operations.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Pursuant to
  the Settlement Agreement, the Private Company will reject the Terminalling
  Agreement and the Throughput Agreement.&#160;&#160;We will have a $35 million
  unsecured claim relating to rejection of the Terminalling Agreement in the
  Bankruptcy Cases.&#160;&#160;In addition, we will have a $20 million unsecured
  claim against the Private Company relating to rejection of the Throughput
  Agreement.&#160;&#160;There can be no assurance <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated </font>(see
  &#8220;&#8212;Settlement with the Private Company&#8221;).</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  addition, under bankruptcy law, a debtor-in-possession, such as the Private
  Company, may seek to avoid certain prepetition transfers if such transfers were
  to insiders and occurred within one year before the bankruptcy filing for
  insiders.&#160;&#160;For purposes of avoidance under bankruptcy law, title to
  real property that is perfected more than thirty days after the transfer is
  deemed to have been transferred as of the date of perfection.&#160;&#160;In
  addition, a debtor-in-possession, such as the Private Company, may seek to avoid
  prepetition transfers of real property that were not perfected as of the
  bankruptcy filing date against a hypothetical bona fide purchaser of such real
  property.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Through a
  series of transactions we acquired certain real property from the Private
  Company during the one-year period preceding the Bankruptcy
  Filings.&#160;&#160;Deeds to approximately 27 asphalt facilities transferred to
  us by the Private Company as part of the Acquired Asphalt Assets either were not
  recorded within thirty days of such transfer or were not recorded as of the
  Bankruptcy Filings.&#160;&#160;In addition, a deed to the Acquired Storage
  Assets was not recorded as of the Bankruptcy Filings.&#160;&#160;Although we
  have title to such properties, the Private Company may in its Bankruptcy Cases
  seek to avoid the transfers of these properties.&#160;&#160;We have defenses
  against these actions based upon bankruptcy law and state law and intend to
  vigorously defend against any such action.&#160;&#160;However, there can be no
  assurance regarding the outcome of any potential litigation.&#160;&#160;If the
  Private Company succeeds in such litigation, we may be required to return the
  affected properties to the Private Company or pay an amount equal to the value
  of such properties, which would have a material adverse effect on our business,
  financial condition, results of operations, cash flows, ability to make
  distributions to our unitholders, the trading price of the our common units and
  our ability to conduct our business.&#160;&#160;We would then have unsecured
  claims in the Bankruptcy Court for the amounts originally paid for such
  properties.&#160;&#160;&#160;An estimate of possible loss, if any, or the range
  of loss cannot be made and therefore we have not accrued a loss contingency
  related to this matter. However, the ultimate resolution of this matter could
  have a material adverse effect on our business, financial condition, results of
  operations, cash flows, ability to make distributions to our unitholders, the
  trading price of the our common units and our ability to conduct our
  business.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, the Private Company will release certain of its
  claims related to this real property including the real property claims
  discussed above (see &#8220;&#8212;Settlement with the Private Company&#8221;).&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There may
  be additional claims that are not released by the Settlement
  Agreement.&#160;&#160;In addition, </font>there can be no assurance <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be
  consummated</font>.</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Governmental
  Investigations</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July
  21, 2008, we received a letter from the staff of the SEC giving notice that the
  SEC is conducting an inquiry relating to us and requesting, among other things,
  that we voluntarily preserve, retain and produce to the SEC certain documents
  and information relating primarily to our disclosures respecting the Private
  Company&#8217;s liquidity issues, which were the subject of our July 17, 2008 press
  release.&#160;&#160;On October 22, 2008, we received a subpoena from the SEC
  pursuant to a formal order of investigation requesting certain documents
  relating to, among other things, the Private Company&#8217;s liquidity
  issues.&#160;&#160;We have been cooperating, and intend to continue cooperating,
  with the SEC in its investigation.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July
  23, 2008, we and our general partner each received a Grand Jury subpoena from
  the United States Attorney&#8217;s Office in Oklahoma City, Oklahoma, requiring, among
  other things, that we and our general partner produce financial and other
  records related to our July 17, 2008 press release.&#160;&#160;We have been
  informed that the U.S. Attorneys&#8217; Offices for the Western District of Oklahoma
  and the Northern District of Oklahoma are in discussions regarding the
  subpoenas, and no date has been set for a response to the
  subpoenas.&#160;&#160;We and our general partner intend to cooperate fully with
  this investigation if and when it proceeds.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Securities
  Litigation</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Please
  see &#8220;Part II&#8212;Item I. Legal Proceedings&#8221; for a discussion of certain securities
  litigation to which we are a party.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Examiner</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On August
  12, 2008, a motion was filed by the United States Trustee asking the Bankruptcy
  Court to appoint an examiner to investigate the Private Company&#8217;s trading
  strategies as well as certain &#8220;insider transactions,&#8221; including the contribution
  of the crude oil assets to us in connection with our initial public offering,
  the sale of the asphalt assets to us in February 2008, the sale of the Eagle
  North Pipeline System to us in May 2008, the sale of certain crude oil storage
  assets to us in May 2008, and the entering into the Holdings Credit Agreements
  by SemGroup Holdings.&#160;&#160;On September 10, 2008, the Bankruptcy Court
  approved the appointment of an examiner, and on October 14, 2008, the United
  States Trustee appointed Louis J. Freeh, former director of the Federal Bureau
  of Investigation, as the examiner.&#160;&#160;The examiner is required to
  prepare and file a report summarizing the findings of his investigation by March
  24, 2009, unless the Bankruptcy Court extends that deadline.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We may
  incur additional costs in cooperating with this examiner.&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  addition, in connection with the Settlement Agreement, we and the Private
  Company will release certain claims relating to the contribution of assets to us
  in connection with our initial public offering and our acquisition of the
  Acquired Asphalt Assets, Acquired Pipeline Assets and Acquired Storage
  Assets.&#160;&#160;However, other claims that may be identified by the examiner
  will not be released in connection with the Settlement Agreement.&#160;
  I</font>f the examiner&#8217;s investigation results in an unfavorable outcome to us,
  such an investigation may prompt the filing of lawsuits by the Private Company&#8217;s
  bankruptcy estate representative to challenge or to seek to unwind transactions
  with us under the bankruptcy laws.&#160;&#160;Such litigation may be expensive
  and, if successful, would have a material adverse effect on our business,
  financial condition, results of operations, ability to make distributions to our
  unitholders and the trading price of our common units.</font></div>
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        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Internal
  Review</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
  previously announced, in July 2008 the Board created an internal review
  subcommittee of the Board comprised of directors who are independent of
  management and the Private Company to determine whether we participate in
  businesses other than as described in our filings with the SEC and to conduct
  investigations into other such specific items as are deemed to be appropriate by
  the subcommittee.&#160;&#160;The subcommittee retained independent legal counsel
  to assist it in its investigations.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline">The subcommittee has investigated a short-term financing
  transaction involving two subsidiaries of the Private Company.&#160;&#160;This
  transaction was identified as a potential source of concern in a whistleblower
  report made after the Private Company filed for bankruptcy.&#160;&#160;Although
  the transaction did not involve </font><font style="DISPLAY: inline">us or
  our</font><font style="DISPLAY: inline"> subsidiaries, it was investigated
  because it did involve certain senior executive officers of </font><font style="DISPLAY: inline">our</font><font style="DISPLAY: inline"> general partner
  who were also senior executive officers of the Private Company at the time of
  the transaction.&#160;&#160;Based upon its investigation, counsel for the
  subcommittee found that, subject to </font>the subcommittee&#8217;s lack of access to
  Private Company documents and electronic records and witnesses<font style="DISPLAY: inline">, although certain irregularities occurred in the
  transactions, the transaction did not appear to cause the relevant officers to
  understand or believe that the Private Company had a lack of liquidity that
  imperiled the Private Company&#8217;s ability to meet its obligations to </font><font style="DISPLAY: inline">us</font><font style="DISPLAY: inline"> and that certain
  aspects of the documentation of the transaction that were out of the ordinary
  did not call into question the integrity of any of the relevant
  officers.</font></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  subcommittee also investigated whether certain senior executive officers of our
  general partner who were also senior executive officers of the Private Company
  knew and understood, beginning as early as July 2007 and at various times
  thereafter, about a lack of liquidity at the Private Company that imperiled the
  Private Company&#8217;s ability to meet its obligations to us.&#160;&#160;Based upon
  this investigation, and subject to the subcommittee&#8217;s lack of access to Private
  Company documents and electronic records and witnesses, counsel for the
  subcommittee found that each of the officers had access to and reviewed Private
  Company financial information, including information regarding the Private
  Company&#8217;s commodity trading activities, from which they could have developed an
  understanding of the nature and significance of the trading activities that led
  to liquidity problems at the Private Company well before they say they
  did.&#160;&#160;While the officers each stated sincerely that they did not
  understand the nature or extent of the Private Company&#8217;s trading-related
  problems until the first week of July 2008 or later, objective evidence suggests
  that they showed at least some indifference to known or easily discoverable
  facts and that they failed to adhere to procedures under the Private Company&#8217;s
  Risk Management Policy created expressly to ensure that the Private Company&#8217;s
  trading activities were properly monitored.&#160;&#160;Nonetheless, counsel for
  the subcommittee was not persuaded by the documents and other evidence it was
  able to access that the officers in fact knew and understood that the Private
  Company&#8217;s liquidity or capital needs were a significant cause for alarm until,
  at the earliest, the second quarter of 2008.&#160;&#160;Moreover, while it
  appeared to counsel that the officers developed a growing awareness of the
  nature and severity of the Private Company&#8217;s liquidity issues over the second
  quarter of 2008, counsel was unable to identify with any more precision the
  specific level of concern or understanding these individuals had prior to July
  2008.&#160;&#160;<font style="DISPLAY: inline">While not within the scope of
  such counsel&#8217;s investigation, counsel was requested by the subcommittee to note
  any information that came to counsel&#8217;s attention during its investigation that
  suggested that the officers intended to deceive or mislead any third
  party.&#160;&#160;Subject to limitations described in its report,</font> no
  information came to counsel&#8217;s attention during its investigation that suggested
  to counsel that the officers intended to deceive or to mislead any third
  parties.&#160;&#160;In addition, in connection with the investigation, counsel
  for the subcommittee did not express any findings of intentional misconduct or
  fraud on the part of any officer or employee of us.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">After
  completion of the internal review, a plan was developed with the advice of the
  Audit Committee of the Board to further strengthen our processes and
  procedures.&#160;&#160;This plan includes, among other things, reevaluating
  executive officers and accounting and finance personnel <font style="DISPLAY: inline">(including a realignment of officers as described
  elsewhere in this report) </font>and hiring, as deemed necessary, additional
  accounting and finance personnel or consultants; reevaluating our internal audit
  function and determining whether to expand the duties and responsibilities of
  such group; evaluating the comprehensive training programs for all management
  personnel covering, among other things, compliance with controls and procedures,
  revising the reporting structure so that the Chief Financial Officer reports
  directly to the Audit Committee, and increasing the business and operational
  oversight role of the Audit Committee.</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Equity
  Awards and Employment Agreements</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Change of Control constituted a change of control under the Plan, which resulted
  in the early vesting of all awards under the Plan.&#160;&#160;As such, the
  phantom units awarded to Messrs. Kevin L. Foxx, Michael J. Brochetti, Alex G.
  Stallings, Peter L. Schwiering and Jerry A. Parsons in the amounts of 150,000
  units, 90,000 units, 75,000 units, 45,000 units and 20,000 units, respectively,
  are fully vested.&#160;&#160;&#160;The common units underlying such awards were
  issued to such individuals in August 2008.&#160;&#160;In addition, the 5,000
  restricted units awarded to each of Messrs. Billings, Kosnik and Bishop for
  their service as independent members of the Board are fully vested.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Change of Control also resulted in a change of control under the employment
  agreements of Messrs. Foxx, Brochetti, Stallings, Schwiering and
  Parsons.&#160;&#160;If within one year after the Change of Control any such
  officer is terminated by our general partner without Cause (as defined below) or
  such officer terminates the agreement for Good Reason (as defined below), he
  will be entitled to payment of any unpaid base salary and vested benefits under
  any incentive plans, a lump sum payment equal to 24 months of base salary and
  continued participation in the our general partner&#8217;s welfare benefit programs
  for one year after termination. Upon such an event, Messrs&#160;Foxx, Brochetti,
  Stallings, Schwiering and Parsons would be entitled to lump sum payments of
  $900,000, $600,000, $550,000, $500,000 and $500,000, respectively, in addition
  to continued participation in our general partner&#8217;s welfare benefit
  programs.&#160;&#160;As of the date of the filing of this report, none of these
  officers is entitled to these benefits as none of them has been terminated by
  our general partner without Cause or has terminated his agreement for Good
  Reason.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
  purposes of the employment agreements:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;Cause&#8221;
  means (i)&#160;conviction of the executive officer by a court of competent
  jurisdiction of any felony or a crime involving moral turpitude; (ii)&#160;the
  executive officer&#8217;s willful and intentional failure or willful intentional
  refusal to follow reasonable and lawful instructions of the Board;
  (iii)&#160;the executive officer&#8217;s material breach or default in the performance
  of his obligations under the employment agreement; or (iv)&#160;the executive
  officer&#8217;s act of misappropriation, embezzlement, intentional fraud or similar
  conduct involving our general partner.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;Good
  Reason&#8221; means (i)&#160;a material reduction in the executive officer&#8217;s base
  salary; (ii)&#160;a material diminution of the executive officer&#8217;s duties,
  authority or responsibilities as in effect immediately prior to such diminution;
  or (iii)&#160;the relocation of the named executive officer&#8217;s principal work
  location to a location more than 50 miles from its current
  location.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Internal
  Controls</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SemGroup
  Energy Partners G.P., L.L.C., our general partner, has sole responsibility for
  conducting our business and for managing our operations. Effective internal
  controls are necessary for our general partner, on our behalf, to provide
  reliable financial reports, prevent fraud and operate us successfully as a
  public company. If our general partner&#8217;s efforts to develop and maintain its
  internal controls are not successful, it is unable to maintain adequate controls
  over our financial processes and reporting in the future or it is unable to
  assist us in complying with our obligations under Section 404 of the
  Sarbanes-Oxley Act of 2002, our operating results could be harmed or we may fail
  to meet our reporting obligations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We and
  our general partner rely upon the Private Company for their personnel, including
  those related to designing and implementing internal controls and disclosure
  controls and procedures.&#160;&#160;Staff reductions by the Private Company or
  other departures by the Private Company&#8217;s employees that provide services to us
  could have a material adverse effect on internal controls and the effectiveness
  of disclosure controls and procedures.&#160;&#160;Ineffective internal controls
  could cause us to report inaccurate financial information or cause investors to
  lose confidence in our reported financial information, which would likely have a
  negative effect on the trading price of our common units.</font></div><br>
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          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Insurance</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We share
  some insurance policies, including our general liability policy, with the
  Private Company. These policies contain caps on the insurer&#8217;s maximum liability
  under the policy, and claims made by either the Private Company or us are
  applied against the caps and deductibles. The possibility exists that, in an
  event in we wish to make a claim under a shared insurance policy, our claim
  could be denied or only partially satisfied due to claims made by the Private
  Company against the policy cap. Further, where events occur that would entitle
  both the Private Company and us to benefits under these insurance policies, the
  full deductible may be borne by the first claimant under the policy. In
  addition, claims made by the Private Company could affect our premiums and our
  ability to obtain insurance in the future.&#160;&#160;The Bankruptcy Filings
  have had and may continue to have an adverse effect on our insurance premiums
  and coverage.&#160;&#160;Our premiums and ability to obtain insurance in the
  future could also be adversely impacted by the Bankruptcy Filings if the Private
  Company fails to renew any shared policies and we are required to purchase our
  own policy, cover any premiums currently being paid by the Private Company or if
  an insurance carrier increases the insurance premiums due to the Bankruptcy
  Filings.&#160;&#160;These increased costs could have a material adverse effect
  on our financial condition and results of operations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Taxation
  as a Corporation</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  anticipated after-tax economic benefit of an investment in our common units
  depends largely on us being treated as a partnership for federal income tax
  purposes.&#160;&#160;If less than 90% of the gross income of a publicly traded
  partnership, such as us, for any taxable year is &#8220;qualifying income&#8221; from
  sources such as the transportation, marketing (other than to end users), or
  processing of crude oil, natural gas or products thereof, interest, dividends or
  similar sources, that partnership will be taxable as a corporation under Section
  7704 of the Internal Revenue Code for federal income tax purposes for that
  taxable year and all subsequent years.&#160;&#160;In this regard, because the
  income we earn from the Throughput Agreement and the Terminalling Agreement with
  the Private Company is &#8220;qualifying income&#8221; any material reduction or elimination
  of that income, or any amendment to the Throughput Agreement or the Terminalling
  Agreement which changes the nature of the services provided or the income
  generated thereunder, may cause our remaining &#8220;qualifying income&#8221; to constitute
  less than 90% of our gross income.&#160;&#160;As a result, we could become
  taxable as a corporation for federal income tax purposes, unless we were to
  transfer the businesses that generate non-qualifying income to one or more
  subsidiaries taxed as corporations and pay entity level income taxes on such
  non-qualifying income.&#160;&#160;The IRS has not provided any ruling to us on
  this matter.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If we
  were treated as a corporation for federal income tax purposes, then we would pay
  federal income tax on our income at the corporate tax rate, which is currently a
  maximum of 35%, and would likely pay state income tax at varying
  rates.&#160;&#160;Distributions would generally be taxed again to unitholders as
  corporate distributions and none of our income, gains, losses, deductions or
  credits would flow through to our unitholders.&#160;&#160;Because a tax would be
  imposed upon us as an entity, cash available for distribution to our unitholders
  would be substantially reduced.&#160;&#160;Treatment of us as a corporation
  would result in a material reduction in the anticipated cash flow and after-tax
  return to unitholders and thus would likely result in a substantial reduction in
  the value of our common units.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Other
  Effects</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Bankruptcy Filings have had and may in the future continue to have a number of
  other impacts on our business and management.&#160;&#160;In the Amended Omnibus
  Agreement and other agreements with the Private Company, the Private Company has
  agreed to indemnify us for certain environmental and other claims relating to
  the crude oil and liquid asphalt cement assets that have been contributed to
  us.&#160;&#160;Due to the Bankruptcy Filings, we may not be able to collect any
  amounts that would otherwise be payable under these indemnification provisions
  if such events were to occur.&#160; Pursuant to the Settlement Agreement, the
  Private Company will reject the Amended Omnibus Agreement including the
  indemnification provisions therein.&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are
  currently pursuing various strategic alternatives for our business and assets
  including the possibility of entering into additional storage contracts with
  third party customers and the sale of all or a portion of our
  assets.&#160;&#160;The uncertainty relating to the Bankruptcy Filings&#160;and
  the recent global market and economic conditions may make it more difficult to
  pursue merger opportunities or enter into storage contracts with third party
  customers.&#160;&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  addition, events related to the Bankruptcy Filings, the securities litigation
  and governmental investigations, and our efforts to enter into storage contracts
  with third party customers and pursue merger opportunities has resulted in
  increased expense beginning in the third quarter of 2008 due to the costs
  related to legal and financial advisors as well as other related
  costs.&#160;&#160;General and administrative expenses (exclusive of noncash
  compensation expense related to the vesting of the units under the Plan)
  increased by approximately $6.6 million and $7.4 million, or approximately 287%
  and 322%, to approximately $8.9 million for the third quarter of 2008 and $9.7
  million for the fourth quarter of 2008, respectively, compared to $2.3 million
  in the second quarter of 2008.&#160;&#160;We expect this increased level of
  general and administrative expenses to continue into 2009.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Items
  Impacting the Comparability of Our Financial Results</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
        are differences in the way our predecessor recorded revenues and the way
        we record revenues.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 72pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
        substantial portion of our revenues are derived from services provided to
        the crude oil purchasing, marketing and distribution operations of the
        Private Company pursuant to the Throughput Agreement. Under the Throughput
        Agreement, the Private Company pays us a fee for gathering,
        transportation, terminalling and storage services based on volume and
        throughput. In rendering these services, we do not take title to, or
        marketing responsibility for, the crude oil that we gather, transport,
        terminal or store and, therefore, we have minimal direct exposure to
        changes in crude oil prices.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 72pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
        Crude Oil Business had historically been a part of the integrated
        operations of the Private Company, and neither the Private Company nor our
        predecessor recorded revenue associated with the gathering,
        transportation, terminalling and storage services provided on an
        intercompany basis. The Private Company and our predecessor recognized
        only the costs associated with providing such services. As such, the
        revenues we receive under the Throughput Agreement are not reflected in
        the historical financial statements of our
    predecessor.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 72pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
        predecessor recognized revenues from third parties for (1)&#160;crude oil
        storage services, (2)&#160;crude oil transportation services and
        (3)&#160;crude oil producer field services. Although a substantial
        majority of our revenues are derived from services provided to the Private
        Company, we also recognize revenue for gathering, transportation,
        terminalling and storage services provided to third
      parties.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
        are differences in the way general and administrative expenses were
        allocated to our predecessor and the way we recognize general and
        administrative expenses.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 72pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">General
        and administrative expenses include office personnel and benefit expenses,
        costs related to our administration facilities, and insurance, accounting
        and legal expenses, including costs allocated by the Private Company for
        centralized general and administrative services performed by the Private
        Company. Such costs were allocated to our predecessor based on the nature
        of the respective expenses and its proportionate share of the Private
        Company&#8217;s head count, compensation expense, net revenues or square footage
        as appropriate.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 72pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
        are party to an Omnibus Agreement with the Private Company.&#160;&#160;The
        Omnibus Agreement was amended in connection with the purchase of the
        Acquired Asphalt Assets to, among other things, increase the fixed
        administrative fee payable under such agreement from $5.0 million per year
        to $7.0 million per year. Pursuant to the Amended Omnibus Agreement, we
        are required to pay our general partner and the Private Company this fixed
        administrative fee for the provision by our general partner and the
        Private Company of various general and administrative services to us for
        three years following the acquisition of our asphalt
        assets.&#160;&#160;Due to the Change of Control, the Private Company is no
        longer obligated to operate our assets or perform other administrative
        services pursuant to the Amended Omnibus Agreement.&#160;&#160;While the
        Private Company has continued to provide such services as of the date of
        the filing of this report, there can be no assurance that it will continue
        to provide such services to us or that we could replace any of these
        services if the Private Company stops providing them.&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
        to the Settlement Agreement, the Private Company will reject the Amended
        Omnibus Agreement as part of the Bankruptcy Cases and we will enter into a
        shared services agreement with the Private Company pursuant to which the
        Private Company will provide certain operational services for
        us.&#160;&#160;There can be no assurance&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that
        the conditions to effectiveness in the Settlement Agreement will be
        completed and that the transactions contemplated thereby will be
        consummated</font> (see &#8220;Item 2. Management&#8217;s Discussion and Analysis of
        Financial Condition and Results of Operations&#8212;Settlement with the Private
        Company&#8221;).&#160;&#160;In addition, if the terms of this shared services
        agreement are not as favorable as the terms under the Amended Omnibus
        Agreement, <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">it
        could have a material adverse effect on our business, financial condition,
        results of operations, cash flows, ability to make distributions to our
        unitholders, the trading price of our common units and our ability to
        conduct our business</font>.&#160; </font>For a more complete description
        of the Omnibus Agreement, see &#8220;Item 13&#8212;Certain Relationships and Related
        Party Transactions, and Director Independence&#8212;Agreements Related to Our
        Acquisition of the Asphalt Assets &#8212;Amended Omnibus Agreement&#8221; in our 2007
        Form 10-K.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 72pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
        incur incremental general and administrative expenses as a result of being
        a publicly traded limited partnership, including costs associated with
        annual and quarterly reports to unitholders, financial statement audit,
        tax return and Schedule K-1 preparation and distribution, investor
        relations activities, registrar and transfer agent fees, incremental
        director and officer liability insurance costs and independent director
        compensation. These incremental general and administrative expenditures
        are not reflected in the historical financial statements of our
        predecessor.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">43</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">With
        the exception of capital lease obligations and prepaid insurance, no
        working capital was contributed to us in connection with our initial
        public offering.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
        predecessor had $31.2 million in debt payable to the Private Company which
        was not assumed by us in our initial public offering. We entered into a
        $250.0 million five-year credit facility and borrowed $137.5 million under
        that facility and used net proceeds of approximately $38.7 million from
        the issuance of 1,875,000 common units pursuant to the underwriters&#8217;
        exercise of their over-allotment option in our initial public offering to
        reduce outstanding borrowings under our credit facility.&#160;&#160;In
        connection with the purchase of our Acquired Asphalt Assets, we amended
        our credit facility to increase our borrowing capacity to $600.0
        million.&#160;&#160;This borrowing capacity has subsequently been reduced
        as described in &#8220;&#8212;Liquidity and Capital Resources.&#8221;&#160;&#160;Our credit
        facility matures in July 2012.&#160;&#160;As of March 13, 2008,&#160;we
        had $448.1 million in outstanding borrowings under our credit facility
        (including $198.1 million under our revolving credit facility and $250.0
        million under our term loan facility) with an aggregate unused credit
        availability of approximately $21.9 million under the credit
        facility.&#160;&#160;Events of default have occurred and are continuing
        under our credit agreement, which prohibit our ability to borrow under the
        credit facility.&#160;&#160;Please see &#8220;&#8212;Liquidity and Capital
        Resources.&#8221;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Results
  of Operations</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The table
  below summarizes the financial results of the Partnership for the three and six
  months ended June 30, 2007 and 2008.&#160;&#160;These financial results reflect
  an allowance for doubtful accounts of $0.9 million related to amounts
  collectible from the Private Company as of June 30, 2008, which are considered
  prepetition debt in the Bankruptcy Filings.<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>These financial results
  also reflect a $0.4 million allowance for doubtful accounts related to amounts
  collectible from third parties as of June 30, 2008.&#160;&#160;The allowance
  related to amounts collectible from third parties was established as a result of
  certain third party customers netting amounts due them from the Private Company
  with amounts due to us.&#160;&#160;Other than the allowance for doubtful
  accounts described above, the results of operations for the three and six months
  ended June 30, 2008 included in this quarterly report were not affected by the
  Bankruptcy Filings and related events.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due to
  the events related to the Bankruptcy Filings, including uncertainties related to
  future revenues and cash flows, we do not expect our financial results for the
  three and six months ended June 30, 2008 to be indicative of our future
  financial results.&#160;&#160;For example, since the Bankruptcy Filings we have
  experienced increased general and administrative expenses related to the costs
  of legal and financial advisors and increased interest expense related to the
  events of default under our credit facility and the associated Forbearance
  Agreement (as defined below)&#160;and amendments thereto.&#160;&#160;In
  addition, the volumes being terminalled, stored, transported and gathered have
  decreased as compared to periods prior to the Bankruptcy Filings, which has
  negatively impacted total revenues.&#160; As an example, fourth quarter total
  revenues are approximately $9.2 million less than&#160;second quarter&#160;2008
  total revenues, in each case excluding fuel surcharge revenues related to fuel
  and power consumed to operate our liquid asphalt cement storage tanks.&#160; As
  of the date of the filing of this report, we continue to collect the minimum
  revenues from the Private Company under the Terminalling Agreement for
  terminalling and storage services provided for liquid asphalt
  cement.&#160;&#160;Our future total revenues may be further impacted if the
  Private Company rejects the Terminalling Agreement or otherwise fails to make
  the minimum payments under the Terminalling Agreement.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, the Private Company will reject the Terminalling
  Agreement and the Throughput Agreement as part of the Bankruptcy Cases and we
  will&#160;receive the Private Company&#8217;s asphalt assets that are connected to our
  asphalt assets.&#160;&#160;In addition, pursuant to the Settlement Agreement, we
  will enter into a new throughput agreement with the Private Company pursuant to
  which we will provide certain crude oil gathering, transportation, terminalling
  and storage services to the Private Company.&#160;&#160;There can be no
  assurance&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated</font> (see &#8220;Item
  2. Management&#8217;s Discussion and Analysis of Financial Condition and Results of
  Operations&#8212;Settlement with the Private Company&#8221;).</font></font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">44</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div>
          <div align="left">
            <div align="center">
              <div align="center">
                <table cellpadding="0" cellspacing="0" width="100%">
                    <tr>
                      <td align="left" valign="bottom" width="30%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="6" valign="bottom" width="20%" style="BORDER-BOTTOM: black 2px solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Three
        Months ended June 30,</font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="6" valign="bottom" width="20%" style="BORDER-BOTTOM: black 2px solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Six
        Months ended June 30,</font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr>
                      <td align="left" valign="bottom" width="30%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr>
                      <td align="left" valign="bottom" width="30%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="14" valign="bottom" width="42%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(in
        thousands)</font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr>
                      <td align="left" valign="bottom" width="30%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Service
        revenues:</font></div>
                      </td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" colspan="2" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" colspan="2" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" colspan="2" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" colspan="2" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" colspan="2" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" colspan="2" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" colspan="2" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" colspan="2" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                      <td align="left" valign="bottom" width="30%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Third
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                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,409</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,013</font></td>
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                    <tr bgcolor="white">
                      <td align="left" valign="bottom" width="30%" style="PADDING-BOTTOM: 2px">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Related
        party</font></div>
                      </td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr bgcolor="#cceeff">
                      <td align="left" valign="bottom" width="30%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        terminalling and storage</font></div>
                      </td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,409</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31,281</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7,145</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">48,892</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr bgcolor="white">
                      <td align="left" valign="bottom" width="30%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Gathering
        and transportation revenues:</font></div>
                      </td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr bgcolor="#cceeff">
                      <td align="left" valign="bottom" width="30%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Third
        party</font></div>
                      </td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6,055</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5,045</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">11,830</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9,638</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                    <tr bgcolor="white">
                      <td align="left" valign="bottom" width="30%" style="PADDING-BOTTOM: 2px">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Related
        party</font></div>
                      </td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18,950</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                    <tr bgcolor="#cceeff">
                      <td align="left" valign="bottom" width="30%" style="PADDING-BOTTOM: 2px">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
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                      </td>
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                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                      <td align="left" valign="bottom" width="30%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                    <tr bgcolor="white">
                      <td align="left" valign="bottom" width="30%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
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                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Terminalling
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                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,197</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12,088</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2,330</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17,096</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                    <tr bgcolor="white">
                      <td align="left" valign="bottom" width="30%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Gathering
        and transportation</font></div>
                      </td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">16,844</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17,417</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31,828</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">34,675</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                    <tr bgcolor="#cceeff">
                      <td align="left" valign="bottom" width="30%" style="PADDING-BOTTOM: 2px">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Allowance
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                      </td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,266</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1,266</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                    <tr bgcolor="white">
                      <td align="left" valign="bottom" width="30%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
        operating expenses</font></div>
                      </td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18,041</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">30,771</font></td>
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                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">34,158</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">53,037</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr bgcolor="#cceeff">
                      <td align="left" valign="bottom" width="30%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                      <td align="left" valign="bottom" width="30%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                    <tr bgcolor="white">
                      <td align="left" valign="bottom" width="30%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
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                      </td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(23,550</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                    <tr bgcolor="#cceeff">
                      <td align="left" valign="bottom" width="30%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interest
        (income) expense</font></div>
                      </td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">516</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(225</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">945</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4,864</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr bgcolor="white">
                      <td align="left" valign="bottom" width="30%" style="PADDING-BOTTOM: 2px">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Income
        tax expense</font></div>
                      </td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">77</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">168</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr bgcolor="#cceeff">
                      <td align="left" valign="bottom" width="30%" style="PADDING-BOTTOM: 4px">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
        income (loss)</font></div>
                      </td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                      <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(12,211</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                      <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">21,596</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                      <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(24,495</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                      <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                      <td align="right" valign="bottom" width="8%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31,354</font></td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                </table>
              </div>
            </div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Three
  Months Ended June 30, 2008 Compared to the Three Months Ended June 30,
  2007</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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  revenues were $55.3 million for the three months ended June 30, 2008 compared to
  $10.5 million for the three months ended June 30, 2007, an increase of $44.8
  million, or 427%. Service revenues include revenues from terminalling and
  storage services and gathering and transportation services. Terminalling and
  storage revenues increased by $26.9 million to $31.3 million for the three
  months ended June 30, 2008 compared to $4.4 million for the three months ended
  June 30, 2007, primarily due to revenues generated under both the Throughput
  Agreement (revenues of $9.9 million for the three months ended June 30, 2008)
  and the Terminalling Agreement (revenues of $20.4 million for the three months
  ended June 30, 2008) which were not present in the three months ended June 30,
  2007. Our predecessor historically did not account for these services which were
  provided on an intercompany basis.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
  gathering and transportation services revenue increased by $17.9 million to
  $24.0 million for the three months ended June 30, 2008 compared to $6.1 million
  for the three months ended June 30, 2007. This increase is primarily due to
  revenues generated under the Throughput Agreement subsequent to the closing of
  our initial public offering. Our predecessor historically did not account for
  these services which were provided on an intercompany basis.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Operating expenses</font>.&#160;
  Operating expenses increased by $12.9 million, or 72%, to $30.9 million for the
  three months ended June 30, 2008 compared to $18.0 million for the three months
  ended June 30, 2007. Our fuel expenses increased by $5.5 million to $8.4 million
  for the three months ended June 30, 2008 compared to $2.9 million for the three
  months ended June 30, 2007. The increase in our fuel costs is attributable to
  the increase in number of transport trucks we operated for the respective
  periods and the rising price of diesel fuel during the comparative
  periods.&#160;&#160;&#160;The Throughput Agreement provides for a fuel
  surcharge, recorded in revenue, which offsets increases in fuel expenses related
  to either rising diesel prices or force majeure events.&#160;&#160;Also included
  in fuel expense for the three months ended June 30, 2008 is $4.9 million of fuel
  and power expense associated with the boiler systems utilized to heat our liquid
  asphalt cement storage tanks that were acquired in February
  2008.&#160;&#160;Under the Terminalling Agreement, this component of fuel
  expense is passed through to the Private Company.&#160;&#160;As a result of this
  agreement, we have recorded $4.9 million in fuel surcharge revenues in relation
  to fuel and power consumed to operate our liquid asphalt cement storage tanks
  for the three months ended June 30, 2008.</font></div><br>
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        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Compensation
  expense increased by $1.5 million to $7.4 million for the three months ended
  June 30, 2008 primarily as a result of the purchase of our Acquired Asphalt
  Assets in February 2008.&#160;&#160;Our repair and maintenance expenses
  decreased by $0.8 million to $1.9 million for the three months ended June 30,
  2008 compared to $2.7 million for the three months ended June 30, 2007,
  primarily due to the timing of routine maintenance in our gathering and
  transportation segment. Lease expense related to crude oil tanker trucks
  increased by $0.3 million to $0.7 million for the three months ended June 30,
  2008. This increase is attributable to the replacement of crude oil transport
  vehicles that were historically financed through capital leases.&#160;&#160;As a
  result of the growth in our property and equipment, our property taxes increased
  by $0.7 million to $0.9 million for the three months ended June 30, 2008
  compared to $0.2 million for the three months ended June 30, 2007.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Depreciation
  expense increased by $3.6 million to $5.7 million for the three months ended
  June 30, 2008 compared to $2.1 million for the three months ended June 30, 2007,
  primarily as a result of capital expenditures in our terminalling and storage
  segment and as a result of the purchase of our Acquired Asphalt Assets in
  February 2008.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The three
  months ended June 30, 2008 include an allowance for doubtful accounts for
  amounts due from the Private Company on June 30, 2008 of $0.9 million, which are
  considered prepetition debt in the Bankruptcy Cases.&#160;&#160;These amounts
  have been reserved due to the uncertainty of collecting prepetition amounts from
  the Private Company in the Bankruptcy Filings.&#160;&#160;The three months ended
  June 30, 2008 also reflect a $0.4 million allowance for doubtful accounts
  related to amounts due from third parties as of June 30, 2008.&#160;&#160;The
  allowance related to amounts due from third parties was established as a result
  of certain third party customers netting amounts due them from the Private
  Company with amounts due to us.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Outside
  services expenses increased by $0.7 million to $1.3 million for the three months
  ended June 30, 2008 compared to $0.6 million for the three months ended June 30,
  2007, primarily due to an increase in third party transportation costs resulting
  from increased volumes gathered in our gathering and transportation
  segment.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Included
  in operating expenses for the three months ended June 30, 2007 are $0.5 million
  in costs associated with the clean up of a crude oil leak in relation to a
  thirty-five mile pipeline located in Conroe, Texas.&#160;&#160;This gathering
  line was sold by the Private Company on April 30, 2007, and the Private Company
  assumed any future obligations associated with the aforementioned
  leak.&#160;&#160;As of June 30, 2008 the clean up process was
  complete.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">General and administrative
  expenses</font>.&#160;General and administrative expenses decreased by $1.0
  million, or 24%, to $3.1 million for the three months ended June 30, 2008
  compared to $4.1 million for the three months ended June 30, 2007. The decrease
  was primarily the result of entering into the Omnibus Agreement with the Private
  Company in July 2007, pursuant to which we pay a fixed monthly fee of $0.4
  million for general and administrative support services provided by the Private
  Company. The Omnibus Agreement was amended in February 2008 in connection with
  the purchase of our Acquired Asphalt Assets which increased our fixed monthly
  fee to $0.6 million.&#160;&#160;Also included in general and administrative
  expenses for the three months ended June 30, 2008 is $0.7 million in non-cash,
  equity-based compensation recognized under our long-term incentive plan. The
  long-term incentive plan did not exist during the three months ended June 30,
  2007.&#160;&#160;Due to the change of control of our general partner related to
  the Private Company's liquidity issues, all awards outstanding under our
  long-term incentive plan as of June 30, 2008 vested on July 18, 2008.&#160; As a
  result, general and administrative expenses for the three months ended September
  30, 2008 will&#160;include $18.0 million in non-cash, equity-based compensation
  recognized under our long-term incentive plan.&#160; General and administrative
  expenses (exclusive of noncash compensation expense related to the vesting of
  the units under the Plan) increased by approximately $6.6 million and $7.4
  million, or approximately 287% and 322%, to approximately $8.9 million for the
  third quarter of 2008 and $9.7 million for the fourth quarter of 2008,
  respectively, compared to $2.3 million in the second quarter of
  2008.&#160;&#160;We expect this increased level of general and administrative
  expenses to continue into 2009.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Interest (income)
  expense</font>.&#160; Interest (income) expense represents interest on capital
  lease obligations and long-term borrowings under our credit facility offset by
  the fair value of our interest rate swap agreements. Interest expense decreased
  by $0.7 million to $0.2 million interest income for the three months ended June
  30, 2008 compared to $0.5 million interest expense for the three months ended
  June 30, 2007. The decrease was primarily due to the two interest rate swap
  agreements entered into during the third quarter of 2007 and the three
  additional interest rate swap agreements entered into in February 2008, the fair
  value accounting resulted in $4.9 million in interest income for the three
  months ended June 30, 2008.&#160;&#160;Due to events related to the Bankruptcy
  Filings, all of these interest rate swap positions were&#160;terminated in the
  third quarter of 2008, and we have recorded a $1.5 million liability as of
  September 30, 2008 with respect to these positions.&#160;&#160;This decrease was
  offset due to an increase in the average long-term borrowings outstanding during
  the three months ended June 30, 2008 compared to the three months ended June 30,
  2007, which accounted for approximately $4.0 million of an increase in interest
  expense, and is a reflection of borrowings under our credit
  facility.</font></div><br>
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        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Six
  Months Ended June&#160;30, 2008 Compared to the Six Months Ended June&#160;30,
  2007</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Service revenues.
  </font>&#160;Service revenues were $95.5 million for the six months ended
  June&#160;30, 2008 compared to $19.1 million for the six months ended
  June&#160;30, 2007, an increase of $76.4 million, or 400%. Service revenues
  include revenues from terminalling and storage services and gathering and
  transportation services. Terminalling and storage revenues increased by $41.8
  million to $48.9 million for the six months ended June&#160;30, 2008 compared to
  $7.1 million for the six months ended June&#160;30, 2007, primarily due to
  revenues generated under both the Throughput Agreement (revenues of $19.8
  million for the six months ended June 30, 2008) and the Terminalling Agreement
  (revenues of $28.1 million for the six months ended June 30, 2008) which were
  not present in the six months ended June 30, 2007. Our predecessor historically
  did not account for these services which were provided on an intercompany
  basis.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
  gathering and transportation services revenue increased by $34.6 million to
  $46.6 million for the six months ended June 30, 2008 compared to $12.0 million
  for the six months ended June 30, 2007. This increase is primarily due to
  revenues generated under the Throughput Agreement subsequent to the closing of
  our initial public offering. Our predecessor historically did not account for
  these services which were provided on an intercompany basis.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Operating expenses</font>.&#160;
  Operating expenses increased by $18.9 million, or 55%, to $53.1 million for the
  six months ended June 30, 2008 compared to $34.2 million for the six months
  ended June 30, 2007. Our fuel expenses increased by $7.6 million to $12.5
  million for the six months ended June 30, 2008 compared to $4.9 million for the
  six months ended June 30, 2007. The increase in our fuel costs is attributable
  to the increase in number of transport trucks we operated for the respective
  periods and the rising price of diesel fuel during the comparative
  periods.&#160;&#160;&#160;The Throughput Agreement provides for a fuel
  surcharge, recorded in revenue, which offsets increases in fuel expenses related
  to either rising diesel prices or force majeure events.&#160;&#160;Also included
  in fuel expense for the six months ended June 30, 2008 is $6.1 million of fuel
  and power expense associated with the boiler systems utilized to heat our liquid
  asphalt cement storage tanks that were acquired in February
  2008.&#160;&#160;Under the Terminalling Agreement, this component of fuel
  expense is passed through to the Private Company.&#160;&#160;As a result of this
  agreement, we have recorded $6.1 million in fuel surcharge revenues in relation
  to fuel and power consumed to operate our liquid asphalt cement storage tanks
  for the six months ended June 30, 2008.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Compensation
  expense increased by $2.9 million to $14.3 million for the six months ended June
  30, 2008 primarily as a result of the purchase of our Acquired Asphalt Assets in
  February 2008.&#160;&#160;Our repair and maintenance expenses decreased by $0.7
  million to $3.8 million for the six months ended June 30, 2008 compared to $4.5
  million for the six months ended June 30, 2007, primarily due to the timing of
  routine maintenance in our gathering and transportation segment. Lease expense
  related to crude oil tanker trucks increased by $0.6 million to $1.2 million for
  the six months ended June 30, 2008. This increase is attributable to the
  replacement of crude oil transport vehicles that were historically financed
  through capital leases.&#160;&#160;As a result of the growth in our property and
  equipment, our property taxes increased by $1.0 million to $1.4 million for the
  six months ended June 30, 2008 compared to $0.4 million for the six months ended
  June 30, 2007.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Depreciation
  expense increased by $5.4 million to $9.6 million for the six months ended June
  30, 2008 compared to $4.2 million for the six months ended June 30, 2007,
  primarily as a result of capital expenditures in our terminalling and storage
  segment and as a result of the purchase of our Acquired Asphalt Assets in
  February 2008.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The six
  months ended June 30, 2008 include an allowance for doubtful accounts for
  amounts due from the Private Company on June 30, 2008 of $0.9 million, which are
  considered prepetition debt in the Bankruptcy Filings.&#160;&#160;These amounts
  have been reserved due to the uncertainty of collecting prepetition amounts from
  the Private Company in the Bankruptcy Filings.&#160;&#160;The six months ended
  June 30, 2008 also reflect a $0.4 million allowance for doubtful accounts
  related to amounts due from third parties as of June 30, 2008.&#160;&#160;The
  allowance related to amounts due from third parties was established as a result
  of certain third party customers netting amounts due them from the Private
  Company with amounts due to us.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Outside
  services expenses increased by $1.4 million to $2.4 million for the six months
  ended June 30, 2008 compared to $1.0 million for the six months ended June 30,
  2007, primarily due to an increase in third party transportation costs resulting
  from increased volumes gathered in our gathering and transportation
  segment.&#160;&#160;In addition, our utilities expenses increased by $0.4
  million to $1.3 million for the six months ended June 30, 2008 compared to $0.9
  million for the six months ended June 30, 2007, primarily due to growth in our
  gathering and transportation segment.</font></div><br>
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        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Included
  in operating expenses for the six months ended June 30, 2007 are $1.6 million in
  costs associated with the clean up of a crude oil leak in relation to a
  thirty-five mile pipeline located in Conroe, Texas.&#160;&#160;This gathering
  line was sold by the Private Company on April 30, 2007, and the Private Company
  assumed any future obligations associated with the aforementioned
  leak.&#160;&#160;As of June 30, 2008 the clean up process was
  complete.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">General and administrative
  expenses</font>.&#160;General and administrative expenses decreased by $2.4
  million, or 28%, to $6.1 million for the six months ended June&#160;30, 2008
  compared to $8.5 million for the six months ended June&#160;30, 2007. The
  decrease was primarily the result of entering into the Omnibus Agreement with
  the Private Company in July 2007, pursuant to which we pay a fixed monthly fee
  of $0.4 million for general and administrative support services provided by the
  Private Company. The Omnibus Agreement was amended in February 2008 in
  connection with the purchase of our Acquired Asphalt Assets which increased our
  fixed monthly fee to $0.6 million.&#160;&#160;Also included in general and
  administrative expenses for the six months ended June 30, 2008 is $1.4 million
  in non-cash, equity-based compensation recognized under our long-term incentive
  plan. The long-term incentive plan did not exist during the six months ended
  June 30, 2007.&#160;&#160;Due to the change of control of our general partner
  related to the Private Company's liquidity issues, all awards outstanding under
  our long-term incentive plan as of June 30, 2008 vested on July 18, 2008.&#160;
  As a result, general and administrative expenses for the three months ended
  September 30, 2008 will include $18.0 million in non-cash, equity-based
  compensation recognized under our long-term incentive plan.&#160; General and
  administrative expenses (exclusive of noncash compensation expense related to
  the vesting of the units under the Plan) increased by approximately $6.6 million
  and $7.4 million, or approximately 287% and 322%, to approximately $8.9 million
  for the third quarter of 2008 and $9.7 million for the fourth quarter of 2008,
  respectively, compared to $2.3 million in the second quarter of
  2008.&#160;&#160;We expect this increased level of general and administrative
  expenses to continue into 2009.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Interest (income)
  expense</font>.&#160; Interest (income) expense represents interest on capital
  lease obligations and long-term borrowings under our credit facility offset by
  the fair value of our interest rate swap agreements.&#160;&#160;Interest expense
  increased by $4.0 million to $4.9 million for the six months ended June 30, 2008
  compared to $0.9 million for the six months ended June 30, 2007. The increase
  was primarily due to an increase in the average long-term borrowings outstanding
  during the six months ended June 30, 2008 compared to the six months ended June
  30, 2007, which accounted for approximately $6.5 million of an increase in
  interest expense, and is a reflection of borrowings under our new credit
  facility.&#160;&#160;This was offset by the two interest rate swap agreements
  entered into during the third quarter of 2007 and the three additional interest
  rate swap agreements entered into in February 2008, the fair value accounting
  resulted in $2.7 million in interest income for the six months ended June 30,
  2008.&#160;&#160;Due to events related to the Bankruptcy Filings, all of these
  interest rate swap positions were&#160;terminated in the third quarter of 2008,
  and we have recorded a $1.5 million liability as of September 30, 2008 with
  respect to these positions.</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effects
  of Inflation</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In recent
  years, inflation has been modest and has not had a material impact upon the
  results of the Partnership&#8217;s operations.</font></div><br>
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        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Off
  Balance Sheet Arrangements</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We do not
  have any off-balance sheet financing arrangements.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Liquidity
  and Capital Resources</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Cash
  Flows and Capital Expenditures</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cash
  generated from operations and borrowings under our credit facility have
  historically been the primary sources of our liquidity. As discussed below,
  events of default have occurred and continue to exist under our credit agreement
  and we therefore cannot borrow under our credit facility or make distributions
  to our unitholders.&#160;&#160;Due to the events related to the Bankruptcy
  Filings, including uncertainties related to future revenues and cash flows as
  well as the inability to borrow under our credit facility or make distributions
  to our unitholders, we do not expect our historical cash flows to be indicative
  of our future financial cash flows.&#160;&#160;We are operating on cash flows
  received from operations and from a $25 million borrowing under our credit
  facility on July 8, 2008 prior to the occurrence of the events of
  default.&#160;&#160;If we are unable to sustain our sources of revenue
  generation and reestablish our relationships within the credit markets, this
  cash position will not be sufficient to operate our business over the
  long-term.&#160;&#160;As of March 13, 2009, we have approximately $33.9 million
  of cash that we are using to operate our business.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Historically,
  our predecessor&#8217;s sources of liquidity included cash generated from operations
  and funding from the Private Company.&#160;&#160;The following table summarizes
  our sources and uses of cash for the six months ended June 30, 2007 and
  2008:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">
        <div>
          <div align="left">
            <div align="center">
              <div align="center">
                <table cellpadding="0" cellspacing="0" width="100%">
                    <tr>
                      <td valign="bottom" width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="6" valign="bottom" width="22%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Six
        Months Ended</font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr>
                      <td valign="bottom" width="40%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="6" valign="bottom" width="22%" style="BORDER-BOTTOM: black 2px solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">June
        30,</font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr>
                      <td valign="bottom" width="40%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="2" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr>
                      <td valign="bottom" width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                      <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td colspan="6" valign="bottom" width="22%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(in
        thousands)</font></div>
                      </td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr bgcolor="#cceeff">
                      <td align="left" valign="bottom" width="40%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
        cash provided by (used in) operating activities</font></div>
                      </td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(21.9</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">51.0</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                    <tr bgcolor="white">
                      <td align="left" valign="bottom" width="40%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
        cash used in investing activities</font></div>
                      </td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(14.9</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(517.8</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
                    </tr>
                    <tr bgcolor="#cceeff">
                      <td align="left" valign="bottom" width="40%">
                        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
        cash provided by financing activities</font></div>
                      </td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">36.8</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                      <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">467.1</font></td>
                      <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                    </tr>
                </table>
              </div>
            </div>
          </div>
        </div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Operating
  Activities</font>.&#160;Net cash provided by operating activities was $51.0
  million for the six months ended June 30, 2008 as compared to the $21.9 million
  used in operating activities for the six months ended June 30,
  2007.&#160;&#160;The increase in net cash provided by operating activities is
  primarily due to a $55.8 million increase in our net income for the six months
  ended June 30, 2008 compared to the six months ended June 30,
  2007.&#160;&#160;In addition, cash provided by our operating activities
  increased due to a $5.4 million increase in depreciation and amortization, a
  $1.3 million increase in bad debt expense, and an increase of $11.8 million in
  cash provided by changes in working capital.&#160;&#160;The increase was
  slightly offset by the change in our unrealized gain related to interest rate
  swap agreements of $2.7 million.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Investing
  Activities</font>.&#160;Net cash used in investing activities was $517.8 million
  for the six months ended June 30, 2008 compared to $14.9 million for the six
  months ended June 30, 2007. This increase is primarily attributable to the
  purchase of our Acquired Asphalt Assets in February 2008 for approximately $380
  million, our purchase of our Acquired Storage Assets in May 2008 for
  approximately $90 million, and our purchase of our Acquired Pipeline Assets in
  May 2008 for approximately $45 million.&#160;&#160;The increase due to the above
  mentioned purchases were offset by a reduction in capital expenditures primarily
  resulting from the timing of construction projects in our terminalling and
  storage segment.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Financing
  Activities</font>.&#160;Net cash provided by financing activities was $467.1
  million for the six months ended June 30, 2008 as compared to $36.8 million for
  the six months ended June 30, 2007.&#160;&#160;Net cash provided by financing
  activities for the six months ended June 30, 2008 is primarily comprised of net
  borrowings under our credit facility of $332.3 million and proceeds from the
  February 2008 public offering, net of offering fees, of $161.2 million, and is
  offset by distributions paid of $23.7 million for the six months ended June 30,
  2008.&#160;&#160;Prior to our initial public offering our net cash provided by
  financing activities primarily comprised of capital contributions received from
  the Private Company.&#160;&#160;The capital contributions served to fund our
  working capital needs and both maintenance and expansion capital expenditure
  projects that are reflected in net cash used in investing activities for the six
  months ended June 30, 2007.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">49</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  Liquidity and Capital Resources</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cash flow
  from operations and our credit facility are our primary sources of liquidity. At
  June 30, 2008, we had approximately $178.1 million of availability under our
  revolving credit facility.&#160;&#160;This availability has been reduced to
  approximately $21.9 million as of the date of filing this report due to the
  existence of events of default under the credit agreement and entering into the
  associated Forbearance Agreement (as defined below).&#160;&#160;Usage of our
  revolving credit facility is subject to ongoing compliance with covenants.
  Events of default have occurred and are continuing under our credit agreement,
  which prohibit us from borrowing under the credit facility to fund working
  capital needs or to pay distributions to our unitholders, among other
  things.&#160;&#160;As a result, we are operating on cash flows received from
  operations and from a $25 million borrowing under our credit facility on July 8,
  2008 prior to the occurrence of the events of default. If we are unable to
  sustain our sources of revenue generation and reestablish our relationships
  within the credit markets, this cash position will not be sufficient to operate
  our business over the long-term.&#160;&#160;As of March 13, 2009, we have
  approximately $33.9&#160;million of cash that we are using to operate our
  business.&#160;&#160;&#160;Historically, we have derived a substantial majority
  of our revenues from services provided to the Private Company, and as such, our
  liquidity&#160;was affected by the liquidity and credit risk of the Private
  Company.&#160;&#160;The Bankruptcy Filings have had a significant impact upon
  our liquidity and financing alternatives and the events and uncertainties
  related to the Bankruptcy Filings as described herein provide for substantial
  doubt about our ability to continue as a going concern.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Capital Requirements</font>. Our
  operations are capital intensive, requiring significant investment to maintain
  and upgrade existing operations. Our capital requirements consist of the
  following:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">maintenance
        capital expenditures, which are capital expenditures made to maintain the
        existing integrity and operating capacity of our assets and related cash
        flows further extending the useful lives of the assets;
    and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">expansion
        capital expenditures, which are capital expenditures made to expand or to
        replace partially or fully depreciated assets or to expand the operating
        capacity or revenue of existing or new assets, whether through
        construction, acquisition or
  modification.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;No
  assurance can be given that we will not be required to restrict our operations
  because of possible limitations on our ability to obtain financing for our
  maintenance capital expenditures and our expansion capital expenditures due to
  the existing events of default under our credit agreement and the uncertainty
  related to the Bankruptcy Filings.&#160;&#160;For example, due to the Bankruptcy
  Filing discussed below, we have suspended capital expenditures related to
  Acquired Pipeline Assets and are evaluating future use of such
  pipeline.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Our Ability to Grow Depends on Our
  Ability to Access External Expansion Capital</font>. Our partnership agreement
  provides that we distribute all of our available cash to our unitholders.
  Available cash is reduced by cash reserves established by our general partner to
  provide for the proper conduct of our business (including for future capital
  expenditures) and to comply with the provisions of our credit facility. However,
  we expect that we will continue to rely primarily upon external financing
  sources, including commercial bank borrowings and the issuance of debt and
  equity securities, rather than cash reserves established by our general partner,
  to fund our acquisitions and expansion capital expenditures that we may make in
  the future.&#160;&#160;We do not expect to make acquisitions or expansion
  capital expenditures while events of default exist under the credit
  agreement.&#160;&#160;To the extent we are unable to finance growth externally
  and we are unwilling to establish cash reserves to fund future acquisitions, our
  cash distribution policy will significantly impair our ability to grow. In
  addition, because we distribute all of our available cash, we may not grow as
  quickly as businesses that reinvest their available cash to expand ongoing
  operations.&#160;&#160;Due to the current events of default that exist under the
  credit agreement, we are prohibited from making distributions of available cash
  to our unitholders and will continue to be prohibited from making any such
  distributions as long as any such events of default exist.&#160;&#160;To the
  extent we issue additional units in connection with any acquisitions or
  expansion capital expenditures, the payment of distributions on those additional
  units may increase the risk that we will be unable to maintain or increase our
  per unit distribution level, which in turn may impact the available cash that we
  have to distribute on each unit. There are no limitations in our partnership
  agreement on our ability to issue additional units, including units ranking
  senior to the common units.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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          </div>
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        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Description of Credit
  Facility</font>.&#160;In July 2007 we entered into a $250.0 million five-year
  credit facility with a syndicate of financial institutions. In connection with
  our acquisition of our asphalt assets, we amended this credit facility to
  increase the total amount we may borrow to $600.0 million. Our amended credit
  facility includes a revolving credit facility and a term loan facility and will
  mature on July&#160;20, 2012.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  credit facility is available for general partnership purposes, including working
  capital, capital expenditures, distributions and repayment of indebtedness that
  is assumed in connection with acquisitions.&#160;&#160;Events of default have
  occurred and are continuing under our credit agreement.&#160;&#160;In addition,
  the Private Company&#8217;s actions related to the Bankruptcy Filings as well as the
  Private Company&#8217;s liquidity issues and any corresponding impact upon us may
  result in additional events of default under our credit agreement.&#160;&#160;No
  cure periods are applicable to these existing events of
  default.&#160;&#160;These events of default have not been waived and are
  continuing under our credit agreement.&#160;&#160;Due to the existing events of
  default under our credit agreement, we are not able to borrow under its credit
  facility to fund working capital needs or for other purposes.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
  on September 18, 2008, we and the requisite lenders under our credit facility
  entered into a Forbearance Agreement and Amendment to Credit Agreement (the
  "Forbearance Agreement") under which the lenders agreed, subject to specified
  limitations and conditions, to forbear from exercising their rights and remedies
  arising from the events of default described above and other defaults or events
  of default described therein for the period commencing on September 18, 2008 and
  ending on the earliest of (i) December 11, 2008, (ii) the occurrence of any
  default or event of default under the credit agreement other than certain
  defaults and events of default indicated in the Forbearance Agreement,&#160;or
  (iii) our failure to comply with any of the terms of the Forbearance Agreement
  (the &#8220;Forbearance Period&#8221;).&#160;&#160;On December 11, 2008, the lenders agreed
  to extend the Forbearance Period until December 18, 2008 pursuant to a First
  Amendment to Forbearance Agreement and Amendment to Credit Agreement (the &#8220;First
  Amendment&#8221;), and on December 18, 2008, the lenders agreed to extend the
  Forbearance Period until March 18, 2009 pursuant to a Second Amendment to
  Forbearance Agreement and Amendment Credit Agreement (the "Second
  Amendment").</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;On March 18,
  2009, we and the requisite lenders entered into the Third Amendment to
  Forbearance Agreement and Amendment to Credit Agreement (the &#8220;Third Amendment&#8221;),
  dated as of March 17, 2009.&#160;&#160;The Third Amendment extends the
  Forbearance Period until the earliest of (i) April 8, 2009, (ii) the occurrence
  of any default or event of default under the credit agreement other than certain
  defaults and events of default indicated in the Forbearance Agreement, as
  amended by the First Amendment, the Second Amendment and the Third
  Amendment,&#160;or (iii) our failure to comply with any of the terms of the
  Forbearance Agreement, as amended by the First Amendment, the Second Amendment
  and the Third Amendment (the &#8220;Extended Forbearance Period&#8221;).&#160;&#160;We are
  working with our lenders to obtain a waiver of the events of default under our
  credit agreement in connection with the transactions related to the Settlement
  Agreement however, there can be no assurance that such a waiver will be
  obtained.&#160;&#160;&#160;&#160;</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior to
  the execution of the Forbearance Agreement, the credit agreement was comprised
  of a $350 million revolving credit facility and a $250 million term loan
  facility.&#160;&#160;The Forbearance Agreement permanently reduced our revolving
  credit facility under the credit agreement from $350 million to $300 million and
  prohibited us from borrowing additional funds under our revolving credit
  facility during the Forbearance Period.&#160;&#160;&#160;Under the Forbearance
  Agreement, we agreed to pay the lenders executing the Forbearance Agreement a
  fee equal to 0.25% of the aggregate commitments under the credit agreement after
  giving affect to the above described commitment reduction.&#160;&#160;The Second
  Amendment further permanently reduced our revolving credit facility under the
  credit agreement from $300 million to $220 million.&#160; The Third Amendment
  prohibits us from borrowing additional funds under our revolving credit facility
  during the Extended Forbearance Period.&#160;&#160;In addition, under the Second
  Amendment, we agreed to pay the lenders executing the Second Amendment a fee
  equal to 0.375% of the aggregate commitments under the credit agreement after
  the above described commitment reduction.&#160;&#160;As of March 13, 2009, we
  had $448.1 million in outstanding borrowings under our credit facility
  (including $198.1 million under its revolving credit facility and $250 million
  under its term loan facility) with an aggregate unused credit availability of
  approximately $21.9 million under our credit facility.&#160;&#160;As described
  above, we are prohibited from borrowing additional funds under our credit
  agreement during the Extended Forbearance Period.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior to
  the events of default, indebtedness under the credit agreement bore interest at
  our option, at either (i)&#160;the higher of the administrative agent&#8217;s prime
  rate or the federal funds rate plus 0.5%, plus an applicable margin that ranges
  from 0.50% to 1.75%, depending on our total leverage ratio and senior secured
  leverage ratio, or (ii)&#160;LIBOR plus an applicable margin that ranges from
  1.50% to 2.75%, depending upon our total leverage ratio and senior secured
  leverage ratio.&#160;&#160;During the Forbearance Period indebtedness under the
  credit agreement bore interest at our option, at either (i)&#160;the
  administrative agent&#8217;s prime rate or the federal funds rate plus 0.50%, plus an
  applicable margin that ranges from 2.75% to 3.75%, depending upon our total
  leverage ratio, or (ii)&#160;LIBOR plus an applicable margin that ranges from
  4.25% to 5.25%, depending upon our total leverage ratio.&#160;&#160;Pursuant to
  the Second Amendment, commencing on December 12, 2008, indebtedness under the
  credit agreement bears interest at our option, at either (i)&#160;the
  administrative agent&#8217;s prime rate or the federal funds rate plus 5.0% per annum,
  with a prime rate or federal funds rate floor of 4.0% per annum, or
  (ii)&#160;LIBOR plus 6.0% per annum, with a LIBOR floor of 3.0% per
  annum.&#160;&#160;During the three months ended June 30, 2008, the weighted
  average interest rate incurred by us was 4.62% resulting in interest expense of
  approximately $4.3 million.&#160;&#160;During the three months ended December
  31, 2008, the weighted average interest rate incurred by us was <font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7.72</font><font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">%</font>
  resulting in interest expense of approximately <font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$8.9</font></font></font></font>
  million.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under the
  Forbearance Agreement, as amended by the First Amendment, the Second Amendment,
  and the Third Amendment, the lender&#8217;s forbearance is subject to certain
  conditions as described therein, including, among other items, periodic
  deliverables and minimum liquidity, minimum receipts and maximum disbursement
  requirements.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under the
  credit agreement, we are subject to certain limitations, including limitations
  on our ability to grant liens, incur additional indebtedness, engage in a
  merger, consolidation or dissolution, enter into transactions with affiliates,
  sell or otherwise dispose of our assets, businesses and operations, materially
  alter the character of its business, and make acquisitions, investments and
  capital expenditures. Under the terms of the Forbearance Agreement, as amended
  by the First Amendment, the Second Amendment, and the Third Amendment, and due
  to the current events of default that exist under the credit agreement, we are
  prohibited from making distributions of available cash to our unitholders and
  will continue to be prohibited from making any such distributions as long as any
  such events of default exist.&#160;&#160;The credit agreement requires us to
  maintain a leverage ratio (the ratio of our consolidated funded indebtedness to
  our consolidated adjusted EBITDA, in each case as defined in the credit
  agreement), determined as of the last day of each<font style="DISPLAY: inline; FONT-SIZE: 10pt">&#160;</font>quarter for the
  four-quarter period ending on the date of determination, of not more than 5.00
  to 1.00 and, on a temporary basis, from the date of the consummation of certain
  acquisitions until the last day of the third consecutive fiscal quarter
  following such acquisitions, not more than 5.50 to 1.00; provided, that after
  the issuance of senior unsecured notes, the leverage ratio limitation will be
  modified by a requirement that we maintain a senior secured leverage ratio of
  not more than 4.00 to 1.00 and a total leverage ratio of not more than 5.50 to
  1.00, subject to temporary increases of the senior secured leverage ratio to not
  more than 4.50 to 1.00 and the total leverage ratio of not more than 6.00 to
  1.00 following the consummation of certain acquisitions as described above. As
  of June 30, 2008 and December 31, 2008, our leverage ratio was 3.97 to 1.00
  and&#160;4.82 to 1.00, respectively.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt">The credit agreement also requires us
  to maintain an interest coverage ratio (the ratio of our consolidated EBITDA to
  our consolidated interest expense, in each case as defined in the credit
  agreement) of not less than 2.75 to 1.00 determined as of the last day of
  each</font> <font style="DISPLAY: inline; FONT-SIZE: 10pt">quarter for the
  four-quarter period ending on the date of determination. As of June 30, 2008
  and&#160;December 31,&#160;2008, our interest coverage ratio was </font><font style="DISPLAY: inline; FONT-SIZE: 10pt">6.49</font><font style="DISPLAY: inline; FONT-SIZE: 10pt"> to 1.00 and 3.61&#160;to 1.00,
  respectively.</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  credit agreement specifies a number of events of default (many of which are
  subject to applicable cure periods), including, among others, failure to pay any
  principal when due or any interest or fees within three business days of the due
  date, failure to perform or otherwise comply with the covenants in the credit
  agreement, failure of any representation or warranty to be true and correct in
  any material respect, failure to pay debt, a change of control of us, our
  general partner or the Private Company, and other customary
  defaults.&#160;&#160;Because events of default exist under the credit agreement,
  the lenders are able to accelerate the maturity of the credit agreement and
  exercise other rights and remedies, including taking available cash in our bank
  accounts.&#160;&#160;The lenders have agreed to forbear from exercising such
  rights during the Extended Forbearance Period subject to certain limitations and
  conditions contained in the Forbearance Agreement, as amended by the First
  Amendment, the Second Amendment, and the Third Amendment.&#160;&#160;If we are
  unable to obtain further forbearance from our lenders or a permanent waiver of
  the events of default under our credit agreement, we may be forced to sell
  assets, make a bankruptcy filing or take other action that could have a material
  adverse effect on our business, the price of our common units and our results of
  operations.</font></div><br>
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        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Contractual
  Obligations</font>.&#160;In addition to the credit facility described above, we
  entered into the Amended Omnibus Agreement with the Private Company pursuant to
  which the Private Company provided all employees and support services necessary
  to run our business. The services included, without limitation, operations,
  marketing, maintenance and repair, legal, accounting, treasury, insurance
  administration and claims processing, risk management, health, safety and
  environmental, information technology, human resources, credit, payroll,
  internal audit, taxes and engineering. Due to the Change of Control, the Private
  Company is no longer obligated to provide these services pursuant to the Amended
  Omnibus Agreement.&#160;&#160;Pursuant to the Order entered by the Bankruptcy
  Court, the Private Company agreed to continue providing such services until
  November 30, 2008.&#160;&#160;&#160;While the Private Company has continued to
  provide such services as of the date of the filing of this report, there can be
  no assurance that it will continue to provide such services to us or that we
  could replace any of these services if the Private Company stops providing
  them.&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, the Private Company will reject the Amended Omnibus
  Agreement as part of the Bankruptcy Cases and we will enter into a shared
  services agreement with the Private Company pursuant to which the Private
  Company will provide certain operational services for us.&#160;&#160;There can
  be no assurance&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated</font> (see &#8220;Item
  2. Management&#8217;s Discussion and Analysis of Financial Condition and Results of
  Operations&#8212;Settlement with the Private Company&#8221;).&#160; </font>If the Private
  Company stops providing these services we may incur increased costs to replace
  these services and our financial results may suffer.&#160;&#160;As of June 30,
  2008, the Private Company was still obligated to provide services to us under
  the Amended Omnibus Agreement and we were obligated to pay our general partner
  and the Private Company a fixed administrative fee, in the amount of $7.0
  million per year, for the provision by our general partner and the Private
  Company of various general and administrative services pursuant to the Amended
  Omnibus Agreement.&#160;&#160;We are no longer obligated to pay this fee due to
  the termination of certain provisions of the Amended Omnibus Agreement in
  connection with the Change of Control.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A summary
  of our contractual cash obligations over the next several fiscal years, as of
  June 30, 2008, was as follows:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div>
          <div align="left">
            <div align="center">
              <div align="center">
                <div>
                  <div align="left">
                    <div align="center">
                      <div align="center">
                        <table cellpadding="0" cellspacing="0" width="100%">
                            <tr>
                              <td align="left" valign="bottom" width="25%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="18" valign="bottom" width="43%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Payments
        Due by Period</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr>
                              <td align="left" valign="bottom" width="25%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Contractual
        Obligations</font></div>
                              </td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="7%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="7%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Less
        than 1 year</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="7%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1-3
        years</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="7%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4-5
        years</font></div>
                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="2" valign="bottom" width="7%" style="BORDER-BOTTOM: black 2px solid">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">More
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                              </td>
                              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr>
                              <td align="left" valign="bottom" width="25%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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                              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td colspan="18" valign="bottom" width="43%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(in
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                              </td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="25%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Omnibus
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                              </td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2.9</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2.9</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="25%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Debt
        obligations (2)</font></div>
                              </td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">421.9</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">421.9</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="#cceeff">
                              <td align="left" valign="bottom" width="25%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Capital
        lease obligations</font></div>
                              </td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.7</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.1</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.6</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                            <tr bgcolor="white">
                              <td align="left" valign="bottom" width="25%">
                                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Operating
        lease obligations</font></div>
                              </td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">13.9</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3.9</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6.5</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3.2</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                              <td align="right" valign="bottom" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.3</font></td>
                              <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                            </tr>
                        </table>
                      </div>
                    </div>
                  </div>
                </div>
                <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
              </div>
            </div>
          </div>
        </div>
      </div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="3%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(1)</font></div>
              </td>
              <td align="left" valign="top" width="75%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">As
        of June 30, 2008, the Private Company was still obligated to provide
        services to us under the Amended Omnibus Agreement and we were obligated
        to pay our general partner and the Private Company a fixed administrative
        fee, in the amount of $7.0 million per year, for the provision by our
        general partner and the Private Company of various general and
        administrative services pursuant to the Amended Omnibus
        Agreement.&#160;&#160;Due to the Change of Control, the Private Company is
        no longer obligated to operate our assets or perform other administrative
        services pursuant to the Amended Omnibus Agreement.&#160;&#160;Pursuant to
        the Order entered by the Bankruptcy Court, the Private Company agreed to
        continue providing such services until November 30,
        2008.&#160;&#160;&#160;While the Private Company has continued to provide
        such services as of the date of the filing of this report, there can be no
        assurance that it will continue to provide such services to us or that we
        could replace any of these services if the Private Company stops providing
        them.&#160;For a description of this agreement, see Note 8 of the Notes to
        the Consolidated Financial Statements included in Item 1 of this Quarterly
        Report.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Pursuant
        to the Settlement Agreement, the Private Company will reject the Amended
        Omnibus Agreement as part of the Bankruptcy Cases and we will enter into a
        shared services agreement with the Private Company pursuant to which the
        Private Company will provide certain operational services for
        us.&#160;&#160;There can be no assurance&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">that
        the conditions to effectiveness in the Settlement Agreement will be
        completed and that the transactions contemplated thereby will be
        consummated</font> (see &#8220;Item 2. Management&#8217;s Discussion and Analysis of
        Financial Condition and Results of Operations&#8212;Settlement with the Private
        Company&#8221;).</font></font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="3%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(2)</font></div>
              </td>
              <td align="left" valign="top" width="75%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Represents
        required future principal repayments of borrowings under our credit
        facility, all of which is variable rate debt. All amounts outstanding
        under the credit facility mature in July 2012.&#160;&#160;See Note 4 of
        the Notes to the Consolidated Financial Statements included in Item 1 of
        this Quarterly Report.&#160;&#160;Events of default have occurred and are
        continuing under our credit agreement, which prohibit us from borrowing
        under the credit facility to fund working capital needs or to pay
        distributions to our unitholders, among other things.&#160;&#160;&#160;The
        lenders under such facility may, among other remedies, declare all
        outstanding amounts under the credit agreement immediately due and payable
        and exercise all other rights and remedies available to the lenders under
        the credit agreement and related loan documents.&#160;&#160;Due to these
        events of default and the corresponding rights of the lenders, the amount
        outstanding under the credit facility has been classified as a current
        obligation.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">53</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Recent
  Accounting Pronouncements</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
  information regarding recent accounting developments that may affect our future
  financial statements, see Note 12 of the Notes to the Consolidated Financial
  Statements included in Item 1 of this Quarterly Report.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Item&#160;3.</font></div>
              </td>
              <td align="left" valign="top" width="69%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a name="quant">Quantitative </a>and Qualitative Disclosures about Market
        Risk</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are
  exposed to market risk due to variable interest rates under our credit
  facility.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
  March 13, 2009 we had $448.1&#160;million outstanding under our credit facility
  that was subject to a variable interest rate.&#160;&#160;Interest rate swap
  agreements are used to manage a portion of the exposure related to changing
  interest rates by converting floating-rate debt to fixed-rate debt. In August
  2007, we entered into interest rate swap agreements with an aggregate notional
  value of $80.0 million that mature on August&#160;20, 2010. Under the terms of
  the interest rate swap agreements, we will pay fixed rates of 4.9% and will
  receive three-month LIBOR with quarterly settlement. The fair market value of
  the August 2007 interest rate swaps at June 30, 2008 was a liability of $2.5
  million.&#160;&#160;In March 2008, we entered into interest rate swap agreements
  with an aggregate notional value of $100.0 million that mature on March 31,
  2011.&#160;&#160;Under the terms of the interest rate swap agreements, we will
  pay fixed rates of 2.6% to 2.7% and will receive three-month LIBOR with
  quarterly settlement.&#160;&#160;The fair market value of the March 2008
  interest rate swaps at June 30, 2008 was a net asset of $3.0
  million.&#160;&#160;The interest rate swaps do not receive hedge accounting
  treatment under SFAS 133. Changes in the fair value of the interest rate swaps
  are recorded in interest expense in the statements of operations.&#160;&#160;In
  addition, the interest rate swap agreements contain cross-default provisions to
  events of default under the credit agreement. Due to events related to the
  Bankruptcy Filings, all of these interest rate swap positions
  were&#160;terminated in the third quarter of 2008, and we have recorded a $1.5
  million liability as of September 30, 2008 with respect to these
  positions.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior to
  the events of default, indebtedness under the credit agreement bore interest at
  our option, at either (i)&#160;the higher of the administrative agent&#8217;s prime
  rate or the federal funds rate plus 0.5%, plus an applicable margin that ranges
  from 0.50% to 1.75%, depending on our total leverage ratio and senior secured
  leverage ratio, or (ii)&#160;LIBOR plus an applicable margin that ranges from
  1.50% to 2.75%, depending upon our total leverage ratio and senior secured
  leverage ratio.&#160;&#160;During the Forbearance Period indebtedness under the
  credit agreement bore interest at our option, at either (i)&#160;the
  administrative agent&#8217;s prime rate or the federal funds rate plus 0.50%, plus an
  applicable margin that ranges from 2.75% to 3.75%, depending upon our total
  leverage ratio, or (ii)&#160;LIBOR plus an applicable margin that ranges from
  4.25% to 5.25%, depending upon our total leverage ratio.&#160;&#160;Pursuant to
  the Second Amendment, commencing on December 12, 2008, indebtedness under the
  credit agreement bears interest at our option, at either (i)&#160;the
  administrative agent&#8217;s prime rate or the federal funds rate plus 5.0% per annum,
  with a prime rate or federal funds rate floor of 4.0% per annum, or
  (ii)&#160;LIBOR plus 6.0% per annum, with a LIBOR floor of 3.0% per
  annum.&#160;&#160;During the three months ended June 30, 2008, the weighted
  average interest rate incurred by us was 4.62% resulting in interest expense of
  approximately $4.3 million.&#160;&#160;During the three months ended December
  31, 2008, the weighted average interest rate incurred by us was&#160;<font style="FONT-WEIGHT: normal"><font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7.72%</font>
  resulting in interest expense of approximately $<font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-WEIGHT: normal">8.9</font></font> million</font>. Due to the
  Forbearance Agreement and the Second Amendment, we expect our interest expense
  to continue to increase as compared to our interest expense prior to the
  Bankruptcy Filings.&#160;&#160;Changes in economic conditions could result in
  higher interest rates, thereby increasing our interest expense and reducing our
  funds available for capital investment, operations or distributions to our
  unitholders. Additionally, if domestic interest rates continue to increase, the
  interest rates on any of our future credit facilities and debt offerings could
  be higher than current levels, causing our financing costs to increase
  accordingly. Based on current borrowings, an increase or decrease of 100 basis
  points in the interest rate will result in increased or decreased, respectively,
  annual interest expenses of $4.5 million.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Item&#160;4T.</font></div>
              </td>
              <td align="left" valign="top" width="70%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a name="controls">Controls</a> and
  Procedures</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Evaluation of
  disclosure controls and procedures.</font> Our general partner&#8217;s management,
  including the Chief Executive Officer and Chief Financial Officer of our general
  partner, evaluated as of the end of the period covered by this report, the
  effectiveness of our disclosure controls and procedures as defined in
  Rule&#160;13a-15(e) under the Securities Exchange Act of 1934.&#160;Based on
  that evaluation, the Chief Executive Officer and Chief Financial Officer of our
  general partner concluded that our disclosure controls and procedures, as of
  June 30, 2008, were effective.&#160;</font></font></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font size="+0"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Changes in
  internal control over financial reporting.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
  There were no changes in our internal control over financial reporting that
  occurred during the quarter ended June 30, 2008 that have materially affected,
  or are reasonably likely to materially affect, our internal control over
  financial reporting.&#160; However, since the completion of the second quarter
  of 2008, the Private Company has made the Bankruptcy Filings, and a subcommittee
  of our Board conducted an internal review, both as discussed elsewhere in this
  report.&#160; One of the findings by counsel for such subcommittee was that
  certain senior executive officers of the Partnership's general partner, who were
  also senior executive officers of the Private Company, showed at least some
  indifference to known or easily discoverable facts and had access to and
  reviewed financial information from which they could have developed an earlier
  understanding of the nature and significance of the trading activities that led
  to the Private Company's liquidity problems.&#160;&#160;For a discussion of the
  internal review, please see &#8220;Item 2. Management&#8217;s Discussion and Analysis of
  Financial Condition and Results of Operations &#8722; Impact of the Bankruptcy of the
  Private Company and Certain of its Subsidiaries and Related Events &#8722; Internal
  Review.&#8221;</font></font></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;After
  completion of the internal review, a plan was developed with the advice of the
  Audit Committee of the Board to further strengthen our processes and
  procedures.&#160;&#160;This plan includes, among other things, reevaluating
  executive officers and accounting and finance personnel (including a realignment
  of officers as described elsewhere in this report) and hiring, as deemed
  necessary, additional accounting and finance personnel or consultants;
  reevaluating our internal audit function and determining whether to expand the
  duties and responsibilities of such group; evaluating the comprehensive training
  programs for all management personnel covering, among other things, compliance
  with controls and procedures, revising the reporting structure so that the Chief
  Financial Officer reports directly to the Audit Committee, and increasing the
  business and operational oversight role of the Audit Committee.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Since the
  completion of the second quarter of 2008, the Private Company has made the
  Bankruptcy Filings discussed elsewhere in this report.&#160;&#160;We and our
  general partner rely upon the Private Company for our personnel, including those
  related to designing and implementing internal controls and disclosure controls
  and procedures.&#160;&#160;Staff reductions by the Private Company or other
  departures by the Private Company&#8217;s employees that provide services to us could
  have a material adverse effect on internal controls and the effectiveness of
  disclosure controls and procedures.&#160;&#160;Management is in the process of
  evaluating any such potential impact and is preparing a transition plan that may
  include, among other items, hiring additional personnel and the redesign and
  implementation of internal controls and disclosure controls and procedures as
  needed.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant to the Amended
  Omnibus Agreement with the Private Company, the Private Company operated our
  assets and performed other administrative services for us such as accounting,
  legal, regulatory, development, finance, land and engineering.&#160;&#160;Due to
  the Change of Control of our general partner, the Private Company is no longer
  obligated to operate our assets or perform other administrative services
  pursuant to the Amended Omnibus Agreement.&#160;&#160;The Private Company agreed
  to continue providing such services until at least November 30, 2008 pursuant to
  the Order entered by the Bankruptcy Court.&#160;&#160;While the Private
  Company&#160;has continued to provide such services as of the date of the filing
  of this report, there can be no assurance that it will continue to provide such
  services to us or that we could replace any of these services if the Private
  Company stops providing them.&#160;&#160;If the Private Company stops providing
  these services we may incur increased costs to replace these services and our
  financial results may suffer.</font>&#160; </font></font></font>
  
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Pursuant
  to the Settlement Agreement, the Private Company will reject the Amended Omnibus
  Agreement as part of the Bankruptcy Cases and we will enter into a shared
  services agreement with the Private Company pursuant to which the Private
  Company will provide certain operational services for us.&#160;&#160;There can
  be no assurance&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated</font> (see &#8220;Item
  2. Management&#8217;s Discussion and Analysis of Financial Condition and Results of
  Operations&#8212;Settlement with the Private Company&#8221;).&#160; In addition, if the
  terms of this shared services agreement are not as favorable as the terms under
  the Amended Omnibus Agreement,&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">it could
  have a material adverse effect on our business, financial condition, results of
  operations, cash flows, ability to make distributions to our unitholders, the
  trading price of our common units and our ability to conduct our
  business.&#160;</font>&#160;&#160;
  </font></font></font></font></font></font></font></div>
        </div>
      </div><br>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">54</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="Part2">PART II. </a>OTHER INFORMATION</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<a name="legal">Item&#160;1.</a></font></div>
              </td>
              <td align="left" valign="top" width="70%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Legal
        Proceedings</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;On July 21,
  2008, we received a letter from the staff of the SEC giving notice that the SEC
  is conducting an inquiry relating to us and requesting, among other things, that
  we voluntarily preserve, retain and produce to the SEC certain documents and
  information relating primarily to our disclosures respecting the Private
  Company&#8217;s liquidity issues, which were the subject of our July 17, 2008 press
  release.&#160;&#160;On October 22, 2008, we received a subpoena from the SEC
  pursuant to a formal order of investigation requesting certain documents
  relating to, among other things, the Private Company&#8217;s liquidity
  issues.&#160;&#160;We have been cooperating, and intend to continue cooperating,
  with the SEC in its investigation.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July
  23, 2008, we and our general partner each received a Grand Jury subpoena from
  the United States Attorney&#8217;s Office in Oklahoma City, Oklahoma, requiring, among
  other things, that we and our general partner produce financial and other
  records related to our July 17, 2008 press release.&#160;&#160;We have been
  informed that the U.S. Attorneys&#8217; Offices for the Western District of Oklahoma
  and the Northern District of Oklahoma are in discussions regarding the
  subpoenas, and no date has been set for a response to the
  subpoenas.&#160;&#160;We and our general partner intend to cooperate fully with
  this investigation if and when it proceeds.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Between
  July 21, 2008 and September 4, 2008, the following class action complaints were
  filed:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  1.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> Poelman v. SemGroup Energy
  Partners, L.P., et al</font>., Civil Action No. 08-CV-6477, in the United States
  District Court for the Southern District of New York (filed July 21,
  2008).&#160; The plaintiff voluntarily dismissed this case on August 26,
  2008;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  2.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> Carson v. SemGroup Energy Partners,
  L.P. et al</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.</font>,
  Civil Action No. 08-cv-425, in the Northern District of Oklahoma (filed July 22,
  2008);</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  3.&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> Charles D. Maurer SIMP Profit
  Sharing Plan f/b/o Charles D. Maurer v. SemGroup Energy Partners, L.P. et
  al.</font>, Civil Action No. 08-cv-6598, in the United States District Court for
  the Southern District of New York (filed July 25, 2008);</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  4.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> Michael Rubin v. SemGroup Energy
  Partners, L.P. et al.</font>, Civil Action No. 08-cv-7063, in the United States
  District Court for the Southern District of New York (filed August 8,
  2008);</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  5.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> Dharam V. Jain v. SemGroup Energy
  Partners, L.P. et al.</font>, Civil Action No. 08-cv-7510, in the United States
  District Court for the Southern District of New York&#160; (filed August 25,
  2008); and</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  6.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> William L. Hickman v. SemGroup
  Energy Partners, L.P. et al.</font>, Civil Action No. 08-cv-7749, in the United
  States District Court for the Southern District of New York (filed September 4,
  2008).</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  The<font style="DISPLAY: inline; FONT-STYLE: italic"> Carson</font> case was
  filed as a putative class action on behalf of all purchasers of our common units
  between February 20, 2008 and July 17, 2008.&#160;&#160;Plaintiff alleges
  violations of Sections 10(b) and 20(a) of the Securities Exchange Act and SEC
  Rule 10b-5, resulting in damages to members of the putative class.&#160;
  Plaintiff's specific allegations include that, despite an obligation to do so,
  the Defendants failed to disclose between February 20, 2008 and May 8, 2008 that
  the Private Company was engaged in high-risk crude oil hedging transactions that
  could affect its ability to continue as a going concern or that the Private
  Company was suffering from liquidity problems.&#160; Plaintiff seeks class
  certification, damages, interest, fees, and costs.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  The<font style="DISPLAY: inline; FONT-STYLE: italic"> Maurer</font> case was
  filed as a putative class action on behalf of all persons who purchased our
  common units pursuant to or traceable to the February 12, 2008 Registration
  Statement and Prospectus.&#160; Plaintiff alleges violations of Section 11 of
  the Securities Act, resulting in damages to members of the putative class.&#160;
  Plaintiff&#8217;s specific allegations include that, despite an obligation to do so,
  the Defendants failed to disclose in connection with the secondary offering in
  February 2008 that the Private Company was engaged in high-risk crude oil
  hedging transactions that could affect its ability to continue as a going
  concern or that the Private Company was suffering from liquidity problems.&#160;
  Plaintiff seeks class certification, damages, interest, fees, and
  costs.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The<font style="DISPLAY: inline; FONT-STYLE: italic"> Rubin, Jain,</font> and<font style="DISPLAY: inline; FONT-STYLE: italic"> Hickman</font> cases were filed as
  putative class actions on behalf of all purchasers of our common units between
  July 17, 2007 and July 17, 2008.&#160; Plaintiffs allege violations of Sections
  11, 12(a)(2), and 15 of the Securities Act and violations of Sections 10(b) and
  20(a) of the Exchange Act and SEC Rule 10b-5, resulting in damages to members of
  the putative class.&#160; Plaintiff&#8217;s specific allegations include that, despite
  an obligation to do so, the Defendants failed to disclose between July 17, 2007
  and July 17, 2008 the adverse financial condition and lack of liquidity of the
  Private Company that was caused by the Private Company&#8217;s speculative and
  unauthorized hedging and trading in crude oil.&#160; Plaintiffs seek class
  certification, rescission of the sale of common units under Section 12(a)(2) of
  the Securities Act, damages, interest, fees, and costs.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to a motion filed with the MDL Panel, the<font style="DISPLAY: inline; FONT-STYLE: italic"> Maurer</font> case has been
  transferred to the Northern District of Oklahoma and consolidated with the<font style="DISPLAY: inline; FONT-STYLE: italic"> Carson</font> case.&#160; The<font style="DISPLAY: inline; FONT-STYLE: italic"> Rubin, Jain,</font> and<font style="DISPLAY: inline; FONT-STYLE: italic"> Hickman</font> cases have also been
  transferred to the Northern District of Oklahoma.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A hearing
  on motions for appointment as lead plaintiff was held in the<font style="DISPLAY: inline; FONT-STYLE: italic"> Carson</font> case on October 17,
  2008.&#160; At that hearing, the court granted a motion to consolidate the <font style="DISPLAY: inline; FONT-STYLE: italic">Carson</font> and <font style="DISPLAY: inline; FONT-STYLE: italic">Maurer</font> cases for pretrial
  proceedings, and the consolidated litigation is now pending as<font style="DISPLAY: inline; FONT-STYLE: italic"> In Re: SemGroup Energy Partners,
  L.P. Securities Litigation</font>, Case No. 08-CV-425-GKF-PJC. The court entered
  an order on October 27, 2008, granting the motion of Harvest Fund Advisors LLC
  to be appointed lead plaintiff in the consolidated litigation.&#160; On January
  23, 2009, the court entered a Scheduling Order providing, among other things,
  that the lead plaintiff may file a consolidated amended complaint within 70 days
  of the date of the order, and that defendants may answer or otherwise respond
  within 60 days of the date of the filing of a consolidated amended
  complaint.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We intend to
  vigorously defend these actions.&#160; There can be no assurance regarding the
  outcome of the litigation.&#160;&#160;An estimate of possible loss, if any, or
  the range of loss cannot be made and therefore we have not accrued a loss
  contingency related to these actions. However, the ultimate resolution of these
  actions could have a material adverse effect on our business, financial
  condition, results of operations, cash flows, ability to make distributions to
  our unitholders, the trading price of the our common units and our ability to
  conduct our business.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We may
  become the subject of additional private or government actions regarding these
  matters in the future.&#160;&#160;Litigation may be time-consuming, expensive
  and disruptive to normal business operations, and the outcome of litigation is
  difficult to predict.&#160;&#160;The defense of these lawsuits may result in the
  incurrence of significant legal expense, both directly and as the result of our
  indemnification obligations.&#160;&#160;The litigation may also divert
  management&#8217;s attention from our operations which may cause our business to
  suffer.&#160;&#160;An unfavorable outcome in any of these matters may have a
  material adverse effect on our business, financial condition, results of
  operations, cash flows, ability to make distributions to our unitholders, the
  trading price of the our common units and our ability to conduct our
  business.<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>All or a
  portion of the defense costs and any amount we may be required to pay to satisfy
  a judgment or settlement of these claims may not be covered by
  insurance.</font></div>
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        </div>
      </div>
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      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<a name="risk">Item&#160;1A.</a></font></div>
              </td>
              <td align="left" valign="top" width="87%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Risk
        Factors</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Limited partner interests are
  inherently different from the capital stock of a corporation, although many of
  the business risks to which we are subject are similar to those that would be
  faced by a corporation engaged in a similar business. You should carefully
  consider the following risk factors together with all of the other information
  included in this report. If any of the following risks were actually to occur,
  our business, financial condition, or results of operations could be materially
  adversely affected. In that case, we might not be able to pay distributions on
  our common units, the trading price of our common units could decline and our
  unitholders could lose all or part of their investment.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Risks
  Related to the Bankruptcy Filings</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
  Bankruptcy Filings may affect the Private Company&#8217;s&#160;&#160;ability to make
  payments to us and may have a material adverse effect on our results of
  operations and our ability to make distributions to our
  unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;On July 22,
  2008, the Private Company made the Bankruptcy Filings.&#160;&#160;The Private
  Company and its subsidiaries continue to operate their businesses and own and
  manage their properties as debtors-in-possession under the jurisdiction of the
  Bankruptcy Court and in accordance with the applicable provisions of the
  Bankruptcy Code.&#160;&#160;None of we, our general partner, our subsidiaries
  nor our general partner&#8217;s subsidiaries are debtors in the Bankruptcy
  Cases.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We are party
  to various agreements with the Private Company and its subsidiaries, including
  subsidiaries that are debtors in the Bankruptcy Cases.&#160;&#160;Under the
  Throughput Agreement, we provide certain crude oil gathering, transportation,
  terminalling and storage services to a subsidiary of the Private Company that is
  a debtor in the Bankruptcy Cases.&#160;&#160;Under the Terminalling Agreement,
  we provide certain liquid asphalt cement terminalling and storage services to a
  subsidiary of the Private Company that is a debtor in the Bankruptcy
  Cases.&#160;&#160;For the six months ended June 30, 2008 and the year ended
  December 31, 2008, we derived approximately 88% and approximately <font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">73%</font>,
  respectively, of our revenues, excluding fuel surcharge revenues related to fuel
  and power consumed to operate our liquid asphalt cement storage tanks, from
  services we provided to the Private Company and its subsidiaries.&#160;&#160;The
  Private Company is obligated to pay us minimum monthly fees totaling $76.1
  million annually and $58.9 million annually in respect of the minimum
  commitments under the Throughput Agreement and the Terminalling Agreement,
  respectively, regardless of whether such services are actually used by the
  Private Company.&#160;&#160;As of the date of the filing of this report,
  payments by the Private Company made under the Throughput Agreement for services
  rendered to the Private Company since September have been made based upon actual
  usage rather than the contractual minimum monthly storage amounts in such
  agreement.&#160;&#160;As of the date of the filing of this report, payments by
  the Private Company made under the Terminalling Agreement have continued to be
  made based upon the contractual minimum monthly storage amounts in such
  agreement.&#160;&#160;However, on February 6, 2009, the Private Company filed a
  motion in the Bankruptcy Court requesting approval of the sale of the Private
  Company&#8217;s asphalt related assets, or in the event of an unsuccessful auction,
  the rejection of the Terminalling Agreement and the winding down of its asphalt
  business.&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, the Private Company will reject the Terminalling
  Agreement and the Throughput Agreement as part of the Bankruptcy Cases and we
  will&#160;receive the Private Company&#8217;s asphalt assets that are connected to our
  asphalt assets. In addition, pursuant to the Settlement Agreement, we will enter
  into a new throughput agreement and new terminalling agreement with the Private
  Company pursuant to which we will provide certain crude oil gathering,
  transportation, terminalling and storage services and asphalt terminalling and
  storage services to the Private Company.&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We expect
  revenues from services provided to the Private Company under this new throughput
  agreement and new terminalling agreement to be substantially less than prior
  revenues from services provided to the Private Company as the new agreements
  will be based upon actual volumes gathered, transported, terminalled and stored
  instead of certain minimum volumes and may be at reduced rates when compared to
  the Throughput Agreement and Terminalling Agreement.&#160; </font>There can be
  no assurance that the conditions to effectiveness in the Settlement Agreement
  will be completed and that the transactions contemplated thereby will be
  consummated (see &#8220;Item 2. Management&#8217;s Discussion and Analysis of Financial
  Condition and Results of Operations&#8212;Settlement with the Private Company&#8221;).
  </font>&#160;See &#8220;&#9472;The Private Company may reject the contracts it has with us
  as part of the Bankruptcy Cases, which could have a material adverse effect on
  our results of operations, cash flows and ability to make distributions to our
  unitholders.&#8221;</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We have been
  pursuing opportunities to provide crude oil terminalling and storage services
  and crude oil gathering and transportation services to third
  parties.&#160;&#160;Although average rates for the new third-party crude oil
  terminalling and storage and transportation and gathering contracts are
  comparable with those previously received from the Private Company, the volumes
  being terminalled, stored, transported and gathered have decreased as compared
  to periods prior to the Bankruptcy Filings, which has negatively impacted total
  revenues.&#160; As an example, fourth quarter total revenues are approximately
  $9.2 million less than&#160;second quarter&#160;2008 total revenues, in each
  case excluding fuel surcharge revenues related to fuel and power consumed to
  operate our liquid asphalt cement storage tanks.</font><br></div>
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        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;There can be
  no assurance that our efforts to increase the percentage of revenues derived
  from third parties will be successful.&#160;&#160;If the Private Company is
  unable to make to us the payments required by it under the Throughput Agreement
  or the Terminalling Agreement for any reason, including the Bankruptcy Filings,
  our revenues would decline to the extent such revenues have not been replaced by
  third party revenues,&#160;our ability to make distributions to our unitholders
  would be reduced and we may be forced to make a bankruptcy filing, any of which
  would likely have a material adverse effect on the trading price of our common
  units.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;In addition,
  the Private Company&#8217;s customers may be less likely to enter into business
  transactions with the Private Company while it is in bankruptcy, and the Private
  Company may choose to curtail its operations or liquidate its assets as part of
  its bankruptcy proceedings.&#160;&#160;As a result, unless we are able to
  generate additional third party revenues, we may experience less volumes in our
  system which could have a material adverse effect on our results of operations
  and cash flows.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  may not be able to continue as a going concern.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;The financial
  statements included in this&#160;Form 10-Q&#160;have been prepared assuming we
  will continue as a going concern, though such an assumption may not be
  true.&#160;&#160;Events of default have occurred and are continuing under our
  credit agreement.&#160;&#160;Additionally, we earned 88% of our revenues,
  excluding fuel surcharge revenues related to fuel and power consumed to operate
  our liquid asphalt cement storage tanks, for the six months ended June 30, 2008
  from the Private Company, which commenced the Bankruptcy Cases in July 2008, the
  effects of which are more fully described herein.&#160;&#160;These factors, as
  well as other events and uncertainties related to the Bankruptcy Filings, raise
  substantial doubt about our ability to continue as a going
  concern.&#160;&#160;While it is not feasible to predict the ultimate outcome of
  the events surrounding the Bankruptcy Cases, we have been and could continue to
  be materially and adversely affected by such events and we may be forced to make
  a bankruptcy filing or take other action that could have a material adverse
  effect on our business, the price of our common units and our results of
  operations.&#160;&#160;See &#8220;Item 2. Management's Discussion and Analysis of
  Financial Condition and Results of Operations&#8221; and Note 2 to the unaudited
  consolidated financial statements.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
  Private Company may reject the contracts it has with us as part of the
  Bankruptcy Cases, which could have a material adverse effect on our results of
  operations, cash flows and ability to make distributions to our
  unitholders.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;The Private
  Company may reject or attempt to modify the contracts it has with us as part of
  the Bankruptcy Cases.&#160;&#160;If the Private Company rejects the contracts it
  has with us, it will be deemed to have breached such
  contracts.&#160;&#160;Because of the Bankruptcy Filings, we may not have an
  adequate remedy for such breach.&#160;&#160;We may not be able to replace the
  volumes provided by the Private Company under these agreements and any contracts
  we make with third parties may be for prices that are less than those charged
  the Private Company under the Throughput Agreement and the Terminalling
  Agreement, which could have a material adverse effect on our results of
  operations, cash flows and ability to make distributions to our
  unitholders.&#160;&#160;On February 6, 2009, the Private Company filed a motion
  in the Bankruptcy Court requesting approval of the sale of its asphalt related
  assets.&#160;&#160;There is significant uncertainty as to the revenues related
  to&#160;our asphalt assets and there is substantial risk that our asphalt assets
  may be idle during 2009 and subsequent years.&#160;&#160;Without revenues from
  our asphalt assets, we may be unable to meet the covenants, including the
  minimum liquidity and minimum receipt requirements, under our Forbearance
  Agreement with our senior secured lenders pursuant to which such lenders have
  agreed to forbear from exercising their rights and remedies arising from the
  events of default under our credit agreement.&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, among other things, the Private Company will reject
  the Throughput Agreement and the Terminalling Agreement and we will&#160;receive
  the Private Company&#8217;s asphalt assets that are connected to our asphalt assets
  <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(unless
  the Private Company executes a definitive agreement to sell substantially all of
  its asphalt assets or business as a going concern to a third-party purchaser and
  we enter into a terminalling and storage agreement with such
  purchaser)</font>.&#160;&#160;There can be no assurance&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated</font> (see &#8220;Item
  2. Management&#8217;s Discussion and Analysis of Financial Condition and Results of
  Operations&#8212;Settlement with the Private Company&#8221;).&#160;&#160;Even if we acquire
  such asphalt assets, we may not be able to enter into agreements to provide
  terminalling and storage services for such assets.&#160;&#160;In addition,
  </font>if the Private Company sells its asphalt assets to a third party the
  Partnership&#160;will&#160;need to negotiate a new terminalling and storage
  contract with the winner of the auction and such agreement may not be on as
  favorable terms as the Terminalling Agreement.</font></div>
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        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
  Private Company may assert claims against us in the Bankruptcy Cases which could
  have a material adverse effect on our cash flows and ability to make
  distributions to our unitholders.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
  bankruptcy law, a debtor-in-possession, such as the Private Company, may seek to
  avoid certain prepetition transfers if such transfers were to insiders and
  occurred within one year before the bankruptcy filing.&#160;&#160;For purposes
  of avoidance under bankruptcy law, title to real property that is perfected more
  than thirty days after the transfer is deemed to have been transferred as of the
  date of perfection.&#160;&#160;In addition, a debtor-in-possession, such as the
  Private Company, may seek to avoid prepetition transfers of real property that
  were not perfected as of the bankruptcy filing date against a hypothetical bona
  fide purchaser of such real property.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Through a
  series of transactions we acquired certain real property from the Private
  Company during the one-year period preceding the Bankruptcy
  Filings.&#160;&#160;Deeds to approximately 27 asphalt facilities transferred to
  us by the Private Company as part of the Acquired Asphalt Assets either were not
  recorded within thirty days of such transfer or were not recorded as of the
  Bankruptcy Filings.&#160;&#160;In addition, a deed to the Acquired Storage
  Assets was not recorded as of the Bankruptcy Filings.&#160;&#160;Although we
  have title to such properties, the Private Company may in its bankruptcy
  proceedings seek to avoid the transfers of these properties.&#160;&#160;We have
  defenses against these actions based upon bankruptcy law and state law and
  intend to vigorously defend against any such action.&#160;&#160;However, there
  can be no assurance regarding the outcome of any potential
  litigation.&#160;&#160;If the Private Company succeeds in such litigation, we
  may be required to return the affected properties to the Private Company or pay
  an amount equal to the value of such properties, which would have a material
  adverse effect on our business, financial condition, results of operations, cash
  flows, ability to make distributions to our unitholders, the trading price of
  the our common units and our ability to conduct our business.&#160;&#160;We
  would then have unsecured claims in the Bankruptcy Court for the amounts
  originally paid for such properties.&#160;&#160;&#160;An estimate of possible
  loss, if any, or the range of loss cannot be made and therefore we have not
  accrued a loss contingency related to this matter. However, the ultimate
  resolution of this matter could have a material adverse effect on our business,
  financial condition, results of operations, cash flows, ability to make
  distributions to our unitholders, the trading price of the our common units and
  our ability to conduct our business.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, the Private Company will release certain of its
  claims related to this real property including the real property claims
  discussed above (see &#8220;Item 2. Management&#8217;s Discussion and Analysis of Financial
  Condition and Results of Operations&#8212;Settlement with the Private
  Company&#8221;).&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There may
  be additional claims that are not released by the Settlement
  Agreement.&#160;&#160;In addition, </font>there can be no assurance <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be
  consummated</font>.</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  did not make a distribution for the second quarter, third quarter or fourth
  quarter of 2008, do not expect to make a distribution for the first quarter of
  2009 at this time and may not make distributions in the future.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We did not
  make a distribution to our common unitholders, subordinated unitholders or
  general partner attributable to the results of operations for the quarters ended
  June 30, 2008, September 30, 2008 or December 31, 2008,&#160;due to the existing
  events of default under our credit agreement and the uncertainty of our future
  cash flows relating to the Bankruptcy Filings.&#160;&#160;Even though we did not
  pay a distribution for the second, third or fourth&#160;quarters of 2008 and we
  do not currently expect to pay a distribution for the&#160;first quarter of
  2009, our unitholders will be liable for taxes on their share of our taxable
  income.&#160;&#160;See &#8220;&#8212;Tax Risks to Common Unitholders&#8212;Our unitholders have
  been and will be required to pay taxes on their share of our taxable income even
  if they have not or do not receive any cash distributions from us.&#8221;&#160;Our
  partnership agreement provides that, during the subordination period, which we
  are currently in, our common units have the right to receive distributions of
  available cash from operating surplus in an amount equal to the minimum
  quarterly distribution of $0.3125 per common unit per quarter, plus any
  arrearages in the payment of the minimum quarterly distribution on the common
  units from prior quarters, before any distributions of available cash from
  operating surplus may be made on the subordinated units.&#160;&#160;If the
  events of default under our credit agreement are not waived by our lenders or
  our business operations, expenses, including interest expense, and prospects do
  not improve, we will not be able to make quarterly distributions to our
  unitholders in the future.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  are exposed to the credit risk of the Private Company and the material
  nonperformance by the Private Company could reduce our ability to make
  distributions to our unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We are party
  to the Terminalling Agreement with the Private Company pursuant to which we
  provide certain liquid asphalt cement terminalling and storage services to the
  Private Company. We are also party to the Throughput Agreement with the Private
  Company pursuant to which we provide certain crude oil gathering,
  transportation, terminalling and storage services to the Private
  Company.&#160;&#160;The Private Company has defaulted under its credit
  facilities and its indenture relating to its senior notes.&#160;&#160;Moody&#8217;s
  and Fitch Ratings have withdrawn their ratings of the Private Company due to the
  Bankruptcy Filings.&#160;&#160;Any material nonperformance under the Throughput
  Agreement or the Terminalling Agreement by the Private Company could materially
  and adversely impact our ability to operate and make distributions to our
  unitholders.&#160;&#160;On February 6, 2009, the Private Company filed a motion
  in the Bankruptcy Court requesting approval of the sale of the Private Company&#8217;s
  asphalt related assets, or in the event of an unsuccessful auction, the
  rejection of the Terminalling Agreement and the winding down of its asphalt
  business.&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, the Private Company will reject the Terminalling
  Agreement and the Throughput Agreement as part of the Bankruptcy Cases and we
  will&#160;receive the Private Company&#8217;s asphalt assets that are connected to our
  asphalt assets.&#160;&#160;In addition, pursuant to the Settlement Agreement, we
  will enter into a new throughput agreement with the Private Company pursuant to
  which we will provide certain crude oil gathering, transportation, terminalling
  and storage services to the Private Company.&#160;&#160;There can be no
  assurance&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated</font> (see &#8220;Item
  2. Management&#8217;s Discussion and Analysis of Financial Condition and Results of
  Operations&#8212;Settlement with the Private Company&#8221;).&#160; </font>See &#8220;&#9472;The Private
  Company may reject the contracts it has with us as part of the Bankruptcy Cases,
  which could have a material adverse effect on our results of operations, cash
  flows and ability to make distributions to our unitholders.&#8221;</font></div>
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        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Though we
  have no indebtedness rated by any credit rating agency, we may have rated debt
  in the future. Credit rating agencies such as Moody&#8217;s and Fitch Ratings may
  consider the Private Company&#8217;s debt ratings when assigning ours, because of the
  Private Company&#8217;s ownership interest in us, the strong operational links between
  the Private Company and us, and our reliance on the Private Company for&#160;a
  substantial portion&#160;of our revenues. Due to the Private Company&#8217;s default
  of its indebtedness and the uncertainty related to the Bankruptcy Filings, we
  could experience an increase in our borrowing costs or difficulty accessing
  capital markets if we are able to access them at all. Such a development could
  adversely affect our ability to grow our business and to make distributions to
  unitholders.</font></div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  do not have employees and rely solely on the employees of the Private
  Company.&#160;&#160;The Private Company is no longer obligated to provide
  services to us, which may adversely affect our financial results, our ability to
  operate and our ability to make distributions to our unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;As is the
  case with many publicly traded partnerships, we do not directly employ any
  persons responsible for managing or operating us or for providing services
  relating to day-to-day business affairs.&#160;&#160;Pursuant to the Amended
  Omnibus Agreement with the Private Company, the Private Company operated our
  assets and performed other administrative services for us such as accounting,
  legal, regulatory, development, finance, land and engineering.&#160;&#160;Due to
  the Change of Control of our general partner, the Private Company is no longer
  obligated to operate our assets or perform other administrative services
  pursuant to the Amended Omnibus Agreement.&#160;&#160;The Private Company agreed
  to continue providing such services until at least November 30, 2008 pursuant to
  the Order entered by the Bankruptcy Court.&#160;&#160;While the Private
  Company&#160;has continued to provide such services as of the date of the filing
  of this report, there can be no assurance that it will continue to provide such
  services to us or that we could replace any of these services if the Private
  Company stops providing them.&#160;&#160;If the Private Company stops providing
  these services we may incur increased costs to replace these services and our
  financial results may suffer.&#160; </font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Pursuant to
  the Settlement Agreement, the Private Company will reject the Amended Omnibus
  Agreement as part of the Bankruptcy Cases and we will enter into a shared
  services agreement with the Private Company pursuant to which the Private
  Company will provide certain operational services for us.&#160;&#160;There can
  be no assurance&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated</font> (see &#8220;Item
  2. Management&#8217;s Discussion and Analysis of Financial Condition and Results of
  Operations&#8212;Settlement with the Private Company&#8221;).&#160;&#160;In addition, if the
  terms of this shared services agreement are not as favorable as the terms under
  the Amended Omnibus Agreement, <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">it could
  have a material adverse effect on our business, financial condition, results of
  operations, cash flows, ability to make distributions to our unitholders, the
  trading price of our common units and our ability to conduct our
  business</font>.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font size="+0" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;In addition</font>,
  in connection with the Bankruptcy</font> Filings, the Private Company may reduce
  a substantial number of its employees, some of whom may provide general and
  administrative and operating services to us.&#160;&#160;Any reductions in
  critical personnel who provide services to us and any increased costs to replace
  such personnel could have a material adverse effect on our ability to conduct
  our business and our results of operations.</font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Beginning
  April 1, 2009, we will begin to directly employ a number of persons responsible
  for managing our operations and for providing services relating
  to&#160;our&#160;day-to-day business affairs.&#160; Subject to the consummation
  of the&#160;transactions contemplated by the&#160;Settlement Agreement, we may
  directly employ additional persons responsible for providing services relating
  to our asphalt assets.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our costs
  may increase as we directly employ individuals associated with our operations
  which could have a material adverse effect on our business, financial condition,
  results of operations, cash flows, ability to make distributions to our
  unitholders, the trading price of our common units and our ability to conduct
  our business.</font></font>
  
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Certain
  of our officers are also officers of the Private Company.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Prior to the
  events surrounding the Bankruptcy Filings, the officers of our general partner
  were also employees and officers or directors of the Private
  Company.&#160;&#160;Messrs. Foxx and Stallings resigned the positions each
  officer held with SemGroup, L.P. in July 2008.&#160;&#160;Mr. Brochetti had
  previously resigned from his position with SemGroup, L.P. in March
  2008.&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
  Parsons left the employment of SemGroup, L.P. in March 2009.&#160;
  </font>Messrs. Foxx, Brochetti, Stallings, and Parsons&#160;remain as officers
  of our general partner.&#160;&#160;Mr.&#160;Schwiering continues to serve as an
  officer of the Private Company and&#160;may have conflicts of interest and may
  favor the Private Company&#8217;s interests over our interests when conducting our
  operations.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  interests may be adverse to the Private Company&#8217;s interests due to the
  Bankruptcy Filings.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We are a
  creditor in the Bankruptcy Cases due to amounts owed to us by the Private
  Company prior to the Bankruptcy Filings.&#160;&#160;In addition, if the Private
  Company fails to make its payments under the Throughput Agreement or the
  Terminalling Agreement or otherwise fails to perform under the contracts we have
  with the Private Company, we may have additional potential claims against the
  Private Company&#8217;s bankruptcy estate.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
  claims made by us against the Private Company in the Bankruptcy Cases will be
  subject to the claim allowance procedure provided in the Bankruptcy Code and
  Bankruptcy Rules.&#160;&#160;If an objection is filed, the Bankruptcy Court
  would determine the extent to which any claim that is objected to is allowed and
  the priority of such claims.&#160;&#160;We are uncertain regarding the ultimate
  amount of damages for breaches of contract or other claims that it will be able
  to establish in the bankruptcy proceedings and we cannot predict the amounts, if
  any, that it will collect or the timing of any such collection, but such losses
  could be substantial and could have a material adverse effect on our ability to
  conduct our business and our results of operations.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, the Private Company will reject the Terminalling
  Agreement and the Throughput Agreement.&#160;&#160;We will have a $35 million
  unsecured claim relating to rejection of the Terminalling Agreement in the
  Bankruptcy Cases.&#160;&#160;In addition, we will have a $20 million unsecured
  claim against the Private Company relating to rejection of the Throughput
  Agreement.&#160;&#160;There can be no assurance&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated</font> (see &#8220;Item
  2. Management&#8217;s Discussion and Analysis of Financial Condition and Results of
  Operations&#8212;Settlement with the Private Company&#8221;).</font><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0.7pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As a
  result of these items, our interests may be adverse to the Private Company&#8217;s
  interests.&#160;&#160;The Private Company provides administrative, legal,
  regulatory, development, finance, land and engineering services for
  us.&#160;&#160;The Private Company is also responsible for obtaining and
  renewing environmental and other permits related to our liquid asphalt cement
  operations.&#160;&#160;In addition, we rely upon the Private Company&#8217;s personnel
  for the design and implementation of our internal controls.&#160;&#160;The
  progress of the Bankruptcy Cases may influence the Private Company&#8217;s decision to
  continue providing any of these services, which could have a material adverse
  effect on our ability to conduct our business and results of
  operations.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  do not have title to all of the intellectual property relating to our
  business.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Pursuant to
  the Amended Omnibus Agreement, we licensed the use of certain trade names and
  marks, including the name &#8220;SemGroup.&#8221;&#160;&#160;This license terminated
  automatically upon the change of control of our general partner.&#160;&#160;The
  termination of the explicit rights to use this intellectual property under the
  Amended Omnibus Agreement may adversely affect our ability to operate or grow
  our business and our results of operations.&#160;&#160;In addition, we may be
  subject to claims for trademark or other intellectual property infringement due
  to our continued use of these intellectual property rights.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, we will enter into a license agreement with the
  Private Company pursuant to which we may use the trade names and mark until
  December 31, 2009.&#160;&#160;In addition, pursuant to the Settlement Agreement,
  the Private Company has agreed to waive all claims relating to infringement of
  the trade names and mark prior to the entering into this license
  agreement.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There can
  be no assurance that the conditions to effectiveness in the Settlement Agreement
  will be completed and that the transactions contemplated thereby will be
  consummated</font>&#160;(see &#8220;Item 2. Management&#8217;s Discussion and Analysis of
  Financial Condition and Results of Operations&#8212;Settlement with the Private
  Company&#8221;).</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  liquid asphalt cement operations are dependent upon the Private Company and may
  be materially and adversely affected by the&#160;&#160;Bankruptcy
  Filings.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We provide
  liquid asphalt cement terminalling and storage services to the Private
  Company.&#160;&#160;The Private Company processes, distributes and markets
  liquid asphalt cement and finished asphalt products to third party
  customers.&#160;&#160;Pursuant to the Amended Omnibus Agreement, the Private
  Company has agreed, so long as the Terminalling Agreement is in effect, not to
  engage in, or acquire or invest in an entity that engages in, the business of
  terminalling and storing liquid asphalt cement within 50 miles of our liquid
  asphalt cement facilities and we have agreed, so long as the Terminalling
  Agreement is in effect, not to engage in, or acquire or invest in an entity that
  engages in, the business of processing, marketing and distributing liquid
  asphalt cement and finished asphalt products within 50 miles of our liquid
  asphalt cement facilities.&#160;&#160;As a result, subject to certain
  exceptions, we are contractually prohibited from marketing or distributing
  liquid asphalt cement directly to third party customers while the Terminalling
  Agreement is in effect.&#160;&#160;In addition, the Private Company is
  responsible for obtaining all environmental and other permits related to our
  liquid asphalt cement operations.&#160;&#160;The Private Company&#8217;s failure to
  obtain, renew or maintain compliance under these permits may materially
  adversely effect our operations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  asphalt industry in the United States is characterized by a high degree of
  seasonality. Much of this seasonality is due to the impact that weather
  conditions have on road construction schedules, particularly in cold weather
  states. Refineries produce liquid asphalt cement year round, but the peak
  asphalt demand season is during the warm weather months when most of the road
  construction activity in the United States takes place. As a result, liquid
  asphalt cement is typically purchased from refineries at low prices in the low
  demand winter months and then processed and sold at higher prices in the peak
  summer demand season.&#160;&#160;Although there remains some liquid asphalt
  cement in our asphalt storage tanks that was not sold during the summer of 2008,
  the Private Company, as of the date of the filing of this report, has not
  purchased any significant volumes of additional liquid asphalt cement during the
  recent winter months.&#160;&#160;Any significant decrease in the amount of
  revenues that we receive from our liquid asphalt cement terminalling and storage
  operations could have a material adverse effect on our cash flows, financial
  condition and results of operations.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
  February 6, 2009, the Private Company filed a motion in the Bankruptcy Court
  requesting approval of the sale of its asphalt related assets.&#160;&#160;There
  is significant uncertainty as to our revenues related to our asphalt assets and
  there is substantial risk that our asphalt assets may be idle during 2009 and
  subsequent years, which would adversely effect our financial condition and
  results of operations.&#160;&#160;Without revenues from our asphalt assets, we
  may be unable to meet the covenants, including the minimum liquidity and minimum
  receipt requirements, under our Forbearance Agreement with our senior secured
  lenders pursuant to which such lenders have agreed to forbear from exercising
  their rights and remedies arising from the events of default under our credit
  agreement.&#160;&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, we will&#160;receive the Private Company&#8217;s asphalt
  assets that are connected to our asphalt assets <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(unless
  the Private Company executes a definitive agreement to sell substantially all of
  its asphalt assets or business as a going concern to a third-party purchaser and
  we enter into a terminalling and storage agreement with such
  purchaser)</font>.&#160;&#160;There can be no assurance&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated</font> (see &#8220;Item
  2. Management&#8217;s Discussion and Analysis of Financial Condition and Results of
  Operations&#8212;Settlement with the Private Company&#8221;).&#160;&#160;Even if we acquire
  such asphalt assets, we may not be able to enter into agreements to provide
  terminalling and storage services for such assets.&#160;&#160;In
  addition,</font> if the Private Company sells its asphalt assets to a third
  party, we&#160;will need to negotiate a new terminalling and storage contract
  with the&#160;purchaser of such assets&#160;and such agreement may not be on as
  favorable terms as the Terminalling Agreement.&#160;&#160;Any significant
  decrease in the amount of revenues that we receive from our liquid asphalt
  cement terminalling and storage operations could have a material adverse effect
  on our cash flows, financial condition and results of operations.</font></div>
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          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Events
  of default currently exist under our credit agreement.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Events of
  default have occurred and are continuing under our credit
  agreement.&#160;&#160;We are therefore prohibited from borrowing under our
  credit facility to fund working capital needs or to pay distributions to our
  unitholders, among other things.&#160;&#160;In addition, the Private Company&#8217;s
  actions related to the Bankruptcy Filings as well as the Private Company&#8217;s
  liquidity issues and any corresponding impact upon us may result in additional
  events of default under our credit agreement.&#160;&#160;As a result, we are
  operating on cash flows received from operations and from a $25 million
  borrowing under our credit facility on July 8, 2008 prior to the occurrence of
  the events of default.&#160;&#160;If we are unable to sustain our sources of
  revenue generation and reestablish our relationships within the credit markets,
  we do not expect such cash flows to be sufficient to operate our business over
  the long-term.&#160;&#160;As of March 13, 2009, we have approximately
  $33.9&#160;million of cash that we are using to operate our
  business.&#160;&#160;No cure periods are applicable to the existing events of
  default.&#160;&#160;These events of default have not been waived and are
  continuing under our credit agreement.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under the
  Forbearance Agreement, as amended by the First Amendment,&#160;the Second
  Amendment and the&#160;Third Amendment,&#160;the lender&#8217;s forbearance is subject
  to certain conditions as described therein, including, among other items,
  periodic deliverables and minimum liquidity, minimum receipts and maximum
  disbursement requirements.&#160;&#160;If we fail to meet these conditions or are
  unable to obtain further forbearance from our lenders or a permanent waiver of
  the events of default under our credit agreement, we may be forced to sell
  assets, make a bankruptcy filing or take other action that could have a material
  adverse effect on our business, the price of our common units and our results of
  operations.&#160;&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  Forbearance Agreement, as amended by the First Amendment, the Second Amendment
  and Third Amendment, permanently reduced our revolving credit facility under the
  credit agreement from $350 million to $220 million.&#160;&#160;In addition, our
  interest expense has increased due to the events of default that exist under our
  credit agreement and our entering into the Forbearance Agreement, as amended by
  the First Amendment, the Second Amendment and the Third
  Amendment.&#160;&#160;For example, the weighted average interest rate incurred
  by us during the three months ended June 30, 2008 was 4.62% resulting in
  interest expense of approximately $4.3 million as compared to a weighted average
  interest rate incurred by us of <font style="FONT-WEIGHT: normal"><font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7.72</font>%
  during the three months ended&#160;December 31,&#160;2008 resulting in interest
  expense of approximately $<font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8.9</font>
  million.&#160;&#160;This increased interest expense may have a material adverse
  effect on our cash flows and results of operations.</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Due to the
  events of default, upon the expiration or termination of any applicable
  forbearance period, the lenders may, among other remedies, declare all
  outstanding amounts under the credit agreement immediately due and payable and
  exercise all other rights and remedies available to the lenders under the credit
  agreement and related loan documents, including taking available cash in our
  bank accounts.&#160;&#160;A vote of lenders having more than 50% of the sum of
  (i) the aggregate revolver commitments and (ii) the outstanding term loan are
  required to exercise such a remedy.&#160;&#160;If the lenders exercise such a
  remedy, we may be forced to make a bankruptcy filing or take other
  actions.&#160;&#160;We are also prohibited from making cash distributions to our
  unitholders while the events of default exist.&#160;&#160;Certain lenders under
  our credit facility are also lenders under the Private Company&#8217;s credit
  facility.&#160;&#160;The progress of the Private Company&#8217;s bankruptcy
  proceedings may influence the decisions of these lenders relating to our credit
  facility which could adversely affect us.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
  Change of Control of the Private Company may lead to additional uncertainty
  regarding our future operations and cash flows.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
  December 15, 2008, Red Apple, which is chaired by John Catsimatidis, announced
  that it controls five of the nine seats on the management committee of the
  general partner of the Private Company and therefore effectively controls the
  Private Company.&#160;&#160;Mr. Catsimatidis has indicated that Red Apple does
  not intend to liquidate the Private Company and that it plans on filing a new
  reorganization plan for the Private Company with the Bankruptcy
  Court.&#160;&#160;As of the date of the filing of this report, Red Apple has not
  filed a reorganization plan.&#160;&#160;There is no assurance that any
  reorganization plan will be submitted by Red Apple or that if a reorganization
  plan is submitted by Red Apple that the Bankruptcy Court will approve such plan
  or that continued performance by the Private Company under the Throughput
  Agreement or the Terminalling Agreement will be part of any such
  plan.&#160;&#160;In addition, the Private Company Change of Control may lead to
  additional uncertainty regarding our continued relationship with the Private
  Company.</font></div>
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        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  are subject to an SEC inquiry and a Federal Grand Jury subpoena.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July
  21, 2008, we received a letter from the staff of the SEC giving notice that the
  SEC is conducting an inquiry relating to us and requesting, among other things,
  that we voluntarily preserve, retain and produce to the SEC certain documents
  and information relating primarily to our disclosures respecting the Private
  Company&#8217;s liquidity issues, which were the subject of our July 17, 2008 press
  release.&#160;&#160;On October 22, 2008, we received a subpoena from the SEC
  pursuant to a formal order of investigation requesting certain documents
  relating to, among other things, the Private Company&#8217;s liquidity
  issues.&#160;&#160;We have been cooperating, and intend to continue cooperating,
  with the SEC in its investigation.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On July
  23, 2008, we and our general partner each received a Grand Jury subpoena from
  the United States Attorney&#8217;s Office in Oklahoma City, Oklahoma, requiring, among
  other things, that we and our general partner produce financial and other
  records related to our July 17, 2008 press release.&#160;&#160;We have been
  informed that the U.S. Attorneys&#8217; Offices for the Western District of Oklahoma
  and the Northern District of Oklahoma are in discussions regarding the
  subpoenas, and no date has been set for a response to the
  subpoenas.&#160;&#160;We and our general partner intend to cooperate fully with
  this investigation if and when it proceeds.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In the
  event that either the SEC inquiry or the Grand Jury investigation leads to
  action against any of our current or former directors or officers, or the
  Partnership itself, the trading price of our common units may be adversely
  impacted.&#160;&#160;In addition, the SEC inquiry and the Grand Jury
  investigation may result in the incurrence of significant legal expense, both
  directly and as the result of our indemnification
  obligations.&#160;&#160;&#160;These matters may also divert management&#8217;s
  attention from our operations which may cause our business to
  suffer.&#160;&#160;If we are subject to adverse findings in either of these
  matters, we could be required to pay damages or penalties or have other remedies
  imposed upon us which could have a material adverse effect on our business,
  financial condition, results of operations, cash flows and ability to make
  distributions to our unitholders.&#160;&#160;All or a portion of the defense
  costs and any amount we may be required to pay in connection with the resolution
  of these matters may not be covered by insurance.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  have been named as a party in lawsuits and may be named in additional litigation
  in the future, all of which could result in an unfavorable outcome and have a
  material adverse effect on our business, financial condition, results of
  operations, cash flows, ability to make distributions to our unitholders, the
  trading price of our common units and our ability to conduct our
  business.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Between
  July 21, 2008 and September 4, 2008, the following class action complaints were
  filed:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  1.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> Poelman v. SemGroup Energy
  Partners, L.P., et al</font>., Civil Action No. 08-CV-6477, in the United States
  District Court for the Southern District of New York (filed July 21,
  2008).&#160; The plaintiff voluntarily dismissed this case on </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  August 26, 2008;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  2.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> Carson v. SemGroup Energy Partners,
  L.P. et al</font><font style="DISPLAY: inline; FONT-WEIGHT: bold">.</font>,
  Civil Action No. 08-cv-425, in the Northern District of Oklahoma (filed July 22,
  2008);</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  3.&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> Charles D. Maurer SIMP Profit
  Sharing Plan f/b/o Charles D. Maurer v. SemGroup Energy Partners, L.P. et
  al.</font>, Civil Action No. 08-cv-6598, in the United States District Court for
  the Southern District of New York (filed </font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  July 25, 2008);</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  4.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> Michael Rubin v. SemGroup Energy
  Partners, L.P. et al.</font>, Civil Action No. 08-cv-7063, in the United States
  District Court for the Southern District of New York (filed August 8,
  2008);</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  5.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> Dharam V. Jain v. SemGroup Energy
  Partners, L.P. et al.</font>, Civil Action No. 08-cv-7510, in the United States
  District Court for the Southern District of New York&#160; (filed August 25,
  2008); and</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;
  6.&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; FONT-STYLE: italic"> William L. Hickman v. SemGroup
  Energy Partners, L.P. et al.</font>, Civil Action No. 08-cv-7749, in the United
  States District Court for the Southern District of New York (filed September 4,
  2008).</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;The<font style="DISPLAY: inline; FONT-STYLE: italic"> Carson</font> case was filed as a
  putative class action on behalf of all purchasers of our common units between
  February 20, 2008 and July 17, 2008.&#160;&#160;Plaintiff alleges violations of
  Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5, resulting in
  damages to members of the putative class.&#160; Plaintiff's specific allegations
  include that, despite an obligation to do so, the Defendants failed to disclose
  between February 20, 2008 and May 8, 2008 that the Private Company was engaged
  in high-risk crude oil hedging transactions that could affect its ability to
  continue as a going concern or that the Private Company was suffering from
  liquidity problems.&#160; Plaintiff seeks class certification, damages,
  interest, fees, and costs.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;The<font style="DISPLAY: inline; FONT-STYLE: italic"> Maurer</font> case was filed as a
  putative class action on behalf of all persons who purchased our common units
  pursuant to or traceable to the February 12, 2008 Registration Statement and
  Prospectus.&#160; Plaintiff alleges violations of Section 11 of the Securities
  Act, resulting in damages to members of the putative class.&#160; Plaintiff&#8217;s
  specific allegations include that, despite an obligation to do so, the
  Defendants failed to disclose in connection with the secondary offering in
  February 2008 that the Private Company was engaged in high-risk crude oil
  hedging transactions that could affect its ability to continue as a going
  concern or that the Private Company was suffering from liquidity problems.&#160;
  Plaintiff seeks class certification, damages, interest, fees, and
  costs.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;The<font style="DISPLAY: inline; FONT-STYLE: italic"> Rubin, Jain,</font> and<font style="DISPLAY: inline; FONT-STYLE: italic"> Hickman</font> cases were filed as
  putative class actions on behalf of all purchasers of our common units between
  July 17, 2007 and July 17, 2008.&#160; Plaintiffs allege violations of Sections
  11, 12(a)(2), and 15 of the Securities Act and violations of Sections 10(b) and
  20(a) of the Exchange Act and SEC Rule 10b-5, resulting in damages to members of
  the putative class.&#160; Plaintiff&#8217;s specific allegations include that, despite
  an obligation to do so, the Defendants failed to disclose between July 17, 2007
  and July 17, 2008 the adverse financial condition and lack of liquidity of the
  Private Company that was caused by the Private Company&#8217;s speculative and
  unauthorized hedging and trading in crude oil.&#160; Plaintiffs seek class
  certification, rescission of the sale of common units under Section 12(a)(2) of
  the Securities Act, damages, interest, fees, and costs.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Pursuant to a
  motion filed with the MDL Panel, the<font style="DISPLAY: inline; FONT-STYLE: italic"> Maurer</font> case has been
  transferred to the Northern District of Oklahoma and consolidated with the<font style="DISPLAY: inline; FONT-STYLE: italic"> Carson</font> case.&#160; The<font style="DISPLAY: inline; FONT-STYLE: italic"> Rubin, Jain,</font> and<font style="DISPLAY: inline; FONT-STYLE: italic"> Hickman</font> cases have also been
  transferred to the Northern District of Oklahoma.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;A hearing on
  motions for appointment as lead plaintiff was held in the<font style="DISPLAY: inline; FONT-STYLE: italic"> Carson</font> case on October 17,
  2008.&#160; At that hearing, the court granted a motion to consolidate the <font style="DISPLAY: inline; FONT-STYLE: italic">Carson</font> and <font style="DISPLAY: inline; FONT-STYLE: italic">Maurer</font> cases for pretrial
  proceedings, and the consolidated litigation is now pending as<font style="DISPLAY: inline; FONT-STYLE: italic"> In Re: SemGroup Energy Partners,
  L.P. Securities Litigation</font>, Case No. 08-CV-425-GKF-PJC. The court entered
  an order on October 27, 2008, granting the motion of Harvest Fund Advisors LLC
  to be appointed lead plaintiff in the consolidated litigation.&#160; On January
  23, 2009, the court entered a Scheduling Order providing, among other things,
  that the lead plaintiff may file a consolidated amended complaint within 70 days
  of the date of the order, and that defendants may answer or otherwise respond
  within 60 days of the date of the filing of a consolidated amended
  complaint.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We intend to
  vigorously defend these actions.&#160; There can be no assurance regarding the
  outcome of the litigation.&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We may become
  the subject of additional private or government actions regarding these matters
  in the future.&#160;&#160;Litigation may be time-consuming, expensive and
  disruptive to normal business operations, and the outcome of litigation is
  difficult to predict.&#160;&#160;The defense of these lawsuits may result in the
  incurrence of significant legal expense, both directly and as the result of our
  indemnification obligations.&#160;&#160;The litigation may also divert
  management&#8217;s attention from our operations which may cause our business to
  suffer.&#160;&#160;An unfavorable outcome in any of these matters may have a
  material adverse effect on our business, financial condition, results of
  operations, cash flows, ability to make distributions to our unitholders, the
  trading price of the our common units and our ability to conduct our
  business.<font style="DISPLAY: inline; FONT-WEIGHT: bold">&#160;</font>All or a
  portion of the defense costs and any amount we may be required to pay to satisfy
  a judgment or settlement of these claims may not be covered by
  insurance.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
  Private Company may not honor its indemnification obligations, which may expose
  us to increased losses.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;In the
  Amended Omnibus Agreement and other agreements with the Private Company, the
  Private Company has agreed to indemnify us for certain environmental and other
  claims relating to the crude oil and liquid asphalt cement assets that have been
  contributed to us.&#160;&#160;Due to the Bankruptcy Filings we may not be able
  to collect any amounts that would otherwise be payable under these
  indemnification provisions if such events were to occur.&#160;&#160;Pursuant to
  the Settlement Agreement, the Private Company will reject the Amended Omnibus
  Agreement including the indemnification provisions therein.&#160; If we
  experience an environmental or other loss and the Private Company fails to honor
  its indemnification obligations, we would experience increased losses which may
  have a material adverse effect on our business, financial condition, results of
  operations, cash flows, ability to make distributions to our unitholders, the
  trading price of our common units and our ability to conduct our
  business.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
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          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  common units were delisted from the Nasdaq and is currently quoted on the Pink
  Sheets, which may make buying or selling our common units more
  difficult</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
  at the opening of business on February 20, 2009, our common units were delisted
  from Nasdaq due to our failure to timely file this Quarterly Report as well as
  our Quarterly Report on Form 10-Q for the quarter ended September 30,
  2008.&#160;&#160;Our common units are currently traded on the Pink Sheets, which
  is an over-the-counter securities market, under the symbol
  SGLP.PK.&#160;&#160;The fact that our common units are not listed on a national
  securities exchange is likely to make trading such common units more difficult
  for broker-dealers, unitholders and investors, potentially leading to further
  declines in the price of our common units.&#160;&#160;In addition, it may limit
  the number of institutional and other investors that will consider investing in
  our common units, which may have an adverse effect on the price of our common
  units.&#160;&#160;It may also make it more difficult for us to raise capital in
  the future.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
  continue to work to become compliant with our SEC reporting obligations and
  intend to promptly seek the relisting of our common units on Nasdaq as soon as
  practicable after we have become compliant with such reporting
  obligations.&#160;&#160;However, there can be no assurances that we will be able
  to relist our common units on Nasdaq or any other national securities exchange
  and we may face a lengthy process to relist our common units if we are able to
  relist them at all.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">If
  our general partner fails to develop or maintain an effective system of internal
  controls, then we may not be able to accurately report our financial results or
  prevent fraud. As a result, current and potential unitholders could lose
  confidence in our financial reporting, which would harm our business and the
  trading price of our common units.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;SemGroup
  Energy Partners G.P., L.L.C., our general partner, has sole responsibility for
  conducting our business and for managing our operations. Effective internal
  controls are necessary for our general partner, on our behalf, to provide
  reliable financial reports, prevent fraud and operate us successfully as a
  public company. If our general partner&#8217;s efforts to develop and maintain its
  internal controls are not successful, it is unable to maintain adequate controls
  over our financial processes and reporting in the future or it is unable to
  assist us in complying with our obligations under Section 404 of the
  Sarbanes-Oxley Act of 2002, our operating results could be harmed or we may fail
  to meet our reporting obligations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We and our
  general partner rely upon the Private Company for our personnel, including those
  related to designing and implementing internal controls and our disclosure
  controls and procedures.&#160;&#160;Staff reductions by the Private Company or
  other departures by the Private Company&#8217;s employees that provide services to us
  could&#160;have a material adverse&#160;effect on internal controls and the
  effectiveness of our disclosure controls and procedures.&#160;&#160;Ineffective
  internal controls could cause us to report inaccurate financial information or
  cause investors to lose confidence in our reported financial information, which
  would likely have a negative effect on the trading price of our common
  units.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
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        </div>
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          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  may incur substantial costs as a result of events related to the Bankruptcy
  Filings and we may be unsuccessful in our efforts in effecting a sale of all or
  a portion of our assets.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Events
  related to the Bankruptcy Filings, the securities litigation and governmental
  investigations, and our efforts to enter into storage contracts with third party
  customers and pursue merger opportunities has resulted in increased expense and
  we expect it to continue to result in increased expense due to the costs related
  to legal and financial advisors as well as other related
  costs.&#160;&#160;General and administrative expenses (exclusive of noncash
  compensation expense related to the vesting of the units under the Plan)
  increased by approximately $6.6 million and $7.4 million, or approximately 287%
  and 322%, to approximately $8.9 million for the third quarter of 2008 and $9.7
  million for the fourth quarter of 2008, respectively, compared to $2.3 million
  in the second quarter of 2008.&#160;&#160;We expect this increased level of
  general and administrative expenses to continue into 2009.&#160;&#160;These
  increased costs may be substantial and could have a material adverse effect on
  our cash flows and results of operations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;In addition,
  we are currently pursuing various strategic alternatives for our business and
  assets including the possibility of entering into storage contracts with third
  party customers and the sale of all or a portion of our assets.&#160;&#160;The
  uncertainty relating to the Bankruptcy Filings and the recent global market and
  economic conditions may make it more difficult to pursue merger opportunities or
  enter into storage contracts with third party customers.&#160;&#160;If we are
  unable to contract with third parties or if our efforts to sell all or a portion
  of our assets are unsuccessful, it could have a material adverse effect on our
  cash flows, results of operations and ability to conduct our
  business.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">We may not be
  able to raise sufficient capital to operate or grow our business.
  </font>&#160;</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We are
  currently operating on cash flows received from operations and from a $25
  million borrowing under our credit facility on July 8, 2008 prior to the
  occurrence of the events of default under our credit agreement.&#160;&#160;If we
  are unable to sustain our sources of revenue generation and reestablish our
  relationships within the credit markets, we do not expect such cash flows to be
  sufficient to operate our business over the long-term.&#160;&#160;As of March
  13, 2009, we have approximately $33.9 million of cash that we are using to
  operate our business.&#160;&#160;Our ability to access capital markets may be
  limited due to the Bankruptcy Filings and the related uncertainty of our future
  cash flows.&#160;&#160;In addition, we may have difficulty obtaining a credit
  rating or any credit rating that we do obtain may be lower that it otherwise
  would be due to our relationships with the Private Company.&#160;&#160;The lack
  of a credit rating or a low credit rating may also adversely impact our ability
  to access capital markets.&#160;&#160;If we fail to raise additional capital or
  are unable to obtain further forbearance from our lenders or a permanent waiver
  of the events of default under our credit agreement, we may be forced to sell
  assets, make a bankruptcy filing or take other action that could have a material
  adverse effect on our business, the price of our common units and our results of
  operations.&#160;&#160;In addition, if we are unable to access the capital
  markets for acquisitions or expansion projects, it will have a material adverse
  effect on our results of operations and ability to conduct our business and may
  adversely effect the trading price of our common units.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  are not fully insured against all risks incident to our business, and could
  incur substantial liabilities as a result.&#160;&#160;In addition, we share some
  insurance policies with the Private Company and claims made by the Private
  Company under such policies or increased costs associated to renew such policies
  due to the Bankruptcy Filings may have a material adverse effect on our
  financial condition and results of operations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We may not be
  able to maintain or obtain insurance of the type and amount we desire at
  reasonable rates. As a result of changing market conditions, premiums and
  deductibles for certain of our insurance policies may increase substantially in
  the future. In some instances, certain insurance could become unavailable or
  available only for reduced amounts of coverage. If we were to incur a
  significant liability for which we were not fully insured, it could have a
  material adverse effect on our financial position and ability to make
  distributions to unitholders.</font></div>
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      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
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        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We share
  some insurance policies, including our general liability policy, with the
  Private Company. These policies contain caps on the insurer&#8217;s maximum liability
  under the policy, and claims made by either the Private Company or us are
  applied against the caps and deductibles. The possibility exists that, in an
  event in which we wish to make a claim under a shared insurance policy, our
  claim could be denied or only partially satisfied due to claims made by the
  Private Company against the policy cap. Further, where events occur that would
  entitle both the Private Company and us to benefits under these insurance
  policies, the full deductible may be borne by the first claimant under the
  policy. In addition, claims made by the Private Company could affect our
  premiums and our ability to obtain insurance in the future.&#160;&#160;The
  Bankruptcy Filings have had and may continue to have an adverse effect on our
  insurance premiums and coverage.&#160;&#160;Our premiums and ability to obtain
  insurance in the future could also be adversely impacted by the Bankruptcy
  Filings if the Private Company fails to renew any shared policies and we are
  required to purchase our own policy, cover any premiums currently being paid by
  the Private Company or if an insurance carrier increases the insurance premiums
  due to the Bankruptcy Filings.&#160;&#160;These increased costs could have a
  material adverse effect on our financial condition and results of
  operations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Risks
  Related to Our Business</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  depend upon the Private Company for a substantial portion of our revenues and
  are therefore indirectly subject to the business risks of the Private
  Company.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Because we depend upon the Private
  Company for a substantial portion of our revenues, we are indirectly subject to
  the business risks of the Private Company, many of which are similar to the
  business risks we face. In particular, these business risks include the
  following:</font></div>
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              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        inability of the Private Company to generate adequate gross margins from
        the purchase, transportation, storage and marketing of petroleum
        products;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">material
        reductions in the supply of crude oil, liquid asphalt cement and petroleum
        products;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
        material decrease in the demand for crude oil, finished asphalt and
        petroleum products in the markets served by the Private
        Company;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        inability of the Private Company to manage its commodity price risk
        resulting from its ownership of crude oil, liquid asphalt cement and
        petroleum products;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">contract
        non-performance by the Private Company&#8217;s customers;
    and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">various
        operational risks to which the Private Company&#8217;s business is
        subject.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>In addition, as a result of the
  Bankruptcy Filings, we are also currently subject to the risks described above
  under &#8220;&#8212;Risks Related to the Bankruptcy Filings.&#8221;</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
  Private Company&#8217;s obligations under the Throughput Agreement and the
  Terminalling Agreement may be reduced or suspended in some circumstances, which
  would reduce our ability to make distributions to our unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">67</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  addition to the impact of the Bankruptcy Filings described above, some of the
  circumstances under which the Private Company&#8217;s obligations under the Throughput
  Agreement and the Terminalling Agreement may be permanently reduced are within
  the exclusive control of the Private Company. Any such permanent reduction would
  reduce our ability to make distributions to our unitholders. For example, under
  the Throughput Agreement, if we and the Private Company cannot agree on an
  upfront payment or ratable fee surcharge to cover substantial and unanticipated
  capital expenditures at any of our facilities in order to comply with new laws
  or regulations, and if we are not able to direct the affected crude oil to
  mutually acceptable storage or gathering and transportation assets that we own,
  either party will have the right to remove the affected facility from the
  Throughput Agreement, and the Private Company&#8217;s minimum monthly payment
  obligation will be correspondingly reduced. The Private Company&#8217;s minimum
  monthly payment obligation may also be temporarily suspended under the
  Throughput Agreement or the Terminalling Agreement to the extent that the
  occurrence of a force majeure event that is outside the control of the parties
  prevents us from making our services available to the Private Company and the
  affected services under the Throughput Agreement or the Terminalling Agreement,
  as applicable, may be terminated if the force majeure event prevents performance
  for more than twelve months. &#160;Please see &#8220;Item 7. Management&#8217;s Discussion
  and Analysis of Financial Condition and Results of Operation&#8221; and &#8220;Item 13.
  Certain Relationships and Related Party Transactions&#8221; in our 2007 Form
  10-K.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, the Private Company will reject the Terminalling
  Agreement and the Throughput Agreement as part of the Bankruptcy Cases and we
  will&#160;receive the Private Company&#8217;s asphalt assets that are connected to our
  asphalt assets.&#160;&#160;In addition, pursuant to the Settlement Agreement, we
  will enter into a new throughput agreement with the Private Company pursuant to
  which we will provide certain crude oil gathering, transportation, terminalling
  and storage services to the Private Company.&#160;&#160;There can be no
  assurance <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated </font>(see &#8220;Item
  2. Management&#8217;s Discussion and Analysis of Financial Condition and Results of
  Operations&#8212;Settlement with the Private Company&#8221;).</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">Even if we regain
  compliance under our credit agreement, we may not be able to obtain funding or
  obtain funding on acceptable terms because of the deterioration of the credit
  and capital markets. This may hinder or prevent us from meeting our future
  capital needs.</font></font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Global
  financial markets and economic conditions have been, and continue to be,
  disrupted and volatile. The debt and equity capital markets have been
  exceedingly distressed. These issues, along with significant write-offs in the
  financial services sector, the re-pricing of credit risk and the current weak
  economic conditions have made, and will likely continue to make, it difficult to
  obtain funding.</font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  particular, the cost of raising money in the debt and equity capital markets has
  increased substantially while the availability of funds from those markets
  generally has diminished significantly. Also, as a result of concerns about the
  stability of financial markets generally and the solvency of counterparties
  specifically, the cost of obtaining money from the credit markets generally has
  increased as many lenders and institutional investors have increased interest
  rates, enacted tighter lending standards, refused to refinance existing debt at
  maturity at all or on terms similar to our current debt and reduced and, in some
  cases, ceased to provide funding to borrowers.&#160;&#160;These factors may have
  a material adverse effect on our ability to obtain a permanent waiver of the
  events of default under our credit agreement or to negotiate further forbearance
  with our lenders.</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due to
  these factors, we cannot be certain that funding will be available if needed and
  to the extent required, on acceptable terms or at all. If funding is not
  available when needed, or is available only on unfavorable terms, we may be
  unable to operate or grow our existing business, make future acquisitions, or
  otherwise take advantage of business opportunities or respond to competitive
  pressures any of which could have a material adverse effect on our financial
  condition and results of operations.&#160;&#160;In addition, such financing, if
  available, may be at higher interest rates or result in substantial equity
  dilution.</font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">We require a
  significant amount of cash to service our indebtedness. Our ability to generate
  cash depends on many factors beyond our control.</font></font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
  ability to make payments on and to refinance our indebtedness and to fund any
  future capital expenditures depends on our ability to generate cash in the
  future. This, to a certain extent, is subject to general economic, financial,
  competitive, legislative, regulatory and other factors that are beyond our
  control. We cannot assure you that we will generate sufficient cash flow from
  operations or that future borrowings will be available to us under our credit
  agreement or otherwise at all or in an amount sufficient to enable us to pay our
  indebtedness or to fund our other liquidity needs.</font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">68</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  may not have sufficient cash from operations following the establishment of cash
  reserves and payment of fees and expenses, including cost reimbursements to our
  general partner, to enable us to make cash distributions to holders of our
  common units and subordinated units.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Due to the events of default that have
  occurred and are continuing under our credit agreement, we are currently
  prohibited from paying distributions to our unitholders.&#160;&#160;Even if we
  regain compliance under our credit agreement or obtain permanent waivers of the
  events of default, we may not have sufficient available cash from operating
  surplus each quarter to enable us to make cash distributions. The amount of cash
  we can distribute on our units principally depends upon the amount of cash we
  generate from our operations, which will fluctuate from quarter to quarter based
  on, among other things, the risks described in this section, including the
  Bankruptcy Filings.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>In addition, the actual amount of cash
  we will have available for distribution will depend on other factors,
  including:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        level of capital expenditures we
  make;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        cost of acquisitions;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
        debt service requirements and other
  liabilities;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">fluctuations
        in our working capital needs;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
        ability to borrow funds and access capital
    markets;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">restrictions
        contained in our credit facility or other debt agreements, including the
        ability to make distributions while events of default exist under our
        credit facility; and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        amount of cash reserves established by our general
    partner.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
  amount of cash we have available for distribution to holders of our common units
  and subordinated units depends primarily on our cash flow and not solely on
  earnings reflected in our financial statements. Consequently, even if we are
  profitable, we may not be able to make cash distributions to holders of our
  common units and subordinated units.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Our
  unitholders should be aware that the amount of cash we have available for
  distribution depends primarily upon our cash flow and not solely on earnings
  reflected in our financial statements, which will be affected by non-cash items.
  As a result, we may make cash distributions during periods when we record losses
  for financial accounting purposes and may not make cash distributions during
  periods when we record net earnings for financial accounting
  purposes.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">A
  significant decrease in demand for crude oil and/or finished asphalt products in
  the areas served by our storage facilities and pipelines could reduce our
  ability to make distributions to our unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;A sustained
  decrease in demand for crude oil and/or finished asphalt products in the areas
  served by our storage facilities and pipelines could significantly reduce our
  revenues and, therefore, reduce our ability to make or increase distributions to
  our unitholders. Factors that could lead to a decrease in market demand for
  crude oil and finished asphalt products include:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">lower
        demand by consumers for refined products, including finished asphalt
        products, as a result of recession or other adverse economic conditions or
        due to high prices caused by an increase in the market price of crude oil
        or higher fuel taxes or other governmental or regulatory actions that
        increase, directly or indirectly, the cost of gasolines or other refined
        products;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
        shift by consumers to more fuel-efficient or alternative fuel vehicles or
        an increase in fuel economy of vehicles, whether as a result of
        technological advances by manufacturers, governmental or regulatory
        actions or otherwise; and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">fluctuations
        in demand for crude oil, such as those caused by refinery downtime or
        shutdowns, could also significantly reduce our revenues and, therefore,
        reduce our ability to make distributions to our
      unitholders.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
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          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">69</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-STYLE: normal; FONT-FAMILY: Times New Roman">Certain
  of our field and pipeline operating costs and expenses are fixed and do not vary
  with the volumes we gather and transport. These costs and expenses may not
  decrease ratably or at all should we experience a reduction in our volumes
  gathered or transmitted by our gathering and transportation operations. As a
  result, we may experience declines in our margin and profitability if our
  volumes decrease.&#160;&#160;Due to events related to the Bankruptcy Filings,
  the volumes being terminalled, stored, transported and gathered have decreased
  as compared to periods prior to the Bankruptcy Filings, which has negatively
  impacted total revenues.&#160; As an example, fourth quarter total revenues are
  approximately $9.2 million less than&#160;second quarter&#160;2008 total
  revenues, in each case excluding fuel surcharge revenues related to fuel and
  power consumed to operate our liquid asphalt cement storage tanks.&#160; As of
  the date of the filing of this report, we continue to collect the minimum
  revenues from the Private Company under the Terminalling Agreement for
  terminalling and storage services provided for liquid asphalt
  cement.&#160;&#160;Our future total revenues may be further impacted if the
  Private Company rejects the Terminalling Agreement or otherwise fails to make
  the minimum payments under the Terminalling Agreement.&#160; <font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-STYLE: normal; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, the Private Company will reject the Terminalling
  Agreement and the Throughput Agreement as part of the Bankruptcy Cases and we
  will&#160;receive the Private Company&#8217;s asphalt assets that are connected to our
  asphalt assets.&#160;&#160;In addition, pursuant to the Settlement Agreement, we
  will enter into a new throughput agreement with the Private Company pursuant to
  which we will provide certain crude oil gathering, transportation, terminalling
  and storage services to the Private Company.&#160;&#160;There can be no
  assurance <font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-STYLE: normal; FONT-FAMILY: Times New Roman">that
  the conditions to effectiveness in the Settlement Agreement will be completed
  and that the transactions contemplated thereby will be
  consummated</font>&#160;(see &#8220;Item 2. Management&#8217;s Discussion and Analysis of
  Financial Condition and Results of Operations&#8212;Settlement with the Private
  Company&#8221;).&#160; </font></font></font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">A
  material decrease in the production of crude oil from the oil fields served by
  our pipelines could materially reduce our ability to make distributions to our
  unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;The
  throughput on our crude oil pipelines depends on the availability of
  attractively priced crude oil produced from the oil fields served by such
  pipelines, or through connections with pipelines owned by third parties. Crude
  oil production may decline for a number of reasons, including natural declines
  due to depleting wells, a material decrease in the price of crude oil, or the
  inability of producers to obtain necessary drilling or other permits from
  applicable governmental authorities. If we are unable to replace volumes lost
  due to a temporary or permanent material decrease in production from the oil
  fields served by our crude oil pipelines, our throughput could decline, reducing
  our revenue and cash flow and adversely affecting our ability to make
  distributions to our unitholders. The Private Company may also have difficulty
  attracting producers while it is in bankruptcy.&#160;&#160;In addition, it is
  difficult to attract producers to a new gathering system if the producer is
  already connected to an existing system. As a result, the Private Company or
  third-party shippers on our pipeline systems may experience difficulty acquiring
  crude oil at the wellhead in areas where there are existing relationships
  between producers and other gatherers and purchasers of crude oil.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">A
  material decrease in the production of liquid asphalt cement could materially
  reduce our ability to make distributions to our unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;The
  throughput at our liquid asphalt cement terminalling and storage facilities
  depends on the availability of attractively priced liquid asphalt cement
  produced from the various liquid asphalt cement producing refineries. Liquid
  asphalt cement production may decline for a number of reasons, including
  refiners processing more light, sweet crude oil or refiners installing coker
  units that further refine heavy residual fuel oil bottoms such as liquid asphalt
  cement. If we are unable to replace volumes lost due to a temporary or permanent
  material decrease in production from the suppliers of liquid asphalt cement, our
  throughput could decline, reducing our revenue and cash flow and adversely
  affecting our ability to make distributions to our unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  debt levels and events of default under the credit agreement may limit our
  ability to make distributions and our flexibility in obtaining additional
  financing and in pursuing other business opportunities.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Our level of
  debt and the existing events of default under the credit facility could have
  important consequences for us, including the following:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
        ability to obtain additional financing, if necessary, for working capital,
        capital expenditures, acquisitions or other purposes may be impaired or
        such financing may not be available on favorable
    terms;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">we
        will need a substantial portion of our cash flow to make principal and
        interest payments on our debt, reducing the funds that would otherwise be
        available for operations, future business opportunities and distributions
        to unitholders;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
        debt level will make us more vulnerable to competitive pressures or a
        downturn in our business or the economy generally;
    and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
        debt level may limit our flexibility in responding to changing business
        and economic conditions.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">70</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-STYLE: normal; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-STYLE: normal; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Our ability
  to service our debt will depend upon, among other things, our future financial
  and operating performance, which will be affected by prevailing economic
  conditions and financial, business, regulatory and other factors. Our ability to
  service debt under our credit facility also will depend on market interest
  rates, since the interest rates applicable to our borrowings will fluctuate with
  the London Interbank Offered Rate, or LIBOR, or the prime rate, and are higher
  because events of default exist under the credit agreement. If our operating
  results are not sufficient to service our current or future indebtedness, we
  will be forced to take actions such as reducing distributions, reducing or
  delaying our business activities, acquisitions, investments or capital
  expenditures, selling assets, restructuring or refinancing our debt, or seeking
  additional equity capital. We may not be able to effect any of these actions on
  satisfactory terms, or at all.</font></font></font>
  
        <div>&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Restrictions
  in our credit facility may prevent us from engaging in some beneficial
  transactions or paying distributions to our unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Our credit
  facility contains covenants limiting our ability to make distributions to
  unitholders so long as an event of default exists under the credit agreement as
  is currently the case. In addition, our credit facility contains various
  covenants that limit, among other things, our ability to incur indebtedness,
  grant liens or enter into a merger, consolidation or sale of assets.
  Furthermore, our credit facility contains covenants requiring us to maintain
  certain financial ratios and tests. Any subsequent refinancing of our current
  debt may have similar or greater restrictions. Please see &#8220;&#8212;Risks Related to the
  Bankruptcy Filings&#8212;Events of default currently exist under our credit agreement&#8221;
  and &#8220;Item 2. Management&#8217;s Discussion and Analysis of Financial Condition and
  Results of Operations&#8212;Liquidity and Capital Resources.&#8221;</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">If we borrow funds to make our
  quarterly distributions, our ability to pursue acquisitions and other business
  opportunities may be limited and our operations may be materially </font><font style="DISPLAY: inline; FONT-STYLE: italic">and </font><font style="DISPLAY: inline; FONT-STYLE: italic">adversely </font><font style="DISPLAY: inline; FONT-STYLE: italic">a</font><font style="DISPLAY: inline; FONT-STYLE: italic">ffected</font>.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Available
  cash for the purpose of making distributions to unitholders includes working
  capital borrowings. If we borrow funds to pay one or more quarterly
  distributions, such amounts will incur interest and must be repaid in accordance
  with the terms of our credit facility. Currently we are prohibited from
  borrowing funds to pay distributions to our unitholders due to the events of
  default that have occurred and are continuing under our credit agreement. If we
  regain compliance under our credit facility or obtain permanent waivers of the
  events of default and are able to again borrow funds to pay distributions to our
  unitholders, any amounts borrowed for distributions to our unitholders will
  reduce the funds available to us for other purposes under our credit facility,
  including amounts available for use in connection with acquisitions and other
  business opportunities. &#160;If we are unable to pursue our growth strategy due
  to our limited ability to borrow funds, our operations may be materially and
  adversely affected.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  face intense competition in our gathering, transportation, terminalling and
  storage activities. Competition from other providers of crude oil gathering,
  transportation, terminalling and storage services that are able to supply the
  Private Company and our other customers with those services at a lower price
  could reduce our ability to make distributions to our unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We are
  subject to competition from other crude oil gathering, transportation,
  terminalling and storage operations that may be able to supply the Private
  Company and our other customers with the same or comparable services on a more
  competitive basis. We compete with national, regional and local gathering,
  storage, terminalling and pipeline companies, including the major integrated oil
  companies, of widely varying sizes, financial resources and experience. Some of
  these competitors are substantially larger than us, have greater financial
  resources, and control substantially greater storage capacity than we do. With
  respect to our gathering and transportation services, these competitors include
  TEPPCO Partners, L.P., Plains All American Pipeline, L.P., ConocoPhillips,
  Sunoco Logistics Partners L.P. and National Cooperative Refinery Association,
  among others. With respect to our storage and terminalling services, these
  competitors include BP plc, Enbridge Energy Partners, L.P. and Plains All
  American Pipeline, L.P. Some of these competitors have greater capital resources
  and control greater supplies of crude oil than the Private Company. Several of
  our competitors conduct portions of their operations through publicly traded
  partnerships with structures similar to ours, including Plains All American
  Pipeline, L.P., TEPPCO Partners, L.P., Sunoco Logistics Partners L.P. and
  Enbridge Energy Partners, L.P. Our ability to compete could be harmed by
  numerous factors, including:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">price
        competition;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        perception that another company can provide better
    service,</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        uncertainty relating to the Private Company having filed bankruptcy;
        and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        availability of alternative supply points, or supply points located closer
        to the operations of the Private Company&#8217;s
    customers.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">71</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-STYLE: normal; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;</font>In addition, the Private
  Company owns midstream assets and may engage in competition with us, subject to
  certain restrictions on the Private Company&#8217;s ability to acquire and construct
  liquid asphalt cement terminalling and storage assets. If we are unable to
  compete with services offered by other midstream enterprises, including the
  Private Company, our ability to make distributions to our unitholders may be
  adversely affected.</font></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Some
  of our pipeline systems are dependent upon their interconnections with other
  crude oil pipelines to reach end markets.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Some of our
  pipeline systems are dependent upon their interconnections with other crude oil
  pipelines to reach end markets. Reduced throughput on<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">&#160;</font>these
  interconnecting pipelines as a result of testing, line repair, reduced operating
  pressures or other causes could result in reduced throughput on our<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">&#160;</font>pipeline
  systems that would adversely affect our revenue and cash flow and our ability to
  make distributions to our unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  completed the acquisition of our asphalt assets on February 20, 2008. If our
  assets do not perform as expected, our future financial performance may be
  negatively impacted.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Our
  acquisition of our asphalt assets significantly increased the size of our
  company and diversified the geographic areas and lines of business in which we
  operate. We cannot assure our unitholders that we will achieve the desired
  profitability from our asphalt assets. In addition, our failure to successfully
  integrate our asphalt assets into our business could adversely affect our
  financial condition and results of operations. We face certain challenges as we
  work to integrate our asphalt assets into our business. In particular, the
  acquisition of our asphalt assets, by adding 46 terminals in 23 states, expanded
  our operations and the types of business in which we engage, significantly
  expanding our geographic scope and increasing the number of employees involved
  in our operations, thereby presenting us with significant challenges as we work
  to manage the increase in scale resulting from the acquisition. Delays in this
  process could have a material adverse effect on our revenues, expenses,
  operating results and financial condition. In addition, events outside of our
  control, including changes in state and federal regulation and laws as well as
  economic trends, also could adversely affect our ability to realize the
  anticipated benefits from the acquisition of our asphalt assets.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Further, the
  liquid asphalt cement operations may not perform in accordance with our
  expectations, we may lose key employees and our expectations with regards to
  integration and synergies may not be fully realized. Our failure to successfully
  integrate and operate our asphalt assets, and to realize the anticipated
  benefits of the acquisition could adversely affect our operating and financial
  results.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Prior
  to the Bankruptcy Filings, a principal focus of our business strategy was to
  grow and expand our business through acquisitions. If we are able to pursue this
  strategy in the future but are unable to make acquisitions on economically
  acceptable terms, our future growth may be limited.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Prior to the
  Bankruptcy Filings, a principal focus of our business strategy was to grow and
  expand our business through acquisitions.&#160;&#160;If we are able to stabilize
  our business, we may be able to again pursue this strategy.&#160;&#160;Our
  ability to grow depends, in part, on our ability to make acquisitions that
  result in an increase in the cash generated per unit from operations. If we are
  unable to make these accretive acquisitions, either because we are (1) unable to
  identify attractive acquisition candidates or negotiate acceptable purchase
  contracts with them, (2) unable to obtain financing for these acquisitions on
  economically acceptable terms or (3) outbid by competitors, then our future
  growth and ability to increase distributions will be limited. Furthermore, even
  if we do make acquisitions that we believe will be accretive, these acquisitions
  may nevertheless result in a decrease in the cash generated from operations per
  unit.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">72</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Any
  acquisition involves potential risks, including, among other
  things:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">mistaken
        assumptions about volumes, revenues and costs, including
        synergies;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">an
        inability to integrate successfully the businesses we
      acquire;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">an
        inability to hire, train or retain qualified personnel to manage and
        operate our business and assets;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        assumption of unknown liabilities;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">limitations
        on rights to indemnity from the
  seller;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">mistaken
        assumptions about the overall costs of equity or
    debt;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        diversion of management&#8217;s and employees&#8217; attention from other business
        concerns;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">unforeseen
        difficulties operating in new product areas or new geographic areas;
        and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">customer
        or key employee losses at the acquired
    businesses.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;If we
  consummate any future acquisitions, our capitalization and results of operations
  may change significantly, and our unitholders will not have the opportunity to
  evaluate the economic, financial and other relevant information that we will
  consider in determining the application of these funds and other
  resources.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Our
  acquisition strategy is based, in part, on our expectation of ongoing
  divestitures of energy assets by industry participants. A material decrease in
  such divestitures would limit our opportunities for future acquisitions and
  could adversely affect our operations and cash flows available for distribution
  to our unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Prior
  to the Bankruptcy Filings, our growth strategy included acquiring midstream
  entities or assets that are distinct and separate from our existing
  terminalling, storage, gathering and transportation operations.&#160;&#160;If we
  are able to pursue this strategy in the future, it could subject us to
  additional business and operating risks.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We may
  acquire midstream assets that have operations in new and distinct lines of
  business from our crude oil or our liquid asphalt cement operations. Integration
  of a new business is a complex, costly and time-consuming process. Failure to
  timely and successfully integrate acquired entities&#8217; new lines of business with
  our existing operations may have a material adverse effect on our business,
  financial condition or results of operations. The difficulties of integrating a
  new business with our existing operations include, among other
  things:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">operating
        distinct businesses that require different operating strategies and
        different managerial expertise;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        necessity of coordinating organizations, systems and facilities in
        different locations;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">integrating
        personnel with diverse business backgrounds and organizational cultures;
        and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">consolidating
        corporate and administrative
  functions.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;In addition,
  the diversion of our attention and any delays or difficulties encountered in
  connection with the integration of a new business, such as unanticipated
  liabilities or costs, could harm our existing business, results of operations,
  financial conditions and prospects. Furthermore, new lines of business will
  subject us to additional business and operating risks. For example, we may in
  the future determine to acquire businesses that are subject to significant risks
  due to fluctuations in commodity prices. These new business and operating risks
  could have a material adverse effect on our financial condition or results of
  operations.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">73</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Expanding
  our business by constructing new assets subjects us to risks that projects may
  not be completed on schedule, and that the costs associated with projects may
  exceed our expectations, which could cause our cash available for distribution
  to our unitholders to be less than anticipated.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;The
  construction of additions or modifications to our existing assets, and the
  construction of new assets, involves numerous regulatory, environmental,
  political, legal and operational uncertainties and requires the expenditure of
  significant amounts of capital. If we undertake these types of projects, they
  may not be completed on schedule or at all or at the budgeted cost. In addition,
  our revenues may not increase immediately upon the expenditure of funds on a
  particular project. Moreover, we may construct facilities to capture anticipated
  future growth in demand in a market in which such growth does not
  materialize.&#160; We acquired certain pipeline and related assets, including a
  130-mile, 8-inch pipeline that originates in Ardmore, Oklahoma and terminates in
  Drumright, Oklahoma from the Private Company in May 2008.&#160;&#160;We have
  suspended capital expenditures on this pipeline due to the Bankruptcy
  Filings.&#160; Management currently intends to put the asset into service by
  late 2009 or early 2010 and is exploring various alternatives to complete the
  project.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  are exposed to the credit risks of our third-party customers in the ordinary
  course of our gathering activities. Any material nonpayment or nonperformance by
  our third-party customers could reduce our ability to make distributions to our
  unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;In addition
  to our dependence on the Private Company, we are subject to risks of loss
  resulting from nonpayment or nonperformance by our third-party customers. Some
  of our customers may be highly leveraged and subject to their own operating and
  regulatory risks. In addition, any material nonpayment or nonperformance by our
  customers could require us to pursue substitute customers for our affected
  assets or provide alternative services. Any such efforts may not be successful
  or may not provide similar fees. These events could reduce our ability to make
  distributions to our unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  revenues from third-party customers are generated under contracts that must be
  renegotiated periodically and that allow the customer to reduce or suspend
  performance in some circumstances, which could cause our revenues from those
  contracts to decline and reduce our ability to make distributions to our
  unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Some of our
  contract-based revenues from customers other than the Private Company are
  generated under contracts with terms which allow the customer to reduce or
  suspend performance under the contract in specified circumstances, such as the
  occurrence of a catastrophic event to our or the customer&#8217;s operations. The
  occurrence of an event which results in a material reduction or suspension of
  our customer&#8217;s performance could reduce our ability to make distributions to our
  unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Many of our
  contracts with third-party customers for producer field services have terms of
  one year or less. As these contracts expire, they must be extended and
  renegotiated or replaced. We may not be able to extend, renegotiate or replace
  these contracts when they expire, and the terms of any renegotiated contracts
  may not be as favorable as the contracts they replace. In particular, our
  ability to extend or replace contracts could be harmed by numerous competitive
  factors, such as those described above under &#8220;&#8212;We face intense competition in
  our gathering, transportation, terminalling and storage activities. Competition
  from other providers of crude oil gathering, transportation, terminalling and
  storage services that are able to supply the Private Company and our other
  customers with those services at a lower price could reduce our ability to make
  distributions to our unitholders.&#8221; Additionally, we may incur substantial costs
  if modifications to our terminals are required in order to attract substitute
  customers or provide alternative services. If we cannot successfully renew
  significant contracts or must renew them on less favorable terms, or if we incur
  substantial costs in modifying our terminals, our revenues from these
  arrangements could decline and our ability to make distributions to our
  unitholders could suffer.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  may incur significant costs and liabilities as a result of pipeline integrity
  management program testing and any necessary pipeline repair, or preventative or
  remedial measures, which could have a material adverse effect on our results of
  operations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">74</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The DOT
  has adopted regulations requiring pipeline operators to develop integrity
  management programs for transportation pipelines located where a leak or rupture
  could do the most harm in &#8220;high consequence areas&#8221;, including high population
  areas, areas that are sources of drinking water, ecological resource areas that
  are unusually sensitive to environmental damage from a pipeline release and
  commercially navigable waterways, unless the operator effectively demonstrates
  by risk assessment that the pipeline could not affect the area. The regulations
  require operators of covered pipelines to:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">perform
        ongoing assessments of pipeline
  integrity;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">identify
        and characterize threats to pipeline segments that could impact a high
        consequence area;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">improve
        data collection, integration and
  analysis;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">repair
        and remediate the pipeline as necessary;
  and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">implement
        preventive and mitigating actions.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;</font></font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  addition to these adopted regulations, in September 2006, the DOT proposed
  amendment of existing pipeline safety standards including its integrity
  management programs to broaden the scope of coverage to include certain rural
  onshore hazardous liquid and low-stress pipeline systems found near &#8220;unusually
  sensitive areas,&#8221; including non-populated areas requiring extra protection
  because of the presence of sole source drinking water resources, endangered
  species, or other ecological resources. Also, in December 2006, the Pipeline
  Inspection, Protection, Enforcement and Safety Act of 2006 was enacted. This act
  reauthorizes and amends the DOT&#8217;s pipeline safety programs and includes a
  provision eliminating the regulatory exemption for hazardous liquid pipelines
  operated at low stress. Adoption of new or more stringent pipeline safety
  regulations affecting our gathering or low-stress pipelines could result in more
  rigorous and costly integrity management planning requirements being imposed on
  those lines, which could have a material adverse effect on our results of
  operations. Please read &#8220;Item 1. Business&#8212;Regulation&#8212;Pipeline Safety&#8221;&#160;in
  our 2007 Form 10-K for more information.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  operations are subject to environmental and worker safety laws and regulations
  that may expose us to significant costs and liabilities. Failure to comply with
  these laws and regulations could adversely affect our ability to make
  distributions to our unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Our midstream
  crude oil gathering, transportation, terminalling and storage operations,
  together with the liquid asphalt cement terminalling and storage assets that we
  acquired from the Private Company, are subject to stringent federal, state and
  local laws and regulations relating to the protection of the environment.
  Various governmental authorities, including the EPA, have the power to enforce
  compliance with these laws and regulations and the permits issued under them,
  and violators are subject to administrative, civil and criminal penalties,
  including civil fines, injunctions or both. Joint and several strict liability
  may be incurred without regard to fault or the legality of the original conduct
  under CERCLA, RCRA and analogous state laws for the remediation of contaminated
  areas. Private parties, including the owners of properties located near our
  terminalling and storage facilities or through which our pipeline systems pass,
  also may have the right to pursue legal actions to enforce compliance, as well
  as seek damages for non-compliance with environmental laws and regulations or
  for personal injury or property damage. Moreover, new stricter laws, regulations
  or enforcement policies could be implemented that significantly increase our
  compliance costs and the cost of any remediation that may become necessary, some
  of which may be material.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;In performing
  midstream operations and liquid asphalt cement terminalling services, we incur
  environmental costs and liabilities in connection with the handling of
  hydrocarbons and solid wastes. We currently own, operate or lease properties
  that for many years have been used for midstream activities, including
  properties in and around the Cushing Interchange, and with respect to our
  asphalt assets, for liquid asphalt cement terminalling and storage activities.
  Activities by us or prior owners, lessees or users of these properties over whom
  we had no control may have resulted in the spill or release of hydrocarbons or
  solid wastes on or under them. Additionally, some sites we own or operate are
  located near current or former storage, terminal and pipeline operations, and
  there is a risk that contamination has migrated from those sites to ours.
  Increasingly strict environmental laws, regulations and enforcement policies as
  well as claims for damages and other similar developments could result in
  significant costs and liabilities, and our ability to make distributions to our
  unitholders could suffer as a result. Please see &#8220;Item
  1&#8212;Business&#8212;Regulation&#8221;&#160;in our 2007 Form 10-K for more
  information.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">75</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  addition, the workplaces associated with the storage facilities and pipelines we
  operate are subject to OSHA requirements and comparable state statutes that
  regulate the protection of the health and safety of workers. The OSHA hazard
  communication standard requires that we maintain information about hazardous
  materials used or produced in our operations and that we provide this
  information to employees, state and local government authorities, and local
  residents. Failure to comply with OSHA requirements, including general industry
  standards, recordkeeping requirements and monitoring of occupational exposure to
  regulated substances, could subject us to fines or significant compliance costs
  and adversely affect our ability to make distributions to our
  unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  business involves many hazards and operational risks, including adverse weather
  conditions, which could cause us to incur substantial liabilities.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Our operations are subject to the many
  hazards inherent in the transportation and storage of crude oil and the storage
  of liquid asphalt cement, including:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">explosions,
        fires, accidents, including road and highway accidents involving our
        tanker trucks;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">extreme
        weather conditions, such as hurricanes which are common in the
        Gulf&#160;Coast and tornadoes and flooding which are common in the
        Midwest;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">damage
        to our pipelines, storage tanks, terminals and related
        equipment;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">leaks
        or releases of crude oil into the environment;
    and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">acts
        of terrorism or vandalism.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;If any of
  these events were to occur, we could suffer substantial losses because of
  personal injury or loss of life, severe damage to and destruction of property
  and equipment, and pollution or other environmental damage resulting in
  curtailment or suspension of our related operations. In addition, mechanical
  malfunctions, faulty measurement or other errors may result in significant costs
  or lost revenues.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  do not own all of the land on which our pipelines and facilities are located,
  which could disrupt our operations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We do not own
  all of the land on which our pipelines and facilities have been constructed, and
  we are therefore subject to the possibility of more onerous terms and/or
  increased costs to retain necessary land use if we do not have valid
  rights-of-way or if such rights-of-way or any material real property leases
  lapse or terminate. We obtain the rights to construct and operate our pipelines
  and some of our terminals and storage facilities on land owned by third parties
  and governmental agencies for a specific period of time. Our loss of these
  rights, through our inability to renew leases, right-of-way contracts or
  otherwise, could have a material adverse effect on our business, results of
  operations and financial condition and our ability to make cash distributions to
  you.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Terrorist
  attacks, and the threat of terrorist attacks, have resulted in increased costs
  to our business. Continued hostilities in the Middle East or other sustained
  military campaigns may adversely impact our results of operations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;The long-term
  impact of terrorist attacks, such as the attacks that occurred on September 11,
  2001, and the threat of future terrorist attacks on our industry in general, and
  on us in particular, is not known at this time. Increased security measures
  taken by us as a precaution against possible terrorist attacks have resulted in
  increased costs to our business. Uncertainty surrounding continued hostilities
  in the Middle East or other sustained military campaigns may affect our
  operations in unpredictable ways, including disruptions of crude oil supplies
  and markets for our services, and the possibility that infrastructure facilities
  could be direct targets of, or indirect casualties of, an act of
  terror.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Changes in
  the insurance markets attributable to terrorist attacks may make certain types
  of insurance more difficult for us to obtain. Moreover, the insurance that may
  be available to us may be significantly more expensive than our existing
  insurance coverage. Instability in the financial markets as a result of
  terrorism or war could also affect our ability to raise capital.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">76</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Risks
  Inherent in an Investment in Us</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Some
  of our general partner&#8217;s directors are affiliates of certain creditors of the
  Private Company; therefore, such creditors may have different business interests
  than the common unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Manchester
  and Alerian are creditors under a loan agreement with SemGroup Holdings, which
  is a subsidiary of the Private Company.&#160;&#160;This loan is secured by our
  subordinated units and incentive distribution rights and the membership
  interests in our general partner, owned by SemGroup Holdings.&#160;&#160;On July
  18, 2008, Manchester and Alerian declared an event of default under the loan
  agreement and exercised their right under a pledge agreement with SemGroup
  Holdings to direct the vote of the membership interests of our general
  partner.&#160;&#160;Manchester and Alerian exercised these voting rights to
  reconstitute our general partner&#8217;s board of directors.&#160;&#160;Manchester
  and/or Alerian may have business interests that are different from the business
  interests of our common unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  general partner has sole responsibility for conducting our business and managing
  our operations.&#160;&#160;Our general partner has conflicts of interest with us
  and limited fiduciary duties, which may permit it to favor its own interests to
  the detriment of our unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Conflicts of
  interest may arise between our general partner, on the one hand, and us and our
  unitholders, on the other hand.&#160;&#160;In resolving those conflicts of
  interest, our general partner may favor its own interests and the interests of
  its affiliates over the interests of our unitholders. Although the conflicts
  committee of our general partner&#8217;s board of directors may review such conflicts
  of interest, our general partner&#8217;s board of directors is not required to submit
  such matters to the conflicts committee. These conflicts include, among others,
  the following situations:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">neither
        our partnership agreement nor any other agreement requires the general
        partner or any person who controls the general partner to pursue a
        business strategy that favors us.&#160;&#160;Such persons may make these
        decisions in their best interest, which may be contrary to our
        interests;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
        general partner is allowed to take into account the interests of parties
        other than us, such as creditors and the Private Company and their
        affiliates, in resolving conflicts of
  interest;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">if
        we do not have sufficient available cash from operating surplus, our
        general partner could cause us to use cash from non-operating sources,
        such as asset sales, issuances of securities and borrowings, to pay
        distributions, which means that we could make distributions that
        deteriorate our capital base and that our general partner could receive
        distributions on its subordinated units and incentive distribution rights
        to which it would not otherwise be entitled if we did not have sufficient
        available cash from operating surplus to make such
        distributions;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
        general partner has limited its liability and reduced its fiduciary
        duties, and has also restricted the remedies available to our unitholders
        for actions that, without the limitations, might constitute breaches of
        fiduciary duty;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
        general partner determines the amount and timing of asset purchases and
        sales, borrowings, issuance of additional partnership securities and
        reserves, each of which can affect the amount of cash that is distributed
        to unitholders;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
        general partner determines the amount and timing of any capital
        expenditures and whether a capital expenditure is a maintenance capital
        expenditure, which reduces operating surplus, or an expansion capital
        expenditure, which does not reduce operating surplus. This determination
        can affect the amount of cash that is distributed to our unitholders and
        the ability of the subordinated units to convert to common
        units;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
        general partner may make a determination to receive a quantity of our
        Class B units in exchange for resetting the target distribution levels
        related to its incentive distribution rights without the approval of the
        conflicts committee of our general partner or our
      unitholders;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
        general partner determines which costs incurred by it and its affiliates
        are reimbursable by us and the Private Company determines the allocation
        of shared overhead expenses;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
        partnership agreement does not restrict our general partner from causing
        us to pay it or its affiliates for any services rendered to us or entering
        into additional contractual arrangements with any of these entities on our
        behalf;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
        general partner intends to limit its liability regarding our contractual
        and other obligations and, in some circumstances, is entitled to be
        indemnified by us;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
        general partner may exercise its limited right to call and purchase common
        units if it and its affiliates own more than 80% of the common
        units;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
        general partner controls the enforcement of obligations owed to us by our
        general partner and its affiliates;
  and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
        general partner decides whether to retain separate counsel, accountants or
        others to perform services for us.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">77</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  partnership agreement limits our general partner&#8217;s fiduciary duties to holders
  of our common units and subordinated units and restricts the remedies available
  to holders of our common units and subordinated units for actions taken by our
  general partner that might otherwise constitute breaches of fiduciary
  duty.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Our
  partnership agreement contains provisions that reduce the fiduciary standards to
  which our general partner would otherwise be held by state fiduciary duty laws.
  For example, our partnership agreement:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">permits
        our general partner to make a number of decisions in its individual
        capacity, as opposed to in its capacity as our general partner. This
        entitles our general partner to consider only the interests and factors
        that it desires, and it has no duty or obligation to give any
        consideration to any interest of, or factors affecting, us, our affiliates
        or any limited partner. Examples include the exercise of its right to
        receive a quantity of our Class B units in exchange for resetting the
        target distribution levels related to its incentive distribution rights,
        the exercise of its limited call right, the exercise of its rights to
        transfer or vote the units it owns, the exercise of its registration
        rights and its determination whether or not to consent to any merger or
        consolidation of the partnership or amendment to the partnership
        agreement;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">provides
        that our general partner will not have any liability to us or our
        unitholders for decisions made in its capacity as a general partner so
        long as it acted in good faith, meaning it believed the decision was in
        the best interests of our
  partnership;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">generally
        provides that affiliated transactions and resolutions of conflicts of
        interest not approved by the conflicts committee of the board of directors
        of our general partner acting in good faith and not involving a vote of
        unitholders must be on terms no less favorable to us than those generally
        being provided to or available from unrelated third parties or must be
        &#8220;fair and reasonable&#8221; to us, as determined by our general partner in good
        faith. In determining whether a transaction or resolution is &#8220;fair and
        reasonable,&#8221; our general partner may consider the totality of the
        relationships between the parties involved, including other transactions
        that may be particularly advantageous or beneficial to
    us;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">provides
        that our general partner and its officers and directors will not be liable
        for monetary damages to us, our limited partners or assignees for any acts
        or omissions unless there has been a final and non-appealable judgment
        entered by a court of competent jurisdiction determining that the general
        partner or its officers and directors acted in bad faith or engaged in
        fraud or willful misconduct or, in the case of a criminal matter, acted
        with knowledge that the conduct was criminal;
    and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">provides
        that in resolving conflicts of interest, it will be presumed that in
        making its decision the general partner acted in good faith, and in any
        proceeding brought by or on behalf of any limited partner or us, the
        person bringing or prosecuting such proceeding will have the burden of
        overcoming such presumption.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;By purchasing
  a common unit, a common unitholder will become bound by the provisions in the
  partnership agreement, including the provisions discussed above.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
  Private Company may compete with us, which could adversely affect our existing
  business and limit our ability to acquire additional assets or
  businesses.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Other than
  the Private Company&#8217;s agreement not to engage in the business of terminalling
  and storing liquid asphalt cement within 50 miles of our liquid asphalt<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">&#160;</font>cement
  facilities, neither our partnership agreement nor the Amended Omnibus Agreement
  prohibits the Private Company or any successor to the Private Company or
  acquirer of its assets from owning assets or engaging in<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">&#160;</font>businesses
  that compete directly or indirectly with us. In addition, subject to the
  restrictions above, the Private Company&#160;or any successor to the Private
  Company or acquirer of its assets may acquire, construct or dispose of<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">&#160;</font>additional
  midstream or other assets in the future, without any obligation to offer us the
  opportunity to purchase or construct any of those assets. &#160;As a
  result,<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-STYLE: italic">&#160;</font>competition
  from the Private Company&#160;or any successor to the Private Company or
  acquirer of its assets&#160;could adversely impact our results of operations and
  cash available for distribution.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">78</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  agreement not to compete with the Private Company may limit our ability to
  grow.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Pursuant to
  the Amended Omnibus Agreement, we have agreed that for so long as the
  Terminalling Agreement is in effect, we will not engage in the business of
  processing, marketing and distributing finished asphalt products within 50 miles
  of our liquid asphalt cement facilities. This agreement not to compete with the
  Private Company may limit our ability to grow if we decide to engage in the
  finished asphalt products business.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the Settlement Agreement, the Private Company will reject the Terminalling
  Agreement and the Amended Omnibus Agreement as part of the Bankruptcy Cases and
  we will no longer be limited by these restrictions.&#160;&#160;There can be no
  assurance <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated </font>(see &#8220;Item
  2. Management&#8217;s Discussion and Analysis of Financial Condition and Results of
  Operations&#8212;Settlement with the Private Company&#8221;).</font></font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Cost
  reimbursements due to our general partner and its affiliates for services
  provided, which are determined by our general partner, may be substantial and
  will reduce our cash available for distribution to our unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Pursuant to
  our partnership agreement, the Private Company receives reimbursement for the
  payment of operating expenses related to our operations and for the provision of
  various general and administrative services for our benefit. Payments for these
  services may be substantial and reduce the amount of cash available for
  distribution to unitholders. In addition, under Delaware partnership law, our
  general partner has unlimited liability for our obligations, such as our debts
  and environmental liabilities, except for our contractual obligations that are
  expressly made without recourse to our general partner. To the extent our
  general partner incurs obligations on our behalf, we are obligated under our
  partnership agreement to reimburse or indemnify our general partner. If we are
  unable or unwilling to reimburse or indemnify our general partner, our general
  partner may take actions to cause us to make payments of these obligations and
  liabilities. Any such payments would reduce the amount of cash otherwise
  available for distribution to our unitholders. Please see &#8220;Item 13&#8212;Certain
  Relationships and Related Party Transactions, and Director
  Independence&#8212;Agreements Related to Our Acquisition of the Asphalt Assets&#8212;Amended
  Omnibus Agreement&#8221; in our 2007 Form 10-K</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Holders
  of our common units have limited voting rights and are not entitled to elect our
  general partner or its directors.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Unlike the
  holders of common stock in a corporation, unitholders have only limited voting
  rights on matters affecting our business and, therefore, limited ability to
  influence management&#8217;s decisions regarding our business. Unitholders did not
  elect our general partner or our general partner&#8217;s board of directors, and have
  no right to elect our general partner or our general partner&#8217;s board of
  directors on an annual or other continuing basis. The present board of directors
  of our general partner was chosen by Manchester and Alerian pursuant to their
  rights under the Holdings Credit Agreements to direct the vote of the membership
  interests of our general partner.&#160;&#160;Furthermore, if the unitholders are
  dissatisfied with the performance of our general partner, they have little
  ability to remove our general partner. Amendments to our partnership agreement
  may be proposed only by or with the consent of our general partner. As a result
  of these limitations, the price at which the common units will trade could be
  diminished because of the absence or reduction of a takeover premium in the
  trading price.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Removal
  of our general partner without its consent will dilute and adversely affect our
  common unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;If our
  general partner is removed without cause during the subordination period and
  units held by our general partner and its affiliates are not voted in favor of
  that removal, all remaining subordinated units will automatically convert into
  common units and any existing arrearages on our common units will be
  extinguished. A removal of our general partner under these circumstances would
  adversely affect our common units by prematurely eliminating their distribution
  and liquidation preference over our subordinated units, which would otherwise
  have continued until we had met certain distribution and performance tests.
  Cause is narrowly defined to mean that a court of competent jurisdiction has
  entered a final, non-appealable judgment finding the general partner liable for
  actual fraud or willful or wanton misconduct in its capacity as our general
  partner. Cause does not include most cases of charges of poor management of the
  business, so the removal of the general partner because of the unitholders&#8217;
  dissatisfaction with our general partner&#8217;s performance in managing our
  partnership will most likely result in the termination of the subordination
  period and conversion of all subordinated units to common units.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">79</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Control
  of our general partner may be transferred to a third party without unitholder
  consent.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Our general
  partner may transfer its general partner interest to a third party in a merger
  or in a sale of all or substantially all of its assets without the consent of
  the unitholders. Furthermore, our partnership agreement does not restrict the
  ability of the Private Company, the owner of our general partner, from
  transferring all or a portion of its ownership interest in our general partner
  to a third party, or Manchester and Alerian from transferring all or a portion
  of their loan interest voting rights in the general partner to a third party.
  The new owner of our general partner would then be in a position to replace the
  board of directors and officers of our general partner with its own choices and
  thereby influence the decisions made by the board of directors and
  officers.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  may issue additional units without approval of our unitholders, which would
  dilute our unitholders&#8217; ownership interests.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Our
  partnership agreement does not limit the number or price of additional limited
  partner interests (including any securities of equal or senior rank to our
  common units, and options, rights, warrants and appreciation rights relating to
  any such securities) that we may issue at any time without the approval of our
  unitholders. In addition, because we are a limited partnership, we will not be
  subject to the shareholder approval requirements relating to the issuance of
  securities contained in Nasdaq Marketplace Rule 4350(i). The issuance by us of
  additional common units or other equity securities of equal or senior rank will
  have the following effects:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
        unitholders&#8217; proportionate ownership interest in us will
        decrease;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        amount of cash available for distribution on each unit may
        decrease;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">because
        a lower percentage of total outstanding units will be subordinated units,
        the risk that a shortfall in the payment of the minimum quarterly
        distribution will be borne by our common unitholders will
        increase;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        ratio of taxable income to distributions may
    increase;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        relative voting strength of each previously outstanding unit may be
        diminished; and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
        market price of the common units may
  decline.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  partnership agreement restricts the voting rights of unitholders, other than our
  general partner and its affiliates, including the Private Company, owning 20% or
  more of our common units.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Unitholders&#8217;
  voting rights are further restricted by the partnership agreement provision
  providing that any units held by a person that owns 20% or more of any class of
  units then outstanding, other than our general partner, its affiliates, their
  transferees and persons who acquired such units with the prior approval of the
  board of directors of our general partner, cannot vote on any matter. Our
  partnership agreement also contains provisions limiting the ability of
  unitholders to call meetings or to acquire information about our operations, as
  well as other provisions.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Affiliates
  of our general partner may sell common units in the public markets, which sales
  could have an adverse impact on the trading price of the common
  units.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Executive
  officers and directors of our general partner beneficially own an aggregate of
  575,970 common units and 1,667 subordinated units and the Private Company
  indirectly owns 12,570,504 subordinated units, although such units are
  collateral to a loan between SemGroup Holdings and Manchester and Alerian. All
  of the subordinated units will convert into common units at the end of the
  subordination period and may convert earlier. The sale of these units in the
  public markets could have an adverse impact on the price of the common units or
  on any trading market that may develop.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">80</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  general partner has a limited call right that may require our unitholders to
  sell their common units at an undesirable time or price.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;If at any
  time our general partner and its affiliates own more than 80% of the common
  units, our general partner will have the right, but not the obligation, which it
  may assign to any of its affiliates or to us, to acquire all, but not less than
  all, of the common units held by unaffiliated persons at a price not less than
  their then-current market price. As a result, our unitholders may be required to
  sell their common units at an undesirable time or price and may not receive any
  return on their investment. Our unitholders also may incur a tax liability upon
  a sale of their units. At the end of the subordination period, assuming no
  additional issuances of common units and no sales of subordinated units, our
  general partner and its affiliates will own 36.8% of the common
  units.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Common
  units held by persons who are not Eligible Holders will be subject to the
  possibility of redemption.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;The Longview
  system is, and any additional interstate pipelines that we acquire or construct
  may be, subject to the rate regulation of the FERC. Our general partner has the
  right under our partnership agreement to institute procedures, by giving notice
  to each of our unitholders, that would require transferees of common units and,
  upon the request of our general partner, existing holders of our common units to
  certify that they are Eligible Holders. The purpose of these certification
  procedures would be to enable us to utilize a federal income tax expense as a
  component of the pipeline&#8217;s cost of service upon which tariffs may be
  established under FERC rate-making policies applicable to entities that pass
  through their taxable income to their owners. Eligible Holders are individuals
  or entities subject to United States federal income taxation on the income
  generated by us or entities not subject to United States federal income taxation
  on the income generated by us, so long as all of the entity&#8217;s owners are subject
  to such taxation. If these tax certification procedures are implemented, we will
  have the right to redeem the common units held by persons who are not Eligible
  Holders at the lesser of the holder&#8217;s purchase price and the then-current market
  price of the units. The redemption price would be paid in cash or by delivery of
  a promissory note, as determined by our general partner.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  unitholders&#8217; liability may not be limited if a court finds that unitholder
  action constitutes control of our business.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;A general
  partner of a partnership generally has unlimited liability for the obligations
  of the partnership, except for those contractual obligations of the partnership
  that are expressly made without recourse to the general partner. Our partnership
  is organized under Delaware law and we conduct business in a number of other
  states. The limitations on the liability of holders of limited partner interests
  for the obligations of a limited partnership have not been clearly established
  in some of the other states in which we do business.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Our
  unitholders could be liable for our obligations as if they were a general
  partner if:</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
        court or government agency determined that we were conducting business in
        a state but had not complied with that particular state&#8217;s partnership
        statute; or</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
        unitholder&#8217;s right to act with other unitholders to remove or replace the
        general partner, to approve some amendments to our partnership agreement
        or to take other actions under our partnership agreement constitute
        &#8220;control&#8221; of our business.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Unitholders
  may have liability to repay distributions that were wrongfully distributed to
  them.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">81</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
  certain circumstances, unitholders may have to repay amounts wrongfully returned
  or distributed to them. Under Section 17-607 and 17-804 of the Delaware Revised
  Uniform Limited Partnership Act, we may not make a distribution to our
  unitholders if the distribution would cause our liabilities to exceed the fair
  value of our assets. Delaware law provides that for a period of three years from
  the date of the impermissible distribution, limited partners who received the
  distribution and who knew at the time of the distribution that it violated
  Delaware law will be liable to the limited partnership for the distribution
  amount. Substituted limited partners are liable for the obligations of the
  assignor to make contributions to the partnership that are known to the
  substituted limited partner at the time it became a limited partner and for
  unknown obligations if the liabilities could be determined from the partnership
  agreement. Liabilities to partners on account of their partnership interests and
  liabilities that are non-recourse to the partnership are not counted for
  purposes of determining whether a distribution is permitted.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Tax
  Risks to Common Unitholders</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  unitholders have been and will be required to pay taxes on their share of our
  taxable income even if they have not or do not receive any cash distributions
  from us.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Because our
  unitholders are treated as partners to whom we will allocate taxable income
  which could be different in amount than the cash we distribute, they will be
  required to pay any federal income taxes and, in some cases, state and local
  income taxes on their share of our taxable income, even if our unitholders
  receive no cash distributions from us. In this regard, we did not pay a
  distribution to our unitholders for the quarters ended June 30, 2008, September
  30, 2008, and December 31, 2008.&#160;&#160;In addition, we do not expect to
  make a distribution relating to the first quarter of 2009 and may not be able to
  make distributions in the future.&#160;&#160;Thus, our unitholders may not
  receive cash distributions from us equal to their share of our taxable income or
  even equal to the actual tax liability that results from their share of our
  taxable income.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  tax treatment depends on our status as a partnership for federal income tax
  purposes, as well as our not being subject to a material amount of entity-level
  taxation by individual states. If the IRS were to treat us as a corporation or
  if we were to become subject to a material amount of entity-level taxation for
  state tax purposes, then our cash available for distribution to our unitholders
  would be substantially reduced.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;The
  anticipated after-tax economic benefit of an investment in our common units
  depends largely on us being treated as a partnership for federal income tax
  purposes.&#160;&#160;If less than 90% of the gross income of a publicly traded
  partnership, such as us, for any taxable year is &#8220;qualifying income&#8221; from
  sources such as the transportation, marketing (other than to end users), or
  processing of crude oil, natural gas or products thereof, interest, dividends or
  similar sources, that partnership will be taxable as a corporation under Section
  7704 of the Internal Revenue Code for federal income tax purposes for that
  taxable year and all subsequent years.&#160;&#160;In this regard, because the
  income we earn from the Private Company is &#8220;qualifying income&#8221; any material
  reduction or elimination of that income, or any amendment to the Throughput
  Agreement or the Terminalling Agreement which changes the nature of the services
  provided or the income generated thereunder, may cause our remaining &#8220;qualifying
  income&#8221; to constitute less than 90% of our gross income.&#160;&#160;As a result,
  we could become taxable as a corporation for federal income tax purposes, unless
  we were to transfer the businesses that generate non-qualifying income to one or
  more subsidiaries taxed as corporations and pay entity level income taxes on
  such non-qualifying income.&#160;&#160;The IRS has not provided any ruling to us
  on this matter.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;If we were
  treated as a corporation for federal income tax purposes, then we would pay
  federal income tax on our income at the corporate tax rate, which is currently a
  maximum of 35%, and would likely pay state income tax at varying
  rates.&#160;&#160;Distributions would generally be taxed again to unitholders as
  corporate distributions and none of our income, gains, losses, deductions or
  credits would flow through to our unitholders.&#160;&#160;Because a tax would be
  imposed upon us as an entity, cash available for distribution to our unitholders
  would be substantially reduced.&#160;&#160;Treatment of us as a corporation
  would result in a material reduction in the anticipated cash flow and after-tax
  return to unitholders and thus would likely result in a substantial reduction in
  the value of our common units.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
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        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Current law
  may change, so as to cause us to be treated as a corporation for federal income
  tax purposes or otherwise subject us to entity-level taxation. In addition,
  because of widespread state budget deficits and other reasons, several states
  are evaluating ways&#160;&#160;to subject partnerships to entity-level taxation
  through the imposition of state income, franchise and other forms of taxation.
  For example, beginning in 2008 we will be required to pay annually a Texas
  franchise tax at a maximum effective rate of 0.7% of our gross income
  apportioned to Texas with respect to the prior year.&#160;&#160;As of June 30,
  2008, we paid $141,000 representing&#160;our estimated tax liability related to
  our 2007 gross income apportioned to Texas.&#160;&#160;Imposition of such a tax
  on us by Texas and, if applicable, by any other state will reduce the cash
  available for distribution to our unitholders. The partnership agreement
  provides that if a law is enacted or existing law is modified or interpreted in
  a manner that subjects us to taxation as a corporation or otherwise subjects us
  to entity-level taxation for federal, state or local income tax purposes, the
  minimum quarterly distribution amount and the target distribution amounts will
  be adjusted to reflect the impact of that law on us.</font></div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
  tax treatment of publicly traded partnerships or an investment in our common
  units could be subject to potential legislative, judicial or administrative
  changes and differing interpretations, possibly on a retroactive
  basis.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;The present
  federal income tax treatment of publicly traded partnerships, including us, or
  an investment in our common units may be modified by administrative, legislative
  or judicial interpretation at any time. For example, members of Congress are
  considering substantive changes to the existing federal income tax laws that
  affect certain publicly traded partnerships. Any modification to the federal
  income tax laws and interpretations thereof may or may not be applied
  retroactively. Although the currently proposed legislation would not appear to
  affect our tax treatment as a partnership, we are unable to predict whether any
  of these changes, or other proposals, will ultimately be enacted. Any such
  changes could negatively impact the value of an investment in our common
  units.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">If
  the IRS contests any of the federal income tax positions we take, the market for
  our common units may be adversely affected, and the costs of any contest will
  reduce our cash available for distribution to our unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We have not
  requested a ruling from the IRS with respect to our treatment as a partnership
  for federal income tax purposes or any other matter affecting us. The IRS may
  adopt positions that differ from the conclusions of our counsel. It may be
  necessary to resort to administrative or court proceedings to sustain some or
  all of our counsel&#8217;s conclusions or the positions we take. A court may not agree
  with some or all of our counsel&#8217;s conclusions or the positions we take. Any
  contest with the IRS may materially and adversely impact the market for our
  common units and the price at which they trade. In addition, the costs of any
  contest with the IRS will be borne indirectly by our unitholders and our general
  partner because the costs will reduce our cash available for
  distribution.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Tax
  gain or loss on the disposition of our common units could be more or less than
  expected.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;If our
  unitholders sell their common units, they will recognize a gain or loss equal to
  the difference between the amount realized and their tax basis in those common
  units. Prior distributions to our unitholders in excess of the total net taxable
  income our unitholders were allocated for a common unit, which decreased their
  tax basis in that common unit, will, in effect, become taxable income to our
  unitholders if the common unit is sold at a price greater than their tax basis
  in that common unit, even if the price our unitholders receive is less than
  their original cost. A substantial portion of the amount realized, whether or
  not representing gain, may be ordinary income. In addition, if our unitholders
  sell their units, they may incur a tax liability in excess of the amount of cash
  our unitholders receive from the sale.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Tax-exempt
  entities, regulated investment companies and foreign persons face unique tax
  issues from owning common units that may result in adverse tax consequences to
  them.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Investment in
  common units by tax-exempt entities, such as individual retirement accounts
  (known as IRAs), regulated investment companies (known as mutual funds), and
  non-U.S. persons raises issues unique to them. For example, virtually all of our
  income allocated to organizations exempt from federal income tax, including
  individual retirement accounts and other retirement plans, will be unrelated
  business taxable income and will be taxable to them. Distributions to non-U.S.
  persons will be reduced by withholding taxes at the highest applicable effective
  tax rate, and non-U.S. persons will be required to file United States federal
  income tax returns and pay tax on their share of our taxable income. If a
  potential unitholder is a tax-exempt entity or a foreign person, it should
  consult its tax advisor before investing in our common units.</font></div>
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        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  will treat each purchaser of units as having the same tax benefits without
  regard to the units purchased. The IRS may challenge this treatment, which could
  adversely affect the value of the common units.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Because we cannot match transferors and
  transferees of common units and because of other reasons, we will adopt
  depreciation and/or amortization positions that may not conform with all aspects
  of existing Treasury regulations and, as a result, our counsel, Baker Botts
  L.L.P., is unable to opine as to the validity of these positions. A successful
  IRS challenge to those positions could adversely affect the amount of tax
  benefits available to our unitholders. It also could affect the timing of these
  tax benefits or the amount of gain from their sale of common units and could
  have a negative impact on the value of our common units or result in audit
  adjustments to our unitholders&#8217; tax returns.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">The
  sale or exchange of 50% or more of our capital and profits interests during any
  twelve-month period will result in the termination of our partnership for
  federal income tax purposes.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>We will be considered to have
  terminated for federal income tax purposes if there are one or more transfers of
  interests in our partnership that together represent a sale or exchange of 50%
  or more of the total interests in our capital and profits within a twelve-month
  period. For these purposes,</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">multiple
        transfers of the same interest within a twelve month period will be
        counted only once;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">if
        the Private Company sells or exchanges its interests in SemGroup Holdings
        or our general partner, the interests held by SemGroup Holdings or our
        general partner, as the case may be, in us will be deemed to have been
        sold or exchanged; and</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div>
        <table cellpadding="0" cellspacing="0" id="list" width="100%">
            <tr valign="top">
              <td align="right" style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif">&#183;&#160;&#160;</font></div>
              </td>
              <td>
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">if
        50% or more of the total interests in the Private Company&#8217;s capital and
        profits are sold or exchanged within a twelve month period, the Private
        Company, SemGroup Holdings and the general partner will be deemed to have
        sold or exchanged all of their interests in
  us.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Our termination would, among other
  things, result in the closing of our taxable year for all unitholders, which
  would result in us filing two tax returns (and our unitholders could receive two
  Schedules K-1) for one fiscal year and could result in a deferral of
  depreciation deductions allowable in computing our taxable income. In the case
  of a unitholder reporting on a taxable year other than a fiscal year ending
  December 31, the closing of our taxable year may also result in more than twelve
  months of our taxable income or loss being includable in his taxable income for
  the year of termination. Our termination currently would not affect our
  classification as a partnership for federal income tax purposes, but instead, we
  would be treated as a new partnership for tax purposes. If treated as a new
  partnership, we must make new tax elections and could be subject to penalties if
  we are unable to determine that a termination occurred.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Our
  unitholders likely will be subject to state and local taxes and return filing or
  withholding requirements as a result of investing in our common
  units.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>In addition to federal income taxes,
  our unitholders will likely be subject to other taxes, such as state and local
  income taxes, unincorporated business taxes and estate, inheritance, or
  intangible taxes that are imposed by the various jurisdictions in which we do
  business or own property. Our unitholders likely will be required to file state
  and local income tax returns and pay state and local income taxes in some or all
  of these various jurisdictions. Further, our unitholders may be subject to
  penalties for failure to comply with those requirements. We own property and
  conduct business in Texas, Oklahoma, Kansas, Colorado, New Mexico, Arkansas,
  California, Georgia, Idaho, Illinois, Indiana, Missouri, Michigan, Montana,
  Nebraska, Nevada, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee,
  Utah, Virginia and Washington. Of these states, Texas does not currently impose
  a state income tax on individuals. We may own property or conduct business in
  other states or foreign countries in the future. It is each unitholder&#8217;s
  responsibility to file all federal, state and local tax returns. Under the tax
  laws of some states where we will conduct business, we may be required to
  withhold a percentage from amounts to be distributed to a unitholder who is not
  a resident of that state. For example, in the case of Oklahoma, we are required
  to either report detailed tax information about our non-Oklahoma resident
  unitholders with an income in Oklahoma in excess of $500 to the taxing
  authority, or withhold an amount equal to 5% of the portion of our distributions
  to unitholders which is deemed to be the Oklahoma share of our income.
  Similarly, we are required to withhold Kansas income tax at a rate of 6.45% on
  each non-Kansas resident unitholder&#8217;s share of our taxable income that is
  attributable to Kansas (regardless of whether such income is distributed),
  unless the non-Kansas resident unitholder files a tax reporting affidavit with
  us which we, in turn, are required to file with the Kansas Department of
  Revenue. Our counsel has not rendered an opinion on the state and local tax
  consequences of an investment in our common units.</font></div>
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          <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  prorate our items of income, gain, loss and deduction between transferors and
  transferees of our units each month based upon the ownership of our units on the
  first day of each month, instead of on the basis of the date a particular unit
  is transferred. The IRS may challenge this treatment, which could change the
  allocation of items of income, gain, loss and deduction among our
  unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;We prorate
  our items of income, gain, loss and deduction between transferors and
  transferees of our units each month based upon the ownership of our units on the
  first day of each month, instead of on the basis of the date a particular unit
  is transferred. The use of this proration method may not be permitted under
  existing Treasury Regulations, and, accordingly, our counsel is unable to opine
  as to the validity of this method. If the IRS were to challenge this method or
  new Treasury regulations were issued, we may be required to change the
  allocation of items of income, gain, loss and deduction among our
  unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">A
  unitholder whose units are loaned to a &#8220;short seller&#8221; to cover a short sale of
  units may be considered as having disposed of those units. If so, he would no
  longer be treated for tax purposes as a partner with respect to those units
  during the period of the loan and may recognize gain or loss from the
  disposition.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Because a
  unitholder whose units are loaned to a &#8220;short seller&#8221; to cover a short sale of
  units may be considered as having disposed of the loaned units, he may no longer
  be treated for tax purposes as a partner with respect to those units during the
  period of the loan to the short seller and the unitholder may recognize gain or
  loss from such disposition. Moreover, during the period of the loan to the short
  seller, any of our income, gain, loss or deduction with respect to those units
  may not be reportable by the unitholder and any cash distributions received by
  the unitholder as to those units could be fully taxable as ordinary income. Our
  counsel has not rendered an opinion regarding the treatment of a unitholder
  where common units are loaned to a short seller to cover a short sale of common
  units; therefore, unitholders desiring to assure their status as partners and
  avoid the risk of gain recognition from a loan to a short seller are urged to
  modify any applicable brokerage account agreements to prohibit their brokers
  from borrowing their units.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">We
  will adopt certain valuation methodologies that may result in a shift of income,
  gain, loss and deduction between the general partner and the unitholders. The
  IRS may challenge this treatment, which could adversely affect the value of the
  common units.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;When we issue
  additional units or engage in certain other transactions, we determine the fair
  market value of our assets and allocate any unrealized gain or loss attributable
  to our assets to the capital accounts of our unitholders and our general
  partner. Our methodology may be viewed as understating the value of our assets.
  In that case, there may be a shift of income, gain, loss and deduction between
  certain unitholders and the general partner, which may be unfavorable to such
  unitholders. Moreover, under our valuation methods, subsequent purchasers of
  common units may have a greater portion of their Internal Revenue Code Section
  743(b) adjustment allocated to our tangible assets and a lesser portion
  allocated to our intangible assets. Because the determination of value and the
  allocation of value are factual matters, rather than legal matters, our counsel
  is unable to opine as to these matters. The IRS may challenge our valuation
  methods, or our allocation of the Section 743(b) adjustment attributable to our
  tangible and intangible assets, and&#160;&#160;allocations of income, gain, loss
  and deduction between the general partner and certain of our
  unitholders.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;A successful
  IRS challenge to these methods or allocations could adversely affect the amount
  of taxable income or loss being allocated to our unitholders. It also could
  affect the amount of gain from our unitholders&#8217; sale of common units and could
  have a negative impact on the value of the common units or result in audit
  adjustments to our unitholders&#8217; tax returns without the benefit of additional
  deductions.</font></div><br>
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        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a name="defaults">Item&#160;3.</a></font></div>
              </td>
              <td align="left" valign="top" width="69%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Defaults
        Upon Senior Securities</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Events of
  default have occurred and are continuing under our credit
  agreement.&#160;&#160;We are therefore prohibited from borrowing under our
  credit facility to fund working capital needs or to pay distributions to our
  unitholders, among other things.&#160;In addition, the Private Company&#8217;s actions
  related to the Bankruptcy Filings as well as the Private Company&#8217;s liquidity
  issues and any corresponding impact upon us may result in additional events of
  default under our credit agreement.&#160;&#160;As a result, we are operating on
  cash flows received from operations and from a $25 million borrowing under our
  credit facility on July 8, 2008 prior to the occurrence of the events of
  default.&#160;&#160;If we are unable to sustain our sources of revenue
  generation and reestablish our relationships within the credit markets, we do
  not expect such cash flows to be sufficient to operate our business over the
  long-term.&#160;&#160;No cure periods are applicable to the existing events of
  default.&#160;&#160;As of March 13, 2009, we have approximately $33.9 million of
  cash that we are using to operate our business.&#160;&#160;These events of
  default have not been waived and are continuing under our credit
  agreement.&#160;&#160;Due to the existing events of default under our credit
  agreement, we are not able to borrow under its credit facility to fund working
  capital needs or for other purposes.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
  on September 18, 2008, we and the requisite lenders under our credit facility
  entered into the Forbearance Agreement under which the lenders agreed, subject
  to specified limitations and conditions, to forbear from exercising their rights
  and remedies arising from the events of default described above and other
  defaults or events of default described therein for&#160;the Forbearance
  Period.&#160;&#160;On December 11, 2008, the lenders agreed to extend the
  Forbearance Period until December 18, 2008 pursuant to the First
  Amendment.&#160;&#160;On December 18, 2008, we and the requisite lenders entered
  into the Second Amendment under which the lenders agreed, subject to specified
  limitations and conditions, to forbear from exercising their rights and remedies
  arising from the events of default described above and other defaults or events
  of default described therein until March 18, 2009.&#160; <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On March
  18, 2009, we and the requisite lenders entered into the Third Amendment under
  which the lenders agreed, subject to specified limitations and conditions, to
  forbear from exercising their rights and remedies arising from the events of
  default described above and other defaults or events of default described
  therein for&#160;the Extended Forbearance
  Period.</font>&#160;&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior to
  the execution of the Forbearance Agreement, the credit agreement was comprised
  of a $350 million revolving credit facility and a $250 million term loan
  facility.&#160;&#160;The Forbearance Agreement permanently reduced our revolving
  credit facility under the credit agreement from $350 million to $300 million and
  prohibited us from borrowing additional funds under our revolving credit
  facility during the Forbearance Period.&#160;&#160;&#160;Under the Forbearance
  Agreement, we agreed to pay the lenders executing the Forbearance Agreement a
  fee equal to 0.25% of the aggregate commitments under the credit agreement after
  giving affect to the above described commitment reduction.&#160;&#160;The Second
  Amendment further permanently reduced our revolving credit facility under the
  credit agreement from $300 million to $220 million.&#160; The Third Amendment
  prohibits us from borrowing additional funds under our revolving credit facility
  during the Extended Forbearance Period.&#160;&#160;In addition, under the Second
  Amendment, we agreed to pay the lenders executing the Second Amendment a fee
  equal to 0.375% of the aggregate commitments under the credit agreement after
  the above described commitment reduction.&#160;&#160;As of March 13, 2009, we
  had $448.1 million in outstanding borrowings under our credit facility
  (including $198.1 million under its revolving credit facility and $250 million
  under its term loan facility) with an aggregate unused credit availability of
  approximately $21.9 million under our credit facility.&#160;&#160;As described
  above, we are prohibited from borrowing additional funds under our credit
  agreement during the Extended Forbearance Period.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior to
  the events of default, indebtedness under the credit agreement bore interest at
  our option, at either (i)&#160;the higher of the administrative agent&#8217;s prime
  rate or the federal funds rate plus 0.5%, plus an applicable margin that ranges
  from 0.50% to 1.75%, depending on our total leverage ratio and senior secured
  leverage ratio, or (ii)&#160;LIBOR plus an applicable margin that ranges from
  1.50% to 2.75%, depending upon our total leverage ratio and senior secured
  leverage ratio.&#160;&#160;During the Forbearance Period indebtedness under the
  credit agreement bore interest at our option, at either (i)&#160;the
  administrative agent&#8217;s prime rate or the federal funds rate plus 0.50%, plus an
  applicable margin that ranges from 2.75% to 3.75%, depending upon our total
  leverage ratio, or (ii)&#160;LIBOR plus an applicable margin that ranges from
  4.25% to 5.25%, depending upon our total leverage ratio.&#160;&#160;Pursuant to
  the Second Amendment, commencing on December 12, 2008, indebtedness under the
  credit agreement bears interest at our option, at either (i)&#160;the
  administrative agent&#8217;s prime rate or the federal funds rate plus 5.0% per annum,
  with a prime rate or federal funds rate floor of 4.0% per annum, or
  (ii)&#160;LIBOR plus 6.0% per annum, with a LIBOR floor of 3.0% per
  annum.&#160;&#160;During the three months ended June 30, 2008, the weighted
  average interest rate incurred by us was 4.62% resulting in interest expense of
  approximately $4.3 million.&#160;&#160;During the three months ended December
  31, 2008, the weighted average interest rate incurred by us <font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">was
  <font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7.72</font>%
  resulting in interest expense of approximately $<font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">8.9
  </font>million</font>.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div><br>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under the
  Forbearance Agreement, as amended by the First Amendment, the Second Amendment
  and the Third Amendment, the lender&#8217;s forbearance is subject to certain
  conditions as described therein, including, among other items, periodic
  deliverables and minimum liquidity, minimum receipts and maximum disbursement
  requirements.&#160;&#160;If we fail to meet these conditions or are unable to
  obtain further forbearance from our lenders or a permanent waiver of the events
  of default under our credit agreement, we may be forced to sell assets, make a
  bankruptcy filing or take other action that could have a material adverse effect
  on our business, the price of our common units and our results of
  operations.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due to
  the events of default, upon the expiration or termination of any applicable
  forbearance period, the lenders may, among other remedies, declare all
  outstanding amounts under the credit agreement immediately due and payable and
  exercise all other rights and remedies available to the lenders under the credit
  agreement and related loan documents.&#160;&#160;A vote of lenders having more
  than 50% of the sum of (i) the aggregate revolver commitments and (ii) the
  outstanding term loan are required to exercise such a remedy.&#160;&#160;If the
  lenders exercise such a remedy, we may be forced to make a bankruptcy filing or
  take other actions.&#160;&#160;We are also prohibited from making cash
  distributions to our unitholders while the events of default
  exist.&#160;&#160;Certain lenders under our credit facility are also lenders
  under the Private Company&#8217;s credit facility.&#160;&#160;The progress of the
  Private Company&#8217;s bankruptcy proceedings may influence the decisions of these
  lenders relating to our credit facility.</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We use
  interest rate swap agreements to manage a portion of the exposure related to
  changing interest rates by converting floating-rate debt to fixed-rate debt. See
  Note 4 for a description of these interest rate swaps.&#160;&#160;&#160;The
  interest rate swap agreements contain cross-default provisions to events of
  default under the credit agreement.&#160;&#160;Due to events related to the
  Bankruptcy Filings, all of these interest rate swap positions
  were&#160;terminated in the third quarter of 2008, and we have recorded a $1.5
  million liability as of September 30, 2008 with respect to these
  positions.</font></div>
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        <div>
          <table cellpadding="0" cellspacing="0" width="100%">
              <tr>
                <td align="left" valign="top" width="9%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a name="exhibits">Item&#160;5.</a></font></div>
                </td>
                <td align="left" valign="top" width="69%">
                  <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a name="item5">Other Information</a></font></div>
                </td>
              </tr>
          </table>
        </div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On March
  18, 2009, we announced the realignment of the management team of our general
  partner.&#160;&#160;Michael J. Brochetti was appointed as our general partner&#8217;s
  <font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Executive
  </font>Vice President&#8212;Corporate Development and Treasurer,</font></font></font>
  Alex G. Stallings was appointed as our general partner&#8217;s Chief Financial Officer
  and Secretary, and James R. Griffin was appointed as our general
  partner&#8217;s</font> Chief Accounting Officer.&#160;&#160;Mr. Brochetti had
  previously served as our general partner&#8217;s Chief Financial Officer; and Mr.
  Stallings had previously served as our general partner&#8217;s Chief Accounting
  Officer and Secretary; and Mr. Griffin had previously served as our general
  partner's controller.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;Additional
  information regarding Mr. Brochetti&#8217;s and Mr. Stallings&#8217; business experience is
  set forth in Item 10 of our Annual Report on Form 10-K for the fiscal year ended
  December 31, 2007, as filed with the Securities and Exchange Commission on March
  6, 2008, and is incorporated herein by reference.</font></font></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In connection with his
  appointment as our general partner's Chief Financial Officer and Secretary, Mr.
  Stallings' annual base salary was increased from $275,000 to $300,000.&#160;
  This increase was approved by the compensation committee of the
  Board.</font></font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB2" style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;James
  R. Griffin has served as controller of our general partner since May of 2007 and
  the Private Company's transactional services controller since September
  2006.&#160;&#160;Prior to joining the Private Company, Mr.&#160;Griffin served
  in various capacities, most recently as an audit manager, for the public
  accounting firm of PricewaterhouseCoopers LLP, working in its Tulsa, Oklahoma
  office since January 2000.</font></font></font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
  connection with his appointment as our general partner&#8217;s Chief Accounting
  Officer, Mr. Griffin entered into the following agreements: (i) an employment
  agreement substantially in the form attached as Exhibit 10.14 to this quarterly
  report, (ii) a phantom unit agreement substantially in the form attached as
  Exhibit 10.15 to this quarterly report and (iii) our general partner&#8217;s customary
  indemnification agreement substantially in the form filed as Exhibit 10.7 to our
  Registration Statement on Form S-1 (Reg. No. 333-141196), filed May&#160;25,
  2007.&#160;&#160;In addition, prior to his appointment as our general partner&#8217;s
  Chief Accounting Officer, Mr. Griffin entered into a retention agreement with
  our general partner, a copy of which is attached as Exhibit 10.16 to this
  quarterly report.&#160;&#160;Each of the employment agreement, phantom unit
  agreement and retention agreement is discussed in more detail
  below.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Employment
  Agreement</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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  to his employment agreement, Mr.&#160;Griffin will be paid an initial annual
  base salary of $210,000. The employment agreement and the corresponding base
  salary amount was approved by the compensation committee of the
  Board.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  employment agreement has a two year term and will renew automatically for
  additional one year terms unless either party gives 90 days prior notice. In
  addition, Mr.&#160;Griffin is eligible for discretionary bonus awards and
  long-term incentives which may be made from time to time in the sole discretion
  of the Board. The employment agreement also provides that Mr.&#160;Griffin is
  eligible to participate in any employee benefit plans maintained by our general
  partner and is entitled to reimbursement for certain out-of-pocket expenses.
  Mr.&#160;Griffin has agreed not to disclose any confidential information
  obtained by him while employed under the agreement. In addition, the employment
  agreement contains payment obligations that may be triggered by a termination
  after a Change of Control as described below.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under the
  employment agreement, the General Partner may be required to pay certain amounts
  upon a Change of Control of us or our general partner or upon the termination of
  Mr.&#160;Griffin&#8217;s employment in certain circumstances.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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  the event of termination for Cause, termination by Mr.&#160;Griffin other than
  for Good Reason, or termination after the expiration of the term of the
  employment agreement, the employment agreement provides for payment of any
  unpaid base salary and vested benefits under any incentive plans, a lump sum
  payment equal to twelve months of base salary and continued participation in our
  general partner&#8217;s welfare benefit programs for the longer of the remainder of
  the term of the employment agreement or one year after termination. Upon such an
  event, Mr.&#160;Griffin would be entitled to a lump sum payment of $210,000, in
  addition to continued participation in the General Partner&#8217;s welfare benefit
  programs and the amounts of unpaid base salary and benefits under any incentive
  plans.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If within
  one year after a Change of Control occurs Mr.&#160;Griffin is terminated by our
  general partner without Cause or Mr.&#160;Griffin terminates the agreement for
  Good Reason, he will be entitled to payment of any unpaid base salary and vested
  benefits under any incentive plans, a lump sum payment equal to 24 months of
  base salary and continued participation in our general partner&#8217;s welfare benefit
  programs for the longer of the remainder of the term of the employment agreement
  or one year after termination. Upon such an event, Mr.&#160;Griffin would be
  entitled to a lump sum payment of $420,000, in addition to continued
  participation in our general partner&#8217;s welfare benefit programs and the amounts
  of unpaid base salary and benefits under any incentive plans.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
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            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;Cause&#8221;
  means (i)&#160;conviction of the officer by a court of competent jurisdiction of
  any felony or a crime involving moral turpitude; (ii)&#160;the officer&#8217;s willful
  and intentional failure or willful intentional refusal to follow reasonable and
  lawful instructions of the Board of our general partner; (iii)&#160;the
  officer&#8217;s material breach or default in the performance of his obligations under
  the employment agreement; or (iv)&#160;the officer&#8217;s act of misappropriation,
  embezzlement, intentional fraud or similar conduct involving our general
  partner.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;Good
  Reason&#8221; means (i)&#160;a material reduction in the officer&#8217;s base salary;
  (ii)&#160;a material diminution of the officer&#8217;s duties, authority or
  responsibilities as in effect immediately prior to such diminution; or
  (iii)&#160;the relocation of the officer&#8217;s principal work location to a location
  more than 50 miles from its current location.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;Change
  of Control&#8221; means any of the following events: (i)&#160;any person or group
  other than SemGroup, L.P., Manchester Securities Corp., Alerian Finance
  Partners, LP, or their respective affiliates, shall become the beneficial owner,
  by way of merger, consolidation, recapitalization, reorganization or otherwise,
  of 50% or more of the combined voting power of the equity interests in us or in
  our general partner; (ii)&#160;our limited partners approve, in one or a series
  of transactions, a plan of complete liquidation of the partnership;
  (iii)&#160;the sale or other disposition by either our general partner or us of
  all or substantially all of the assets of our general partner or us in one or
  more transactions to any person other than our general partner and its
  affiliates; or (iv)&#160;a transaction resulting in a person other than our
  general partner or an affiliate of our general partner being our general
  partner.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Phantom
  Unit Agreement</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the phantom unit agreement, Mr.&#160;Griffin was granted 30,000 phantom units
  under the Plan.&#160;&#160;The entering into the phantom unit agreement and the
  granting of these 30,000 phantom units to Mr. Griffin was approved by the
  compensation committee of the Board.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Phantom
  Units granted to Mr. Griffin pursuant to the phantom unit agreement vest in
  one-third increments over a three year period, subject to earlier vesting on a
  change of control or upon a termination without cause or due to death or
  disability. Mr. Griffin will receive one common unit upon vesting of each
  phantom unit. In addition, the phantom units have distribution equivalent rights
  for each fiscal quarter in which our quarterly cash distribution to our
  subordinated and common unitholders for such quarter equals or exceeds $0.39 per
  unit (or $1.56 per unit on an annualized basis). Pursuant to the distribution
  equivalent right, Mr. Griffin will be entitled to receive a cash payment with
  respect to each phantom unit then outstanding equal to the product of
  (i)&#160;the per unit cash distributions paid to our unitholders during such
  fiscal quarter, if any, multiplied by (ii)&#160;the number of unvested phantom
  units.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Retention
  Agreement</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
  to the retention agreement, Mr.&#160;Griffin is entitled to payments totaling up
  to $180,000 (the &#8220;Retention Amount&#8221;) if he is employed by our general partner on
  certain dates.&#160;&#160;Mr. Griffin received 25% of the Retention Amount, or
  $45,000, for continued employment on October 30, 2008.&#160;&#160;Mr. Griffin
  will be entitled to receive the remaining 75% of the Retention Amount, or
  $135,000, if (i) he is employed by our general partner on July 31, 2009 or (ii)
  his employment is terminated by our general partner other than for Cause (as
  defined above) or he terminates his employment for Good Reason (as defined
  above) prior to July 31, 2009.&#160;&#160;Provided Mr. Griffin meets the terms
  and conditions contained in the retention agreement, he will be entitled to
  these payments in addition to any payments made to him pursuant to his
  employment agreement or otherwise.</font></div>
            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
          </div>
        </div>
      </div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="9%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a name="exhibits">Item&#160;6.</a></font></div>
              </td>
              <td align="left" valign="top" width="69%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Exhibits</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
  information required by this Item&#160;6 is set forth in the Index to Exhibits
  accompanying this quarterly report and is incorporated herein by
  reference.</font></div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">87</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="signatures">SIGNATURES</a></font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="middle" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="middle" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="middle" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="middle" width="39%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
            </tr>
            <tr>
              <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="bottom" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" colspan="3" valign="top" width="46%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 2.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SemGroup
        Energy Partners, L.P.</font></div>
              </td>
            </tr>
            <tr>
              <td valign="middle" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td colspan="2" valign="middle" width="22%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td colspan="2" valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td colspan="2" valign="middle" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td colspan="2" valign="middle" width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
            </tr>
            <tr>
              <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="bottom" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="top" width="7%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">By:&#160;&#160;&#160;&#160;</font></div>
              </td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="39%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SemGroup
        Energy Partners G.P., L.L.C.</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">its
        General Partner</font></div>
              </td>
            </tr>
            <tr>
              <td colspan="3" valign="middle" width="24%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td colspan="2" valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td colspan="2" valign="middle" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td colspan="2" valign="middle" width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
            </tr>
            <tr>
              <td align="left" colspan="3" valign="top" width="24%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 2.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Date:<font size="+0"> </font><font size="+0"><font size="+0" style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">March<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;23,
        2009</font></font></font></font></font></div>
              </td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="top" width="7%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">By:&#160;&#160;&#160;&#160;</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="top" width="39%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">/s/
        Alex G. Stallings</font></div>
              </td>
            </tr>
            <tr>
              <td colspan="3" valign="top" width="24%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="bottom" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="39%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Alex
        G. Stallings</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Chief
        Financial Officer and Secretary</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="bottom" width="39%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
            </tr>
            <tr>
              <td colspan="3" valign="middle" width="24%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td colspan="2" valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td colspan="2" valign="middle" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td colspan="2" valign="middle" width="40%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
            </tr>
            <tr>
              <td align="left" colspan="3" valign="top" width="24%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 2.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Date:&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">March
        23, 2009</font></font></div>
              </td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="top" width="7%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">By:&#160;&#160;&#160;&#160;</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="top" width="39%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">/s/
        James R. Griffin</font></div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
              <td align="left" valign="bottom" width="39%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">James
        R. Griffin</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Chief
        Accounting Officer</font></div>
              </td>
            </tr>
        </table>
      </div><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="center">
          </div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">&#160;
  </font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman"><a href="#TOC">Table of Contents</a></font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">INDEX
  TO EXHIBITS</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
      <div>
        <div align="center">
          <div align="center">
            <div align="center">
              <div align="center">
                <div align="center">
                  <div align="center">
                    <div align="center">
                      <div align="center">
                        <div align="center">
                          <div align="center">
                            <div align="center">
                              <div align="center">
                                <div align="center">
                                  <table cellpadding="0" cellspacing="0" width="100%">
                                      <tr>
                                        <td valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td valign="middle" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="bottom" width="5%" style="BORDER-BOTTOM: black 2px solid">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Exhibit</font></div>
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Number</font></div>
                                        </td>
                                        <td align="left" valign="bottom" width="3%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                                        </td>
                                        <td valign="bottom" width="83%" style="BORDER-BOTTOM: black 2px solid">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                                            <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Exhibit
        Name</font></div>
                                          </div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;3.1</font></div>
                                        </td>
                                        <td align="left" valign="bottom" width="3%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                                        </td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Certificate
        of Limited Partnership of SemGroup Energy Partners, L.P. (the
        &#8220;Partnership&#8221;), dated February 22, 2007 (filed as Exhibit 3.1 to the
        Partnership&#8217;s Registration Statement on Form S-1 (Reg. No. 333-141196),
        filed March 9, 2007, and incorporated herein by
    reference).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td colspan="2" valign="middle" width="86%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;3.2</font></div>
                                        </td>
                                        <td align="left" valign="bottom" width="3%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                                        </td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">First
        Amended and Restated Agreement of Limited Partnership of the Partnership,
        dated July 20, 2007 (filed as Exhibit 3.1 to the Partnership&#8217;s Current
        Report on Form 8-K, filed July 25, 2007, and incorporated herein by
        reference).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td colspan="2" valign="middle" width="86%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;3.3</font></div>
                                        </td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amendment
        No. 1 to First Amended and Restated Agreement of Limited Partnership of
        the Partnership, effective as of July 20, 2007 (filed as Exhibit 3.1 to
        the Partnership&#8217;s Current Report on Form 8-K, filed on April 14, 2008, and
        incorporated herein by reference).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td valign="top" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;3.4</font></div>
                                        </td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amendment
        No. 2 to First Amended and Restated Agreement of Limited Partnership of
        the Partnership, dated June 25, 2008 (filed as Exhibit 3.1 to the
        Partnership&#8217;s Current Report on Form 8-K, filed on June 30, 2008, and
        incorporated herein by reference).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td valign="top" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;3.5</font></div>
                                        </td>
                                        <td align="left" valign="bottom" width="3%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                                        </td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Certificate
        of Formation of SemGroup Energy Partners G.P., L.L.C. (the &#8220;General
        Partner&#8221;), dated February 22, 2007 (filed as Exhibit 3.3 to the
        Partnership&#8217;s Registration Statement on Form S-1 (Reg. No. 333-141196),
        filed March 9, 2007, and incorporated herein by
    reference).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td colspan="2" valign="middle" width="86%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;3.6</font></div>
                                        </td>
                                        <td align="left" valign="bottom" width="3%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                                        </td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amended
        and Restated Limited Liability Company Agreement of the General Partner,
        dated July 20, 2007 (filed as Exhibit 3.2 to the Partnership&#8217;s Current
        Report on Form 8-K, filed July 25, 2007, and incorporated herein by
        reference).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td colspan="2" valign="middle" width="86%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;3.7</font></div>
                                        </td>
                                        <td align="left" valign="bottom" width="3%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                                        </td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amendment
        No. 1 to Amended and Restated Limited Liability Company Agreement of the
        General Partner, dated June 25, 2008 (filed as Exhibit 3.2 to the
        Partnership&#8217;s Current Report on Form 8-K, filed on June 30, 2008, and
        incorporated herein by reference).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td colspan="2" valign="middle" width="86%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;3.8</font></div>
                                        </td>
                                        <td align="left" valign="bottom" width="3%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                                        </td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amendment
        No. 2 to Amended and Restated Limited Liability Company Agreement of the
        General Partner, dated July 18, 2008 (filed as Exhibit 3.1 to the
        Partnership&#8217;s Current Report on Form 8-K, filed on July 22, 2008, and
        incorporated herein by reference).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td colspan="2" valign="middle" width="86%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;4.1</font></div>
                                        </td>
                                        <td align="left" valign="bottom" width="3%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                                        </td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Specimen
        Unit Certificate (included in Exhibit 3.2).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td colspan="2" valign="middle" width="86%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.1</font></div>
                                        </td>
                                        <td align="left" valign="bottom" width="3%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                                        </td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Purchase
        and Sale Agreement, dated as of May 12, 2008, by and between SemCrude,
        L.P. and SemGroup Energy Partners, L.L.C. (filed as Exhibit 2.1 to the
        Partnership&#8217;s Current Report on Form 8-K, filed May 15, 2008, and
        incorporated herein by reference).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td colspan="2" valign="middle" width="86%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.2</font></div>
                                        </td>
                                        <td align="left" valign="bottom" width="3%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                                        </td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Purchase
        and Sale Agreement, dated as of May 20, 2008, by and between SemGroup
        Energy Partners, L.L.C. and SemCrude, L.P. (filed as Exhibit 2.1 to the
        Partnership&#8217;s Current Report on Form 8-K, filed May 23, 2008, and
        incorporated herein by reference).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td colspan="2" valign="middle" width="86%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.3</font></div>
                                        </td>
                                        <td align="left" valign="bottom" width="3%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                                        </td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Form
        of Phantom Unit Grant Agreement (filed as Exhibit 10.1 to the
        Partnership&#8217;s Current Report on Form 8-K, filed on June 24, 2008, and
        incorporated herein by reference)</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td colspan="2" valign="middle" width="86%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.4</font></div>
                                        </td>
                                        <td align="left" valign="bottom" width="3%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                                        </td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Form
        of Phantom Unit Grant Agreement (filed as Exhibit 10.2 to the
        Partnership&#8217;s Current Report on Form 8-K, filed on June 24, 2008, and
        incorporated herein by reference)</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td colspan="2" valign="middle" width="86%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.5</font></div>
                                        </td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Agreed
        Order of the United States Bankruptcy Court for the District of Delaware
        Regarding Motion by SemGroup Energy Partners, L.P. (i) to Compel Debtors
        to Provide Adequate Protection and (ii) to Modify the Automatic Stay
        (filed as Exhibit 99.1 to the Partnership&#8217;s Current Report on Form 8-K,
        filed on September 9, 2008, and incorporated herein by
        reference).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td colspan="2" valign="middle" width="86%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.6</font></div>
                                        </td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Forbearance
        Agreement and Amendment to Credit Agreement, dated September 12, 2008 but
        effective as of September 18, 2008, by and among SemGroup Energy Partners,
        L.P., Wachovia Bank, National Association, as Administrative Agent, L/C
        Issuer and Swing Line Lender, and the Lenders party thereto (filed as
        Exhibit 10.1 to the Partnership&#8217;s Current Report on Form 8-K, filed on
        September 22, 2008, and incorporated herein by
    reference).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="middle" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td colspan="2" valign="middle" width="86%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.7</font></div>
                                        </td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">First
        Amendment to Forbearance Agreement and Amendment to Credit Agreement,
        dated as of December 11, 2008, by and among SemGroup Energy Partners,
        L.P., Wachovia Bank, National Association, as Administrative Agent, L/C
        Issuer and Swing Line Lender, and the Lenders party thereto (filed as
        Exhibit 10.1 to the Partnership&#8217;s Current Report on Form 8-K, filed on
        December 12, 2008, and incorporated herein by
    reference).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td valign="top" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%" style="PADDING-LEFT: 0pt">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt; TEXT-ALIGN: center" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.8</font></div>
                                        </td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Second
        Amendment to Forbearance Agreement and Amendment to Credit Agreement,
        dated as of December 18, 2008, by and among SemGroup Energy Partners,
        L.P., Wachovia Bank, National Association, as Administrative Agent, L/C
        Issuer and Swing Line Lender, and the Lenders party thereto (filed as
        Exhibit 10.1 to the Partnership&#8217;s Current Report on Form 8-K, filed on
        December 19, 2008, and incorporated herein by
    reference).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td valign="top" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.9</font></font></div>
                                        </td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td valign="top" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Third
        Amendment to Forbearance Agreement and Amendment to Credit Agreement,
        dated as of March 17, 2009, by and among SemGroup Energy Partners, L.P.,
        Wachovia Bank, National Association, as Administrative Agent, L/C Issuer
        and Swing Line Lender, and the Lenders party thereto (filed as Exhibit
        10.1 to the Partnership&#8217;s Current Report on Form 8-K, filed on March 19,
        2009, and incorporated herein by reference).</font></font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td valign="top" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt; TEXT-ALIGN: center" align="center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.10</font></div>
                                        </td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amendment
        to the SemGroup Energy Partners G.P., L.L.C. Long Term Incentive Plan
        (filed as Exhibit 10.1 to the Partnership&#8217;s Current Report on Form 8-K,
        filed on December 23, 2008, and incorporated herein by
        reference).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td valign="top" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt; TEXT-ALIGN: center" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.11</font></div>
                                        </td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Form
        of Director Restricted Common Unit Agreement (filed as Exhibit 10.2 to the
        Partnership&#8217;s Current Report on Form 8-K, filed on December 23, 2008, and
        incorporated herein by reference).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td valign="top" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt; TEXT-ALIGN: center" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.12</font></div>
                                        </td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td align="left" valign="top" width="83%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Form
        of Director Restricted Subordinated Unit Agreement (filed as Exhibit 10.3
        to the Partnership&#8217;s Current Report on Form 8-K, filed on December 23,
        2008, and incorporated herein by reference).</font></div>
                                        </td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                        <td valign="top" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
        </font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.13</font></font></div>
                                        </td>
                                        <td align="left" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td align="left" valign="top" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Term
        Sheet, dated as of March 6, 2009 (filed as Exhibit 10.1 to the
        Partnership&#8217;s Current Report on Form 8-K, filed on March 10, 2009, and
        incorporated herein by reference.</font></font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td align="left" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td align="left" valign="top" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.14*</font></div>
                                        </td>
                                        <td align="left" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td align="left" valign="top" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Form
        of Employment Agreement.</font></font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td align="left" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td align="left" valign="top" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.15*</font></div>
                                        </td>
                                        <td align="left" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td align="left" valign="top" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Form
        of Phantom Unit Agreement.</font></font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td align="left" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td align="left" valign="top" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10.16*</font></div>
                                        </td>
                                        <td align="left" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td align="left" valign="top" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Retention
        Agreement.</font></font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td align="left" valign="bottom" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                        <td align="left" valign="top" width="83%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                                      </tr>
                                      <tr>
                                        <td valign="top" width="5%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt; TEXT-ALIGN: center" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;31.1*</font></div>
                                        </td>
                                        <td align="left" valign="bottom" width="3%">
                                          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0.8pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;</font></div>
                                        </td>
                                        <td align="left" valign="top" width="83%">
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        Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551, this Exhibit
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metadata_documents: [{"type": "10-Q", "sequence": "1", "filename": "form10q.htm", "description": "Q2 2008 10Q", "secsgml_size_bytes": 1721172}]
metadata_filer: {"company-data": {"conformed-name": "SemGroup Energy Partners, L.P.", "cik": "0001392091", "assigned-sic": "4610", "irs-number": "208536826", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-33503", "film-number": "09697809"}, "business-address": {"street1": "TWO WARREN PLACE", "street2": "6120 SOUTH YALE AVENUE, SUITE 700", "city": "TULSA", "state": "OK", "zip": "74136", "phone": "(918) 524-8100"}, "mail-address": {"street1": "TWO WARREN PLACE", "street2": "6120 SOUTH YALE AVENUE, SUITE 700", "city": "TULSA", "state": "OK", "zip": "74136"}}
text: form10q.htm
  UNITED
  STATES
  SECURITIES
  AND EXCHANGE COMMISSION
  Washington,
  D.C. 20549
  FORM
  10-Q
  x
  QUARTERLY
        REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
        1934
  For the
  quarterly period ended June 30, 2008
  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 001-33503
  SEMGROUP
  ENERGY PARTNERS, L.P.
  (Exact
  name of registrant as specified in its charter)
  Delaware
  20-8536826
  (State
        or other jurisdiction of
  incorporation
        or organization)
  (IRS
        Employer
  Identification
        No.)
  Two
  Warren Place
  6120
  South Yale Avenue, Suite 500
  Tulsa,
  Oklahoma 74136
  (Address
  of principal executive offices, zip code)
  Registrant's
  telephone number, including area code: (918) 524-5500
  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
  ¨
  No
  x
  Indicate
  by check mark whether the registrant is a large accelerated filer, an
  accelerated filer, a non-accelerated filer, or a smaller reporting company. See
  the definitions of "large accelerated filer", "accelerated filer", and "smaller
  reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
  Large
  accelerated filer
  ¨
  Accelerated
  filer
  ¨
  Non-accelerated
  filer
  x
  (Do not
  check if a smaller reporting
  company)                                                                                                                                    Smaller
  reporting company
  ¨
  Indicate
  by check mark whether the registrant is a shell company (as defined in Rule
  12b-2 of the Exchange Act).    Yes
  ¨
  No
  x
  As
  of March 13, 2009, there were 21,557,309 common units and
  12,570,504 subordinated units outstanding.
  Table
  of Contents
  Page
  PART I - FINANCIAL INFORMATION
  Item I.
  Financial Statements
  1
  SemGroup
        Energy Partners, L.P.
  Consolidated Balance Sheets as of December 31, 2007 and June
        30, 2008
  1
  Consolidated Statements of Operations for the three and six
        months ended June 30, 2007 and 2008
  2
  Consolidated Statements of Changes in Partners' Capital for
        the six months ended June 30, 2008
  3
  Consolidated Statements of Cash Flows for the six months ended
        June 30, 2007 and 2008
  4
  Notes to the Consolidated Financial
        Statements
  5
  Item 2.
  Management's Discussion and Analysis of Financial Condition
        and Results of Operations
  32
  Item 3.
  Quantitative and Qualitative Disclosures about Market
        Risk
  54
  Item 4T.
  Controls and Procedures
  54
  PART II. OTHER INFORMATION
  55
  Item 1.
  Legal Proceedings
  55
  Item
        1A.
  Risk Factors
  57
  Item
        3.
  Defaults Upon Senior Securities
  86
  Item
        5.
  Other Information
  87
  Item 6.
  Exhibits
  87
  SIGNATURES
  CERTIFICATIONS
  Table of Contents
  PART I – FINANCIAL INFORMATION
  Item 1.
  Financial
        Statements
  SEMGROUP
  ENERGY PARTNERS, L.P.
  CONSOLIDATED
  BALANCE SHEETS
  (in
  thousands, except units)
  As
        of December 31,
  As
        of June 30,
  2007
  2008
  (unaudited)
  ASSETS
  Current
        assets:
  Cash
        and cash equivalents
  $
  416
  $
  758
  Accounts
        receivable, net of allowance for doubtful accounts of $0 and
        $357
  at
        December 31, 2007 and June 30, 2008, respectively
  2,666
  2,081
  Receivables
        from related parties, net of allowance for doubtful accounts
        of
  $0
        and $900 at December 31, 2007 and June 30, 2008,
      respectively
  9,665
  1,971
  Prepaid
        insurance
  797
  1,091
  Debt
        issuance costs
  -
  2,776
  Interest
        rate swaps asset
  -
  2,998
  Other
        current assets
  442
  506
  Total
        current assets
  13,986
  12,181
  Property,
        plant and equipment, net of accumulated depreciation of $40,222 and
        $69,277
  at
        December 31, 2007 and June 30, 2008, respectively
  102,239
  293,681
  Goodwill
  6,340
  6,340
  Other
        assets, net
  2,917
  1,976
  Total
        assets
  $
  125,482
  $
  314,178
  LIABILITIES AND PARTNERS' CAPITAL
        (DEFICIT)
  Current
        liabilities:
  Accounts
        payable
  $
  3,045
  $
  3,941
  Payables
        to related parties
  10,227
  9,915
  Accrued
        interest payable
  449
  1,921
  Accrued
        property taxes
  -
  1,183
  Unearned
        revenue
  -
  968
  Other
        accrued liabilities
  340
  290
  Current
        portion of capital lease obligations
  1,236
  1,116
  Interest
        rate swaps liability
  -
  2,502
  Current
        portion of long term debt
  -
  421,900
  Total
        current liabilities
  15,297
  443,736
  Long-term
        debt
  89,600
  -
  Long-term
        capital lease obligations
  1,123
  587
  Interest
        rate swaps liability
  2,233
  -
  Commitments
        and contingencies (Notes 4, 10 and 13)
  Partners'
        capital (deficit):
  Common
        unitholders (14,375,000 and 21,275,000 units issued and outstanding
        at
  December
        31, 2007 and June 30, 2008, respectively)
  317,004
  479,253
  Subordinated
        unitholders (12,570,504 units issued and outstanding for both
        dates)
  (287,210
  )
  (285,469
  )
  General
        partner interest (2.0% interest with 549,908 and 690,725 general partner
        units
  outstanding
        at December 31, 2007 and June 30, 2008, respectively)
  (12,565
  )
  (323,929
  )
  Total
        Partners' capital (deficit)
  17,229
  (130,145
  )
  Total
        liabilities and Partners' capital (deficit)
  $
  125,482
  $
  314,178
  See
  accompanying notes to unaudited financial statements.
  1
  Table of Contents
  SEMGROUP
  ENERGY PARTNERS, L.P.
  CONSOLIDATED
  STATEMENTS OF OPERATIONS
  (
  in thousands, except per unit
  data)
  Three
        Months Ended
  Six
        Months Ended
  June
        30,
  June
        30,
  2007
  2008
  2007
  2008
  (unaudited)
  Service revenue:
  Third
        party revenue
  $
  10,464
  $
  6,027
  $
  18,975
  $
  10,651
  Related
        party revenue
  -
  49,249
  123
  84,839
  Total
        revenue
  10,464
  55,276
  19,098
  95,490
  Expenses:
  Operating
  18,041
  29,505
  34,158
  51,771
  Allowance
        for doubtful accounts
  -
  1,266
  -
  1,266
  General
        and administrative
  4,118
  3,057
  8,490
  6,067
  Total
        expenses
  22,159
  33,828
  42,648
  59,104
  Operating
        income (loss)
  (11,695
  )
  21,448
  (23,550
  )
  36,386
  Other
        expenses:
  Interest
        (income) expense
  516
  (225
  )
  945
  4,864
  Income
        (loss) before income taxes
  (12,211
  )
  21,673
  (24,495
  )
  31,522
  Provision
        for income taxes
  -
  77
  -
  168
  Net
        income (loss)
  $
  (12,211
  )
  $
  21,596
  $
  (24,495
  )
  $
  31,354
  Allocation
        of net income to limited and subordinated partners:
  General
        partner interest in net income
  $
  3,410
  $
  3,605
  Net
        income allocable to limited and subordinated partners
  $
  18,186
  $
  27,749
  Basic
        and diluted net income per common unit
  $
  0.53
  $
  0.84
  Basic
        and diluted net income per subordinated unit
  $
  0.53
  $
  0.84
  Weighted
        average common units outstanding - basic and diluted
  21,275
  19,310
  Weighted
        average subordinated partners' units outstanding - basic and
        diluted
  12,571
  12,571
  See
  accompanying notes to unaudited financial statements.
  2
  Table of Contents
  SEMGROUP
  ENERGY PARTNERS, L.P.
  CONSOLIDATED
  STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
  (in
  thousands)
  General
  Total
  Common
  Subordinated
  Partner
  Partners'
  Unitholders
  Unitholders
  Interest
  Capital
        (Deficit)
  (unaudited)
  Balance,
        December 31, 2007
  $
  317,004
  $
  (287,210
  )
  $
  (12,565
  )
  $
  17,229
  Net
        income
  17,296
  10,453
  3,605
  31,354
  Equity-based
        compensation
  849
  559
  29
  1,437
  Distributions
        paid
  (13,719
  )
  (9,271
  )
  (727
  )
  (23,717
  )
  Proceeds
        from sale of 6,900,000 common units, net of underwriters' discount
        and
  offering
        expenses of $7.1 million
  157,823
  157,823
  Proceeds
        from issuance of 140,817 general partner units
  3,365
  3,365
  Consideration
        paid in excess of historical cost of assets acquired from Private
        Company
  (317,636
  )
  (317,636
  )
  Balance,
        June 30, 2008
  $
  479,253
  $
  (285,469
  )
  $
  (323,929
  )
  $
  (130,145
  )
  See
  accompanying notes to unaudited financial statements.
  3
  Table of Contents
  SEMGROUP
  ENERGY PARTNERS, L.P.
  CONSOLIDATED
  STATEMENTS OF CASH FLOWS
  (in
  thousands)
  Six
        Months Ended
  June
        30,
  2007
  2008
  (unaudited)
  Cash
        flows from operating activities
  :
  Net
        income (loss)
  $
  (24,495
  )
  $
  31,354
  Adjustments
        to reconcile net income (loss) to net cash provided by (used in) operating
        activities:
  Provision
        for uncollectible receivables from third parties
  -
  357
  Provision
        for uncollectible receivables from related parties
  -
  900
  Depreciation
        and amortization
  4,387
  9,772
  Amortization
        of debt issuance costs
  -
  262
  Unrealized
        gain related to interest rate swaps
  -
  (2,729
  )
  (Gain)
        loss on sale of assets
  52
  (46
  )
  Equity-based
        incentive compensation expense
  -
  1,437
  Changes
        in assets and liabilities:
  Decrease
        (increase) in accounts receivable
  (1,269
  )
  228
  Decrease
        in receivables from related parties
  -
  6,794
  Increase
        in prepaid insurance
  (399
  )
  (294
  )
  Increase
        in other current assets
  (105
  )
  (369
  )
  Decrease
        (increase) in other assets
  70
  (152
  )
  Increase
        (decrease) in accounts payable
  (747
  )
  242
  Decrease
        in payables to related parties
  -
  (312
  )
  Increase
        in accrued interest payable
  -
  1,472
  Increase
        in accrued property taxes
  -
  1,183
  Increase
        in unearned revenue
  -
  968
  Increase
        (decrease) in accrued liabilities
  605
  (50
  )
  Net
        cash provided by (used in) operating activities
  (21,901
  )
  51,017
  Cash
        flows from investing activities:
  Acquisition
        of assets from Private Company
  -
  (514,643
  )
  Capital
        expenditures
  (15,265
  )
  (3,485
  )
  Proceeds
        from sale of assets
  331
  372
  Net
        cash used in investing activities
  (14,934
  )
  (517,756
  )
  Cash flows from financing
        activities
  :
  Debt
        issuance costs
  -
  (2,094
  )
  Payments
        on capital lease obligations
  (992
  )
  (646
  )
  Borrowings
        under credit facility
  -
  492,400
  Payments
        under credit facility
  -
  (160,100
  )
  Proceeds
        from equity issuance, net of offering costs
  -
  161,238
  Distributions
        paid
  -
  (23,717
  )
  Contributions
        from Parent
  37,827
  -
  Net
        cash provided by financing activities
  36,835
  467,081
  Net
        increase in cash and cash equivalents
  -
  342
  Cash
        and cash equivalents at beginning of period
  -
  416
  Cash
        and cash equivalents at end of period
  $
  -
  $
  758
  Supplemental
        disclosure of cash flow information:
  Increase
        (decrease) in accounts payable related to purchases of property, plant and
        equipment
  $
  (421
  )
  $
  654
  See
  accompanying notes to unaudited financial statements.
  4
  Table of Contents
  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  1.
  ORGANIZATION AND NATURE OF BUSINESS
  SemGroup
  Energy Partners, L.P. and subsidiaries (the "Partnership") is a publicly traded
  master limited partnership with operations in twenty-three states. The
  Partnership provides integrated terminalling, storage, gathering and
  transportation services for companies engaged in the production, distribution
  and marketing of crude oil and liquid asphalt cement. The Partnership manages
  its operations through two operating segments: (i) terminalling and storage
  services and (ii) gathering and transportation services. The Partnership
  was formed in February 2007 as a Delaware master limited partnership initially
  to own, operate and develop a diversified portfolio of complementary midstream
  energy assets.
  On
  July 20, 2007, the Partnership issued 12,500,000 common units, representing
  limited partner interests in the Partnership, and 12,570,504 subordinated units,
  representing additional limited partner interests in the Partnership, to
  SemGroup Holdings, L.P. ("SemGroup Holdings") and 549,908 general partner units
  representing a 2.0% general partner interest in the Partnership to SemGroup
  Energy Partners G.P., L.L.C.  SemGroup Holdings subsequently offered
  12,500,000 common units pursuant to a public offering at a price of $22 per
  unit. In addition, the Partnership issued an additional 1,875,000 common units
  to the public pursuant to the underwriters' exercise of their over-allotment
  option. The initial public offering closed on July 23, 2007.  In
  connection with its initial public offering, the Partnership entered into a
  Throughput Agreement (the "Throughput Agreement") with SemGroup, L.P.
  (collectively, with its subsidiaries other than the Partnership and the
  Partnership's general partner, the "Private Company") under which the
  Partnership provides crude oil gathering and transportation and terminalling and
  storage services to the Private Company.
  On
  February 20, 2008, the Partnership purchased land, receiving
  infrastructure, machinery, pumps and piping and 46 liquid asphalt cement and
  residual fuel oil terminalling and storage facilities (the "Acquired Asphalt
  Assets") from the Private Company for aggregate consideration of $379.5 million,
  including $0.7 million of acquisition-related costs. For accounting purposes,
  the acquisition has been reflected as a purchase of assets, with the Acquired
  Asphalt Assets recorded at the historical cost of the Private Company, which was
  approximately $145.5 million, with the additional purchase price of $234.0
  million reflected in the statement of changes in partners' capital as a
  distribution to the Private Company.  In conjunction with the purchase
  of the Acquired Asphalt Assets, the Partnership amended its existing credit
  facility, increasing its borrowing capacity to $600 million. Concurrently, the
  Partnership issued 6,000,000 common units, receiving proceeds, net of
  underwriting discounts and offering-related costs, of $137.2 million. The
  Partnership's general partner also made a capital contribution of $2.9 million
  to maintain its 2.0% general partner interest in the Partnership. On
  March 5, 2008, the Partnership issued an additional 900,000 common units,
  receiving proceeds, net of underwriting discounts, of $20.6 million, in
  connection with the underwriters' exercise of their over-allotment option in
  full. The Partnership's general partner made a corresponding capital
  contribution of $0.4 million to maintain its 2.0% general partner interest in
  the Partnership.  In connection with the acquisition of the Acquired
  Asphalt Assets, the Partnership entered into a Terminalling and Storage
  Agreement (the "Terminalling Agreement") with the Private Company and certain of
  its subsidiaries under which the Partnership provides liquid asphalt cement
  terminalling and storage and throughput services to the Private Company and the
  Private Company has agreed to use the Partnership's services at certain minimum
  levels.  The board of directors of the Partnership's general partner
  (the "Board") approved the acquisition of the Acquired Asphalt Assets as well as
  the terms of the related agreements based on a recommendation from its conflicts
  committee, which consisted entirely of independent directors. The conflicts
  committee retained independent legal and financial advisors to assist it in
  evaluating the transaction and considered a number of factors in approving the
  acquisition, including an opinion from the committee's independent financial
  advisor that the consideration paid for the Acquired Asphalt Assets was fair,
  from a financial point of view, to the Partnership.
  5
  Table of Contents
  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  On May 12, 2008, the
  Partnership purchased the Eagle North Pipeline System, a 130-mile, 8-inch
  pipeline that originates in Ardmore, Oklahoma and terminates in Drumright,
  Oklahoma (the "Acquired Pipeline Assets") from the Private Company for aggregate
  consideration of $45.1 million, including $0.1 million of acquisition-related
  costs.  For accounting purposes, the acquisition has been reflected as
  a purchase of assets, with the Acquired Pipeline Assets recorded at the
  historical cost of the Private Company, which was approximately $35.1 million,
  with the additional purchase price of $10.0 million reflected in the statement
  of changes in partners' capital as a distribution to the Private
  Company.  The acquisition was funded with borrowings under the
  Partnership's existing revolving credit facility.  The Board approved
  the acquisition of the Acquired Pipeline Assets based on a recommendation from
  its conflicts committee, which consisted entirely of independent directors. The
  conflicts committee retained independent legal and financial advisors to assist
  it in evaluating the transaction and considered a number of factors in approving
  the acquisition, including an opinion from the committee's independent financial
  advisor that the consideration paid for the Acquired Pipeline Assets was fair,
  from a financial point of view, to the Partnership.
  On May
  30, 2008, the Partnership purchased eight recently constructed crude oil storage
  tanks located at the Cushing Interchange from the Private Company and the
  Private Company assigned a take-or-pay, fee-based agreement to the
  Partnership that commits substantially all of the 2.0 million barrels of new
  storage to a third-party customer through August 2010 (the "Acquired
  Storage Assets") for aggregate consideration of $90.2 million, including $0.2
  million of acquisition-related costs.  For accounting purposes, the
  acquisition has been reflected as a purchase of assets, with the Acquired
  Storage Assets recorded at the historical cost of the Private Company, which was
  approximately $16.6 million, with the additional purchase price of $73.6 million
  reflected in the statement of changes in partners' capital as a distribution to
  the Private Company.  The acquisition was funded with borrowings under
  the Partnership's existing revolving credit facility.  The Board
  approved the acquisition of the Acquired Storage Assets based on a
  recommendation from its conflicts committee, which consisted entirely of
  independent directors. The conflicts committee retained independent legal and
  financial advisors to assist it in evaluating the transaction and considered a
  number of factors in approving the acquisition, including an opinion from the
  committee's independent financial advisor that the consideration paid for the
  Acquired Storage Assets was fair, from a financial point of view, to the
  Partnership.
  For the
  six months ended June 30, 2008 and the year ended December 31, 2008,
  the Partnership derived approximately
  88%
  and approximately 73
  %
  ,
  respectively
  , of its revenues, excluding fuel surcharge revenues related
  to fuel and power consumed to operate its liquid asphalt cement storage tanks,
  from services it provided to the Private Company.
  On July
  22, 2008, the Private Company and certain of its subsidiaries filed voluntary
  petitions (the "Bankruptcy Filings") for reorganization under Chapter 11 of the
  Bankruptcy Code in the United States Bankruptcy Court for the District of
  Delaware (the "Bankruptcy Court"), Case No. 08-11547-BLS.   The
  Private Company and its subsidiaries continue to operate their businesses and
  own and manage their properties as debtors-in-possession under the jurisdiction
  of the Bankruptcy Court and in accordance with the applicable provisions of the
  Bankruptcy Code. None of the Partnership, its general partner, the
  subsidiaries of the Partnership nor the subsidiaries of the general partner were
  party to the Bankruptcy Filings.  See Notes 4 and 13 for a discussion
  of the impact of the Bankruptcy Filings and related events upon the
  Partnership.
  2.
  BASIS OF PRESENTATION
  The
  accompanying financial statements have been prepared assuming that the
  Partnership will continue as a going concern.  As discussed in Notes 4
  and 13 to the financial statements, events of default have occurred and are
  continuing under the Partnership's credit agreement resulting in the
  classification of $421.9 million of debt as a current liability and a working
  capital deficiency of $431.6 million.  The Partnership is operating on
  cash flows received from operations and from a $25.0 million borrowing
  under its credit facility on July 8, 2008 prior to the occurrence of the
  events of default. If the Partnership is unable to sustain its sources
  of revenue generation and reestablish its relationships within the credit
  markets, this cash position will not be sufficient to operate its business
  over the long-term.  As of March 13, 2009, the Partnership has
  approximately $33.9 million of cash that it is using to operate its
  business.  Additionally, the Partnership earned 88% of its revenues,
  excluding fuel surcharge revenues related to fuel and power consumed to operate
  its liquid asphalt cement storage tanks, for the six months ended June 30, 2008
  from the Private Company, which made the Bankruptcy Filings in July 2008, the
  effects of which are more fully disclosed in Note 13.  These factors
  raise substantial doubt about the Partnership's ability to continue as a going
  concern.  Management's plans in regard to these matters are also
  discussed in Note 13.  The accompanying financial statements do not
  include any adjustments that might result from the outcome of this
  uncertainty.
  6
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  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  The
  accompanying consolidated financial statements and related notes include the
  accounts of the Partnership, and prior to July 20, 2007, the operations
  contributed to the Partnership by the Private Company in connection with the
  Partnership's initial public offering. The financial statements have been
  prepared in accordance with accounting principles and practices generally
  accepted in the United States of America ("GAAP").
  The
  accompanying financial statements include the results of operations of crude oil
  terminalling and storage and gathering and transportation operations that were
  contributed to the Partnership prior to the closing of the Partnership's initial
  public offering on a carve-out basis and are referred to herein as the
  "Predecessor."  Both the Partnership and the Predecessor had common
  ownership and, in accordance with Emerging Issues Task Force Issue
  No. 87-21, "Change of Accounting Basis in Master Limited Partnership
  Transactions," the assets and liabilities transferred were carried forward to
  the Partnership at their historical amounts.  Additionally, due to the
  common control of the Private Company and the Partnership, subsequent
  acquisitions of fixed assets from the Private Company are recorded at the
  historical cost of the Private Company.  All significant intercompany
  accounts and transactions have been eliminated in the preparation of the
  accompanying financial statements.
  Through
  the date of the initial public offering, the Private Company provided cash
  management services to the Predecessor through a centralized treasury system. As
  a result, all of the Predecessor's charges and cost allocations covered by the
  centralized treasury system were deemed to have been paid to the Private Company
  in cash during the period in which the cost was recorded in the financial
  statements. In addition, cash advances by the Private Company in excess of cash
  earned by the Predecessor are reflected as contributions from the Private
  Company in the statements of cash flows.
  Historically,
  the Predecessor was a part of the integrated operations of the Private Company,
  and neither the Private Company nor the Predecessor recorded revenue associated
  with the terminalling and storage and gathering and transportation services
  provided on an intercompany basis. The Private Company and the Predecessor
  recognized only the costs associated with providing such services. Accordingly,
  revenues reflected in these financial statements for all periods prior to the
  contribution of the assets, liabilities and operations to the Partnership by the
  Private Company on July 20, 2007 relate to services provided to third
  parties. Prior to the close of its initial public offering in July 2007, the
  Partnership entered into a Throughput Agreement with the Private Company under
  which the Partnership provides crude oil gathering and transportation and
  terminalling and storage services to the Private Company.  In
  connection with its February 2008 purchase of the Acquired Asphalt Assets, the
  Partnership entered into a Terminalling Agreement with the Private Company under
  which the Partnership provides liquid asphalt cement terminalling and storage
  and throughput services to the Private Company (See Note 8).
  The
  accompanying financial statements include allocated general and administrative
  charges from the Private Company for indirect corporate overhead to cover costs
  of functions such as legal, accounting, treasury, environmental safety,
  information technology and other corporate services. General and administrative
  charges allocated by the Private Company prior to the contribution of the
  assets, liabilities and operations to the Partnership by the Private Company
  were $2.7 million for the six months ended June 30, 2007. Management believes
  that the allocated general and administrative expense is representative of the
  costs and expenses incurred by the Private Company for the Predecessor. Prior to
  the close of its initial public offering in July 2007, the Partnership entered
  into an Omnibus Agreement with the Private Company under which the Partnership
  reimburses the Private Company for the provision of various general and
  administrative services for the Partnership's benefit.  The Omnibus
  Agreement was amended in conjunction with the purchase of the Acquired Asphalt
  Assets in February 2008 (See Note 8).  The events related to the
  Bankruptcy Filings have terminated the Private Company's obligations to provide
  services to the Partnership under the Omnibus Agreement.  Pursuant to
  an order entered by the Bankruptcy Court, the Private Company agreed to continue
  providing such services until November 30, 2008.  Although the Private
  Company is not required to continue providing these services pursuant to the
  Omnibus Agreement or the order of the Bankruptcy Court, the Private Company has
  continued to provide these services to the Partnership as of the date of the
  filing of this report (See Note 13).
  Pursuant
  to the Settlement Agreement (as defined below), the Private Company will reject
  the Amended Omnibus Agreement as part of the Bankruptcy Cases (as defined below)
  and the Partnership and the Private Company will enter into a shared services
  agreement pursuant to which the Private Company will provide certain operational
  services for the Partnership.  There can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see Note
  13).
  7
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  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  The
  statements of operations for the three and six months ended June 30, 2007 and
  2008 and the statements of cash flows for the six months ended June 30, 2007 and
  2008 are unaudited. In the opinion of management, the unaudited interim
  financial statements have been prepared on the same bases as the audited
  financial statements and include all adjustments necessary to present fairly the
  financial position and results of operations for the respective interim periods.
   These consolidated financial statements and notes should be read in
  conjunction with the consolidated financial statements and notes thereto
  included in the Partnership's annual report on Form 10-K for the year ended
  December 31, 2007 filed with the Securities and Exchange Commission (the
  "SEC") on March 6, 2008.  Interim financial results are not
  necessarily indicative of the results to be expected for an annual period. The
  year-end balance sheet data was derived from audited financial statements, but
  does not include all disclosures required by accounting principles generally
  accepted in the United States of America.
  3.
  PROPERTY, PLANT AND EQUIPMENT
  Property,
  plant and equipment, net is stated at cost and consisted of the following (in
  thousands):
  Estimated
  Useful
  December
        31,
  June
        30,
  Lives
        (Years)
  2007
  2008
  Land
  $
  309
  $
  15,065
  Land
        improvements
  10-20
  -
  5,179
  Pipelines
        and facilities
  5-31
  34,626
  94,177
  Storage
        and terminal facilities
  10-35
  71,873
  166,625
  Transportation
        equipment
  3-10
  25,133
  24,996
  Office
        property and equipment and other
  3-31
  8,505
  19,973
  Construction-in-progress
  2,015
  36,943
  Property,
        plant and equipment, gross
  142,461
  362,958
  Accumulated
        depreciation
  (40,222
  )
  (69,277
  )
  Property,
        plant and equipment, net
  $
  102,239
  $
  293,681
  Property,
  plant and equipment includes assets under capital leases of $2.4 million and
  $1.7 million, net of accumulated depreciation of $4.2 million and $4.7 million
  at December 31, 2007 and June 30, 2008, respectively. All capital leases
  relate to the transportation equipment asset category.  At June 30,
  2008, $35.5 million of construction-in-progress consists of the Eagle North
  Pipeline System, a 130-mile, 8-inch pipeline that was acquired by the
  Partnership from the Private Company on May 12, 2008.  The Partnership has
  suspended capital expenditures on this pipeline due to the Bankruptcy Filings
  (See Note 13).  Management currently intends to put the asset into service
  by late 2009 or early 2010 and is exploring various alternatives to complete the
  project.
  Depreciation
  expense for the six months ended June 30, 2007 and June 30, 2008 was $4.2
  million and $9.6 million, respectively.
  4.
  LONG TERM DEBT
  On
  July 20, 2007, the Partnership entered into a $250.0 million five-year
  credit facility with a syndicate of financial institutions. The Partnership
  borrowed approximately $137.5 million prior to the closing of the initial
  public offering. The Partnership distributed $136.5 million, net of debt
  issuance costs of $1.0 million, advanced under the credit agreement to SemGroup
  Holdings. On July 23, 2007, the Partnership repaid approximately $38.7
  million under the credit facility with the proceeds it received in connection
  with the exercise of the underwriters' over-allotment option in the
  Partnership's initial public offering.
  In
  connection with its purchase of the Acquired Asphalt Assets, the Partnership
  amended this credit facility to increase the total borrowing capacity to $600.0
  million.  The credit facility will mature on July 20,
  2012.
  8
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  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  Events of
  default have occurred and are continuing under the Partnership's credit
  agreement.  In addition, the Private Company's actions related to the
  Bankruptcy Filings as well as the Private Company's liquidity issues and any
  corresponding impact upon the Partnership may result in additional events of
  default under the Partnership's credit agreement (See Note 13).  No
  cure periods are applicable to these existing events of
  default.  These events of default have not been waived and are
  continuing under the Partnership's credit agreement.  Due to the
  existing events of default under the Partnership's credit agreement, the
  Partnership is not able to borrow under its credit facility to fund working
  capital needs or for other purposes (See Note 13).
  Due to
  the events of default, upon the expiration or termination of any applicable
  forbearance period, the lenders may, among other remedies, declare all
  outstanding amounts under the credit agreement immediately due and payable and
  exercise all other rights and remedies available to the lenders under the credit
  agreement and related loan documents.  A vote of lenders having more
  than 50% of the sum of (i) the aggregate revolver commitments and (ii) the
  outstanding term loan are required to exercise such a remedy.  If the
  lenders exercise such a remedy, the Partnership may be forced to make
  a bankruptcy filing or take other actions.  The Partnership is also
  prohibited from making cash distributions to its unitholders while the events of
  default exist.  Certain lenders under the
  Partnership's credit facility are also lenders under the Private Company's
  credit facility.  The progress of the Private Company's bankruptcy
  proceedings may influence the decisions of these lenders relating to the
  Partnership's credit facility.
  Effective
  on September 18, 2008, the Partnership and the requisite lenders under its
  credit facility entered into a Forbearance Agreement and Amendment to Credit
  Agreement (the "Forbearance Agreement") under which the lenders agreed, subject
  to specified limitations and conditions, to forbear from exercising their rights
  and remedies arising from the Partnership's events of default described above
  and other defaults or events of default described therein for the period
  commencing on September 18, 2008 and ending on the earliest of (i) December 11,
  2008, (ii) the occurrence of any default or event of default under the credit
  agreement other than certain defaults and events of default indicated in the
  Forbearance Agreement, or (iii) the failure of the Partnership to comply
  with any of the terms of the Forbearance Agreement (the "Forbearance
  Period").  On December 11, 2008, the lenders agreed to extend the
  Forbearance Period until December 18, 2008 pursuant to a First Amendment to
  Forbearance Agreement and Amendment to Credit Agreement (the "First Amendment"),
  and on December 18, 2008, the lenders agreed to extend the Forbearance Period
  until March 18, 2009 pursuant to a Second Amendment to Forbearance Agreement and
  Amendment to Credit Agreement (the "Second Amendment").
  On March 18,
  2009, the Partnership and the requisite lenders entered into the Third Amendment
  to Forbearance Agreement and Amendment to Credit Agreement (the "Third
  Amendment"), dated as of March 17, 2009.  The Third Amendment extends
  the Forbearance Period until the earliest of (i) April 8, 2009, (ii) the
  occurrence of any default or event of default under the credit agreement other
  than certain defaults and events of default indicated in the Forbearance
  Agreement, as amended by the First Amendment, the Second Amendment and the Third
  Amendment, or (iii) the failure of the Partnership to comply with any of
  the terms of the Forbearance Agreement, as amended by the First Amendment, the
  Second Amendment and the Third Amendment (the "Extended Forbearance
  Period").  The Partnership is working with its lenders to obtain a
  waiver of the events of default under its credit agreement in connection with
  the transactions related to the Settlement Agreement (as defined below);
  however, there can be no assurance that such a waiver will be
  obtained.
  Prior to the
  execution of the Forbearance Agreement, the credit agreement was comprised of a
  $350 million revolving credit facility and a $250 million term loan
  facility.  The Forbearance Agreement permanently reduced the
  Partnership's revolving credit facility under the credit agreement from $350
  million to $300 million and prohibited the Partnership from borrowing additional
  funds under its revolving credit facility during the Forbearance
  Period.   Under the Forbearance Agreement, the Partnership agreed
  to pay the lenders executing the Forbearance Agreement a fee equal to 0.25% of
  the aggregate commitments under the credit agreement after giving effect to the
  above described commitment reduction.  The Second Amendment further
  permanently reduced the Partnership's revolving credit facility under the credit
  agreement from $300 million to $220 million.  The Third
  Amendment prohibits the Partnership from borrowing additional funds under
  its revolving credit facility during the Extended Forbearance
  Period.  In addition, under the Second Amendment, the Partnership
  agreed to pay the lenders executing the Second Amendment a fee equal to 0.375%
  of the aggregate commitments under the credit agreement after the above
  described commitment reduction.  As of March 13, 2009, the Partnership
  had $448.1 million in outstanding borrowings under its credit facility
  (including $198.1 million under its revolving credit facility and $250 million
  under its term loan facility) with an aggregate unused credit availability of
  approximately $21.9 million under its credit facility.  As described
  above, the Partnership is prohibited from borrowing additional funds under its
  credit agreement during the Extended Forbearance Period.
  9
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  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  Prior to
  the events of default, indebtedness under the credit agreement bore interest at
  the Partnership's option, at either (i) the higher of the administrative
  agent's prime rate or the federal funds rate plus 0.5%, plus an applicable
  margin that ranges from 0.50% to 1.75%, depending on the Partnership's total
  leverage ratio and senior secured leverage ratio, or (ii) LIBOR plus an
  applicable margin that ranges from 1.50% to 2.75%, depending upon the
  Partnership's total leverage ratio and senior secured leverage
  ratio.  During the Forbearance Period indebtedness under the credit
  agreement bore interest at the Partnership's option, at either (i) the
  administrative agent's prime rate or the federal funds rate plus 0.50%, plus an
  applicable margin that ranges from 2.75% to 3.75%, depending upon the
  Partnership's total leverage ratio, or (ii) LIBOR plus an applicable margin
  that ranges from 4.25% to 5.25%, depending upon the Partnership's total leverage
  ratio.  Pursuant to the Second Amendment, commencing on December 12,
  2008, indebtedness under the credit agreement bears interest at the
  Partnership's option, at either (i) the administrative agent's prime rate
  or the federal funds rate plus 5.0% per annum, with a prime rate or federal
  funds rate floor of 4.0% per annum, or (ii) LIBOR plus 6.0% per annum, with
  a LIBOR floor of 3.0% per annum.  During the three months ended June 30,
  2008, the weighted average interest rate incurred by the Partnership was 4.62%
  resulting in interest expense of approximately $4.3 million.  During
  the three months ended December 31, 2008, the weighted average interest rate
  incurred by the Partnership was 7.72% resulting in interest expense of
  approximately $8.9 million.
  Under the
  Forbearance Agreement, as amended by the First Amendment, the Second Amendment,
  and the Third Amendment, the lender's forbearance is subject to certain
  conditions as described therein, including, among other items, periodic
  deliverables and minimum liquidity, minimum receipts and maximum disbursement
  requirements.
  Under the
  credit agreement, the Partnership is subject to certain limitations, including
  limitations on its ability to grant liens, incur additional indebtedness, engage
  in a merger, consolidation or dissolution, enter into transactions with
  affiliates, sell or otherwise dispose of its assets, businesses and operations,
  materially alter the character of its business, and make acquisitions,
  investments and capital expenditures. Under the terms of the Forbearance
  Agreement, as amended by the First Amendment, the Second Amendment, and the
  Third Amendment, and due to the current events of default that exist under the
  credit agreement, the Partnership is prohibited from making distributions of
  available cash to its unitholders and will continue to be prohibited from making
  any such distributions as long as any such events of default
  exist.  The credit agreement requires the Partnership to maintain a
  leverage ratio (the ratio of its consolidated funded indebtedness to its
  consolidated adjusted EBITDA, in each case as defined in the credit agreement),
  determined as of the last day of each
  quarter for the
  four-quarter period ending on the date of determination, of not more than 5.00
  to 1.00 and, on a temporary basis, from the date of the consummation of certain
  acquisitions until the last day of the third consecutive fiscal quarter
  following such acquisitions, not more than 5.50 to 1.00; provided, that after
  the issuance of senior unsecured notes, the leverage ratio limitation will be
  modified by a requirement that the Partnership maintain a senior secured
  leverage ratio of not more than 4.00 to 1.00 and a total leverage ratio of not
  more than 5.50 to 1.00, subject to temporary increases of the senior secured
  leverage ratio to not more than 4.50 to 1.00 and the total leverage ratio of not
  more than 6.00 to 1.00 following the consummation of certain acquisitions as
  described above. As of June 30, 2008 and December 31, 2008, the
  Partnership's leverage ratio was 3.97 to 1.00 and 4.82 to 1.00,
  respectively.
  The credit agreement also requires the
  Partnership to maintain an interest coverage ratio (the ratio of its
  consolidated EBITDA to its consolidated interest expense, in each case as
  defined in the credit agreement) of not less than 2.75 to 1.00 determined as of
  the last day of each
  quarter for the four-quarter period
  ending on the date of determination. As of June 30, 2008 and December
  31, 2008, the Partnership's interest coverage ratio was
  6.49
  to 1.00 and 3.61 to 1.00,
  respectively.
  The
  credit agreement specifies a number of events of default (many of which are
  subject to applicable cure periods), including, among others, failure to pay any
  principal when due or any interest or fees within three business days of the due
  date, failure to perform or otherwise comply with the covenants in the credit
  agreement, failure of any representation or warranty to be true and correct in
  any material respect, failure to pay debt, a change of control of the
  Partnership, the Partnership's general partner or the Private Company, and other
  customary defaults.  Because events of default exist under the credit
  agreement, the lenders are able to accelerate the maturity of the credit
  agreement and exercise other rights and remedies, including taking available
  cash in the Partnership's bank accounts.  The lenders have
  agreed to forbear from exercising such rights during the Extended Forbearance
  Period subject to certain limitations and conditions contained in the
  Forbearance Agreement, as amended by the First Amendment, the Second Amendment,
  and the Third Amendment.  If the Partnership is unable to obtain
  further forbearance from its lenders or a permanent waiver of the events of
  default under its credit agreement, it may be forced to sell assets, make a
  bankruptcy filing or take other action that could have a material adverse effect
  on its business, the price of its common units and its results of
  operations.
  10
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  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  The
  Partnership is exposed to market risk for changes in interest rates related to
  its credit facility. Interest rate swap agreements are used to manage a portion
  of the exposure related to changing interest rates by converting floating-rate
  debt to fixed-rate debt. In August 2007 the Partnership entered into interest
  rate swap agreements with an aggregate notional value of $80.0 million that
  mature on August 20, 2010. Under the terms of the interest rate swap
  agreements, the Partnership will pay fixed rates of 4.9% and will receive
  three-month LIBOR with quarterly settlement. The fair market value of the August
  2007 interest rate swaps at June 30, 2008 was a liability of $2.5
  million.  In March 2008 the Partnership entered into interest rate
  swap agreements with an aggregate notional value of $100.0 million that mature
  on March 31, 2011.  Under the terms of the interest rate swap
  agreements, the Partnership will pay fixed rates of 2.6% to 2.7% and will
  receive three-month LIBOR with quarterly settlement.  The fair market
  value of the March 2008 interest rate swaps at June 30, 2008 was a net asset of
  $3.0 million.  The interest rate swaps do not receive hedge accounting
  treatment under Statement of Financial Accounting Standard ("SFAS") SFAS No.
  133, "
  Accounting for
  Derivative Instruments and Hedging Activities
  " ("SFAS 133"). Changes in
  the fair value of the interest rate swaps are recorded in interest expense in
  the statements of operations.  In addition, the interest rate swap
  agreements contain cross-default provisions to events of default under the
  credit agreement.  Due to events related to the Bankruptcy Filings,
  all of these interest rate swap positions were terminated in the third
  quarter of 2008, and the Partnership has recorded a $1.5 million liability as of
  September 30, 2008 with respect to these positions.
  5.
  FAIR VALUE MEASUREMENTS
  The
  Partnership adopted SFAS No. 157, "
  Fair Value Measurements
  ,"
  effective January 1, 2008 for financial assets and liabilities measured on
  a recurring basis. SFAS No. 157 applies to all financial assets and
  financial liabilities that are being measured and reported on a fair value
  basis. In February 2008, the FASB issued FSP No. 157-2, which delayed the
  effective date of SFAS No. 157 by one year for nonfinancial assets and
  liabilities except those that are recognized and recorded in the financial
  statements at fair value on a recurring basis. As defined in SFAS No. 157, fair
  value is the price that would be received to sell an asset or paid to transfer a
  liability in an orderly transaction between market participants at the
  measurement date (exit price). SFAS No. 157 requires disclosure that
  establishes a framework for measuring fair value and expands disclosure about
  fair value measurements. The statement requires fair value measurements be
  classified and disclosed in one of the following categories:
  Level
        1:
  Unadjusted
        quoted prices in active markets that are accessible at the measurement
        date for identical, unrestricted assets or liabilities. The Partnership
        considers active markets as those in which transactions for the assets or
        liabilities occur in sufficient frequency and volume to provide pricing
        information on an ongoing basis.
  Level
        2:
  Quoted
        prices in markets that are not active, or inputs which are observable,
        either directly or indirectly, for substantially the full term of the
        asset or liability.
  Level
        3:
  Measured
        based on prices or valuation models that require inputs that are both
        significant to the fair value measurement and less observable from
        objective sources (i.e., supported by little or no market activity). The
        Partnership's Level 3 instruments are comprised of interest rate
        swaps.  Although the Partnership utilizes third party broker
        quotes to assess the reasonableness of its prices and valuation, the
        Partnership does not have sufficient corroborating market evidence to
        support classifying these assets and liabilities as Level
      2.
  As required
  by SFAS No. 157, financial assets and liabilities are classified based on
  the lowest level of input that is significant to the fair value measurement. The
  Partnership's assessment of the significance of a particular input to the fair
  value measurement requires judgment, and may affect the valuation of the fair
  value of assets and liabilities and their placement within the fair value
  hierarchy levels. The following table summarizes the valuation of the
  Partnership's investments and financial instruments by SFAS No. 157 pricing
  levels as of June 30, 2008 (in thousands):
  11
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  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  Fair
        Value Measurements at Reporting Date Using
  Quoted
        Prices in Active
  Significant
        Other
  Significant
  Markets
        for Identical
  Observable
  Unobservable
  Assets
  Inputs
  Inputs
  Description
  June
        30, 2008
  (Level
        1)
  (Level
        2)
  (Level
        3)
  Interest
        rate swap assets
  $
  2,998
  $
  -
  $
  -
  $
  2,998
  Interest
        rate swap liabilities
  (2,502
  )
  -
  -
  (2,502
  )
  Total
  $
  496
  $
  -
  $
  -
  $
  496
  The following
  table sets forth a reconciliation of changes in the fair value of the
  Partnership's net financial liabilities classified as level 3 in the fair value
  hierarchy (in thousands):
  Fair
        Value Measurements Using
  Significant
        Unobservable Inputs
  (Level
        3)
  Three
        Months Ended June 30, 2008
  Six
        Months Ended June 30, 2008
  Beginning
        balance
  $
  (4,390
  )
  $
  (2,233
  )
  Total
        gains or losses (realized/unrealized)
  Included
        in earnings (1)
  4,720
  2,569
  Included
        in other comprehensive income
  -
  -
  Purchases,
        issuances, and settlements
  166
  160
  Transfers
        in and/or out of Level 3
  -
  -
  Ending
        balance, June 30, 2008
  $
  496
  $
  496
  The
        amount of total gains for the period included
  in
        earnings attributable to the change in the unrealized
  gains
        or losses relating to assets and liabilities still
  held
        at the reporting date
  $
  4,886
  $
  2,729
  (1)
        Amounts reported as included in earnings are reported as interest (income)
        expense on the statements of operations.
  6.
  NET INCOME PER LIMITED PARTNER UNIT
  Subject
  to applicability of Emerging Issues Task Force Issue No. 03-06 ("EITF
  03-06"), "Participating Securities and the Two-Class Method under Financial
  Accounting Standards Board ("FASB") Statement No. 128," as discussed below,
  Partnership income is allocated to the limited partners, including the holders
  of subordinated units, and to the general partner after consideration of its
  incentive distribution rights.  Income allocable to the limited
  partners is first allocated to the common unitholders up to the quarterly
  minimum distribution of $0.3125 per unit, with remaining income allocated to the
  subordinated unitholders up to the minimum distribution amount. Basic and
  diluted net income per common and subordinated partner unit is determined by
  dividing net income attributable to common and subordinated partners by the
  weighted average number of outstanding common and subordinated partner units
  during the period.
  EITF
  03-06 addresses the computation of earnings per share by entities that have
  issued securities other than common stock that contractually entitle the holder
  to participate in dividends and earnings of the entity when, and if, it declares
  dividends on its common stock (or partnership distributions to unitholders).
  Under EITF 03-06, in accounting periods where the Partnership's aggregate net
  income exceeds aggregate dividends declared in the period, the Partnership is
  required to present earnings per unit as if all of the earnings for the periods
  were distributed.
  The
  following sets forth the computation of basic and diluted net income per common
  and subordinated unit (in thousands, except per unit data):
  12
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  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  Three
        Months
  Three
        Months
  Six
        Months
  Six
        Months
  Ended
  Ended
  Ended
  Ended
  June
        30, 2007
  June
        30, 2008
  June
        30, 2007
  June
        30, 2008
  Net
        income (loss)
  $
  (12,211
  )
  $
  21,596
  $
  (24,495
  )
  $
  31,354
  Less:
        General partner interest in net income
  3,410
  3,605
  Net
        income available to limited and subordinated partners
  $
  18,186
  $
  27,749
  Basic
        and diluted weighted average number of units:
  Common
        units
  21,275
  19,310
  Subordinated
        units
  12,571
  12,571
  Restricted
        and phantom units
  530
  508
  Basic
        and diluted net income per common unit
  $
  0.53
  $
  0.84
  Basic
        and diluted net income per subordinated unit
  $
  0.53
  $
  0.84
  7.
  PARTNERS' CAPITAL AND DISTRIBUTIONS
  The
  Partnership has not made a distribution to its common unitholders, subordinated
  unitholders or general partner since May 15, 2008 due to the existing events of
  default under its credit agreement and the uncertainty of its future cash flows
  relating to the Bankruptcy Filings.  The Partnership's unitholders
  will be required to pay taxes on their share of the Partnership's taxable income
  even though they did not receive a distribution for the quarters ended June 30,
  2008, September 30, 2008 or December 31, 2008.  In addition, the
  Partnership does not currently expect to make a distribution relating to
  operations during the first quarter of 2009.  If the events of
  default under the Partnership's credit agreement are not waived by its lenders
  or the Partnership's business operations and prospects do not improve, the
  Partnership may not make quarterly distributions to its unitholders in the
  future (See Note 13).  The Partnership's partnership agreement
  provides that, during the subordination period, which the Partnership is
  currently in, the Partnership's common units will have the right to receive
  distributions of available cash from operating surplus in an amount equal to the
  minimum quarterly distribution of $0.3125 per common unit per quarter, plus any
  arrearages in the payment of the minimum quarterly distribution on the common
  units from prior quarters, before any distributions of available cash from
  operating surplus may be made on the subordinated units.
  On April
  24, 2008, the Partnership declared a cash distribution of $0.40 per unit on its
  outstanding units for the three month period ended March 31,
  2008.  The distribution was paid on May 15, 2008 to unitholders of
  record on May 5, 2008. The total distribution paid was approximately $14.3
  million, with approximately $8.5 million, $5.0 million, and $0.6 million paid to
  the Partnership's common unitholders, subordinated unitholders and general
  partner, respectively, and $0.2 million paid to phantom and restricted
  unitholders pursuant to awards granted under the Partnership's long-term
  incentive plan.
  On
  February 20, 2008, the Partnership purchased the Acquired Asphalt Assets
  from the Private Company for aggregate consideration of $379.5 million,
  including $0.7 million of acquisition-related costs. For accounting purposes,
  the acquisition has been reflected as a purchase of assets, with the Acquired
  Asphalt Assets recorded at the historical cost of the Private Company, which was
  approximately $145.5 million, and with the additional purchase price of $234.0
  million reflected in the statement of changes in partners' capital as a
  distribution to the Private Company.  The Board approved the
  acquisition of the Acquired Asphalt Assets as well as the terms of the related
  agreements based on a recommendation from its conflicts committee, which
  consisted entirely of independent directors. The conflicts committee retained
  independent legal and financial advisors to assist it in evaluating the
  transaction and considered a number of factors in approving the acquisition,
  including an opinion from the committee's independent financial advisor that the
  consideration paid for the Acquired Asphalt Assets was fair, from a financial
  point of view, to the Partnership.
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  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  On May
  12, 2008, the Partnership purchased the Acquired Pipeline Assets from the
  Private Company for aggregate consideration of $45.1 million, including $0.1
  million of acquisition-related costs. For accounting purposes, the acquisition
  has been reflected as a purchase of assets, with the Acquired Pipeline Assets
  recorded at the historical cost of the Private Company, which was approximately
  $35.1 million, and with the additional purchase price of $10.0 million reflected
  in the statement of changes in partners' capital as a distribution to the
  Private Company.  The Board approved the acquisition of the Acquired
  Pipeline Assets based on a recommendation from its conflicts committee, which
  consisted entirely of independent directors. The conflicts committee retained
  independent legal and financial advisors to assist it in evaluating the
  transaction and considered a number of factors in approving the acquisition,
  including an opinion from the committee's independent financial advisor that the
  consideration paid for the Acquired Pipeline Assets was fair, from a financial
  point of view, to the Partnership.
  On May
  30, 2008, the Partnership purchased the Acquired Storage Assets from the Private
  Company for aggregate consideration of $90.2 million, including $0.2 million of
  acquisition-related costs. For accounting purposes, the acquisition has been
  reflected as a purchase of assets, with the Acquired Storage Assets recorded at
  the historical cost of the Private Company, which was approximately $16.6
  million, and with the additional purchase price of $73.6 million reflected in
  the statement of changes in partners' capital as a distribution to the Private
  Company.  The Board approved the acquisition of the Acquired Storage
  Assets based on a recommendation from its conflicts committee, which consisted
  entirely of independent directors. The conflicts committee retained independent
  legal and financial advisors to assist it in evaluating the transaction and
  considered a number of factors in approving the acquisition, including an
  opinion from the committee's independent financial advisor that the
  consideration paid for the Acquired Storage Assets was fair, from a financial
  point of view, to the Partnership.
  As a
  result of the Private Company's control of the Partnership's general partner,
  consideration paid in excess of the historical cost of the Acquired Asphalt
  Assets, Acquired Pipeline Assets, and Acquired Storage Assets were treated as
  distributions to the Private Company.  This resulted in an aggregate
  reduction in Partners' Capital of $317.6 million and negative Partners' Capital
  of $130.2 million as of June 30, 2008.  As discussed in the Partnership's
  Annual Report on Form 10-K for the year ended December 31, 2007, as a result of
  the Private Company's control of the Partnership's general partner, the
  Partnership was subject to the risk that the Private Company may favor its own
  interest in proposing the terms of any acquisition (or drop downs) the
  Partnership makes from the Private Company and such terms may not be as
  favorable as those received from an unrelated third party.  The Board
  approved the acquisition of the Acquired Asphalt Assets, the Acquired Pipeline
  Assets, and Acquired Storage Assets, as well as the terms of the related
  agreements based on a recommendation from its conflicts committee, which
  consisted entirely of independent directors. The conflicts committee retained
  independent legal and financial advisors to assist it in evaluating these
  transactions and considered a number of factors in approving the acquisitions,
  including opinions from the committee's independent financial advisor that the
  consideration paid for the Acquired Asphalt Assets, the Acquired Pipeline
  Assets, and the Acquired Storage Assets was fair, from a financial point of
  view, to the Partnership.
  8.
  RELATED PARTY TRANSACTIONS
  Prior to
  the close of its initial public offering in July 2007, the Partnership entered
  into the Throughput Agreement with the Private Company. For the six months ended
  June 30, 2008, the Partnership recognized revenue of $56.2 million under the
  Throughput Agreement.
  In
  conjunction with the purchase of the Acquired Asphalt Assets in February 2008,
  the Partnership entered into a Terminalling Agreement with the Private Company.
  For the six months ended June 30, 2008, the Partnership recognized revenue of
  $28.2 million under the Terminalling Agreement, including fuel surcharge
  revenues related to fuel and power consumed to operate its liquid asphalt cement
  storage tanks.
  Based on
  the minimum requirements under the Throughput Agreement and the Terminalling
  Agreement, the Private Company is obligated to pay the Partnership an aggregate
  minimum monthly fee totaling $135 million annually for the Partnership's
  gathering and transportation services and the Partnership's terminalling and
  storage services.  Pursuant to an order of the Bankruptcy Court
  entered on September 9, 2008, the Private Company is no longer making such
  minimum payments under the Throughput Agreement but instead is paying a market
  rate based upon the Private Company's actual usage.
  Pursuant
  to the Settlement Agreement (as defined below), the Private Company
  will reject the Throughput Agreement as part of the Bankruptcy Cases (as defined
  below) and the Partnership and the Private Company will enter into a new
  throughput agreement pursuant to which the Partnership will provide certain
  crude oil gathering, transportation, terminalling and storage services to the
  Private Company.  There can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see
  Note 13).
  The revenues under the Terminalling Agreement have been
  and will continue to be adversely affected by the Bankruptcy Filings (See Note
  13).
  The
  Partnership does not take title to, or marketing responsibility for, the crude
  oil or liquid asphalt cement that it gathers, transports, terminals and stores.
  The Throughput Agreement and the Terminalling Agreement contain a Consumer Price
  Index adjustment that may offset a portion of any increased costs that the
  Partnership incurs. If new laws or regulations that affect these services
  provided under the Throughput Agreement or the Terminalling Agreement generally
  are enacted that require the Partnership to make substantial and unanticipated
  capital expenditures, the Partnership has the right pursuant to the terms of
  such agreements to negotiate an upfront payment or monthly surcharge to be paid
  by the Private Company for the use of the Partnership's services to cover the
  Private Company's pro rata portion of the cost of complying with these laws or
  regulations, after the Partnership has made efforts to mitigate their effect.
  The Partnership and the Private Company are obligated to negotiate in good faith
  to agree on the level of the monthly surcharge. The surcharge will not apply in
  respect of routine capital expenditures.
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  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  The
  Private Company's obligations under the Throughput Agreement and the
  Terminalling Agreement may be temporarily suspended during the occurrence of a
  force majeure event that renders performance of services impossible with respect
  to an asset for at least 30 consecutive days. If a force majeure event results
  in a diminution in the services the Partnership is able to provide to the
  Private Company pursuant to the Throughput Agreement or the Terminalling
  Agreement, the Private Company's minimum service usage commitment would be
  reduced proportionately for the duration of the force majeure event. If such a
  force majeure event continues for twelve consecutive months or more, the
  Partnership and the Private Company will each have the right to terminate the
  rights and obligations with respect to the affected services under the
  Throughput Agreement or the Terminalling Agreement.
  The
  Throughput Agreement and the Terminalling Agreement have initial terms that
  expire on December 31, 2014 with additional automatic one-year renewals
  unless either party terminates the agreement upon one year's prior
  notice.  The Private Company may reject or attempt to modify these
  contracts in the Bankruptcy Cases (as defined below) (See Note 13). The
  Throughput Agreement and the Terminalling Agreement may be assigned by the
  Private Company only with the Partnership's consent; provided, however, that the
  Bankruptcy Court may approve an assignment of these agreements despite the
  Partnership's objections.  On February 6, 2009, the Private Company
  filed a motion in the Bankruptcy Court requesting approval of the sale of the
  Private Company's asphalt related assets, or in the event of an unsuccessful
  auction, the rejection of the Terminalling Agreement and the winding down of its
  asphalt business (See Note 13).
  The
  Throughput Agreement and the Terminalling Agreement do not apply to any services
  the Partnership may provide to customers other than the Private
  Company.
  Pursuant
  to the Settlement Agreement (as defined below), the Private Company will
  reject the Terminalling Agreement and the Throughput Agreement as part of the
  Bankruptcy Cases (as defined below) and the Partnership will receive the
  Private Company's asphalt assets that are connected to the Partnership's asphalt
  assets.  In addition, pursuant to the Settlement Agreement, the
  Partnership and the Private Company will enter into a new throughput agreement
  pursuant to which the Partnership will provide certain crude oil gathering,
  transportation, terminalling and storage services to the Private
  Company.  There can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see Note
  13).
  As of
  December 31, 2007 and June 30, 2008, the Partnership had $9.7 million
  and $2.0 million
  in
  receivables from the Private Company and its subsidiaries, net of allowance for
  doubtful accounts of $0 and $0.9 million, respectively.  The $0.9
  million allowance for doubtful accounts relates to amounts that were due from
  the Private Company as of June 30, 2008 and are considered prepetition debt in
  the Bankruptcy Cases.  These amounts have been reserved due to the
  uncertainty of collecting prepetition amounts from the Private Company in the
  Bankruptcy Cases (See Note 13).
  Under the Partnership's partnership
  agreement and the Omnibus Agreement with the Private Company, the Partnership
  reimburses the Private Company for the provision of various general and
  administrative services for the Partnership's benefit. As of June 30, 2008, the
  Partnership paid the Private Company a fixed administrative fee for providing
  general and administrative services to the Partnership.  This fixed
  administrative fee was initially fixed at $5.0 million per year through
  July 2010.  Concurrently with the closing of the purchase of the
  Acquired Asphalt Assets, the Partnership amended and restated the Omnibus
  Agreement, increasing the fixed administrative fee the Partnership pays the
  Private Company for providing general and administrative services to the
  Partnership from $5.0 million per year to $7.0 million per year through February
  2011, subject to annual increases based on increases in the Consumer Price Index
  and subject to further increases in connection with expansions of the
  Partnership's operations through the acquisition or construction of new assets
  or businesses with the concurrence of the Partnership's conflicts
  committee.
  After February 2011, the general and
  administrative expenses will be allocated to the Partnership only in accordance
  with the partnership agreement. For the six months ended June 30, 2008, the
  Partnership paid the Private Company $
  3
  .2
  million for the services provided under
  the Omnibus Agreement.  The obligation for the Private Company to
  provide services under the Omnibus Agreement and the corresponding
  administrative fee payable by the Partnership were terminated in connection with
  the events related to the change of control of the Partnership's General
  Partner.  The Private Company agreed to provide these services until
  at least November 30, 2008 pursuant to an Agreed Order approved by the
  Bankruptcy Court and, as of the date of filing this report, has continued to
  provide these services (See Note 13).
  Pursuant
  to the Settlement Agreement (as defined below), the Private Company will
  reject the Amended Omnibus Agreement as part of the Bankruptcy Cases (as defined
  below) and the Partnership and the Private Company will enter into a shared
  services agreement pursuant to which the Private Company will provide certain
  operational services for the Partnership.  There can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see Note
  13).
  The
  Partnership also reimburses the Private Company for direct operating payroll and
  payroll-related costs and other operating costs associated with services the
  Private Company's employees provide to the Partnership. For the six months ended
  June 30, 2008, the Partnership recorded $14.3 million in compensation costs and
  $1.6 million in other operating costs related to services provided by the
  Private Company's employees which are reflected as operating expenses in the
  accompanying statement of operations. As of December 31, 2007 and June 30,
  2008, the Partnership had $10.2 million and $9.9 million
  in payables to the
  Private Company and its subsidiaries. As of the date of the filing of this
  report, the Partnership has not paid the $9.9 million payable to the Private
  Company prior to the Bankruptcy Filings.
  Pursuant
  to the Settlement Agreement (as defined below), these pre-petition claims by the
  Private Company will be netted against pre-petition claims by the
  Partnership and waived.  There can be no assurance that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated (see Note
  13).
  15
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  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  The
  Partnership has acquired various assets, including the Acquired Asphalt Assets,
  the Acquired Pipeline Assets and the Acquired Storage Assets, from the Private
  Company.  See Notes 1 and 7 for a description of these
  acquisitions.
  During
  the six months ended June 30, 2008, the Partnership made payments of
  $1.0 million to a third party entity on whose board of directors a former
  member of the Board serves in connection with leased transport trucks and
  trailers utilized in the Partnership's gathering and transportation services
  segment. At June 30, 2008 the Partnership had future commitments to this
  entity totaling $8.5 million.
  As of
  June 30, 2008, the Partnership had a banking relationship with a third party
  banking entity on whose board of directors a former member of the Board
  served.
  9.
  LONG-TERM INCENTIVE PLAN
  In July
  2007, the Partnership's general partner adopted the SemGroup Energy Partners
  G.P., L.L.C. Long-Term Incentive Plan (the "Plan"). The compensation committee
  of the Board administers the Plan. The Plan authorizes the grant of an aggregate
  of 1.25 million common units deliverable upon vesting. Although other types
  of awards are contemplated under the Plan, currently outstanding awards include
  "phantom" units, which convey the right to receive common units upon vesting,
  and "restricted" units, which are grants of common units restricted until the
  time of vesting. The phantom unit awards also include distribution equivalent
  rights ("DERs").
  Subject
  to applicable earning criteria, a DER entitles the grantee to a cash payment
  equal to the cash distribution paid on an outstanding common unit prior to the
  vesting date of the underlying award. Recipients of restricted units are
  entitled to receive cash distributions paid on common units during the vesting
  period which distributions are reflected initially as a reduction of partners'
  capital. Distributions paid on units which ultimately do not vest are
  reclassified as compensation expense.
  In July
  2007, 475,000 phantom common units and 5,000 restricted common units were
  granted which vest ratably over periods of four and three years, respectively.
  In October 2007, 5,000 restricted common units were granted which vest ratably
  over three years. In June 2008, 375,000 phantom common units were granted which
  vest ratably over three years.  These grants are equity awards under
  SFAS 123(R), "
  Share-Based
  Payment
  " and, accordingly, the fair value of the awards as of the grant
  date is expensed over the vesting period. The weighted average grant date
  fair-value of the awards is $23.86 per unit. The value of these award grants was
  approximately $10.5 million, $0.1 million, $0.1 million and $9.8
  million on their grant dates, respectively, and the unrecognized estimated
  compensation cost at June 30, 2008 was $18.0 million, which will be
  recognized over the remaining vesting periods. As of June 30, 2008, all
  outstanding awards were expected to fully vest.  Due to the change of
  control of the Partnership's general partner related to the Private Company's
  liquidity issues, all outstanding awards vested on July 18, 2008.  On
  August 14, 2008, 282,309 common units were issued in connection with the vesting
  of certain of the outstanding awards.  In addition, in December 2008
  the Plan was amended to provide for the delivery of subordinated units in
  addition to common units upon vesting and 3,333 restricted common units and
  1,667 restricted subordinated units were awarded under the Plan (See Note
  13).
  The
  Partnership's equity-based incentive compensation expense for the six months
  ended June 30, 2007 and 2008 was $0 and $1.4 million, respectively.
  10.
  COMMITMENTS AND CONTINGENCIES
  The
  Partnership is from time to time subject to various legal actions and claims
  incidental to its business, including those arising out of environmental-related
  matters. Management believes that these routine legal proceedings will not have
  a material adverse effect on the financial position, results of operations or
  cash flows of the Partnership. Once management determines that information
  pertaining to a legal proceeding indicates that it is probable that a liability
  has been incurred and the amount of such liability can be reasonably estimated,
  an accrual is established equal to its estimate of the likely exposure. The
  Partnership did not have an accrual for legal settlements as of
  December 31, 2007 or June 30, 2008.  The Partnership is subject
  to securities class actions lawsuits, an SEC investigation and a Grand Jury
  investigation due to events related to the Bankruptcy Filings (See Note
  13).  An unfavorable outcome in any of these matters may have a
  material adverse effect on the Partnership's business, financial condition,
  results of operations, cash flows, ability to make distributions to its
  unitholders and the trading price of the Partnership's common
  units.
  16
  Table of Contents
  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  The
  Partnership has contractual obligations to perform dismantlement and removal
  activities in the event that some of its liquid asphalt cement and residual fuel
  oil terminalling and storage assets are abandoned. These obligations include
  varying levels of activity including completely removing the assets and
  returning the land to its original state. The Partnership has determined that
  the settlement dates related to the retirement obligations are indeterminate.
  The assets with indeterminate settlement dates have been in existence for many
  years and with regular maintenance will continue to be in service for many years
  to come. Also, it is not possible to predict when demands for the Partnership's
  terminalling and storage services will cease, and the Partnership does not
  believe that such demand will cease for the foreseeable
  future.  Accordingly, the Partnership believes the date when these
  assets will be abandoned is indeterminate. With no reasonably determinable
  abandonment date, the Partnership cannot reasonably estimate the fair value of
  the associated asset retirement obligations.  Management believes that
  if the Partnership's asset retirement obligations were settled in the
  foreseeable future the potential cash flows that would be required to settle the
  obligations based on current costs are not material.  The Partnership
  will record asset retirement obligations for these assets in the period in which
  sufficient information becomes available for it to reasonably determine the
  settlement dates.
  In the
  Amended Omnibus Agreement and other agreements with the Private Company, the
  Private Company has agreed to indemnify the Partnership for certain
  environmental and other claims relating to the crude oil and liquid asphalt
  cement assets that have been contributed to the Partnership.  Due to
  the Bankruptcy Filings the Partnership may not be able to collect any amounts
  that would otherwise be payable under these indemnification provisions if such
  events were to occur.  Pursuant to the Settlement Agreement (as
  defined below), the Private Company will reject the Amended Omnibus Agreement
  including the indemnification provisions therein.
  If the Partnership experiences
  an environmental or other loss and the Private Company fails to honor its
  indemnification obligations, it would experience increased losses which may
  have a material adverse effect on its business, financial condition, results of
  operations, cash flows, ability to make distributions to its unitholders,
  the trading price of its common units and the ability to
  conduct its business.
  11.
  OPERATING SEGMENTS
  The
  Partnership's operations consist of two operating segments:
  (i) terminalling and storage services and (ii) gathering and
  transportation services.
  TERMINALLING AND STORAGE
  SERVICES
  —The Partnership provides crude oil and liquid asphalt cement
  terminalling and storage services at its terminalling and storage facilities
  located in twenty-three states.
  GATHERING AND TRANSPORTATION
  SERVICES
  —The Partnership owns and operates two pipeline systems, the
  Mid-Continent system and the Longview system, that gather crude oil purchased by
  the Private Company and its other customers and transports it to refiners, to
  common carrier pipelines for ultimate delivery to refiners or to terminalling
  and storage facilities owned by the Partnership and others. The Partnership
  refers to its gathering and transportation system located in Oklahoma and the
  Texas Panhandle as the Mid-Continent system. It refers to its second gathering
  and transportation system, which is located in Texas, as the Longview system. In
  addition to its pipelines, the Partnership uses its owned and leased tanker
  trucks to gather crude oil for the Private Company and its other customers at
  remote wellhead locations generally not covered by pipeline and gathering
  systems and to transport the crude oil to aggregation points and storage
  facilities located along pipeline gathering and transportation systems. In
  connection with its gathering services, the Partnership also provides a number
  of producer field services, ranging from gathering condensates from natural gas
  companies to hauling produced water to disposal wells.
  The
  Partnership's management evaluates performance based upon segment operating
  margin, which includes revenues from related parties and external customers and
  operating expenses excluding depreciation and amortization. The non-GAAP measure
  of operating margin (in the aggregate and by segment) is presented in the
  following table. The Partnership computes the components of operating margin by
  using amounts that are determined in accordance with GAAP. A reconciliation of
  operating margin to income (loss) before income tax, which is its nearest
  comparable GAAP financial measure, is included in the following table. The
  Partnership believes that investors benefit from having access to the same
  financial measures being utilized by management. Operating margin is an
  important measure of the economic performance of the Partnership's core
  operations. This measure forms the basis of the Partnership's internal financial
  reporting and is used by its management in deciding how to allocate capital
  resources between segments.  Income (loss) before income tax,
  alternatively, includes expense items, such as depreciation and amortization,
  general and administrative expenses and interest expense, which management does
  not consider when evaluating the core profitability of an
  operation.
  The
  following table reflects certain financial data for each segment for the periods
  indicated:
  17
  Table of Contents
  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  Terminalling
        and Storage
  Gathering
        and Transportation
  Total
  (in thousands)
  Three
        Months Ended June 30, 2007
  Service
        revenue
  Third
        party revenue
  $
  4,409
  $
  6,055
  $
  10,464
  Related
        party revenue
  -
  -
  -
  Total
        revenue for reportable segments
  4,409
  6,055
  10,464
  (1
  )
  Operating
        expenses (excluding depreciation and amortization)
  606
  15,248
  15,854
  Operating
        margin (excluding depreciation and amortization)
  3,803
  (9,193
  )
  (5,390
  )
  (2
  )
  Total
        assets (end of period)
  66,148
  50,476
  116,624
  Three
        Months Ended June 30, 2008
  Service
        revenue
  Third
        party revenue
  $
  982
  $
  5,045
  $
  6,027
  Related
        party revenue
  30,299
  18,950
  49,249
  Total
        revenue for reportable segments
  31,281
  23,995
  55,276
  Operating
        expenses (excluding depreciation and amortization)
  8,151
  15,595
  23,746
  Allowance
        for doubtful accounts
  817
  449
  1,266
  Operating
        margin (excluding depreciation and amortization)
  22,313
  7,951
  30,264
  (2
  )
  Total
        assets (end of period)
  227,255
  86,923
  314,178
  Six
        Months Ended June 30, 2007
  Service
        revenue
  Third
        party revenue
  $
  7,145
  $
  11,830
  $
  18,975
  Related
        party revenue
  -
  123
  123
  Total
        revenue for reportable segments
  7,145
  11,953
  19,098
  (1
  )
  Operating
        expenses (excluding depreciation and amortization)
  1,156
  28,615
  29,771
  Operating
        margin (excluding depreciation and amortization)
  5,989
  (16,662
  )
  (10,673
  )
  (2
  )
  Total
        assets (end of period)
  66,148
  50,476
  116,624
  Six
        Months Ended June 30, 2008
  Service
        revenue
  Third
        party revenue
  $
  1,013
  $
  9,638
  $
  10,651
  Related
        party revenue
  47,879
  36,960
  84,839
  Total
        revenue for reportable segments
  48,892
  46,598
  95,490
  Operating
        expenses (excluding depreciation and amortization)
  10,970
  31,029
  41,999
  Allowance
        for doubtful accounts
  817
  449
  1,266
  Operating
        margin (excluding depreciation and amortization)
  37,105
  15,120
  52,225
  (2
  )
  Total
        assets (end of period)
  227,255
  86,923
  314,178
  (1)
  Historically,
        the Predecessor was a part of the integrated operations of the Private
        Company, and neither the Private Company nor the Predecessor recorded
        revenue associated with the terminalling and storage and gathering and
        transportation services provided on an intercompany basis. Accordingly,
        revenues reflected for all periods prior to the contribution of the
        assets, liabilities and operations to the Partnership by the Private
        Company on July 20, 2007 are substantially services provided to third
        parties.
  (2)
  The
        following table reconciles segment operating margin (excluding
        depreciation and amortization) to income (loss) before income
        taxes:
  Three
        Months Ended June 30,
  Six
        Months Ended June 30,
  2007
  2008
  2007
  2008
  (in
        thousands)
  Operating
        margin (excluding depreciation and amortization)
  $
  (5,390
  )
  $
  30,264
  $
  (10,673
  )
  $
  52,225
  Depreciation
        and amortization
  2,187
  5,759
  4,387
  9,772
  General
        and administrative expenses
  4,118
  3,057
  8,490
  6,067
  Interest
        (income) expense
  516
  (225
  )
  945
  4,864
  Income
        (loss) before income taxes
  $
  (12,211
  )
  $
  21,673
  $
  (24,495
  )
  $
  31,522
  18
  Table of Contents
  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  12.
  RECENTLY ISSUED ACCOUNTING STANDARDS
  In
  June 2008, the Emerging Issues Task Force ("EITF") issued Issue
  No. 03-6-1, "
  Determining
  Whether Instruments Granted in Share-Based Payment Transactions Are
  Participating Securities
  " ("EITF 03-6-1").  EITF 03-6-1 addresses
  whether instruments granted in share-based payment transactions are
  participating securities prior to vesting and, therefore, need to be included in
  the earnings allocation in computing earnings per share ("EPS") under the
  two-class method.  EITF 03-6-1 will be effective for financial statements
  issued for fiscal years beginning after December 15, 2008, and interim
  periods within those years.  All prior-period EPS data presented will be
  adjusted retrospectively to conform with the provisions of EITF 03-6-1. The
  Partnership is evaluating the expected impact of adoption of EITF
  03-6-1.
  In
  April 2008, the Financial Accounting Standards Board ("FASB") issued FASB
  Staff Position ("FSP") No. FAS 142-3 "
  Determination of the Useful Life of
  Intangible Assets
  " ("FSP No. FAS 142-3").  FSP No. FAS
  142-3 amends the factors that should be considered in developing renewal or
  extension assumptions used to determine the useful life of a recognized
  intangible asset under SFAS No. 142, "
  Goodwill and Other Intangible Assets
  " ("SFAS 142").  The intent of this FSP is to improve the
  consistency between the useful life of a recognized intangible asset under
  SFAS 142 and the period of expected cash flows used to measure the fair
  value of the asset under SFAS No. 141 (revised 2007), "
  Business Combinations
  ," and
  other GAAP.  This FSP will be effective for financial statements issued for
  fiscal years beginning after December 15, 2008, and interim periods within
  those fiscal years.  The Partnership is evaluating the expected impact;
  however, it believes adoption will not impact the Partnership's financial
  position, results of operations or cash flows.
  In
  March 2008, the FASB issued SFAS No. 161, "Disclosures about
  Derivative Instruments and Hedging Activities-an amendment of FASB Statement No.
  133" ("SFAS No. 161"). This Statement requires enhanced disclosures about the
  Partnership's derivative and hedging activities. This statement is effective for
  financial statements issued for fiscal years and interim periods beginning after
  November 15, 2008. The Partnership will adopt SFAS No. 161 beginning
  January 1, 2009. With the adoption of this statement, the Partnership does
  not expect any significant impact on its financial position, results of
  operations or cash flows.
  In March
  2008, the Emerging Issues Task Force ("EITF") of the FASB reached a final
  consensus on Issue No. 07-4, "Application of the Two-Class Method under
  FASB Statement No. 128, Earnings per Share, to Master Limited Partnerships"
  ("Issue No. 07-4"). This conclusion reached by the EITF affects how a
  master limited partnership ("MLP") allocates income between its general partner,
  which typically holds incentive distribution rights ("IDRs") along with the
  general partner interest, and the limited partners. It is not uncommon for MLPs
  to experience timing differences between the recognition of income and
  partnership distributions. The amount of incentive distribution is typically
  calculated based on the amount of distributions paid to the MLP's partners. The
  issue is whether current period earnings of an MLP should be allocated to the
  holders of IDRs as well as the holders of the general and limited partnership
  interests when applying the two-class method under SFAS No. 128, "Earnings Per
  Share."
  The
  conclusion reached by the EITF in Issue No. 07-4 is that when current
  period earnings are in excess of cash distributions, the undistributed earnings
  should be allocated to the holders of the general partner interest, the holders
  of the limited partner interest and incentive distribution rights holders based
  upon the terms of the partnership agreement. Under this model, contractual
  limitations on distributions to incentive distribution rights holders would be
  considered when determining the amount of earnings to allocate to them. That is,
  undistributed earnings would not be considered available cash for purposes of
  allocating earnings to incentive distribution rights holders. Conversely, when
  cash distributions are in excess of earnings, net income (or loss) should be
  reduced (increased) by the distributions made to the holders of the general
  partner interest, the holders of the limited partner interest and incentive
  distribution rights holders. The resulting net loss would then be allocated to
  the holders of the general partner interest and the holders of the limited
  partner interest based on their respective sharing of the losses based upon the
  terms of the partnership agreement.
  Issue
  No. 07-4 is effective for fiscal years beginning after December 15,
  2008 and interim periods within those fiscal years. The accounting treatment is
  effective for all financial statements presented. The Partnership is currently
  considering the impact of the adoption of Issue 07-4 on its presentation of
  earnings per unit.
  19
  Table of Contents
  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  In
  December 2007, the FASB issued SFAS No. 141(R), "Business
  Combinations."  This statement requires assets acquired and
  liabilities assumed to be measured at fair value as of the acquisition date,
  acquisition related costs incurred prior to the acquisition to be expensed and
  contractual contingencies to be recognized at fair value as of the acquisition
  date. This statement is effective for financial statements issued for fiscal
  years beginning after December 15, 2008. The Partnership is currently
  assessing the impact, if any, the adoption of this statement will have on its
  financial position, results of operations or cash flows.
  13.
  SUBSEQUENT EVENTS
  Due to
  the events related to the Bankruptcy Filings described herein, including the
  uncertainty relating to future cash flows and the existing events of default
  under the Partnership's credit facility, the Partnership faces substantial doubt
  as to its ability to continue as a going concern.  While it is not
  feasible to predict the ultimate outcome of the events surrounding the
  Bankruptcy Cases, the Partnership has been and could continue to be materially
  and adversely affected by such events and it may be forced to make a bankruptcy
  filing or take other action that could have a material adverse effect on its
  business, the price of its common units and its results of
  operations.
  Bankruptcy
  Filings
  On July
  17, 2008, the Partnership issued a press release announcing that the Private
  Company was experiencing liquidity issues and was exploring various
  alternatives, including raising additional equity, debt capital or the filing of
  a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code
  to address these issues.  The Partnership filed this press release in
  a Current Report on Form 8-K filed with the SEC on July 18, 2008.
  On July
  22, 2008 and thereafter, the Private Company and certain of its subsidiaries
  made the Bankruptcy Filings.  The Private Company and its subsidiaries
  continue to operate their businesses and own and manage their properties as
  debtors-in-possession under the jurisdiction of the Bankruptcy Court and in
  accordance with the applicable provisions of the Bankruptcy Code (the
  "Bankruptcy Cases"). None of the Partnership, its general partner, the
  subsidiaries of the Partnership nor the subsidiaries of the general partner are
  debtors in the Bankruptcy Cases.  However, because of the contractual
  relationships with the Private Company and certain of its subsidiaries, the
  Bankruptcy Filings have adversely impacted the Partnership and may in the future
  impact the Partnership in various ways, including the items discussed
  below.  The Partnership's financial results as of June 30, 2008
  reflect an allowance for doubtful accounts of $0.9 million related to amounts
  due from the Private Company as of June 30, 2008, which are considered
  prepetition debt in the Bankruptcy Cases.  The Partnership's financial
  results as of June 30, 2008 also reflect a $0.4 million allowance for doubtful
  accounts related to amounts due from third parties as of June 30,
  2008.  The allowance related to amounts due from third parties was
  established as a result of certain third party customers netting amounts due
  them from the Private Company with amounts due to the
  Partnership.  Other than the allowance for doubtful accounts described
  above, the results of operations for the three and six months ended
  June 30, 2008 included in this quarterly report were not affected by the
  Bankruptcy Filings and related events.
  Board
  and Management Composition
  On July
  9, 2008, Edward F. Kosnik was appointed as an independent member of the
  Board.  Mr. Kosnik is the chairman of the compensation committee
  and also serves on the audit committee and the conflicts committee of the Board.
  Under the provisions of the Plan, Mr. Kosnik was granted an award of 5,000
  restricted common units on July 9, 2008. These restricted common units
  vested on July 18, 2008 in connection with the change of control of the
  Partnership's general partner described below.
  20
  Table of Contents
  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  On July
  18, 2008, Manchester Securities Corp. and Alerian Finance Partners, LP
  ("Manchester and Alerian"), as lenders to SemGroup Holdings, the sole member of
  the Partnership's general partner, exercised certain rights described below
  under a Loan Agreement and a Pledge Agreement, each dated June 25, 2008 (the
  "Holdings Credit Agreements"), that were triggered by certain events of default
  under the Holdings Credit Agreements.  The Holdings Credit Agreements
  are secured by the subordinated units and incentive distribution rights of the
  Partnership and the membership interests in the Partnership's general partner
  owned by SemGroup Holdings.  Manchester and Alerian have not
  foreclosed on the subordinated units of the Partnership owned by SemGroup
  Holdings or the membership interests in the Partnership's general
  partner.  Manchester and Alerian may in the future exercise other
  remedies available to them under the Holdings Credit Agreement and related loan
  documents, including taking action to foreclose on the collateral securing the
  loan, which may cause an additional event of default under the
  Partnership's credit agreement and its Forbearance Agreement. 
  Neither the Partnership nor the Partnership's general partner is a party to the
  Holdings Credit Agreements or the related loan documents.
  On July
  18, 2008, Manchester and Alerian exercised their right under the Holdings Credit
  Agreements to vote the membership interests of the Partnership's general partner
  in order to reconstitute the Board (the "Change of Control").  Messrs.
  Thomas L. Kivisto, Gregory C. Wallace, Kevin L. Foxx, Michael J. Brochetti and
  W. Anderson Bishop were removed from the Board.  Mr. Bishop had served
  as the chairman of the audit committee and as a member of the conflicts
  committee and compensation committee of the Board.  Messrs. Sundar S.
  Srinivasan, David N. Bernfeld and Gabriel Hammond (each of
  whom is affiliated with Manchester or Alerian) were appointed to
  the Board.  Mr. Srinivasan was elected as Chairman of the
  Board.  Messrs. Brian F. Billings and Edward F. Kosnik remain as
  independent directors of the Board and continue to serve as members of the
  conflicts committee, audit committee and compensation committee of the
  Board.  In addition, Messrs. Foxx and Alex Stallings resigned the
  positions each officer held with SemGroup, L.P. in July 2008.  Mr.
  Brochetti had previously resigned from his position with SemGroup, L.P. in March
  2008.  Messrs. Foxx, Brochetti and Stallings remain as officers of the
  Partnership's general partner.
  On
  October 1, 2008, Dave Miller (who is an affiliate of Manchester) and Duke R.
  Ligon were appointed members of the Board. Mr. Ligon is an independent
  member of the Board and is the chairman of the audit committee and also serves
  on the compensation committee and the conflicts committee of the Board. Under
  the provisions of the Plan, Mr. Ligon was granted an award of 3,333
  restricted common units and 1,667 restricted subordinated units on December 23,
  2008 (See Note 9). These restricted common units and restricted
  subordinated units will vest in one-third increments over a three-year
  period.  The Plan was amended in December 2008 to provide for the
  issuance of restricted subordinated units.
  On
  January 9, 2009, Mr. Srinivasan resigned his positions as Chairman of the Board
  and as a director.  Mr. Ligon was subsequently elected as Chairman of
  the Board.
  As discussed in
  "Part II. Item 5. Other Information," on
  March 18,
  2009
  ,
  the Board realigned the officers of the Partnership's
  general partner appointing Michael J. Brochetti as Executive Vice
  President—Corporate Development and Treasurer, Alex G. Stallings as Chief
  Financial Officer and Secretary, and James R. Griffin as Chief Accounting
  Officer.  Mr. Brochetti had previously served as Chief Financial
  Officer and Mr. Stallings had previously served as Chief Accounting Officer and
  Secretary.
  21
  Table of Contents
  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  Bankruptcy
  Court Order
  On
  September 9, 2008, the Bankruptcy Court entered an order relating to the
  settlement of certain matters between the Partnership and the Private Company
  (the "Order") in the Bankruptcy Cases.  Among other things, the Order
  provided that (i) the Private Company shall directly pay any utility costs
  attributable to the operations of the Private Company at certain shared
  facilities, and the Private Company will pay the Partnership for past utility
  cost reimbursements that are due from the Private Company; (ii) commencing on
  September 15, 2008, payments under the Terminalling Agreement shall be netted
  against amounts due under the Amended Omnibus Agreement and shall be made on the
  15th day of each month for the prior month (with a three business-day grace
  period); (iii) the Private Company will provide the Partnership with a letter of
  credit in the amount of approximately $4.9 million to secure the Private
  Company's postpetition obligations under the Terminalling Agreement; (iv) the
  Private Company will make payments under the Throughput Agreement for the month
  of August on September 15, 2008 (with a three business-day grace period) based
  upon the monthly contract minimums in the Throughput Agreement and netted
  against amounts due under the Amended Omnibus Agreement; (v) the Private Company
  will make payments under the Throughput Agreement for the months of September
  and October on October 15, 2008 (with a three business-day grace period) and
  November 15, 2008 (with a three business-day grace period), respectively, or
  three business days after amounts due are determined and documentation therefore
  has been provided and exchanged based upon actual volumes for each such month
  and at a rate equal to the average rate charged by the Partnership to
  third-party shippers in the same geographical area, with any such amounts netted
  against amounts due under the Amended Omnibus Agreement; (vi) the parties will
  reevaluate the Throughput Agreement and the payment terms with respect to
  services provided after October 2008; (vii) representatives of the Private
  Company and the Partnership will meet to discuss the transition to the
  Partnership of certain of the Private Company's employees necessary to maintain
  the Partnership's business, and pending agreement between the parties, the
  Private Company shall continue to provide services in accordance with the
  Amended Omnibus Agreement through at least November 30, 2008; (viii) the Private
  Company will consent to an order relating a third-party storage contract which
  shall provide that the Partnership is the rightful owner of the rights in and to
  a certain third-party storage agreement and the corresponding amounts due
  thereunder; and (ix) the Partnership will enter into a specified lease with the
  Private Company to permit the Private Company to construct a
  pipeline.
  Since the
  time that the Order was entered, the Partnership negotiated a replacement letter
  of credit, which expires on April 7, 2009, in the amount of approximately $4.9
  million to secure the Private Company's postpetition obligations under the
  Terminalling Agreement.  Although certain provisions of the Order have
  expired, the Private Company, as of the date of filing this report, has
  continued to (i) provide services under the Amended Omnibus Agreement, (ii) make
  payments to the Partnership under the Terminalling Agreement based upon the
  monthly contract minimums (netted against amounts due under the Amended Omnibus
  Agreement) and (iii) make payments under the Throughput Agreement to the
  Partnership for actual volumes transported or stored each month at a rate equal
  to the average rate charged by the Partnership to third-party shippers in the
  same geographical area (netted against amounts due under the Amended Omnibus
  Agreement).  However, there can be no assurance that the Private
  Company will continue to provide such services or make such payments in the
  future.
  Pursuant
  to the Settlement Agreement (as defined below), such services and payments will
  be modified as described below under "—Settlement with the Private
  Company."
  Settlement with
  the Private Company
  .
  On March
  12, 2009, the Bankruptcy Court held a hearing and approved the transactions
  contemplated by a term sheet
  relating to the settlement of certain
  matters between the Private Company and the Partnership (the "Settlement
  Agreement").
  The
  Bankruptcy Court entered an order approving the Settlement Agreement on March
  20, 2009.
  The
  Settlement Agreement provides for the following, among other
  things:
  ·
  the
        Partnership will transfer certain crude oil storage assets located in
        Kansas to the Private Company;
  ·
  the
        Private Company will transfer ownership of 355,000 barrels of crude oil
        tank bottoms and line fill to the
  Partnership;
  ·
  the
        Private Company will reject the Throughput Agreement as part of the
        Bankruptcy Cases;
  ·
  the
        Partnership and its affiliates will have a $20 million unsecured claim
        against the Private Company relating to rejection of the Throughput
        Agreement;
  ·
  the
        Partnership and the Private Company will enter into a new throughput
        agreement pursuant to which the Partnership will provide certain crude oil
        gathering, transportation, terminalling and storage services to the
        Private Company;
  ·
  the
        Partnership will offer employment to certain crude oil
        employees;
  ·
  the
        Private Company will transfer its asphalt assets that are connected to the
        Partnership's asphalt assets to the Partnership or one of its affiliates
        (unless the Private Company executes a definitive agreement to sell
        substantially all of its asphalt assets or business as a going concern to
        a third-party purchaser and the Partnership enters into a terminalling and
        storage agreement with such
  purchaser);
  ·
  the
        Private Company will reject the Terminalling Agreement as part of the
        Bankruptcy Cases;
  ·
  a
        subsidiary of the Partnership will have a $35 million unsecured claim
        against the Private Company relating to rejection of the Terminalling
        Agreement;
  ·
  the
        Partnership and the Private Company will enter into a new terminalling
        agreement pursuant to which the Partnership will provide asphalt
        terminalling and storage services for the Private Company 's remaining
        asphalt inventory on the following terms: (i) the Partnership will receive
        a monthly storage service fee equal to $0.565 per barrel multiplied by the
        total shell capacity in barrels for each tank where the Private Company
        has asphalt inventory and (ii) the Partnership will receive a throughput
        fee of $9.25 per ton for each ton of the Private Company's asphalt
        inventory that is delivered out of or otherwise removed from the
        Partnership's asphalt assets (unless the Private Company executes a
        definitive agreement to sell substantially all of its asphalt assets or
        business as a going concern to a third-party purchaser and the Partnership
        enters into a terminalling and storage agreement with such
        purchaser);
  ·
  the
        Private Company will remove all of its remaining asphalt inventory from
        the Partnership's asphalt storage facilities no later than October 31,
        2009 (unless the Private Company executes a definitive agreement to sell
        substantially all of its asphalt assets or business as a going concern to
        a third-party purchaser and the Partnership enters into a terminalling and
        storage agreement with such
  purchaser);
  ·
  the
        Private Company will be entitled to receive 20% of the proceeds of any
        sale by the Partnership of any of the asphalt assets transferred to the
        Partnership in connection with the Settlement Agreement that occurs within
        nine months of the transfer of such assets to the Partnership (unless the
        Private Company executes a definitive agreement to sell substantially all
        of its asphalt assets or business as a going concern to a third-party
        purchaser and the Partnership enters into a terminalling and storage
        agreement with such purchaser);
  ·
  the
        Private Company will reject the Amended and Restated Omnibus Agreement as
        part of the Bankruptcy Cases;
  ·
  the
        Partnership and the Private Company will enter into a shared services
        agreement pursuant to which the Private Company will provide certain
        operational services for the
  Partnership;
  ·
  other
        than as provided above, the Partnership and the Private Company entered
        into mutual releases of claims relating to the rejection of the
        Terminalling and Storage Agreement, Throughput Agreement and Amended and
        Restated Omnibus Agreement;
  ·
  certain
        pre-petition claims by the Private Company and the Partnership will be
        netted and waived;
  ·
  the
        Private Company and the Partnership will resolve certain remaining issues
        related to the contribution of crude oil assets to the Partnership in
        connection with the Partnership's initial public offering, the
        Partnership's acquisition of the Acquired Asphalt Assets, the
        Partnership's acquisition of the Acquired Pipeline Assets and the
        Partnership's acquisition of the Acquired Storage Assets, including the
        release of claims relating to such acquisitions;
    and
  ·
  the
        Partnership and the Private Company will enter into a license agreement
        providing the Partnership with a non-exclusive, worldwide license to use
        certain trade names, including the name "SemGroup", and the corresponding
        mark until December 31, 2009, and the Private Company will waive claims
        for infringement relating to such trade names and mark prior to the date
        of such license agreement.
  The
  parties agreed to negotiate and execute definitive documentation, to be approved
  by the Bankruptcy Court, with respect to the items contained in the
  Settlement Agreement as soon as practicably possible, which will supersede the
  Settlement Agreement when so executed.
  The Settlement Agreement is
  subject to the obtaining of a consent from the Partnership's lenders under its
  credit agreement and a waiver of the existing defaults or events of default
  under the credit agreement.  There can be no assurance that the
  Partnership's lenders will provide the required consent to the transactions or
  waiver of existing defaults or events of default under the Partnership's credit
  agreement or that the transactions contemplated by the Settlement Agreement will
  be consummated.
  Partnership
  Revenues
  For the six
  months ended June 30, 2008 and the year ended December 31, 2008, the Partnership
  derived
  approximately
  88% and
  approxi
  mately
  73%
  ,
  respectively
  , of its revenues,
  excluding fuel surcharge revenues related to fuel and power consumed to operate
  its liquid asphalt cement storage tanks, from services it provided to the
  Private Company and its subsidiaries.  The Private Company is
  obligated to pay the Partnership minimum monthly fees totaling $76.1 million
  annually and $58.9 million annually in respect of the minimum commitments under
  the Throughput Agreement and the Terminalling Agreement, respectively,
  regardless of whether such services are actually utilized by the Private
  Company.  As described above, the Order requires the Private Company
  to make certain payments under the Throughput Agreement and Terminalling
  Agreement.  As of the date of the filing of this report, payments made
  under the Throughput Agreement for services rendered since September 2008 have
  been made based upon actual usage rather than the contractual minimum monthly
  storage amounts in such agreement.  As of the date of the filing of
  this report, payments made under the Terminalling Agreement have continued to be
  made based upon the contractual minimum monthly storage amounts in such
  agreement.  The Partnership has been pursuing opportunities to provide
  crude oil terminalling and storage services and crude oil gathering and
  transportation services to third parties.
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  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  As a
  result of new crude oil third-party storage contracts, the Partnership increased
  its third-party terminalling and storage revenue (excluding fuel surcharge
  revenues related to fuel and power consumed to operate its liquid asphalt cement
  storage tanks) from approximately $1.0 million, or approximately 4% of
  total terminalling and storage revenue during the second quarter of 2008,
  to approximately $4.7 million and $8.4 million, or approximately 17% and 34% of
  total terminalling and storage revenue for the third quarter of 2008 and
  the fourth quarter of 2008, respectively.
  In
  addition, as a result of new third-party crude oil transportation contracts and
  reduced commitments of usage by the Private Company under the Throughput
  Agreement, the Partnership increased its third-party gathering and
  transportation revenue from approximately $5.0 million, or approximately 21% of
  total gathering and transportation revenue during the second quarter of 2008, to
  approximately $10.9 million and $13.9 million, or approximately 51% and 86% of
  total gathering and transportation revenue for the third quarter of 2008
  and the fourth quarter of 2008, respectively.
  The
  significant majority of the increase in third party revenues results from an
  increase in third-party crude oil services provided and a corresponding decrease
  in the Private Company's crude oil services provided due to the termination of
  the monthly contract minimum revenues under the Throughput Agreement in
  September 2008.  Average rates for the new third-party crude oil
  terminalling and storage and transportation and gathering contracts are
  comparable with those previously received from the Private Company. 
  However, the volumes being terminalled, stored, transported and gathered have
  decreased as compared to periods prior to the Bankruptcy Filings, which has
  negatively impacted total revenues.  As an example, fourth quarter 2008
  total revenues are approximately $9.2 million less than second
  quarter 2008 total revenues, in each case excluding fuel surcharge revenues
  related to fuel and power consumed to operate its liquid asphalt cement storage
  tanks.  Pursuant to the Settlement Agreement, the Partnership has agreed to
  waive the fees pursuant to the Terminalling Agreement for the month of March
  2009, and the Partnership will enter into a new terminalling agreement with the
  Private Company for periods thereafter (see "-Settlement with the Private
  Company").
  Any delay
  or failure of the Private Company to make its required payments under the
  Throughput Agreement or the Terminalling Agreement, to the extent such revenues
  have not been replaced by third party revenues, will have a material
  adverse effect on the Partnership's financial condition and results of
  operations.  For example, the Partnership has reserved as a doubtful
  account the receivable balance owed by the Private Company for services provided
  to the Private Company during the first 21 days of July, totaling $9.6 million,
  as such amounts are considered prepetition debt in the Bankruptcy
  Filings.  In addition, the Private Company may reject the contracts it
  has with the Partnership, including the Throughput Agreement and the
  Terminalling Agreement, as part of its bankruptcy proceedings, which ultimately
  would have the effect of breaching such contracts.  Such action would
  have a material adverse effect on the Partnership's financial condition and
  results of operations.  Any transaction relating to a rejection,
  assignment or modification of the Throughput Agreement or the Terminalling
  Agreement would require approval of the Bankruptcy Court.  On February
  6, 2009, the Private Company filed a motion in the Bankruptcy Court requesting
  approval of the sale of its asphalt related assets, or in the event of an
  unsuccessful auction, the rejection of the Terminalling Agreement and the
  winding down of its asphalt business (see "—Asphalt Operations" below).
  Pursuant
  to the Settlement Agreement, among other items, the Private Company will reject
  the Terminalling Agreement and the Throughput Agreement as part of the
  Bankruptcy Cases.  In addition, pursuant to the Settlement Agreement,
  the Partnership and the Private Company will enter into a new throughput
  agreement and a new terminalling agreement pursuant to which the Partnership
  will provide certain crude oil gathering, transportation, terminalling and
  storage services and asphalt terminalling and storage services to the
  Private Company.  There can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see
  "—Settlement with the Private Company").
  The
  Partnership has entered into various crude oil transportation and storage
  contracts with third parties and is continuing to pursue additional contracts
  with third parties; however, there can be no assurance that any of these
  additional efforts will be successful.  In addition, certain third
  parties may be less likely to enter into business transactions with the
  Partnership due to the Bankruptcy Filings.  The Private Company may
  also choose to curtail its operations or liquidate its assets as part of the
  Bankruptcy Cases.  As a result, unless the Partnership is able to
  generate additional third party revenues, the Partnership may experience lower
  volume in its system which could have a material adverse effect on its results
  of operations and cash flows.
  23
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  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  Asphalt
  Operations
  The
  Partnership provides liquid asphalt cement terminalling and storage services to
  the Private Company.  The Private Company processes, distributes and
  markets liquid asphalt cement and finished asphalt products to third party
  customers.  Pursuant to the Amended Omnibus Agreement, the Private
  Company has agreed, so long as the Terminalling Agreement is in effect, not to
  engage in, or acquire or invest in an entity that engages in, the business of
  terminalling and storing liquid asphalt cement within 50 miles of the
  Partnership's liquid asphalt cement facilities and the Partnership has agreed,
  so long as the Terminalling Agreement is in effect, not to engage in, or acquire
  or invest in an entity that engages in, the business of processing, marketing
  and distributing liquid asphalt cement and finished asphalt products within 50
  miles of its liquid asphalt cement facilities.  As a result, subject
  to certain exceptions, the Partnership is contractually prohibited from
  marketing or distributing liquid asphalt cement directly to third party
  customers while the Terminalling Agreement is in effect.  In addition,
  the Private Company is responsible for obtaining and maintaining all
  environmental and other permits related to the Partnership's liquid asphalt
  cement operations.  The Private Company's failure to obtain, renew or
  maintain compliance under these permits may materially adversely effect the
  Partnership's operations.  The Partnership is currently evaluating
  strategic alternatives for its asphalt operations, including the possibility of
  entering into storage contracts with third party customers and the sale of all
  or a portion of its assets.
  The
  asphalt industry in the United States is characterized by a high degree of
  seasonality. Much of this seasonality is due to the impact that weather
  conditions have on road construction schedules, particularly in cold weather
  states. Refineries produce liquid asphalt cement year round, but the peak
  asphalt demand season is during the warm weather months when most of the road
  construction activity in the United States takes place. As a result, liquid
  asphalt cement is typically purchased from refineries at low prices in the low
  demand winter months and then processed and sold at higher prices in the peak
  summer demand season.  Although there remains some liquid asphalt
  cement in the Partnership's asphalt storage tanks that was not sold during the
  summer of 2008, the Private Company, as of the date of the filing of this
  report, has not purchased any significant volumes of additional liquid asphalt
  cement during the recent winter months.
  On
  February 6, 2009, the Private Company filed a motion in the Bankruptcy Court
  requesting approval of the sale of its asphalt related assets.  There
  is significant uncertainty as to the Partnership's revenues related to its
  asphalt assets and there is substantial risk that the Partnership's asphalt
  assets may be idle during 2009 and subsequent years, which would adversely
  effect the Partnership's financial condition and results of
  operations.  Without revenues from its asphalt assets, the Partnership
  may be unable to meet the covenants, including the minimum liquidity and minimum
  receipt requirements, under its Forbearance Agreement with its senior secured
  lenders pursuant to which such lenders have agreed to forbear from exercising
  their rights and remedies arising from the Partnership's events of default under
  its credit agreement.
  Pursuant
  to the Settlement Agreement filed for approval with the Bankruptcy Court, the
  Partnership will receive the Private Company's asphalt assets that are
  connected to the Partnership's asphalt assets
  (unless
  the Private Company executes a definitive agreement to sell substantially all of
  its asphalt assets or business as a going concern to a third-party purchaser and
  the Partnership enters into a terminalling and storage agreement with such
  purchaser).
  The transfer
  of the Private Company's asphalt assets in connection with the Settlement
  Agreement will provide the Partnership with outbound logistics for its existing
  asphalt assets and, therefore, will allow it to better provide asphalt
  terminalling and storage services.  In addition, the Private Company
  will reject the Terminalling Agreement as part of the Bankruptcy Cases and the
  Partnership and the Private Company will enter into a new terminalling agreement
  pursuant to which the Partnership will provide asphalt terminalling and storage
  services for the Private Company's remaining asphalt inventory.
  There can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see
  "—Settlement with the Private Company").  Even if the Partnership
  acquires such asphalt assets, it may not be able to enter into agreements to
  provide terminalling and storage services for such assets.  In
  addition,
  if the Private Company sells its asphalt assets to a
  third party, the Partnership will need to negotiate a new
  terminalling and storage contract with the purchaser of such assets and such
  agreement may not be on as favorable terms as the Terminalling
  Agreement.  Any significant decrease in the amount of revenues that
  the Partnership receives from its liquid asphalt cement terminalling and storage
  operations could have a material adverse effect on the Partnership's cash flows,
  financial condition and results of operations.
  Operation
  and General Administration of the Partnership
  As is the
  case with many publicly traded partnerships, the Partnership does not directly
  employ any persons responsible for managing or operating the Partnership or for
  providing services relating to day-to-day business affairs.  Pursuant
  to the Amended Omnibus Agreement, the Private Company operated the Partnership's
  assets and performed other administrative services for the Partnership such as
  accounting, legal, regulatory, development, finance, land and
  engineering.  Due to the Change of Control, the Private Company is no
  longer obligated to operate the Partnership's assets or perform other
  administrative services pursuant to the Amended Omnibus
  Agreement.  The Private Company agreed to continue providing such
  services until at least November 30, 2008 pursuant to the
  Order.  While the Private Company has continued to provide such
  services as of the date of the filing of this report, there can be no assurance
  that it will continue to provide such services to the Partnership or that the
  Partnership could replace any of these services if the Private Company stops
  providing them.  If the Private Company stops providing these
  services, the Partnership may incur increased costs to replace these services
  and its financial results may suffer.
  Pursuant
  to the Settlement Agreement, the Private Company will reject the Amended Omnibus
  Agreement as part of the Bankruptcy Cases and the Partnership and the Private
  Company will enter into a shared services agreement pursuant to which the
  Private Company will provide certain operational services for the
  Partnership.  There can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see
  "—Settlement with the Private Company").  In addition, if the terms of
  this shared services agreement are not as favorable as the terms under the
  Amended Omnibus Agreement,
  it could
  have a material adverse effect on the Partnership's business, financial
  condition, results of operations, cash flows, ability to make distributions to
  its unitholders, the trading price of its common units and its ability to
  conduct its business.
  24
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  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  In
  addition, in connection with the Bankruptcy Cases, the Private Company may
  reduce a substantial number of its employees or some of the Private Company's
  employees may choose to terminate their employment with the Private Company,
  some of whom may currently be providing general and administrative and operating
  services to the Partnership.  Any reductions in critical personnel who
  provide services to the Partnership and any increased costs to replace such
  personnel could have a material adverse effect on its ability to conduct its
  business and its results of operations.
  Change
  of Control of the Private Company
  On
  December 15, 2008, Red Apple Group Inc. ("Red Apple"), which is chaired by John
  Catsimatidis, announced that it controls five of the nine seats on the
  management committee of the general partner of the Private Company and therefore
  effectively controls the Private Company (the "Private Company Change of
  Control").  Mr. Catsimatidis has indicated that Red Apple does not
  intend to liquidate the Private Company and that it plans on filing a new
  reorganization plan for the Private Company with the Bankruptcy
  Court.  As of the date of the filing of this report, Red Apple has not
  filed a reorganization plan.  There is no assurance that any
  reorganization plan will be submitted by Red Apple or that if a reorganization
  plan is submitted by Red Apple that the Bankruptcy Court will approve such plan
  or that continued performance by the Private Company under the Throughput
  Agreement or the Terminalling Agreement will be part of any such
  plan.  In addition, the Private Company Change of Control may lead to
  additional uncertainty regarding the Partnership's continued relationship with
  the Private Company.  The Partnership is unsure what impact, if
  any, the Private Company Change of Control will have on the
  Partnership and its operations.
  Intellectual
  Property Rights
  Pursuant
  to the Amended Omnibus Agreement, the Partnership licensed the use of certain
  trade names and marks, including the name "SemGroup."  This license
  terminated automatically upon the Change of Control.  The termination
  of the explicit rights to use this intellectual property under the Amended
  Omnibus Agreement may adversely effect the Partnership's ability to operate or
  grow its business and its results of operations.  In addition, the
  Partnership may be subject to claims for trademark or other intellectual
  property infringement due to its continued use of these intellectual property
  rights.
  Pursuant
  to the Settlement Agreement, the Partnership and the Private Company will enter
  into a license agreement pursuant to which the Partnership may use the trade
  names and mark until December 31, 2009.  In addition, pursuant to the
  Settlement Agreement, the Private Company has agreed to waive all claims
  relating to infringement of the trade names and mark prior to the date of
  this license agreement.  There can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see
  "—Settlement with the Private Company").
  Credit
  Facility
  As
  described in Note 4, certain events of default have occurred and are continuing
  under the Partnership's credit agreement, which prohibit the Partnership from
  borrowing under its credit facility to fund working capital needs or to pay
  distributions to its unitholders, among other things.  No cure periods
  are applicable to the existing events of default.  These events of
  default have not been waived and are continuing under the Partnership's credit
  agreement.  In addition, the Private Company's action related to the
  Bankruptcy Cases as well as the Private Company's liquidity issues and any
  corresponding impact may result in additional events of default under the
  Partnership's credit Agreement.
  The Partnership and the
  requisite lenders under its credit facility have entered into the Forbearance
  Agreement relating to the existing events of default under the credit
  agreement.
  Waiver of
  the existing events of default under the credit agreement is a condition
  precedent to the effectiveness of the Settlement Agreement.  There can
  be no assurance that the Partnership's lenders will provide such a waiver and
  that the transactions contemplated by the Settlement Agreement will be
  consummated.
  See Note 4 for more information regarding the
  Partnership's credit facility, the events of default thereunder and the
  Forbearance Agreement.
  Distributions
  to Unitholders
  The
  Partnership did not make a distribution to its common unitholders, subordinated
  unitholders or general partner attributable to the results of operations for the
  quarters ended June 30, 2008, September 30, 2008 or December 31, 2008 due
  to the existing events of default under its credit agreement and the uncertainty
  of its future cash flows relating to the Bankruptcy Filings.  The
  Partnership's unitholders will be required to pay taxes on their share of the
  Partnership's taxable income even though they did not receive a cash
  distribution for the quarters ended June 30, 2008, September 30, 2008 or
  December 31, 2008.  In addition, the Partnership does not currently
  expect to make a distribution relating to the first quarter of
  2009.  The Partnership distributed approximately $14.3 million to its
  unitholders for the three months ended March 31, 2008.  If the events
  of default under the Partnership's credit agreement are not waived by its
  lenders or the Partnership's business operations and prospects do not improve,
  the Partnership may not make quarterly distributions to its unitholders in the
  future.  Pursuant to the Forbearance Agreement, as amended by the
  First Amendment, the Second Amendment, and the Third Amendment, the Partnership
  is prohibited from making distributions to its unitholders during the Extended
  Forbearance Period.
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  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  The
  Partnership's partnership agreement provides that, during the subordination
  period, which the Partnership is currently in, the Partnership's common units
  will have the right to receive distributions of available cash from operating
  surplus in an amount equal to the minimum quarterly distribution of $0.3125 per
  common unit per quarter, plus any arrearages in the payment of the minimum
  quarterly distribution on the common units from prior quarters, before any
  distributions of available cash from operating surplus may be made on the
  subordinated units.
  Nasdaq
  Delisting
  Effective
  at the opening of business on February 20, 2009, the Partnership's common units
  were delisted from the Nasdaq Global Market ("Nasdaq") due to the Partnership's
  failure to timely file this Quarterly Report as well as its Quarterly Report on
  Form 10-Q for the quarter ended September 30, 2008.  The Partnership's
  common units are currently traded on the Pink Sheets, which is an
  over-the-counter securities market, under the symbol SGLP.PK.  The
  fact that the Partnership's common units are not listed on a national securities
  exchange is likely to make trading such common units more difficult for
  broker-dealers, unitholders and investors, potentially leading to further
  declines in the price of the common units.  In addition, it may limit
  the number of institutional and other investors that will consider investing in
  the Partnership's common units, which may have an adverse effect on the price of
  its common units.  It may also make it more difficult for the
  Partnership to raise capital in the future.
  The
  Partnership continues to work to become compliant with its SEC reporting
  obligations and intends to promptly seek the relisting of its common units on
  Nasdaq as soon as practicable after it has become compliant with such reporting
  obligations.  However, there can be no assurances that the Partnership
  will be able to relist its common units on Nasdaq or any other national
  securities exchange and the Partnership may face a lengthy process to relist its
  common units if it is able to relist them at all.
  Claims
  Against and By the Private Company's Bankruptcy Estate
  The
  Partnership currently has claims against the Private Company's bankruptcy estate
  due to amounts owed the Partnership by the Private Company prior to the
  Bankruptcy Filings.  In addition, if the Private Company fails to make
  its payments under the Throughput Agreement or the Terminalling Agreement or
  otherwise fails to perform under the contracts the Partnership has with the
  Private Company, the Partnership may have additional potential claims against
  the Private Company's bankruptcy estate.
  Any
  claims asserted by the Partnership against the Private Company in the Bankruptcy
  Cases will be subject to the claim allowance procedure provided in the
  Bankruptcy Code and Bankruptcy Rules.  If an objection is filed, the
  Bankruptcy Court will determine the extent to which any such claim that has been
  objected to is allowed and the priority of such claims.  The
  Partnership is uncertain regarding the ultimate amount of damages for breaches
  of contract or other claims that it will be able to establish in the Bankruptcy
  Cases and the Partnership cannot predict the amounts, if any, that it will
  collect or the timing of any such collection, but its losses could be
  substantial and could have a material adverse effect
  on the
  Partnership's business, financial condition, results of operations, cash flows,
  ability to make distributions to its unitholders, the trading price of its
  common units and its ability to conduct its business
  .
  Pursuant to the Settlement
  Agreement, the Private Company will reject the Terminalling Agreement and the
  Throughput Agreement.  The Partnership will have a $35 million
  unsecured claim relating to rejection of the Terminalling Agreement in the
  Bankruptcy Cases.  In addition, the Partnership will have a $20
  million unsecured claim against the Private Company relating to rejection of the
  Throughput Agreement.  There can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see
  "—Settlement with the Private Company").
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  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  In
  addition, under bankruptcy law, a debtor-in-possession, such as the Private
  Company, may seek to avoid certain prepetition transfers if such transfers were
  to insiders and occurred within one year before the bankruptcy
  filing.  For purposes of avoidance under bankruptcy law, title to real
  property that is perfected more than thirty days after the transfer is deemed to
  have been transferred as of the date of perfection.  In addition, a
  debtor-in-possession, such as the Private Company, may seek to avoid prepetition
  transfers of real property that were not perfected as of the bankruptcy filing
  date against a hypothetical bona fide purchaser of such real
  property.
  Through a
  series of transactions the Partnership acquired certain real property from the
  Private Company during the one-year period preceding the Bankruptcy
  Filings.  Deeds to approximately 27 asphalt facilities transferred to
  the Partnership by the Private Company as part of the Acquired Asphalt Assets
  either were not recorded within thirty days of such transfer or were not
  recorded as of the Bankruptcy Filings.  In addition, a deed to the
  Acquired Storage Assets was not recorded as of the Bankruptcy
  Filings.  Although the Partnership has title to such properties, the
  Private Company may in the Bankruptcy Cases seek to avoid the transfers of
  these properties.  The Partnership has defenses against these actions
  based upon bankruptcy law and state law and intends to vigorously defend against
  any such action.  However, there can be no assurance regarding the
  outcome of any potential litigation.  If the Private Company succeeds
  in such litigation, the Partnership may be required to return the affected
  properties to the Private Company or pay an amount equal to the value of such
  properties, which would have a material adverse effect on the Partnership's
  business, financial condition, results of operations, cash flows, ability to
  make distributions to its unitholders, the trading price of the Partnership's
  common units and its ability to conduct its business.  The Partnership
  would then have unsecured claims in the Bankruptcy Court for the amounts
  originally paid for such properties.   An estimate of possible
  loss, if any, or the range of loss cannot be made and therefore the Partnership
  has not accrued a loss contingency related to this matter. However, the ultimate
  resolution of this matter could have a material adverse effect on the
  Partnership's business, financial condition, results of operations, cash flows,
  ability to make distributions to its unitholders, the trading price of the
  Partnership's common units and its ability to conduct its business.
  Pursuant
  to the Settlement Agreement, the Private Company will release certain of its
  claims related to this real property including the real property claims
  discussed above (see "—Settlement with the Private Company").
  There may
  be additional claims that are not released by the Settlement
  Agreement.  In addition, t
  here can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be
  consummated
  .
  Governmental
  Investigations
  On July
  21, 2008, the Partnership received a letter from the staff of the SEC giving
  notice that the SEC is conducting an inquiry relating to the Partnership and
  requesting, among other things, that the Partnership voluntarily preserve,
  retain and produce to the SEC certain documents and information relating
  primarily to the Partnership's disclosures respecting the Private Company's
  liquidity issues, which were the subject of the Partnership's July 17, 2008
  press release.  On October 22, 2008, the Partnership received a
  subpoena from the SEC pursuant to a formal order of investigation requesting
  certain documents relating to, among other things, the Private Company's
  liquidity issues.  The Partnership has been cooperating, and intends
  to continue cooperating, with the SEC in its investigation.
  On July
  23, 2008, the Partnership and its general partner each received a Grand Jury
  subpoena from the United States Attorney's Office in Oklahoma City, Oklahoma,
  requiring, among other things, that the Partnership and its general partner
  produce financial and other records related to the Partnership's July 17, 2008
  press release.  The Partnership has been informed that the U.S.
  Attorneys' Offices for the Western District of Oklahoma and the Northern
  District of Oklahoma are in discussions regarding the subpoenas, and no date has
  been set for a response to the subpoenas.  The Partnership and its
  general partner intend to cooperate fully with this investigation if and when it
  proceeds.
  Securities
  Litigation
  Between
  July 21, 2008 and September 4, 2008, the following class action complaints were
  filed:
  1.
  Poelman v. SemGroup Energy
  Partners, L.P., et al
  ., Civil Action No. 08-CV-6477, in the United States
  District Court for the Southern District of New York (filed July 21,
  2008).  The plaintiff voluntarily dismissed this case on August 26,
  2008;
  2.
  Carson v. SemGroup Energy Partners,
  L.P. et al
  .
  ,
  Civil Action No. 08-cv-425, in the Northern District of Oklahoma (filed July 22,
  2008);
  3.
  Charles D. Maurer SIMP Profit
  Sharing Plan f/b/o Charles D. Maurer v. SemGroup Energy Partners, L.P. et
  al.
  , Civil Action No. 08-cv-6598, in the United States District Court for
  the Southern District of New York (filed July 25, 2008);
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  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  4.
  Michael Rubin v. SemGroup Energy
  Partners, L.P. et al.
  , Civil Action No. 08-cv-7063, in the United States
  District Court for the Southern District of New York (filed August 8,
  2008);
  5.
  Dharam V. Jain v. SemGroup Energy
  Partners, L.P. et al.
  , Civil Action No. 08-cv-7510, in the United States
  District Court for the Southern District of New York  (filed August 25,
  2008); and
  6.
  William L. Hickman v. SemGroup
  Energy Partners, L.P. et al.
  , Civil Action No. 08-cv-7749, in the United
  States District Court for the Southern District of New York (filed September 4,
  2008).
  The
  Carson
  case was
  filed as a putative class action on behalf of all purchasers of the
  Partnership's common units between February 20, 2008 and July 17,
  2008.  Plaintiff alleges violations of Sections 10(b) and 20(a) of the
  Securities Exchange Act of 1934 ("Exchange Act") and SEC Rule 10b-5, resulting
  in damages to members of the putative class.  Plaintiff's specific
  allegations include that, despite an obligation to do so, the Defendants failed
  to disclose between February 20, 2008 and May 8, 2008 that the Private Company
  was engaged in high-risk crude oil hedging transactions that could affect its
  ability to continue as a going concern or that the Private Company was suffering
  from liquidity problems.  Plaintiff seeks class certification, damages,
  interest, fees, and costs.
  The
  Maurer
  case was
  filed as a putative class action on behalf of all persons who purchased the
  Partnership's common units pursuant to or traceable to the February 12, 2008
  Registration Statement and Prospectus.  Plaintiff alleges violations of
  Section 11 of the Securities Act of 1933 ("Securities Act"), resulting in
  damages to members of the putative class.  Plaintiff's specific allegations
  include that, despite an obligation to do so, the Defendants failed to disclose
  in connection with the secondary offering in February 2008 that the Private
  Company was engaged in high-risk crude oil hedging transactions that could
  affect its ability to continue as a going concern or that the Private Company
  was suffering from liquidity problems.  Plaintiff seeks class
  certification, damages, interest, fees, and costs.
  The
  Rubin, Jain,
  and
  Hickman
  cases were filed as
  putative class actions on behalf of all purchasers of the Partnership's common
  units between July 17, 2007 and July 17, 2008.  Plaintiffs allege
  violations of Sections 11, 12(a)(2), and 15 of the Securities Act and violations
  of Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5, resulting in
  damages to members of the putative class.  Plaintiff's specific allegations
  include that, despite an obligation to do so, the Defendants failed to disclose
  between July 17, 2007 and July 17, 2008 the adverse financial condition and lack
  of liquidity of the Private Company that was caused by the Private Company's
  speculative and unauthorized hedging and trading in crude oil.  Plaintiffs
  seek class certification, rescission of the sale of common units under Section
  12(a)(2) of the Securities Act, damages, interest, fees, and costs.
  Pursuant
  to a motion filed with the United States Judicial Panel on Multidistrict
  Litigation ("MDL Panel"), the
  Maurer
  case has been transferred to the Northern District of Oklahoma and
  consolidated with the
  Carson
  case.  The
  Rubin, Jain,
  and
  Hickman
  cases have also been transferred to the Northern District of
  Oklahoma.
  A hearing
  on motions for appointment as lead plaintiff was held in the
  Carson
  case on October 17,
  2008.  At that hearing, the court granted a motion to consolidate the
  Carson
  and
  Maurer
  cases for pretrial
  proceedings, and the consolidated litigation is now pending as
  In Re: SemGroup Energy Partners,
  L.P. Securities Litigation
  , Case No. 08-CV-425-GKF-PJC. The court entered
  an order on October 27, 2008, granting the motion of Harvest Fund Advisors LLC
  to be appointed lead plaintiff in the consolidated litigation.  On January
  23, 2009, the court entered a Scheduling Order providing, among other things,
  that the lead plaintiff may file a consolidated amended complaint within 70 days
  of the date of the order, and that defendants may answer or otherwise respond
  within 60 days of the date of the filing of a consolidated amended
  complaint.
  The
  Partnership intends to vigorously defend these actions.  There can be no
  assurance regarding the outcome of the litigation.  An estimate of
  possible loss, if any, or the range of loss cannot be made and therefore the
  Partnership has not accrued a loss contingency related to these actions.
  However, the ultimate resolution of these actions could have a material adverse
  effect on the Partnership's business, financial condition, results of
  operations, cash flows, ability to make distributions to its unitholders, the
  trading price of the Partnership's common units and its ability to conduct its
  business.
  28
  Table of Contents
  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  The
  Partnership may become the subject of additional private or government actions
  regarding these matters in the future.  Litigation may be
  time-consuming, expensive and disruptive to normal business operations, and the
  outcome of litigation is difficult to predict.  The defense of these
  lawsuits may result in the incurrence of significant legal expense, both
  directly and as the result of the Partnership's indemnification
  obligations.  The litigation may also divert management's attention
  from the Partnership's operations which may cause its business to
  suffer.  An unfavorable outcome in any of these matters may have a
  material adverse effect on the Partnership's business, financial condition,
  results of operations, cash flows, ability to make distributions to its
  unitholders, the trading price of the Partnership's common units and its ability
  to conduct its business.
  All or a portion of the
  defense costs and any amount the Partnership may be required to pay to satisfy a
  judgment or settlement of these claims may not be covered by
  insurance.
  Examiner
  On August
  12, 2008, a motion was filed by the United States Trustee asking the Bankruptcy
  Court to appoint an examiner to investigate the Private Company's trading
  strategies as well as certain "insider transactions," including the contribution
  of the crude oil assets to the Partnership in connection with its initial public
  offering, the sale of the Acquired Asphalt Assets to the Partnership, the sale
  of the Acquired Pipeline Assets to the Partnership, the sale of the Acquired
  Storage Assets to the Partnership, and the entering into the Holdings Credit
  Agreements by SemGroup Holdings.  On September 10, 2008, the
  Bankruptcy Court approved the appointment of an examiner, and on October 14,
  2008, the United States Trustee appointed Louis J. Freeh, former director of the
  Federal Bureau of Investigation, as the examiner.  The examiner is
  required to prepare and file a report summarizing the findings of his
  investigation by March 24, 2009, unless the Bankruptcy Court extends that
  deadline.
  The
  Partnership may incur additional costs in cooperating with this
  examiner.
  In
  addition, in connection with the Settlement Agreement, the Partnership and the
  Private Company will release certain claims relating to the contribution of
  assets to the Partnership in connection with its initial public offering and the
  Partnership's acquisition of the Acquired Asphalt Assets, Acquired Pipeline
  Assets and Acquired Storage Assets.  However, other claims that may be
  identified by the examiner will not be released in connection with the
  Settlement Agreement.
  If the examiner's investigation results in an
  unfavorable outcome to the Partnership, such an investigation may prompt the
  filing of lawsuits in the Bankruptcy Cases to challenge or to seek to unwind
  transactions with the Partnership under the bankruptcy laws.  Such
  litigation may be expensive and, if successful, would have a material adverse
  effect on the Partnership's business, financial condition, results of
  operations, ability to make distributions to its unitholders and the trading
  price of the Partnership's common units.
  Internal
  Review
  As
  previously announced, in July 2008 the Board created an internal review
  subcommittee of the Board comprised of directors who are independent of
  management and the Private Company to determine whether the Partnership
  participates in businesses other than as described in its filings with the SEC
  and to conduct investigations into other such specific items as are deemed to be
  appropriate by the subcommittee.  The subcommittee retained
  independent legal counsel to assist it in its investigations.
  The subcommittee has investigated a short-term financing
  transaction involving two subsidiaries of the Private Company.  This
  transaction was identified as a potential source of concern in a whistleblower
  report made after the Private Company filed for bankruptcy.  Although
  the transaction did not involve the Partnership or its subsidiaries, it was
  investigated because it did involve certain senior executive officers of the
  Partnership's general partner who were also senior executive officers of the
  Private Company at the time of the transaction.  Based upon its
  investigation, counsel for the subcommittee found that, subject to
  the
  subcommittee's lack of access to Private Company documents and electronic
  records and witnesses
  , although certain
  irregularities occurred in the transactions, the transaction did not appear to
  cause the relevant officers to understand or believe that the Private Company
  had a lack of liquidity that imperiled the Private Company's ability to meet its
  obligations to the Partnership and that certain aspects of the documentation of
  the transaction that were out of the ordinary did not call into question the
  integrity of any of the relevant officers.
  The
  subcommittee also investigated whether certain senior executive officers of the
  Partnership's general partner who were also senior executive officers of the
  Private Company knew and understood, beginning as early as July 2007 and at
  various times thereafter, about a lack of liquidity at the Private Company that
  imperiled the Private Company's ability to meet its obligations to the
  Partnership.  Based upon this investigation, and subject to the
  subcommittee's lack of access to Private Company documents and electronic
  records and witnesses, counsel for the subcommittee found that each of the
  officers had access to and reviewed Private Company financial information,
  including information regarding the Private Company's commodity trading
  activities, from which they could have developed an understanding of the nature
  and significance of the trading activities that led to liquidity problems at the
  Private Company well before they say they did.  While the officers
  each stated sincerely that they did not understand the nature or extent of the
  Private Company's trading-related problems until the first week of July 2008 or
  later, objective evidence suggests that they showed at least some indifference
  to known or easily discoverable facts and that they failed to adhere to
  procedures under the Private Company's Risk Management Policy created expressly
  to ensure that the Private Company's trading activities were properly
  monitored.  Nonetheless, counsel for the subcommittee was not
  persuaded by the documents and other evidence it was able to access that the
  officers in fact knew and understood that the Private Company's liquidity or
  capital needs were a significant cause for alarm until, at the earliest, the
  second quarter of 2008.  Moreover, while it appeared to counsel that
  the officers developed a growing awareness of the nature and severity of the
  Private Company's liquidity issues over the second quarter of 2008, counsel was
  unable to identify with any more precision the specific level of concern or
  understanding these individuals had prior to July 2008.
  While not within the scope of such counsel's
  investigation, counsel was requested by the subcommittee to note any information
  that came to counsel's attention during its investigation that suggested that
  the officers intended to deceive or mislead any third party.  Subject
  to limitations described in its report,
  no information came to counsel's
  attention during its investigation that suggested to counsel that the officers
  intended to deceive or to mislead any third parties.  In addition, in
  connection with the investigation, counsel for the subcommittee did not express
  any findings of intentional misconduct or fraud on the part of any officer or
  employee of the Partnership.
  After
  completion of the internal review, a plan was developed with the advice of the
  Audit Committee of the Board to further strengthen the processes and procedures
  at the Partnership.  This plan includes, among other things,
  reevaluating executive officers and accounting and finance personnel
  (including a realignment of officers as described
  elsewhere in this report)
  and hiring, as deemed necessary, additional
  accounting and finance personnel or consultants; reevaluating the Partnership's
  internal audit function and determining whether to expand the duties and
  responsibilities of such group; evaluating the comprehensive training programs
  for all management personnel covering, among other things, compliance with
  controls and procedures, revising the reporting structure so that the Chief
  Financial Officer reports directly to the Audit Committee, and increasing the
  business and operational oversight role of the Audit Committee.
  Equity
  Awards and Employment Agreements
  The
  Change of Control constituted a change of control under the Plan, which resulted
  in the early vesting of all awards under the Plan.  As such, the
  phantom units awarded to Messrs. Kevin L. Foxx, Michael J. Brochetti, Alex G.
  Stallings, Peter L. Schwiering and Jerry A. Parsons in the amounts of 150,000
  units, 90,000 units, 75,000 units, 45,000 units and 20,000 units, respectively,
  are fully vested.  The common units underlying such awards were issued
  to such individuals in August 2008.  In addition, the 5,000 restricted
  units awarded to each of Messrs. Billings, Kosnik and Bishop for their service
  as independent members of the Board fully vested.
  The
  Change of Control also resulted in a change of control under the employment
  agreements of Messrs. Foxx, Brochetti, Stallings, Schwiering and
  Parsons.  If within one year after the Change of Control any such
  officer is terminated by the Partnership's general partner without Cause (as
  defined below) or such officer terminates the agreement for Good Reason (as
  defined below), he will be entitled to payment of any unpaid base salary and
  vested benefits under any incentive plans, a lump sum payment equal to 24 months
  of base salary and continued participation in the Partnership's general
  partner's welfare benefit programs for one year after termination. Upon such an
  event, Messrs Foxx, Brochetti, Stallings, Schwiering and Parsons would be
  entitled to lump sum payments of $900,000, $600,000, $550,000, $500,000 and
  $500,000, respectively, in addition to continued participation in the
  Partnership's general partner's welfare benefit programs.  As of the
  date of the filing of this report, none of these officers is entitled to these
  benefits as none of them has been terminated by the Partnership's general
  partner without Cause or has terminated his agreement for Good
  Reason.
  29
  Table of Contents
  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  For
  purposes of the employment agreements:
  "Cause"
  means (i) conviction of the executive officer by a court of competent
  jurisdiction of any felony or a crime involving moral turpitude; (ii) the
  executive officer's willful and intentional failure or willful intentional
  refusal to follow reasonable and lawful instructions of the Board;
  (iii) the executive officer's material breach or default in the performance
  of his obligations under the employment agreement; or (iv) the executive
  officer's act of misappropriation, embezzlement, intentional fraud or similar
  conduct involving the Partnership's general partner.
  "Good
  Reason" means (i) a material reduction in the executive officer's base
  salary; (ii) a material diminution of the executive officer's duties,
  authority or responsibilities as in effect immediately prior to such diminution;
  or (iii) the relocation of the named executive officer's principal work
  location to a location more than 50 miles from its current
  location.
  Insurance
  The
  Partnership shares some insurance policies, including its general liability
  policy, with the Private Company. These policies contain caps on the insurer's
  maximum liability under the policy, and claims made by either the Private
  Company or the Partnership are applied against the caps and deductibles. The
  possibility exists that, in an event in which the Partnership wishes to make a
  claim under a shared insurance policy, the Partnership's claim could be denied
  or only partially satisfied due to claims made by the Private Company against
  the policy cap. Further, where events occur that would entitle both the Private
  Company and the Partnership to benefits under these insurance policies, the full
  deductible may be borne by the first claimant under the policy. In addition,
  claims made by the Private Company could affect the Partnership's premiums and
  its ability to obtain insurance in the future.  The Bankruptcy Filings
  have had and may continue to have an adverse effect on the Partnership's
  insurance premiums and coverage.  The Partnership's premiums and
  ability to obtain insurance in the future could also be adversely impacted by
  the Bankruptcy Filings if the Private Company fails to renew any shared policies
  and the Partnership is required to purchase its own policy, cover any premiums
  currently being paid by the Private Company or if an insurance carrier increases
  the insurance premiums due to the Bankruptcy Filings.  These increased
  costs could have a material adverse effect on the Partnership's financial
  condition and results of operations.
  Taxation
  as a Corporation
  The
  anticipated after-tax economic benefit of an investment in the Partnership's
  common units depends largely on the Partnership being treated as a partnership
  for federal income tax purposes.  If less than 90% of the gross income
  of a publicly traded partnership, such as the Partnership, for any taxable year
  is "qualifying income" from sources such as the transportation, marketing (other
  than to end users), or processing of crude oil, natural gas or products thereof,
  interest, dividends or similar sources, that partnership will be taxable as a
  corporation under Section 7704 of the Internal Revenue Code for federal income
  tax purposes for that taxable year and all subsequent years.  In this
  regard, because the income the Partnership earns from the Throughput Agreement
  and the Terminalling Agreement with the Private Company is "qualifying income"
  any material reduction or elimination of that income or any amendment to the
  Throughput Agreement or the Terminalling Agreement which changes the nature of
  the services provided or the income generated thereunder, may cause the
  Partnership's remaining "qualifying income" to constitute less than 90% of its
  gross income.  As a result, the Partnership could become taxable as a
  corporation for federal income tax purposes, unless it were to transfer the
  businesses that generate non-qualifying income to one or more subsidiaries taxed
  as corporations and pay entity level income taxes on such non-qualifying
  income.  The IRS has not provided any ruling to the Partnership on
  this matter.
  If the
  Partnership were treated as a corporation for federal income tax purposes, then
  it would pay federal income tax on its income at the corporate tax rate, which
  is currently a maximum of 35%, and would likely pay state income tax at varying
  rates.  Distributions would generally be taxed again to unitholders as
  corporate distributions and none of the Partnership's income, gains, losses,
  deductions or credits would flow through to its unitholders.  Because
  a tax would be imposed upon the Partnership as an entity, cash available for
  distribution to its unitholders would be substantially
  reduced.  Treatment of the Partnership as a corporation would result
  in a material reduction in the anticipated cash flow and after-tax return to
  unitholders and thus would likely result in a substantial reduction in the value
  of the Partnership's common units.
  30
  Table of Contents
  SEMGROUP
  ENERGY PARTNERS, L.P.
  NOTES
  TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
  Other
  Effects
  The
  Bankruptcy Filings have had and may in the future continue to have a number of
  other impacts on the Partnership's business and management.  In the
  Amended Omnibus Agreement and other agreements with the Private Company, the
  Private Company has agreed to indemnify the Partnership for certain
  environmental and other claims relating to the crude oil and liquid asphalt
  cement assets that have been contributed to the Partnership.  Due to
  the Bankruptcy Filings, the Partnership may not be able to collect any amounts
  that would otherwise be payable under these indemnification provisions if such
  events were to occur.  Pursuant to the Settlement Agreement, the Private
  Company will reject the Amended Omnibus Agreement including the indemnification
  provisions therein.
  The
  Partnership is currently pursuing various strategic alternatives for its
  business and assets including the possibility of entering into storage contracts
  with third party customers and the sale of all or a portion of its
  assets.  The uncertainty relating to the Bankruptcy Filings and the
  recent global market and economic conditions may make it more difficult to
  pursue merger opportunities or enter into storage contracts with third party
  customers.
  In
  addition, general and administrative expenses (exclusive of noncash compensation
  expense related to the vesting of the units under the Plan- See Note 9)
  increased by approximately $6.6 million and $7.4 million, or approximately 287%
  and 322%, to approximately $8.9 million for the third quarter of 2008 and $9.7
  million for the fourth quarter of 2008, respectively, compared to $2.3 million
  in the second quarter of 2008.  This increase is due to increased
  costs related to legal and financial advisors as well as other related costs in
  connection with events related to the Bankruptcy Filings, the securities
  litigation and governmental investigations, and the Partnership's efforts to
  enter into storage contracts with third party customers and pursue merger
  opportunities.  The Partnership expects this increased level
  of general and administrative expenses to continue into 2009.
  31
  Table of Contents
  Item 2.
  Management's
        Discussion and Analysis of Financial Condition and Results of
        Operations
  As
  used in this quarterly report, unless we indicate otherwise: (1) "SemGroup
  Energy Partners," "our," "we," "us" and similar terms refer to SemGroup Energy
  Partners, L.P., together with our subsidiaries, (2) the "Private Company" refers
  to SemGroup, L.P. and its subsidiaries and affiliates (other than our general
  partner and us), and (3) "Crude Oil Business" refers to the crude oil
  gathering, transportation, terminalling and storage assets that were contributed
  to us by the Private Company. The historical financial statements for periods
  prior to the contribution of the operations to us by the Private Company on
  July 20, 2007 reflect the operations of our predecessor. The following
  discussion analyzes the historical financial condition and results of operations
  of the Partnership and should be read in conjunction with our predecessor's
  financial statements and notes thereto, and Management's Discussion and Analysis
  of Financial Condition and Results of Operations presented in our Annual Report
  on Form 10-K for the year ended December 31, 2007.  The Partnership as
  used herein refers to the financial results and operations of our predecessor
  until its contribution to us, and to our financial results and operations
  thereafter.
  Forward-Looking
  Statements
  This
  report contains "forward-looking statements" intended to qualify for the safe
  harbors from liability established by the federal securities laws. Statements
  included in this quarterly report that are not historical facts (including any
  statements concerning plans and objectives of management for future operations
  or economic performance, the impact of the Bankruptcy Filings, or assumptions or
  forecasts related thereto), including, without limitation, the information set
  forth in Management's Discussion and Analysis of Financial Condition and Results
  of Operations, are forward-looking statements. These statements can be
  identified by the use of forward-looking terminology including "may," "will,"
  "should," "believe," "expect," "intend," "anticipate," "estimate," "continue,"
  or other similar words. These statements discuss future expectations, contain
  projections of results of operations or of financial condition, or state other
  "forward-looking" information. We and our representatives may from time to time
  make other oral or written statements that are also forward-looking
  statements.
  Such
  forward-looking statements are subject to various risks and uncertainties that
  could cause actual results to differ materially from those anticipated as of the
  date of the filing of this report. Although we believe that the expectations
  reflected in these forward-looking statements are based on reasonable
  assumptions, no assurance can be given that these expectations will prove to be
  correct. Important factors that could cause our actual results to differ
  materially from the expectations reflected in these forward-looking statements
  include, among other things, those set forth in Part I, "Item 1A. Risk Factors"
  in our Annual Report on Form 10-K for the year ended December 31, 2007, which
  was filed with the Securities and Exchange Commission (the "SEC") on March 6,
  2008 (the "2007 Form 10-K"), and those set forth in "Item 1A. Risk Factors" of
  this report.
  All
  forward-looking statements included in this report are based on information
  available to us on the date of this report. We undertake no obligation to
  publicly update or revise any forward-looking statement, whether as a result of
  new information, future events or otherwise. All subsequent written and oral
  forward-looking statements attributable to us or persons acting on our behalf
  are expressly qualified in their entirety by the cautionary statements contained
  throughout this report.
  Overview
  We are a
  publicly traded master limited partnership with operations in twenty-three
  states. We provide integrated terminalling, storage, gathering and
  transportation services for companies engaged in the production, distribution
  and marketing of crude oil and liquid asphalt cement. We manage our operations
  through two operating segments: (i) terminalling and storage services and
  (ii) gathering and transportation services. We were formed in February 2007
  as a Delaware master limited partnership initially to own, operate and develop a
  diversified portfolio of complementary midstream energy assets.
  In July
  2007, we issued 12,500,000 common units, representing limited partner interests,
  and 12,570,504 subordinated units, representing additional limited partner
  interests, to SemGroup Holdings, L.P., or SemGroup Holdings, and 549,908 general
  partner units representing a 2% general partner interest to SemGroup Energy
  Partners G.P., L.L.C., our general partner. SemGroup Holdings then completed a
  public offering of 12,500,000 common units at a price of $22 per unit. In
  addition, we issued an additional 1,875,000 common units to the public pursuant
  to the underwriters' exercise of their over-allotment option. We did not receive
  any proceeds from the common units sold by SemGroup Holdings. We received net
  proceeds of approximately $38.7 million after deducting underwriting discounts
  from the sale of common units in connection with the exercise of the
  underwriters' over-allotment option. We used these net proceeds to reduce
  outstanding borrowings under our credit facility.
  32
  Table of Contents
  On
  February 20, 2008, we purchased land, receiving infrastructure, machinery,
  pumps and piping and 46 liquid asphalt cement and residual fuel oil terminalling
  and storage facilities (the "Acquired Asphalt Assets") from the Private Company
  for aggregate consideration of $379.5 million, including $0.7 million of
  acquisition-related costs. For accounting purposes, the acquisition has been
  reflected as a purchase of assets, with the Acquired Asphalt Assets recorded at
  the historical cost of the Private Company, which was approximately $145.5
  million, with the additional purchase price of $234.0 million reflected in the
  statement of changes in partners' capital as a distribution to the Private
  Company.  In conjunction with the purchase of the Acquired Asphalt
  Assets, we amended our existing credit facility, increasing our
  borrowing capacity to $600 million. Concurrently, we issued 6,000,000
  common units, receiving proceeds, net of underwriting discounts and
  offering-related costs, of $137.2 million. Our general partner also made a
  capital contribution of $2.9 million to maintain its 2.0% general partner
  interest in us. On March 5, 2008, we issued an additional 900,000
  common units, receiving proceeds, net of underwriting discounts, of $20.6
  million, in connection with the underwriters' exercise of their over-allotment
  option in full. Our general partner made a corresponding capital
  contribution of $0.4 million to maintain its 2.0% general partner interest in
  us.  In connection with the acquisition of the Acquired Asphalt
  Assets, we entered into a Terminalling and Storage Agreement (the
  "Terminalling Agreement") with the Private Company and certain of its
  subsidiaries under which we provide liquid asphalt cement terminalling and
  storage and throughput services to the Private Company and the Private Company
  has agreed to use the our services at certain minimum
  levels.  Our general partner's Board of Directors (the "Board")
  approved the acquisition of the Acquired Asphalt Assets as well as the terms of
  the related agreements based on a recommendation from its conflicts committee,
  which consisted entirely of independent directors. The conflicts committee
  retained independent legal and financial advisors to assist it in evaluating the
  transaction and considered a number of factors in approving the acquisition,
  including an opinion from the committee's independent financial advisor that the
  consideration paid for the Acquired Asphalt Assets was fair, from a financial
  point of view, to us.
  On May
  12, 2008, we purchased the Eagle North Pipeline System, a 130-mile, 8-inch
  pipeline that originates in Ardmore, Oklahoma and terminates in Drumright,
  Oklahoma as well as other real and personal property related to the pipeline
  (the "Acquired Pipeline Assets") from the Private Company for aggregate
  consideration of $45.1 million, including $0.1 million of acquisition-related
  costs.  The acquisition was funded with borrowings under our revolving
  credit facility.  We have suspended capital expenditures on this
  pipeline due to the Bankruptcy Filings.  Management currently intends to
  put the asset into service by late 2009 or early 2010 and is exploring various
  alternatives to complete the project.  The Board approved the
  acquisition of the Acquired Pipeline Assets based on a recommendation from its
  conflicts committee, which consisted entirely of independent directors. The
  conflicts committee retained independent legal and financial advisors to assist
  it in evaluating the transaction and considered a number of factors in approving
  the acquisition, including an opinion from the committee's independent financial
  advisor that the consideration paid for the Acquired Pipeline Assets was fair,
  from a financial point of view, to us.
  On May
  30, 2008, we purchased certain land, crude oil storage and terminalling
  facilities with an aggregate of approximately 2.0 million barrels of
  storage capacity and related assets located at the Cushing Interchange from the
  Private Company and we assumed a take-or-pay, fee-based, third party
  contract through August 2010 relating to the additional 2.0 million barrels
  of storage capacity (the "Acquired Storage Assets") for aggregate
  consideration of $90.2 million, including $0.2 million of acquisition-related
  costs.  The acquisition was funded with borrowings under our revolving
  credit facility.  The Board approved the acquisition of the Acquired
  Storage Assets based on a recommendation from its conflicts committee, which
  consisted entirely of independent directors. The conflicts committee retained
  independent legal and financial advisors to assist it in evaluating the
  transaction and considered a number of factors in approving the acquisition,
  including an opinion from the committee's independent financial advisor that the
  consideration paid for the Acquired Storage Assets was fair, from a financial
  point of view, to us.
  Impact
  of the Bankruptcy of the Private Company and Certain of its Subsidiaries and
  Related Events
  Due to
  the events related to the Bankruptcy Filings described herein, including the
  uncertainty relating to future cash flows and the existing events of default
  under our credit facility, we face substantial doubt as to our ability to
  continue as a going concern.  While it is not feasible to predict the
  ultimate outcome of the events surrounding the Bankruptcy Cases (as defined
  below), we have been and could continue to be materially and adversely affected
  by such events and we may be forced to make a bankruptcy filing or take other
  action that could have a material adverse effect on our business, the price of
  our common units and our results of operations.
  33
  Table of Contents
  Bankruptcy
  Filings
  On July
  17, 2008, we issued a press release announcing that the Private Company was
  experiencing liquidity issues and was exploring various alternatives, including
  raising additional equity, debt capital or the filing of a voluntary petition
  for reorganization under Chapter 11 of the Bankruptcy Code to address these
  issues.  We filed this press release in a Current Report on Form 8-K
  filed with the SEC on July 18, 2008.
  On July
  22, 2008, the Private Company and certain of its subsidiaries filed voluntary
  petitions (the "Bankruptcy Filings") for reorganization under Chapter 11 of the
  Bankruptcy Code in the United States Bankruptcy Court for the District of
  Delaware (the "Bankruptcy Court"), Case No. 08-11547-BLS.  The Private
  Company and its subsidiaries continue to operate their businesses and own and
  manage their properties as debtors-in-possession under the jurisdiction of the
  Bankruptcy Court and in accordance with the applicable provisions of the
  Bankruptcy Code (the "Bankruptcy Cases"). None of we, our general partner,
  our subsidiaries nor our general partner's subsidiaries are debtors in the
  Bankruptcy Cases.  However, because of our contractual relationships
  with the Private Company and certain of its subsidiaries, the Bankruptcy Filings
  have impacted us and may in the future impact us in various ways, including the
  items discussed below.  Our financial results as of June 30, 2008
  reflect an allowance for doubtful accounts of $0.9 million related to amounts
  collectible from the Private Company as of June 30, 2008, which are considered
  prepetition debt in the Bankruptcy Cases.  Our financial results as of
  June 30, 2008 also reflect a $0.4 million allowance for doubtful accounts
  related to amounts collectible from third parties as of June 30,
  2008.  The allowance related to amounts collectible from third parties
  was established as a result of certain third party customers netting amounts due
  them from the Private Company with amounts due to us.  Other than the
  allowance for doubtful accounts described above, the results of operations for
  the three and six months ended June 30, 2008 included in this quarterly report
  were not affected by the Bankruptcy Filings and related events.
  Board
  and Management Composition
  On July
  18, 2008, Manchester Securities Corp. and Alerian Finance Partners, LP
  ("Manchester and Alerian"), as lenders to SemGroup Holdings, the sole member of
  our general partner, exercised certain rights described below under a Loan
  Agreement and a Pledge Agreement, each dated June 25, 2008 (the "Holdings Credit
  Agreements"), that were triggered by certain events of default under the
  Holdings Credit Agreements.  The Holdings Credit Agreements are
  secured by our subordinated units and incentive distribution rights and the
  membership interests in our general partner owned by SemGroup Holdings. 
  Manchester and Alerian have not foreclosed on our subordinated units owned by
  SemGroup Holdings or the membership interests in our general
  partner.  Manchester and Alerian may in the future exercise other
  remedies available to them under the Holdings Credit Agreement and related loan
  documents, including taking action to foreclose on the collateral securing the
  loan, which may cause an additional event of default under our credit agreement
  and Forbearance Agreement (as defined below).  Neither we nor our
  general partner is a party to the Holdings Credit Agreements or the related loan
  documents.
  On July
  18, 2008, Manchester and Alerian exercised their right under the Holdings Credit
  Agreements to vote the membership interests of our general partner in order to
  reconstitute the Board (the "Change of Control").  Messrs. Thomas L.
  Kivisto, Gregory C. Wallace, Kevin L. Foxx, Michael J. Brochetti and W. Anderson
  Bishop were removed from the Board.  Mr. Bishop had served as the
  chairman of the audit committee and as a member of the conflicts committee and
  compensation committee of the Board.  Messrs. Sundar S. Srinivasan,
  David N. Bernfeld and Gabriel Hammond (each of
  whom is affiliated with Manchester or Alerian) were
  appointed as directors of the Board.  Mr. Srinivasan was elected as
  Chairman of the Board.  Messrs. Brian F. Billings and Edward F. Kosnik
  remain as directors of the Board and continue to serve as members of the
  conflicts committee, audit committee and compensation committee of the
  Board.  In addition, Messrs. Foxx and Alex Stallings resigned the
  positions each officer held with SemGroup, L.P. in July 2008.  Mr.
  Brochetti had previously resigned from his position with SemGroup, L.P. in March
  2008.  Messrs. Foxx, Brochetti and Stallings remain as officers of our
  general partner.
  On
  October 1, 2008, Dave Miller (who is an affiliate of Manchester) and
  Duke R. Ligon were appointed members of the Board. Mr. Ligon is an
  independent member of the Board and is the chairman of the audit committee and
  also serves on the compensation committee and the conflicts committee of the
  Board. Under the provisions of the SemGroup Energy Partners G.P., L.L.C.
  Long-Term Incentive Plan (the "Plan"), Mr. Ligon was granted an award of
  3,333 restricted common units and 1,667 restricted subordinated units on
  December 23, 2008. These restricted common units and restricted
  subordinated units will vest in one-third increments over a three-year
  period.  The Plan was amended in December 2008 to provide for the
  issuance of restricted subordinated units.
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  Table of Contents
  On
  January 9, 2009, Mr. Srinivasan resigned his positions as Chairman of the Board
  and as a director.  Mr. Ligon was subsequently elected as Chairman of
  the Board.
  As
  discussed in "Part II. Item 5. Other Information," on
  March 18, 2009
  ,
  the
  Board realigned the officers of our general partner appointing
  Michael J. Brochetti as Executive Vice President—Corporate Development and
  Treasurer, Alex G. Stallings as Chief Financial Officer and Secretary, and James
  R. Griffin as Chief Accounting Officer.  Mr. Brochetti had previously
  served as Chief Financial Officer, and Mr. Stallings had previously served as
  Chief Accounting Officer and Secretary.
  Bankruptcy
  Court Order
  On
  September 9, 2008, the Bankruptcy Court entered an order relating to the
  settlement of certain matters between us and the Private Company (the "Order")
  in the Bankruptcy Cases.  Among other things, the Order provided that
  (i) the Private Company shall directly pay any utility costs attributable to the
  operations of the Private Company at certain shared facilities, and the Private
  Company will pay us for past utility cost reimbursements that are due from the
  Private Company; (ii) commencing on September 15, 2008, payments under the
  Terminalling Agreement shall be netted against amounts due under the Amended
  Omnibus Agreement and shall be made on the 15th day of each month for the prior
  month (with a three business-day grace period); (iii) the Private Company will
  provide us with a letter of credit in the amount of approximately $4.9 million
  to secure the Private Company's postpetition obligations under the Terminalling
  Agreement; (iv) the Private Company will make payments under the Throughput
  Agreement for the month of August on September 15, 2008 (with a three
  business-day grace period) based upon the monthly contract minimums in the
  Throughput Agreement and netted against amounts due under the Amended Omnibus
  Agreement; (v) the Private Company will make payments under the Throughput
  Agreement for the months of September and October on October 15, 2008 (with a
  three business-day grace period) and November 15, 2008 (with a three
  business-day grace period), respectively, or three business days after amounts
  due are determined and documentation therefore has been provided and exchanged
  based upon actual volumes for each such month and at a rate equal to the average
  rate charged by us to third-party shippers in the same geographical area, with
  any such amounts netted against amounts due under the Amended Omnibus Agreement;
  (vi) the parties will reevaluate the Throughput Agreement and the payment terms
  with respect to services provided after October 2008; (vii) representatives of
  the Private Company and us will meet to discuss the transition to us of certain
  of the Private Company's employees necessary to maintain our business, and
  pending agreement between the parties, the Private Company shall continue to
  provide services in accordance with the Amended Omnibus Agreement through at
  least November 30, 2008; (viii) the Private Company will consent to an order
  relating a third-party storage contract which shall provide that we are the
  rightful owner of the rights in and to a certain third-party storage agreement
  and the corresponding amounts due thereunder; and (ix) we will enter into a
  specified lease with the Private Company to permit the Private Company to
  construct a pipeline.
  Since the
  time that the Order was entered, we negotiated a replacement letter of credit,
  which expires on April 7, 2009, in the amount of approximately $4.9 million to
  secure the Private Company's postpetition obligations under the Terminalling
  Agreement.  Although certain portions of the Order have expired, the
  Private Company, as of the date of filing this report, has continued to (i)
  provide services under the Amended Omnibus Agreement, (ii) make payments to us
  under the Terminalling Agreement based upon the monthly contract minimums
  (netted against amounts due under the Amended Omnibus Agreement) and (iii) make
  payments to us under the Throughput Agreement for actual volumes transported or
  stored each month at a rate equal to the average rate charged by us to
  third-party shippers in the same geographical area (netted against amounts due
  under the Amended Omnibus Agreement).  However, there can be no
  assurance that the Private Company will continue to provide such services or
  make such payments in the future.
  Pursuant
  to the Settlement Agreement (as defined below), such services and payments will
  be modified as described below under "—Settlement with the Private
  Company."
  Settlement with the Private
  Company
  .
  On March 12, 2009, the
  Bankruptcy Court held a hearing and approved the transactions contemplated by a
  term sheet
  relating to the
  settlement of certain matters between us and the Private Company (the
  "Settlement Agreement").
  The
  Bankruptcy Court entered an order approving the Settlement Agreement on March
  20, 2009.
  The
  Settlement Agreement provides for the following, among other
  things:
  ·
  we
        will transfer certain crude oil storage assets located in Kansas to the
        Private Company;
  ·
  the
        Private Company will transfer ownership of 355,000 barrels of crude oil
        tank bottoms and line fill to us;
  ·
  the
        Private Company will reject the Throughput Agreement as part of the
        Bankruptcy Cases;
  ·
  we
        and our affiliates will have a $20 million unsecured claim against the
        Private Company relating to rejection of the Throughput
        Agreement;
  ·
  we
        and the Private Company will enter into a new throughput agreement
        pursuant to which we will provide certain crude oil gathering,
        transportation, terminalling and storage services to the Private
        Company;
  ·
  we
        will offer employment to certain crude oil
    employees;
  ·
  the
        Private Company will transfer its asphalt assets that are connected to our
        asphalt assets to the us or one of our affiliates (unless the Private
        Company executes a definitive agreement to sell substantially all of its
        asphalt assets or business as a going concern to a third-party purchaser
        and we enter into a terminalling and storage agreement with such
        purchaser);
  ·
  the
        Private Company will reject the Terminalling Agreement as part of the
        Bankruptcy Cases;
  ·
  one
        of our subsidiaries will have a $35 million unsecured claim against the
        Private Company relating to rejection of the Terminalling
        Agreement;
  ·
  we
        and the Private Company will enter into a new terminalling agreement
        pursuant to which we will provide asphalt terminalling and storage
        services for the Private Company 's remaining asphalt inventory on the
        following terms: (i) we will receive a monthly storage service fee equal
        to $0.565 per barrel multiplied by the total shell capacity in barrels for
        each tank where the Private Company has asphalt inventory and (ii) we will
        receive a throughput fee of $9.25 per ton for each ton of the Private
        Company's asphalt inventory that is delivered out of or otherwise removed
        from our asphalt assets (unless the Private Company executes a definitive
        agreement to sell substantially all of its asphalt assets or business as a
        going concern to a third-party purchaser and we enter into a terminalling
        and storage agreement with such
  purchaser);
  ·
  the
        Private Company will remove all of its remaining asphalt inventory from
        our asphalt storage facilities no later than October 31, 2009 (unless the
        Private Company executes a definitive agreement to sell substantially all
        of its asphalt assets or business as a going concern to a third-party
        purchaser and we enter into a terminalling and storage agreement with such
        purchaser);
  ·
  the
        Private Company will be entitled to receive 20% of the proceeds of any
        sale by us of any of the asphalt assets transferred to us in connection
        with the Settlement Agreement that occurs within nine months of the
        transfer of such assets to us (unless the Private Company executes a
        definitive agreement to sell substantially all of its asphalt assets or
        business as a going concern to a third-party purchaser and we enter into a
        terminalling and storage agreement with such
    purchaser);
  ·
  the
        Private Company will reject the Amended and Restated Omnibus Agreement as
        part of the Bankruptcy Cases;
  ·
  we
        and the Private Company will enter into a shared services agreement
        pursuant to which the Private Company will provide certain operational
        services for us;
  ·
  other
        than as provided above, we and the Private Company entered into mutual
        releases of claims relating to the rejection of the Terminalling and
        Storage Agreement, Throughput Agreement and Amended and Restated Omnibus
        Agreement;
  ·
  certain
        pre-petition claims by the Private Company and us will be netted and
        waived;
  ·
  we
        and the Private Company will resolve certain remaining issues related to
        the contribution of crude oil assets to us in connection with our initial
        public offering, our acquisition of the Acquired Asphalt Assets, our
        acquisition of the Acquired Pipeline Assets and our acquisition of the
        Acquired Storage Assets, including the release of claims relating to such
        acquisitions; and
  ·
  we
        and the Private Company will enter into a license agreement providing us
        with a non-exclusive, worldwide license to use certain trade names,
        including the name "SemGroup", and the corresponding mark until December
        31, 2009, and the Private Company will waive claims for infringement
        relating to such trade names and mark prior to the date of such license
        agreement.
  The parties agreed to
  negotiate and execute definitive documentation, to be approved by the Bankruptcy
  Court, with respect to the items contained in the Settlement Agreement as
  soon as practicably possible, which will supersede the Settlement Agreement when
  so executed.
  The Settlement Agreement
  is subject to the obtaining of a consent from our lenders under our credit
  agreement and a waiver of the existing defaults or events of default under the
  credit agreement.  There can be no assurance that our lenders will
  provide the required consent to the transactions or waiver of existing defaults
  or events of default under our credit agreement or that the transactions
  contemplated by the Settlement Agreement will be
  consummated.
  Our
  Revenues
  We
  provide services to the crude oil purchasing, marketing and distribution
  operations of the Private Company pursuant to a crude oil gathering,
  transportation, terminalling and storage agreement with the Private Company,
  which we refer to as the Throughput Agreement, and we provide services to the
  finished asphalt product processing and marketing operations of the Private
  Company pursuant to a terminalling and storage agreement with the Private
  Company, which we refer to as the Terminalling Agreement.  For a
  detailed description of the Throughput Agreement and the Terminalling Agreement,
  please see "Item 7. Management's Discussion and Analysis of Financial Condition
  and Results of Operation" and "Item 13. Certain Relationships and Related Party
  Transactions" in our 2007 Form 10-K.  For the six months ended June
  30, 2008 and the year ended December 31, 2008, we derived
  approximately 88% and approximately
  73%
  ,
  respectively, of our revenues, excluding fuel surcharge revenues related to fuel
  and power consumed to operate our liquid asphalt cement storage tanks, from
  services we provided to the Private Company and its subsidiaries.  The
  Private Company is obligated to pay us minimum monthly fees totaling $76.1
  million annually and $58.9 million annually in respect of the minimum
  commitments under the Throughput Agreement and the Terminalling Agreement,
  respectively, regardless of whether such services are actually utilized by the
  Private Company.  As described above, the Order requires the Private
  Company to make certain payments under the Throughput Agreement and Terminalling
  Agreement.  As of the date of the filing of this report, payments made
  under the Throughput Agreement for services rendered since September 2008 have
  been made based upon actual usage rather than the contractual minimum monthly
  storage amounts in such agreement.  As of the date of the filing of
  this report, payments made under the Terminalling Agreement have continued to be
  made based upon the contractual minimum monthly storage amounts in such
  agreement.  We have been pursuing opportunities to provide crude oil
  terminalling and storage services and crude oil gathering and transportation
  services to third parties.
  35
  Table of Contents
  As a
  result of new crude oil third-party storage contracts, we have increased our
  third-party terminalling and storage revenue (excluding fuel surcharge revenues
  related to fuel and power consumed to operate our liquid asphalt cement storage
  tanks) from approximately $1.0 million, or approximately 4% of total
  terminalling and storage revenue during the second quarter of 2008, to
  approximately $4.7 million and $8.4 million, or approximately 17% and 34% of
  total terminalling and storage revenue for the third quarter of 2008 and
  the fourth quarter of 2008, respectively.
  In
  addition, as a result of new third-party crude oil transportation contracts and
  reduced commitments of usage by the Private Company under the Throughput
  Agreement, we have increased our third-party gathering and transportation
  revenue from approximately $5.0 million, or approximately 21% of total gathering
  and transportation revenue during the second quarter of 2008, to approximately
  $10.9 million and $13.9 million, or approximately 51% and 86% of total gathering
  and transportation revenue for the third quarter of 2008 and the fourth
  quarter of 2008, respectively.
  The
  significant majority of the increase in third party revenues results from an
  increase in third-party crude oil services provided and a corresponding decrease
  in the Private Company's crude oil services provided due to the termination of
  the monthly contract minimum revenues under the Throughput Agreement in
  September 2008.  Average rates for the new third-party crude oil
  terminalling and storage and transportation and gathering contracts are
  comparable with those previously received from the Private Company. 
  However, the volumes being terminalled, stored, transported and gathered have
  decreased as compared to periods prior to the Bankruptcy Filings, which has
  negatively impacted total revenues.  As an example, fourth quarter total
  revenues are approximately $9.2 million less than second quarter 2008
  total revenues, in each case excluding fuel surcharge revenues related to fuel
  and power consumed to operate our liquid asphalt cement storage tanks. Pursuant
  to the Settlement Agreement, we have agreed to waive the fees pursuant to the
  Terminalling Agreement for the month of March 2009, and we will enter into a new
  terminalling agreement with the Private Company for periods thereafter (see
  "-Settlement with the Private Company").
  Any delay
  or failure of the Private Company to make its required payments under the
  Throughput Agreement or the Terminalling Agreement, to the extent such revenues
  have not been replaced by third party revenues, will have a material
  adverse effect on our financial condition and results of
  operations.  For example, we have reserved as a doubtful account the
  receivable balance owed by the Private Company for services provided to the
  Private Company during the first 21 days of July, totaling $9.6 million, as such
  amounts are considered prepetition debt in the Bankruptcy Filings.  In
  addition, the Private Company may reject the contracts it has with us, including
  the Throughput Agreement and the Terminalling Agreement, as part of its
  bankruptcy proceedings, which ultimately would have the effect of breaching such
  contracts.  Such action would have a material adverse effect on our
  financial condition and results of operations.  Any transaction
  relating to a rejection, assignment or modification of the Throughput Agreement
  or the Terminalling Agreement would require approval of the Bankruptcy
  Court.  On February 6, 2009, the Private Company filed a motion in the
  Bankruptcy Court requesting approval of the sale of its asphalt related assets,
  or in the event of an unsuccessful auction, the rejection of the Terminalling
  Agreement and the winding down of its asphalt business (see "—Asphalt
  Operations" below).
  Pursuant
  to the Settlement Agreement, among other things, the Private Company will reject
  the Terminalling Agreement and the Throughput Agreement as part of the
  Bankruptcy Cases.  In addition, pursuant to the Settlement Agreement,
  we will enter into a new throughput agreement and a new terminalling agreement
  with the Private Company pursuant to which we will provide certain crude oil
  gathering, transportation, terminalling and storage services and asphalt
  terminalling and storage services to the Private Company.
  We expect
  revenues from services provided to the Private Company under this new throughput
  agreement and new terminalling agreement to be substantially less than prior
  revenues from services provided to the Private Company as the new agreements
  will be based upon actual volumes gathered, transported, terminalled and stored
  instead of certain minimum volumes and may be at reduced rates when compared to
  the Throughput Agreement and Terminalling Agreement.
  There can be
  no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see
  "—Settlement with the Private Company").
  We have
  entered into various crude oil transportation and storage contracts with third
  parties and are continuing to pursue additional contracts with third parties;
  however, there can be no assurance that any of these additional efforts will be
  successful.  In addition, certain third parties may be less likely to
  enter into business transactions with us due to the Bankruptcy
  Filings.  The Private Company may also choose to curtail its
  operations or liquidate its assets as part of the Bankruptcy
  Cases.  As a result, unless we are able to generate additional third
  party revenues, we may experience lower volume in our system which could
  have a material adverse effect on our results of operations and cash
  flows.
  36
  Table of Contents
  Asphalt
  Operations
  We
  provide liquid asphalt cement terminalling and storage services to the Private
  Company.  The Private Company processes, distributes and markets
  liquid asphalt cement and finished asphalt products to third party
  customers.  Pursuant to the Amended Omnibus Agreement, the Private
  Company has agreed, so long as the Terminalling Agreement is in effect, not to
  engage in, or acquire or invest in an entity that engages in, the business of
  terminalling and storing liquid asphalt cement within 50 miles of our liquid
  asphalt cement facilities and we have agreed, so long as the Terminalling
  Agreement is in effect, not to engage in, or acquire or invest in an entity that
  engages in, the business of processing, marketing and distributing liquid
  asphalt cement and finished asphalt products within 50 miles of our liquid
  asphalt cement facilities.  As a result, subject to certain
  exceptions, we are contractually prohibited from marketing or distributing
  liquid asphalt cement directly to third party customers while the Terminalling
  Agreement is in effect.  In addition, the Private Company is
  responsible for obtaining and maintaining all environmental and other permits
  related to our liquid asphalt cement operations.  The Private
  Company's failure to obtain, renew or maintain compliance under these permits
  may materially adversely effect our operations.  We are currently
  evaluating strategic alternatives for our asphalt operations, including the
  possibility of entering into storage contracts with third party customers and
  the sale of all or a portion of our assets.
  The
  asphalt industry in the United States is characterized by a high degree of
  seasonality. Much of this seasonality is due to the impact that weather
  conditions have on road construction schedules, particularly in cold weather
  states. Refineries produce liquid asphalt cement year round, but the peak
  asphalt demand season is during the warm weather months when most of the road
  construction activity in the United States takes place. As a result, liquid
  asphalt cement is typically purchased from refineries at low prices in the low
  demand winter months and then processed and sold at higher prices in the peak
  summer demand season.  Although there remains some liquid asphalt
  cement in our asphalt storage tanks that was not sold during the summer of 2008,
  the Private Company, as of the date of the filing of this report, has not
  purchased any significant volumes of additional liquid asphalt cement during the
  recent winter months.
  On
  February 6, 2009, the Private Company filed a motion in the Bankruptcy Court
  requesting approval of the sale of its asphalt related assets.  There
  is significant uncertainty as to our revenues related to our asphalt assets and
  there is substantial risk that our asphalt assets may be idle during 2009 and
  subsequent years, which would adversely effect our financial condition and
  results of operations.  Without revenues from our asphalt assets, we
  may be unable to meet the covenants, including the minimum liquidity and minimum
  receipt requirements, under our Forbearance Agreement (as defined
  below) with our senior secured lenders pursuant to which such lenders have
  agreed to forbear from exercising their rights and remedies arising from the
  events of default under our credit agreement.
  Pursuant
  to the Settlement Agreement, we will receive the Private Company's asphalt
  assets that are connected to our asphalt assets
  (unless
  the Private Company executes a definitive agreement to sell substantially all of
  its asphalt assets or business as a going concern to a third-party purchaser and
  we enter into a terminalling and storage agreement with such
  purchaser).
  The transfer
  of the Private Company's asphalt assets in connection with the Settlement
  Agreement will provide us with outbound logistics for our existing asphalt
  assets and, therefore, will allow us to better provide asphalt terminalling and
  storage services.  In addition, the Private Company will reject the
  Terminalling Agreement as part of the Bankruptcy Cases and we and the Private
  Company will enter into a new terminalling agreement pursuant to which we will
  provide asphalt terminalling and storage services for the Private Company 's
  remaining asphalt inventory.
  There can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see
  "—Settlement with the Private Company").  Even if we acquire such
  asphalt assets, we may not be able to enter into agreements to provide
  terminalling and storage services for such assets.  In
  addition,
  if the Private Company sells its asphalt assets to a third
  party, we will need to negotiate a new terminalling and storage
  contract with the purchaser of such assets and such agreement may not be on as
  favorable terms as the Terminalling Agreement.  Any significant
  decrease in the amount of revenues that we receive from our liquid asphalt
  cement terminalling and storage operations could have a material adverse effect
  on our cash flows, financial condition and results of operations.
  Operation
  and General Administration of the Partnership
  As is the
  case with many publicly traded partnerships, we do not directly employ any
  persons responsible for managing or operating our business or for providing
  services relating to day-to-day business affairs.  Pursuant to the
  Amended Omnibus Agreement, the Private Company operated our assets and performed
  other administrative services for us such as accounting, legal, regulatory,
  development, finance, land and engineering.  Due to the Change of
  Control, the Private Company is no longer obligated to operate our assets or
  perform other administrative services pursuant to the Amended Omnibus
  Agreement.  The Private Company agreed to continue providing such
  services until at least November 30, 2008 pursuant to the
  Order.  While the Private Company has continued to provide such
  services as of the date of the filing of this report, there can be no assurance
  that it will continue to provide such services to us or that we could replace
  any of these services if the Private Company stops providing them.
  Pursuant
  to the Settlement Agreement, the Private Company will reject the Amended Omnibus
  Agreement as part of the Bankruptcy Cases and we will enter into a shared
  services agreement with the Private Company pursuant to which the Private
  Company will provide certain operational services for us.  There can
  be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see
  "—Settlement with the Private Company").  In addition, if the terms of
  this shared services agreement are not as favorable as the terms under the
  Amended Omnibus Agreement,
  it could
  have a material adverse effect on our business, financial condition, results of
  operations, cash flows, ability to make distributions to our unitholders, the
  trading price of our common units and our ability to conduct our business.
  If the Private Company stops providing these services, we may
  incur increased costs to replace these services and our financial results may
  suffer.
  37
  Table of Contents
  In
  addition, in connection with the Bankruptcy Cases, the Private Company may
  reduce a substantial number of its employees or some of the Private Company's
  employees may choose to terminate their employment with the Private Company,
  some of whom may currently be providing general and administrative and operating
  services to us.  Any reductions in critical personnel who provide
  services to us and any increased costs to replace such personnel could have a
  material adverse effect on our ability to conduct our business and our results
  of operations.
  Change
  of Control of the Private Company
  On
  December 15, 2008, Red Apple Group Inc. ("Red Apple"), which is chaired by John
  Catsimatidis, announced that it controls five of the nine seats on the
  management committee of the general partner of the Private Company and therefore
  effectively controls the Private Company (the "Private Company Change of
  Control").  Mr. Catsimatidis has indicated that Red Apple does not
  intend to liquidate the Private Company and that it plans on filing a new
  reorganization plan for the Private Company with the Bankruptcy
  Court.  As of the date of the filing of this report, Red Apple has not
  filed a reorganization plan.  There is no assurance that any
  reorganization plan will be submitted by Red Apple or that if a reorganization
  plan is submitted by Red Apple that the Bankruptcy Court will approve such plan
  or that continued performance by the Private Company under the Throughput
  Agreement or the Terminalling Agreement will be part of any such
  plan.  In addition, the Private Company Change of Control may lead to
  additional uncertainty regarding our continued relationship with the Private
  Company.  We are unsure what impact, if any, the Private
  Company Change of Control will have on us and our operations.
  Intellectual
  Property Rights
  Pursuant
  to the Amended Omnibus Agreement, we licensed the use of certain trade names and
  marks, including the name "SemGroup."  This license terminated
  automatically upon the Change of Control.  The termination of the
  explicit rights to use this intellectual property under the Amended Omnibus
  Agreement may adversely effect our ability to operate or grow our business and
  our results of operations.  In addition, we may be subject to claims
  for trademark or other intellectual property infringement due to our continued
  use of these intellectual property rights.
  Pursuant
  to the Settlement Agreement, we will enter into a license agreement with the
  Private Company pursuant to which we may use the trade names and mark until
  December 31, 2009.  In addition, pursuant to the Settlement Agreement,
  the Private Company has agreed to waive all claims relating to infringement of
  the trade names and mark prior to the date of this license
  agreement.  There can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see
  "—Settlement with the Private Company").
  Credit
  Facility
  As
  described below under "—Liquidity and Capital Resources", certain events of
  default have occurred and are continuing under our credit agreement, which
  prohibit us from borrowing under our credit facility to fund working capital
  needs or to pay distributions to its unitholders, among other
  things.  No cure periods are applicable to the existing events of
  default.  These events of default have not been waived and are
  continuing under our credit agreement.  In addition, the Private
  Company's action related to the Bankruptcy Cases as well as the Private
  Company's liquidity issues and any corresponding impact may result in additional
  events of default under the Partnership's credit agreement.  We and
  the requisite lenders under our credit facility have entered into a Forbearance
  Agreement (as defined below) relating to the existing events of default under
  the credit agreement.
  Waiver of
  the existing events of default under our credit agreement is a condition
  precedent to the effectiveness of the Settlement Agreement.  There can
  be no assurance that our lenders will provide such a waiver and that the
  transactions contemplated by the Settlement Agreement will be consummated.
  See "—Liquidity and Capital Resources" for more information regarding our
  credit facility, the events of default thereunder and the Forbearance Agreement
  (as defined below).
  Distributions
  to Our Unitholders
  We did
  not make a distribution to our common unitholders, subordinated unitholders or
  general partner attributable to the results of operations for the quarters ended
  June 30, 2008, September 30, 2008, or December 31, 2008 due to the existing
  events of default under our credit agreement and the uncertainty of our future
  cash flows relating to the Bankruptcy Filings.  Our unitholders will
  be required to pay taxes on their share of our taxable income even though they
  did not receive a cash distribution for the quarters ended June 30, 2008,
  September 30, 2008 or December 31, 2008.  In addition, we do not
  currently expect to make a distribution relating to the first quarter of
  2009.  We distributed approximately $14.3 million to our unitholders
  for the three months ended March 31, 2008.  If the events of default
  under our credit agreement are not waived by our lenders or our business
  operations and prospects do not improve, we may not make quarterly distributions
  to our unitholders in the future.
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  Table of Contents
  Our
  partnership agreement provides that, during the subordination period, which we
  are currently in, our common units have the right to receive distributions of
  available cash from operating surplus in an amount equal to the minimum
  quarterly distribution of $0.3125 per common unit per quarter, plus any
  arrearages in the payment of the minimum quarterly distribution on the common
  units from prior quarters, before any distributions of available cash from
  operating surplus may be made on the subordinated units.
  Nasdaq
  Delisting
  Effective
  at the opening of business on February 20, 2009, our common units were delisted
  from the Nasdaq Global Market ("Nasdaq") due to our failure to timely file this
  Quarterly Report as well as our Quarterly Report on Form 10-Q for the quarter
  ended September 30, 2008.  Our common units are currently traded on
  the Pink Sheets, which is an over-the-counter securities market, under the
  symbol SGLP.PK.  The fact that our common units are not listed on a
  national securities exchange is likely to make trading such common units more
  difficult for broker-dealers, unitholders and investors, potentially leading to
  further declines in the price of our common units.  In addition, it
  may limit the number of institutional and other investors that will consider
  investing in our common units, which may have an adverse effect on the price of
  our common units.  It may also make it more difficult for us to raise
  capital in the future.
  We
  continue to work to become compliant with our SEC reporting obligations and
  intend to promptly seek the relisting of our common units on Nasdaq as soon as
  practicable after we have become compliant with such reporting
  obligations.  However, there can be no assurances that we will be able
  to relist our common units on Nasdaq or any other national securities exchange
  and we may face a lengthy process to relist our common units if we are able to
  relist them at all.
  Claims
  Against and By The Private Company's Bankruptcy Estate
  We
  currently have claims against the Private Company's bankruptcy estate due to
  amounts owed us by the Private Company prior to the Bankruptcy
  Filings.  In addition, if the Private Company fails to make its
  payments under the Throughput Agreement or the Terminalling Agreement or
  otherwise fails to perform under the contracts we have with the Private Company,
  we may have additional potential claims against the Private Company's bankruptcy
  estate.
  Any
  claims asserted by us against the Private Company in the Bankruptcy Cases will
  be subject to the claim allowance procedure provided in the Bankruptcy Code and
  Bankruptcy Rules.  If an objection is filed, the Bankruptcy Court will
  determine the extent to which any such claim that has been objected to is
  allowed and the priority of such claims.  We are uncertain regarding
  the ultimate amount of damages for breaches of contract or other claims that we
  will be able to establish in the Bankruptcy Cases and we cannot predict the
  amounts, if any, that we will collect or the timing of any such collection, but
  such losses could be substantial and could have a material adverse effect on the
  Partnership's ability to conduct its business and its results of
  operations.
  Pursuant to
  the Settlement Agreement, the Private Company will reject the Terminalling
  Agreement and the Throughput Agreement.  We will have a $35 million
  unsecured claim relating to rejection of the Terminalling Agreement in the
  Bankruptcy Cases.  In addition, we will have a $20 million unsecured
  claim against the Private Company relating to rejection of the Throughput
  Agreement.  There can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see
  "—Settlement with the Private Company").
  In
  addition, under bankruptcy law, a debtor-in-possession, such as the Private
  Company, may seek to avoid certain prepetition transfers if such transfers were
  to insiders and occurred within one year before the bankruptcy filing for
  insiders.  For purposes of avoidance under bankruptcy law, title to
  real property that is perfected more than thirty days after the transfer is
  deemed to have been transferred as of the date of perfection.  In
  addition, a debtor-in-possession, such as the Private Company, may seek to avoid
  prepetition transfers of real property that were not perfected as of the
  bankruptcy filing date against a hypothetical bona fide purchaser of such real
  property.
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  Table of Contents
  Through a
  series of transactions we acquired certain real property from the Private
  Company during the one-year period preceding the Bankruptcy
  Filings.  Deeds to approximately 27 asphalt facilities transferred to
  us by the Private Company as part of the Acquired Asphalt Assets either were not
  recorded within thirty days of such transfer or were not recorded as of the
  Bankruptcy Filings.  In addition, a deed to the Acquired Storage
  Assets was not recorded as of the Bankruptcy Filings.  Although we
  have title to such properties, the Private Company may in its Bankruptcy Cases
  seek to avoid the transfers of these properties.  We have defenses
  against these actions based upon bankruptcy law and state law and intend to
  vigorously defend against any such action.  However, there can be no
  assurance regarding the outcome of any potential litigation.  If the
  Private Company succeeds in such litigation, we may be required to return the
  affected properties to the Private Company or pay an amount equal to the value
  of such properties, which would have a material adverse effect on our business,
  financial condition, results of operations, cash flows, ability to make
  distributions to our unitholders, the trading price of the our common units and
  our ability to conduct our business.  We would then have unsecured
  claims in the Bankruptcy Court for the amounts originally paid for such
  properties.   An estimate of possible loss, if any, or the range
  of loss cannot be made and therefore we have not accrued a loss contingency
  related to this matter. However, the ultimate resolution of this matter could
  have a material adverse effect on our business, financial condition, results of
  operations, cash flows, ability to make distributions to our unitholders, the
  trading price of the our common units and our ability to conduct our
  business.
  Pursuant
  to the Settlement Agreement, the Private Company will release certain of its
  claims related to this real property including the real property claims
  discussed above (see "—Settlement with the Private Company").
  There may
  be additional claims that are not released by the Settlement
  Agreement.  In addition,
  there can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be
  consummated
  .
  Governmental
  Investigations
  On July
  21, 2008, we received a letter from the staff of the SEC giving notice that the
  SEC is conducting an inquiry relating to us and requesting, among other things,
  that we voluntarily preserve, retain and produce to the SEC certain documents
  and information relating primarily to our disclosures respecting the Private
  Company's liquidity issues, which were the subject of our July 17, 2008 press
  release.  On October 22, 2008, we received a subpoena from the SEC
  pursuant to a formal order of investigation requesting certain documents
  relating to, among other things, the Private Company's liquidity
  issues.  We have been cooperating, and intend to continue cooperating,
  with the SEC in its investigation.
  On July
  23, 2008, we and our general partner each received a Grand Jury subpoena from
  the United States Attorney's Office in Oklahoma City, Oklahoma, requiring, among
  other things, that we and our general partner produce financial and other
  records related to our July 17, 2008 press release.  We have been
  informed that the U.S. Attorneys' Offices for the Western District of Oklahoma
  and the Northern District of Oklahoma are in discussions regarding the
  subpoenas, and no date has been set for a response to the
  subpoenas.  We and our general partner intend to cooperate fully with
  this investigation if and when it proceeds.
  Securities
  Litigation
  Please
  see "Part II—Item I. Legal Proceedings" for a discussion of certain securities
  litigation to which we are a party.
  Examiner
  On August
  12, 2008, a motion was filed by the United States Trustee asking the Bankruptcy
  Court to appoint an examiner to investigate the Private Company's trading
  strategies as well as certain "insider transactions," including the contribution
  of the crude oil assets to us in connection with our initial public offering,
  the sale of the asphalt assets to us in February 2008, the sale of the Eagle
  North Pipeline System to us in May 2008, the sale of certain crude oil storage
  assets to us in May 2008, and the entering into the Holdings Credit Agreements
  by SemGroup Holdings.  On September 10, 2008, the Bankruptcy Court
  approved the appointment of an examiner, and on October 14, 2008, the United
  States Trustee appointed Louis J. Freeh, former director of the Federal Bureau
  of Investigation, as the examiner.  The examiner is required to
  prepare and file a report summarizing the findings of his investigation by March
  24, 2009, unless the Bankruptcy Court extends that deadline.
  We may
  incur additional costs in cooperating with this examiner.
  In
  addition, in connection with the Settlement Agreement, we and the Private
  Company will release certain claims relating to the contribution of assets to us
  in connection with our initial public offering and our acquisition of the
  Acquired Asphalt Assets, Acquired Pipeline Assets and Acquired Storage
  Assets.  However, other claims that may be identified by the examiner
  will not be released in connection with the Settlement Agreement. 
  I
  f the examiner's investigation results in an unfavorable outcome to us,
  such an investigation may prompt the filing of lawsuits by the Private Company's
  bankruptcy estate representative to challenge or to seek to unwind transactions
  with us under the bankruptcy laws.  Such litigation may be expensive
  and, if successful, would have a material adverse effect on our business,
  financial condition, results of operations, ability to make distributions to our
  unitholders and the trading price of our common units.
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  Table of Contents
  Internal
  Review
  As
  previously announced, in July 2008 the Board created an internal review
  subcommittee of the Board comprised of directors who are independent of
  management and the Private Company to determine whether we participate in
  businesses other than as described in our filings with the SEC and to conduct
  investigations into other such specific items as are deemed to be appropriate by
  the subcommittee.  The subcommittee retained independent legal counsel
  to assist it in its investigations.
  The subcommittee has investigated a short-term financing
  transaction involving two subsidiaries of the Private Company.  This
  transaction was identified as a potential source of concern in a whistleblower
  report made after the Private Company filed for bankruptcy.  Although
  the transaction did not involve
  us or
  our
  subsidiaries, it was investigated
  because it did involve certain senior executive officers of
  our
  general partner
  who were also senior executive officers of the Private Company at the time of
  the transaction.  Based upon its investigation, counsel for the
  subcommittee found that, subject to
  the subcommittee's lack of access to
  Private Company documents and electronic records and witnesses
  , although certain irregularities occurred in the
  transactions, the transaction did not appear to cause the relevant officers to
  understand or believe that the Private Company had a lack of liquidity that
  imperiled the Private Company's ability to meet its obligations to
  us
  and that certain
  aspects of the documentation of the transaction that were out of the ordinary
  did not call into question the integrity of any of the relevant
  officers.
  The
  subcommittee also investigated whether certain senior executive officers of our
  general partner who were also senior executive officers of the Private Company
  knew and understood, beginning as early as July 2007 and at various times
  thereafter, about a lack of liquidity at the Private Company that imperiled the
  Private Company's ability to meet its obligations to us.  Based upon
  this investigation, and subject to the subcommittee's lack of access to Private
  Company documents and electronic records and witnesses, counsel for the
  subcommittee found that each of the officers had access to and reviewed Private
  Company financial information, including information regarding the Private
  Company's commodity trading activities, from which they could have developed an
  understanding of the nature and significance of the trading activities that led
  to liquidity problems at the Private Company well before they say they
  did.  While the officers each stated sincerely that they did not
  understand the nature or extent of the Private Company's trading-related
  problems until the first week of July 2008 or later, objective evidence suggests
  that they showed at least some indifference to known or easily discoverable
  facts and that they failed to adhere to procedures under the Private Company's
  Risk Management Policy created expressly to ensure that the Private Company's
  trading activities were properly monitored.  Nonetheless, counsel for
  the subcommittee was not persuaded by the documents and other evidence it was
  able to access that the officers in fact knew and understood that the Private
  Company's liquidity or capital needs were a significant cause for alarm until,
  at the earliest, the second quarter of 2008.  Moreover, while it
  appeared to counsel that the officers developed a growing awareness of the
  nature and severity of the Private Company's liquidity issues over the second
  quarter of 2008, counsel was unable to identify with any more precision the
  specific level of concern or understanding these individuals had prior to July
  2008.
  While not within the scope of
  such counsel's investigation, counsel was requested by the subcommittee to note
  any information that came to counsel's attention during its investigation that
  suggested that the officers intended to deceive or mislead any third
  party.  Subject to limitations described in its report,
  no
  information came to counsel's attention during its investigation that suggested
  to counsel that the officers intended to deceive or to mislead any third
  parties.  In addition, in connection with the investigation, counsel
  for the subcommittee did not express any findings of intentional misconduct or
  fraud on the part of any officer or employee of us.
  After
  completion of the internal review, a plan was developed with the advice of the
  Audit Committee of the Board to further strengthen our processes and
  procedures.  This plan includes, among other things, reevaluating
  executive officers and accounting and finance personnel
  (including a realignment of officers as described
  elsewhere in this report)
  and hiring, as deemed necessary, additional
  accounting and finance personnel or consultants; reevaluating our internal audit
  function and determining whether to expand the duties and responsibilities of
  such group; evaluating the comprehensive training programs for all management
  personnel covering, among other things, compliance with controls and procedures,
  revising the reporting structure so that the Chief Financial Officer reports
  directly to the Audit Committee, and increasing the business and operational
  oversight role of the Audit Committee.
  Equity
  Awards and Employment Agreements
  The
  Change of Control constituted a change of control under the Plan, which resulted
  in the early vesting of all awards under the Plan.  As such, the
  phantom units awarded to Messrs. Kevin L. Foxx, Michael J. Brochetti, Alex G.
  Stallings, Peter L. Schwiering and Jerry A. Parsons in the amounts of 150,000
  units, 90,000 units, 75,000 units, 45,000 units and 20,000 units, respectively,
  are fully vested.   The common units underlying such awards were
  issued to such individuals in August 2008.  In addition, the 5,000
  restricted units awarded to each of Messrs. Billings, Kosnik and Bishop for
  their service as independent members of the Board are fully vested.
  The
  Change of Control also resulted in a change of control under the employment
  agreements of Messrs. Foxx, Brochetti, Stallings, Schwiering and
  Parsons.  If within one year after the Change of Control any such
  officer is terminated by our general partner without Cause (as defined below) or
  such officer terminates the agreement for Good Reason (as defined below), he
  will be entitled to payment of any unpaid base salary and vested benefits under
  any incentive plans, a lump sum payment equal to 24 months of base salary and
  continued participation in the our general partner's welfare benefit programs
  for one year after termination. Upon such an event, Messrs Foxx, Brochetti,
  Stallings, Schwiering and Parsons would be entitled to lump sum payments of
  $900,000, $600,000, $550,000, $500,000 and $500,000, respectively, in addition
  to continued participation in our general partner's welfare benefit
  programs.  As of the date of the filing of this report, none of these
  officers is entitled to these benefits as none of them has been terminated by
  our general partner without Cause or has terminated his agreement for Good
  Reason.
  For
  purposes of the employment agreements:
  "Cause"
  means (i) conviction of the executive officer by a court of competent
  jurisdiction of any felony or a crime involving moral turpitude; (ii) the
  executive officer's willful and intentional failure or willful intentional
  refusal to follow reasonable and lawful instructions of the Board;
  (iii) the executive officer's material breach or default in the performance
  of his obligations under the employment agreement; or (iv) the executive
  officer's act of misappropriation, embezzlement, intentional fraud or similar
  conduct involving our general partner.
  "Good
  Reason" means (i) a material reduction in the executive officer's base
  salary; (ii) a material diminution of the executive officer's duties,
  authority or responsibilities as in effect immediately prior to such diminution;
  or (iii) the relocation of the named executive officer's principal work
  location to a location more than 50 miles from its current
  location.
  Internal
  Controls
  SemGroup
  Energy Partners G.P., L.L.C., our general partner, has sole responsibility for
  conducting our business and for managing our operations. Effective internal
  controls are necessary for our general partner, on our behalf, to provide
  reliable financial reports, prevent fraud and operate us successfully as a
  public company. If our general partner's efforts to develop and maintain its
  internal controls are not successful, it is unable to maintain adequate controls
  over our financial processes and reporting in the future or it is unable to
  assist us in complying with our obligations under Section 404 of the
  Sarbanes-Oxley Act of 2002, our operating results could be harmed or we may fail
  to meet our reporting obligations.
  We and
  our general partner rely upon the Private Company for their personnel, including
  those related to designing and implementing internal controls and disclosure
  controls and procedures.  Staff reductions by the Private Company or
  other departures by the Private Company's employees that provide services to us
  could have a material adverse effect on internal controls and the effectiveness
  of disclosure controls and procedures.  Ineffective internal controls
  could cause us to report inaccurate financial information or cause investors to
  lose confidence in our reported financial information, which would likely have a
  negative effect on the trading price of our common units.
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  Table of Contents
  Insurance
  We share
  some insurance policies, including our general liability policy, with the
  Private Company. These policies contain caps on the insurer's maximum liability
  under the policy, and claims made by either the Private Company or us are
  applied against the caps and deductibles. The possibility exists that, in an
  event in we wish to make a claim under a shared insurance policy, our claim
  could be denied or only partially satisfied due to claims made by the Private
  Company against the policy cap. Further, where events occur that would entitle
  both the Private Company and us to benefits under these insurance policies, the
  full deductible may be borne by the first claimant under the policy. In
  addition, claims made by the Private Company could affect our premiums and our
  ability to obtain insurance in the future.  The Bankruptcy Filings
  have had and may continue to have an adverse effect on our insurance premiums
  and coverage.  Our premiums and ability to obtain insurance in the
  future could also be adversely impacted by the Bankruptcy Filings if the Private
  Company fails to renew any shared policies and we are required to purchase our
  own policy, cover any premiums currently being paid by the Private Company or if
  an insurance carrier increases the insurance premiums due to the Bankruptcy
  Filings.  These increased costs could have a material adverse effect
  on our financial condition and results of operations.
  Taxation
  as a Corporation
  The
  anticipated after-tax economic benefit of an investment in our common units
  depends largely on us being treated as a partnership for federal income tax
  purposes.  If less than 90% of the gross income of a publicly traded
  partnership, such as us, for any taxable year is "qualifying income" from
  sources such as the transportation, marketing (other than to end users), or
  processing of crude oil, natural gas or products thereof, interest, dividends or
  similar sources, that partnership will be taxable as a corporation under Section
  7704 of the Internal Revenue Code for federal income tax purposes for that
  taxable year and all subsequent years.  In this regard, because the
  income we earn from the Throughput Agreement and the Terminalling Agreement with
  the Private Company is "qualifying income" any material reduction or elimination
  of that income, or any amendment to the Throughput Agreement or the Terminalling
  Agreement which changes the nature of the services provided or the income
  generated thereunder, may cause our remaining "qualifying income" to constitute
  less than 90% of our gross income.  As a result, we could become
  taxable as a corporation for federal income tax purposes, unless we were to
  transfer the businesses that generate non-qualifying income to one or more
  subsidiaries taxed as corporations and pay entity level income taxes on such
  non-qualifying income.  The IRS has not provided any ruling to us on
  this matter.
  If we
  were treated as a corporation for federal income tax purposes, then we would pay
  federal income tax on our income at the corporate tax rate, which is currently a
  maximum of 35%, and would likely pay state income tax at varying
  rates.  Distributions would generally be taxed again to unitholders as
  corporate distributions and none of our income, gains, losses, deductions or
  credits would flow through to our unitholders.  Because a tax would be
  imposed upon us as an entity, cash available for distribution to our unitholders
  would be substantially reduced.  Treatment of us as a corporation
  would result in a material reduction in the anticipated cash flow and after-tax
  return to unitholders and thus would likely result in a substantial reduction in
  the value of our common units.
  Other
  Effects
  The
  Bankruptcy Filings have had and may in the future continue to have a number of
  other impacts on our business and management.  In the Amended Omnibus
  Agreement and other agreements with the Private Company, the Private Company has
  agreed to indemnify us for certain environmental and other claims relating to
  the crude oil and liquid asphalt cement assets that have been contributed to
  us.  Due to the Bankruptcy Filings, we may not be able to collect any
  amounts that would otherwise be payable under these indemnification provisions
  if such events were to occur.  Pursuant to the Settlement Agreement, the
  Private Company will reject the Amended Omnibus Agreement including the
  indemnification provisions therein.
  We are
  currently pursuing various strategic alternatives for our business and assets
  including the possibility of entering into additional storage contracts with
  third party customers and the sale of all or a portion of our
  assets.  The uncertainty relating to the Bankruptcy Filings and
  the recent global market and economic conditions may make it more difficult to
  pursue merger opportunities or enter into storage contracts with third party
  customers.
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  Table of Contents
  In
  addition, events related to the Bankruptcy Filings, the securities litigation
  and governmental investigations, and our efforts to enter into storage contracts
  with third party customers and pursue merger opportunities has resulted in
  increased expense beginning in the third quarter of 2008 due to the costs
  related to legal and financial advisors as well as other related
  costs.  General and administrative expenses (exclusive of noncash
  compensation expense related to the vesting of the units under the Plan)
  increased by approximately $6.6 million and $7.4 million, or approximately 287%
  and 322%, to approximately $8.9 million for the third quarter of 2008 and $9.7
  million for the fourth quarter of 2008, respectively, compared to $2.3 million
  in the second quarter of 2008.  We expect this increased level of
  general and administrative expenses to continue into 2009.
  Items
  Impacting the Comparability of Our Financial Results
  ·
  There
        are differences in the way our predecessor recorded revenues and the way
        we record revenues.
  o
  A
        substantial portion of our revenues are derived from services provided to
        the crude oil purchasing, marketing and distribution operations of the
        Private Company pursuant to the Throughput Agreement. Under the Throughput
        Agreement, the Private Company pays us a fee for gathering,
        transportation, terminalling and storage services based on volume and
        throughput. In rendering these services, we do not take title to, or
        marketing responsibility for, the crude oil that we gather, transport,
        terminal or store and, therefore, we have minimal direct exposure to
        changes in crude oil prices.
  o
  The
        Crude Oil Business had historically been a part of the integrated
        operations of the Private Company, and neither the Private Company nor our
        predecessor recorded revenue associated with the gathering,
        transportation, terminalling and storage services provided on an
        intercompany basis. The Private Company and our predecessor recognized
        only the costs associated with providing such services. As such, the
        revenues we receive under the Throughput Agreement are not reflected in
        the historical financial statements of our
    predecessor.
  o
  Our
        predecessor recognized revenues from third parties for (1) crude oil
        storage services, (2) crude oil transportation services and
        (3) crude oil producer field services. Although a substantial
        majority of our revenues are derived from services provided to the Private
        Company, we also recognize revenue for gathering, transportation,
        terminalling and storage services provided to third
      parties.
  ·
  There
        are differences in the way general and administrative expenses were
        allocated to our predecessor and the way we recognize general and
        administrative expenses.
  o
  General
        and administrative expenses include office personnel and benefit expenses,
        costs related to our administration facilities, and insurance, accounting
        and legal expenses, including costs allocated by the Private Company for
        centralized general and administrative services performed by the Private
        Company. Such costs were allocated to our predecessor based on the nature
        of the respective expenses and its proportionate share of the Private
        Company's head count, compensation expense, net revenues or square footage
        as appropriate.
  o
  We
        are party to an Omnibus Agreement with the Private Company.  The
        Omnibus Agreement was amended in connection with the purchase of the
        Acquired Asphalt Assets to, among other things, increase the fixed
        administrative fee payable under such agreement from $5.0 million per year
        to $7.0 million per year. Pursuant to the Amended Omnibus Agreement, we
        are required to pay our general partner and the Private Company this fixed
        administrative fee for the provision by our general partner and the
        Private Company of various general and administrative services to us for
        three years following the acquisition of our asphalt
        assets.  Due to the Change of Control, the Private Company is no
        longer obligated to operate our assets or perform other administrative
        services pursuant to the Amended Omnibus Agreement.  While the
        Private Company has continued to provide such services as of the date of
        the filing of this report, there can be no assurance that it will continue
        to provide such services to us or that we could replace any of these
        services if the Private Company stops providing them.
  Pursuant
        to the Settlement Agreement, the Private Company will reject the Amended
        Omnibus Agreement as part of the Bankruptcy Cases and we will enter into a
        shared services agreement with the Private Company pursuant to which the
        Private Company will provide certain operational services for
        us.  There can be no assurance
  that
        the conditions to effectiveness in the Settlement Agreement will be
        completed and that the transactions contemplated thereby will be
        consummated
  (see "Item 2. Management's Discussion and Analysis of
        Financial Condition and Results of Operations—Settlement with the Private
        Company").  In addition, if the terms of this shared services
        agreement are not as favorable as the terms under the Amended Omnibus
        Agreement,
  it
        could have a material adverse effect on our business, financial condition,
        results of operations, cash flows, ability to make distributions to our
        unitholders, the trading price of our common units and our ability to
        conduct our business
  .
  For a more complete description
        of the Omnibus Agreement, see "Item 13—Certain Relationships and Related
        Party Transactions, and Director Independence—Agreements Related to Our
        Acquisition of the Asphalt Assets —Amended Omnibus Agreement" in our 2007
        Form 10-K.
  o
  We
        incur incremental general and administrative expenses as a result of being
        a publicly traded limited partnership, including costs associated with
        annual and quarterly reports to unitholders, financial statement audit,
        tax return and Schedule K-1 preparation and distribution, investor
        relations activities, registrar and transfer agent fees, incremental
        director and officer liability insurance costs and independent director
        compensation. These incremental general and administrative expenditures
        are not reflected in the historical financial statements of our
        predecessor.
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  Table of Contents
  ·
  With
        the exception of capital lease obligations and prepaid insurance, no
        working capital was contributed to us in connection with our initial
        public offering.
  ·
  Our
        predecessor had $31.2 million in debt payable to the Private Company which
        was not assumed by us in our initial public offering. We entered into a
        $250.0 million five-year credit facility and borrowed $137.5 million under
        that facility and used net proceeds of approximately $38.7 million from
        the issuance of 1,875,000 common units pursuant to the underwriters'
        exercise of their over-allotment option in our initial public offering to
        reduce outstanding borrowings under our credit facility.  In
        connection with the purchase of our Acquired Asphalt Assets, we amended
        our credit facility to increase our borrowing capacity to $600.0
        million.  This borrowing capacity has subsequently been reduced
        as described in "—Liquidity and Capital Resources."  Our credit
        facility matures in July 2012.  As of March 13, 2008, we
        had $448.1 million in outstanding borrowings under our credit facility
        (including $198.1 million under our revolving credit facility and $250.0
        million under our term loan facility) with an aggregate unused credit
        availability of approximately $21.9 million under the credit
        facility.  Events of default have occurred and are continuing
        under our credit agreement, which prohibit our ability to borrow under the
        credit facility.  Please see "—Liquidity and Capital
        Resources."
  Results
  of Operations
  The table
  below summarizes the financial results of the Partnership for the three and six
  months ended June 30, 2007 and 2008.  These financial results reflect
  an allowance for doubtful accounts of $0.9 million related to amounts
  collectible from the Private Company as of June 30, 2008, which are considered
  prepetition debt in the Bankruptcy Filings.
  These financial results
  also reflect a $0.4 million allowance for doubtful accounts related to amounts
  collectible from third parties as of June 30, 2008.  The allowance
  related to amounts collectible from third parties was established as a result of
  certain third party customers netting amounts due them from the Private Company
  with amounts due to us.  Other than the allowance for doubtful
  accounts described above, the results of operations for the three and six months
  ended June 30, 2008 included in this quarterly report were not affected by the
  Bankruptcy Filings and related events.
  Due to
  the events related to the Bankruptcy Filings, including uncertainties related to
  future revenues and cash flows, we do not expect our financial results for the
  three and six months ended June 30, 2008 to be indicative of our future
  financial results.  For example, since the Bankruptcy Filings we have
  experienced increased general and administrative expenses related to the costs
  of legal and financial advisors and increased interest expense related to the
  events of default under our credit facility and the associated Forbearance
  Agreement (as defined below) and amendments thereto.  In
  addition, the volumes being terminalled, stored, transported and gathered have
  decreased as compared to periods prior to the Bankruptcy Filings, which has
  negatively impacted total revenues.  As an example, fourth quarter total
  revenues are approximately $9.2 million less than second quarter 2008
  total revenues, in each case excluding fuel surcharge revenues related to fuel
  and power consumed to operate our liquid asphalt cement storage tanks.  As
  of the date of the filing of this report, we continue to collect the minimum
  revenues from the Private Company under the Terminalling Agreement for
  terminalling and storage services provided for liquid asphalt
  cement.  Our future total revenues may be further impacted if the
  Private Company rejects the Terminalling Agreement or otherwise fails to make
  the minimum payments under the Terminalling Agreement.
  Pursuant
  to the Settlement Agreement, the Private Company will reject the Terminalling
  Agreement and the Throughput Agreement as part of the Bankruptcy Cases and we
  will receive the Private Company's asphalt assets that are connected to our
  asphalt assets.  In addition, pursuant to the Settlement Agreement, we
  will enter into a new throughput agreement with the Private Company pursuant to
  which we will provide certain crude oil gathering, transportation, terminalling
  and storage services to the Private Company.  There can be no
  assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see "Item
  2. Management's Discussion and Analysis of Financial Condition and Results of
  Operations—Settlement with the Private Company").
  44
  Table of Contents
  Three
        Months ended June 30,
  Six
        Months ended June 30,
  2007
  2008
  2007
  2008
  (in
        thousands)
  Service
        revenues:
  Terminalling
        and storage revenues:
  Third
        party
  $
  4,409
  $
  982
  $
  7,145
  $
  1,013
  Related
        party
  -
  30,299
  -
  47,879
  Total
        terminalling and storage
  4,409
  31,281
  7,145
  48,892
  Gathering
        and transportation revenues:
  Third
        party
  6,055
  5,045
  11,830
  9,638
  Related
        party
  -
  18,950
  123
  36,960
  Total
        gathering and transportation
  6,055
  23,995
  11,953
  46,598
  Total
        revenues
  10,464
  55,276
  19,098
  95,490
  Operating
        expenses:
  Terminalling
        and storage
  1,197
  12,088
  2,330
  17,096
  Gathering
        and transportation
  16,844
  17,417
  31,828
  34,675
  Allowance
        for doubtful accounts
  -
  1,266
  -
  1,266
  Total
        operating expenses
  18,041
  30,771
  34,158
  53,037
  General
        and administrative expenses:
  4,118
  3,057
  8,490
  6,067
  Operating
        income (loss)
  (11,695
  )
  21,448
  (23,550
  )
  36,386
  Interest
        (income) expense
  516
  (225
  )
  945
  4,864
  Income
        tax expense
  -
  77
  -
  168
  Net
        income (loss)
  $
  (12,211
  )
  $
  21,596
  $
  (24,495
  )
  $
  31,354
  Three
  Months Ended June 30, 2008 Compared to the Three Months Ended June 30,
  2007
  Service revenues.
  Service
  revenues were $55.3 million for the three months ended June 30, 2008 compared to
  $10.5 million for the three months ended June 30, 2007, an increase of $44.8
  million, or 427%. Service revenues include revenues from terminalling and
  storage services and gathering and transportation services. Terminalling and
  storage revenues increased by $26.9 million to $31.3 million for the three
  months ended June 30, 2008 compared to $4.4 million for the three months ended
  June 30, 2007, primarily due to revenues generated under both the Throughput
  Agreement (revenues of $9.9 million for the three months ended June 30, 2008)
  and the Terminalling Agreement (revenues of $20.4 million for the three months
  ended June 30, 2008) which were not present in the three months ended June 30,
  2007. Our predecessor historically did not account for these services which were
  provided on an intercompany basis.
  Our
  gathering and transportation services revenue increased by $17.9 million to
  $24.0 million for the three months ended June 30, 2008 compared to $6.1 million
  for the three months ended June 30, 2007. This increase is primarily due to
  revenues generated under the Throughput Agreement subsequent to the closing of
  our initial public offering. Our predecessor historically did not account for
  these services which were provided on an intercompany basis.
  Operating expenses
  . 
  Operating expenses increased by $12.9 million, or 72%, to $30.9 million for the
  three months ended June 30, 2008 compared to $18.0 million for the three months
  ended June 30, 2007. Our fuel expenses increased by $5.5 million to $8.4 million
  for the three months ended June 30, 2008 compared to $2.9 million for the three
  months ended June 30, 2007. The increase in our fuel costs is attributable to
  the increase in number of transport trucks we operated for the respective
  periods and the rising price of diesel fuel during the comparative
  periods.   The Throughput Agreement provides for a fuel
  surcharge, recorded in revenue, which offsets increases in fuel expenses related
  to either rising diesel prices or force majeure events.  Also included
  in fuel expense for the three months ended June 30, 2008 is $4.9 million of fuel
  and power expense associated with the boiler systems utilized to heat our liquid
  asphalt cement storage tanks that were acquired in February
  2008.  Under the Terminalling Agreement, this component of fuel
  expense is passed through to the Private Company.  As a result of this
  agreement, we have recorded $4.9 million in fuel surcharge revenues in relation
  to fuel and power consumed to operate our liquid asphalt cement storage tanks
  for the three months ended June 30, 2008.
  45
  Table of Contents
  Compensation
  expense increased by $1.5 million to $7.4 million for the three months ended
  June 30, 2008 primarily as a result of the purchase of our Acquired Asphalt
  Assets in February 2008.  Our repair and maintenance expenses
  decreased by $0.8 million to $1.9 million for the three months ended June 30,
  2008 compared to $2.7 million for the three months ended June 30, 2007,
  primarily due to the timing of routine maintenance in our gathering and
  transportation segment. Lease expense related to crude oil tanker trucks
  increased by $0.3 million to $0.7 million for the three months ended June 30,
  2008. This increase is attributable to the replacement of crude oil transport
  vehicles that were historically financed through capital leases.  As a
  result of the growth in our property and equipment, our property taxes increased
  by $0.7 million to $0.9 million for the three months ended June 30, 2008
  compared to $0.2 million for the three months ended June 30, 2007.
  Depreciation
  expense increased by $3.6 million to $5.7 million for the three months ended
  June 30, 2008 compared to $2.1 million for the three months ended June 30, 2007,
  primarily as a result of capital expenditures in our terminalling and storage
  segment and as a result of the purchase of our Acquired Asphalt Assets in
  February 2008.
  The three
  months ended June 30, 2008 include an allowance for doubtful accounts for
  amounts due from the Private Company on June 30, 2008 of $0.9 million, which are
  considered prepetition debt in the Bankruptcy Cases.  These amounts
  have been reserved due to the uncertainty of collecting prepetition amounts from
  the Private Company in the Bankruptcy Filings.  The three months ended
  June 30, 2008 also reflect a $0.4 million allowance for doubtful accounts
  related to amounts due from third parties as of June 30, 2008.  The
  allowance related to amounts due from third parties was established as a result
  of certain third party customers netting amounts due them from the Private
  Company with amounts due to us.
  Outside
  services expenses increased by $0.7 million to $1.3 million for the three months
  ended June 30, 2008 compared to $0.6 million for the three months ended June 30,
  2007, primarily due to an increase in third party transportation costs resulting
  from increased volumes gathered in our gathering and transportation
  segment.
  Included
  in operating expenses for the three months ended June 30, 2007 are $0.5 million
  in costs associated with the clean up of a crude oil leak in relation to a
  thirty-five mile pipeline located in Conroe, Texas.  This gathering
  line was sold by the Private Company on April 30, 2007, and the Private Company
  assumed any future obligations associated with the aforementioned
  leak.  As of June 30, 2008 the clean up process was
  complete.
  General and administrative
  expenses
  . General and administrative expenses decreased by $1.0
  million, or 24%, to $3.1 million for the three months ended June 30, 2008
  compared to $4.1 million for the three months ended June 30, 2007. The decrease
  was primarily the result of entering into the Omnibus Agreement with the Private
  Company in July 2007, pursuant to which we pay a fixed monthly fee of $0.4
  million for general and administrative support services provided by the Private
  Company. The Omnibus Agreement was amended in February 2008 in connection with
  the purchase of our Acquired Asphalt Assets which increased our fixed monthly
  fee to $0.6 million.  Also included in general and administrative
  expenses for the three months ended June 30, 2008 is $0.7 million in non-cash,
  equity-based compensation recognized under our long-term incentive plan. The
  long-term incentive plan did not exist during the three months ended June 30,
  2007.  Due to the change of control of our general partner related to
  the Private Company's liquidity issues, all awards outstanding under our
  long-term incentive plan as of June 30, 2008 vested on July 18, 2008.  As a
  result, general and administrative expenses for the three months ended September
  30, 2008 will include $18.0 million in non-cash, equity-based compensation
  recognized under our long-term incentive plan.  General and administrative
  expenses (exclusive of noncash compensation expense related to the vesting of
  the units under the Plan) increased by approximately $6.6 million and $7.4
  million, or approximately 287% and 322%, to approximately $8.9 million for the
  third quarter of 2008 and $9.7 million for the fourth quarter of 2008,
  respectively, compared to $2.3 million in the second quarter of
  2008.  We expect this increased level of general and administrative
  expenses to continue into 2009.
  Interest (income)
  expense
  .  Interest (income) expense represents interest on capital
  lease obligations and long-term borrowings under our credit facility offset by
  the fair value of our interest rate swap agreements. Interest expense decreased
  by $0.7 million to $0.2 million interest income for the three months ended June
  30, 2008 compared to $0.5 million interest expense for the three months ended
  June 30, 2007. The decrease was primarily due to the two interest rate swap
  agreements entered into during the third quarter of 2007 and the three
  additional interest rate swap agreements entered into in February 2008, the fair
  value accounting resulted in $4.9 million in interest income for the three
  months ended June 30, 2008.  Due to events related to the Bankruptcy
  Filings, all of these interest rate swap positions were terminated in the
  third quarter of 2008, and we have recorded a $1.5 million liability as of
  September 30, 2008 with respect to these positions.  This decrease was
  offset due to an increase in the average long-term borrowings outstanding during
  the three months ended June 30, 2008 compared to the three months ended June 30,
  2007, which accounted for approximately $4.0 million of an increase in interest
  expense, and is a reflection of borrowings under our credit
  facility.
  46
  Table of Contents
  Six
  Months Ended June 30, 2008 Compared to the Six Months Ended June 30,
  2007
  Service revenues.
  Service revenues were $95.5 million for the six months ended
  June 30, 2008 compared to $19.1 million for the six months ended
  June 30, 2007, an increase of $76.4 million, or 400%. Service revenues
  include revenues from terminalling and storage services and gathering and
  transportation services. Terminalling and storage revenues increased by $41.8
  million to $48.9 million for the six months ended June 30, 2008 compared to
  $7.1 million for the six months ended June 30, 2007, primarily due to
  revenues generated under both the Throughput Agreement (revenues of $19.8
  million for the six months ended June 30, 2008) and the Terminalling Agreement
  (revenues of $28.1 million for the six months ended June 30, 2008) which were
  not present in the six months ended June 30, 2007. Our predecessor historically
  did not account for these services which were provided on an intercompany
  basis.
  Our
  gathering and transportation services revenue increased by $34.6 million to
  $46.6 million for the six months ended June 30, 2008 compared to $12.0 million
  for the six months ended June 30, 2007. This increase is primarily due to
  revenues generated under the Throughput Agreement subsequent to the closing of
  our initial public offering. Our predecessor historically did not account for
  these services which were provided on an intercompany basis.
  Operating expenses
  . 
  Operating expenses increased by $18.9 million, or 55%, to $53.1 million for the
  six months ended June 30, 2008 compared to $34.2 million for the six months
  ended June 30, 2007. Our fuel expenses increased by $7.6 million to $12.5
  million for the six months ended June 30, 2008 compared to $4.9 million for the
  six months ended June 30, 2007. The increase in our fuel costs is attributable
  to the increase in number of transport trucks we operated for the respective
  periods and the rising price of diesel fuel during the comparative
  periods.   The Throughput Agreement provides for a fuel
  surcharge, recorded in revenue, which offsets increases in fuel expenses related
  to either rising diesel prices or force majeure events.  Also included
  in fuel expense for the six months ended June 30, 2008 is $6.1 million of fuel
  and power expense associated with the boiler systems utilized to heat our liquid
  asphalt cement storage tanks that were acquired in February
  2008.  Under the Terminalling Agreement, this component of fuel
  expense is passed through to the Private Company.  As a result of this
  agreement, we have recorded $6.1 million in fuel surcharge revenues in relation
  to fuel and power consumed to operate our liquid asphalt cement storage tanks
  for the six months ended June 30, 2008.
  Compensation
  expense increased by $2.9 million to $14.3 million for the six months ended June
  30, 2008 primarily as a result of the purchase of our Acquired Asphalt Assets in
  February 2008.  Our repair and maintenance expenses decreased by $0.7
  million to $3.8 million for the six months ended June 30, 2008 compared to $4.5
  million for the six months ended June 30, 2007, primarily due to the timing of
  routine maintenance in our gathering and transportation segment. Lease expense
  related to crude oil tanker trucks increased by $0.6 million to $1.2 million for
  the six months ended June 30, 2008. This increase is attributable to the
  replacement of crude oil transport vehicles that were historically financed
  through capital leases.  As a result of the growth in our property and
  equipment, our property taxes increased by $1.0 million to $1.4 million for the
  six months ended June 30, 2008 compared to $0.4 million for the six months ended
  June 30, 2007.
  Depreciation
  expense increased by $5.4 million to $9.6 million for the six months ended June
  30, 2008 compared to $4.2 million for the six months ended June 30, 2007,
  primarily as a result of capital expenditures in our terminalling and storage
  segment and as a result of the purchase of our Acquired Asphalt Assets in
  February 2008.
  The six
  months ended June 30, 2008 include an allowance for doubtful accounts for
  amounts due from the Private Company on June 30, 2008 of $0.9 million, which are
  considered prepetition debt in the Bankruptcy Filings.  These amounts
  have been reserved due to the uncertainty of collecting prepetition amounts from
  the Private Company in the Bankruptcy Filings.  The six months ended
  June 30, 2008 also reflect a $0.4 million allowance for doubtful accounts
  related to amounts due from third parties as of June 30, 2008.  The
  allowance related to amounts due from third parties was established as a result
  of certain third party customers netting amounts due them from the Private
  Company with amounts due to us.
  Outside
  services expenses increased by $1.4 million to $2.4 million for the six months
  ended June 30, 2008 compared to $1.0 million for the six months ended June 30,
  2007, primarily due to an increase in third party transportation costs resulting
  from increased volumes gathered in our gathering and transportation
  segment.  In addition, our utilities expenses increased by $0.4
  million to $1.3 million for the six months ended June 30, 2008 compared to $0.9
  million for the six months ended June 30, 2007, primarily due to growth in our
  gathering and transportation segment.
  47
  Table of Contents
  Included
  in operating expenses for the six months ended June 30, 2007 are $1.6 million in
  costs associated with the clean up of a crude oil leak in relation to a
  thirty-five mile pipeline located in Conroe, Texas.  This gathering
  line was sold by the Private Company on April 30, 2007, and the Private Company
  assumed any future obligations associated with the aforementioned
  leak.  As of June 30, 2008 the clean up process was
  complete.
  General and administrative
  expenses
  . General and administrative expenses decreased by $2.4
  million, or 28%, to $6.1 million for the six months ended June 30, 2008
  compared to $8.5 million for the six months ended June 30, 2007. The
  decrease was primarily the result of entering into the Omnibus Agreement with
  the Private Company in July 2007, pursuant to which we pay a fixed monthly fee
  of $0.4 million for general and administrative support services provided by the
  Private Company. The Omnibus Agreement was amended in February 2008 in
  connection with the purchase of our Acquired Asphalt Assets which increased our
  fixed monthly fee to $0.6 million.  Also included in general and
  administrative expenses for the six months ended June 30, 2008 is $1.4 million
  in non-cash, equity-based compensation recognized under our long-term incentive
  plan. The long-term incentive plan did not exist during the six months ended
  June 30, 2007.  Due to the change of control of our general partner
  related to the Private Company's liquidity issues, all awards outstanding under
  our long-term incentive plan as of June 30, 2008 vested on July 18, 2008. 
  As a result, general and administrative expenses for the three months ended
  September 30, 2008 will include $18.0 million in non-cash, equity-based
  compensation recognized under our long-term incentive plan.  General and
  administrative expenses (exclusive of noncash compensation expense related to
  the vesting of the units under the Plan) increased by approximately $6.6 million
  and $7.4 million, or approximately 287% and 322%, to approximately $8.9 million
  for the third quarter of 2008 and $9.7 million for the fourth quarter of 2008,
  respectively, compared to $2.3 million in the second quarter of
  2008.  We expect this increased level of general and administrative
  expenses to continue into 2009.
  Interest (income)
  expense
  .  Interest (income) expense represents interest on capital
  lease obligations and long-term borrowings under our credit facility offset by
  the fair value of our interest rate swap agreements.  Interest expense
  increased by $4.0 million to $4.9 million for the six months ended June 30, 2008
  compared to $0.9 million for the six months ended June 30, 2007. The increase
  was primarily due to an increase in the average long-term borrowings outstanding
  during the six months ended June 30, 2008 compared to the six months ended June
  30, 2007, which accounted for approximately $6.5 million of an increase in
  interest expense, and is a reflection of borrowings under our new credit
  facility.  This was offset by the two interest rate swap agreements
  entered into during the third quarter of 2007 and the three additional interest
  rate swap agreements entered into in February 2008, the fair value accounting
  resulted in $2.7 million in interest income for the six months ended June 30,
  2008.  Due to events related to the Bankruptcy Filings, all of these
  interest rate swap positions were terminated in the third quarter of 2008,
  and we have recorded a $1.5 million liability as of September 30, 2008 with
  respect to these positions.
  Effects
  of Inflation
  In recent
  years, inflation has been modest and has not had a material impact upon the
  results of the Partnership's operations.
  48
  Table of Contents
  Off
  Balance Sheet Arrangements
  We do not
  have any off-balance sheet financing arrangements.
  Liquidity
  and Capital Resources
  Cash
  Flows and Capital Expenditures
  Cash
  generated from operations and borrowings under our credit facility have
  historically been the primary sources of our liquidity. As discussed below,
  events of default have occurred and continue to exist under our credit agreement
  and we therefore cannot borrow under our credit facility or make distributions
  to our unitholders.  Due to the events related to the Bankruptcy
  Filings, including uncertainties related to future revenues and cash flows as
  well as the inability to borrow under our credit facility or make distributions
  to our unitholders, we do not expect our historical cash flows to be indicative
  of our future financial cash flows.  We are operating on cash flows
  received from operations and from a $25 million borrowing under our credit
  facility on July 8, 2008 prior to the occurrence of the events of
  default.  If we are unable to sustain our sources of revenue
  generation and reestablish our relationships within the credit markets, this
  cash position will not be sufficient to operate our business over the
  long-term.  As of March 13, 2009, we have approximately $33.9 million
  of cash that we are using to operate our business.
  Historically,
  our predecessor's sources of liquidity included cash generated from operations
  and funding from the Private Company.  The following table summarizes
  our sources and uses of cash for the six months ended June 30, 2007 and
  2008:
  Six
        Months Ended
  June
        30,
  2007
  2008
  (in
        thousands)
  Net
        cash provided by (used in) operating activities
  (21.9
  )
  51.0
  Net
        cash used in investing activities
  (14.9
  )
  (517.8
  )
  Net
        cash provided by financing activities
  36.8
  467.1
  Operating
  Activities
  . Net cash provided by operating activities was $51.0
  million for the six months ended June 30, 2008 as compared to the $21.9 million
  used in operating activities for the six months ended June 30,
  2007.  The increase in net cash provided by operating activities is
  primarily due to a $55.8 million increase in our net income for the six months
  ended June 30, 2008 compared to the six months ended June 30,
  2007.  In addition, cash provided by our operating activities
  increased due to a $5.4 million increase in depreciation and amortization, a
  $1.3 million increase in bad debt expense, and an increase of $11.8 million in
  cash provided by changes in working capital.  The increase was
  slightly offset by the change in our unrealized gain related to interest rate
  swap agreements of $2.7 million.
  Investing
  Activities
  . Net cash used in investing activities was $517.8 million
  for the six months ended June 30, 2008 compared to $14.9 million for the six
  months ended June 30, 2007. This increase is primarily attributable to the
  purchase of our Acquired Asphalt Assets in February 2008 for approximately $380
  million, our purchase of our Acquired Storage Assets in May 2008 for
  approximately $90 million, and our purchase of our Acquired Pipeline Assets in
  May 2008 for approximately $45 million.  The increase due to the above
  mentioned purchases were offset by a reduction in capital expenditures primarily
  resulting from the timing of construction projects in our terminalling and
  storage segment.
  Financing
  Activities
  . Net cash provided by financing activities was $467.1
  million for the six months ended June 30, 2008 as compared to $36.8 million for
  the six months ended June 30, 2007.  Net cash provided by financing
  activities for the six months ended June 30, 2008 is primarily comprised of net
  borrowings under our credit facility of $332.3 million and proceeds from the
  February 2008 public offering, net of offering fees, of $161.2 million, and is
  offset by distributions paid of $23.7 million for the six months ended June 30,
  2008.  Prior to our initial public offering our net cash provided by
  financing activities primarily comprised of capital contributions received from
  the Private Company.  The capital contributions served to fund our
  working capital needs and both maintenance and expansion capital expenditure
  projects that are reflected in net cash used in investing activities for the six
  months ended June 30, 2007.
  49
  Table of Contents
  Our
  Liquidity and Capital Resources
  Cash flow
  from operations and our credit facility are our primary sources of liquidity. At
  June 30, 2008, we had approximately $178.1 million of availability under our
  revolving credit facility.  This availability has been reduced to
  approximately $21.9 million as of the date of filing this report due to the
  existence of events of default under the credit agreement and entering into the
  associated Forbearance Agreement (as defined below).  Usage of our
  revolving credit facility is subject to ongoing compliance with covenants.
  Events of default have occurred and are continuing under our credit agreement,
  which prohibit us from borrowing under the credit facility to fund working
  capital needs or to pay distributions to our unitholders, among other
  things.  As a result, we are operating on cash flows received from
  operations and from a $25 million borrowing under our credit facility on July 8,
  2008 prior to the occurrence of the events of default. If we are unable to
  sustain our sources of revenue generation and reestablish our relationships
  within the credit markets, this cash position will not be sufficient to operate
  our business over the long-term.  As of March 13, 2009, we have
  approximately $33.9 million of cash that we are using to operate our
  business.   Historically, we have derived a substantial majority
  of our revenues from services provided to the Private Company, and as such, our
  liquidity was affected by the liquidity and credit risk of the Private
  Company.  The Bankruptcy Filings have had a significant impact upon
  our liquidity and financing alternatives and the events and uncertainties
  related to the Bankruptcy Filings as described herein provide for substantial
  doubt about our ability to continue as a going concern.
  Capital Requirements
  . Our
  operations are capital intensive, requiring significant investment to maintain
  and upgrade existing operations. Our capital requirements consist of the
  following:
  ·
  maintenance
        capital expenditures, which are capital expenditures made to maintain the
        existing integrity and operating capacity of our assets and related cash
        flows further extending the useful lives of the assets;
    and
  ·
  expansion
        capital expenditures, which are capital expenditures made to expand or to
        replace partially or fully depreciated assets or to expand the operating
        capacity or revenue of existing or new assets, whether through
        construction, acquisition or
  modification.
  No
  assurance can be given that we will not be required to restrict our operations
  because of possible limitations on our ability to obtain financing for our
  maintenance capital expenditures and our expansion capital expenditures due to
  the existing events of default under our credit agreement and the uncertainty
  related to the Bankruptcy Filings.  For example, due to the Bankruptcy
  Filing discussed below, we have suspended capital expenditures related to
  Acquired Pipeline Assets and are evaluating future use of such
  pipeline.
  Our Ability to Grow Depends on Our
  Ability to Access External Expansion Capital
  . Our partnership agreement
  provides that we distribute all of our available cash to our unitholders.
  Available cash is reduced by cash reserves established by our general partner to
  provide for the proper conduct of our business (including for future capital
  expenditures) and to comply with the provisions of our credit facility. However,
  we expect that we will continue to rely primarily upon external financing
  sources, including commercial bank borrowings and the issuance of debt and
  equity securities, rather than cash reserves established by our general partner,
  to fund our acquisitions and expansion capital expenditures that we may make in
  the future.  We do not expect to make acquisitions or expansion
  capital expenditures while events of default exist under the credit
  agreement.  To the extent we are unable to finance growth externally
  and we are unwilling to establish cash reserves to fund future acquisitions, our
  cash distribution policy will significantly impair our ability to grow. In
  addition, because we distribute all of our available cash, we may not grow as
  quickly as businesses that reinvest their available cash to expand ongoing
  operations.  Due to the current events of default that exist under the
  credit agreement, we are prohibited from making distributions of available cash
  to our unitholders and will continue to be prohibited from making any such
  distributions as long as any such events of default exist.  To the
  extent we issue additional units in connection with any acquisitions or
  expansion capital expenditures, the payment of distributions on those additional
  units may increase the risk that we will be unable to maintain or increase our
  per unit distribution level, which in turn may impact the available cash that we
  have to distribute on each unit. There are no limitations in our partnership
  agreement on our ability to issue additional units, including units ranking
  senior to the common units.
  50
  Table of Contents
  Description of Credit
  Facility
  . In July 2007 we entered into a $250.0 million five-year
  credit facility with a syndicate of financial institutions. In connection with
  our acquisition of our asphalt assets, we amended this credit facility to
  increase the total amount we may borrow to $600.0 million. Our amended credit
  facility includes a revolving credit facility and a term loan facility and will
  mature on July 20, 2012.
  The
  credit facility is available for general partnership purposes, including working
  capital, capital expenditures, distributions and repayment of indebtedness that
  is assumed in connection with acquisitions.  Events of default have
  occurred and are continuing under our credit agreement.  In addition,
  the Private Company's actions related to the Bankruptcy Filings as well as the
  Private Company's liquidity issues and any corresponding impact upon us may
  result in additional events of default under our credit agreement.  No
  cure periods are applicable to these existing events of
  default.  These events of default have not been waived and are
  continuing under our credit agreement.  Due to the existing events of
  default under our credit agreement, we are not able to borrow under its credit
  facility to fund working capital needs or for other purposes.
  Effective
  on September 18, 2008, we and the requisite lenders under our credit facility
  entered into a Forbearance Agreement and Amendment to Credit Agreement (the
  "Forbearance Agreement") under which the lenders agreed, subject to specified
  limitations and conditions, to forbear from exercising their rights and remedies
  arising from the events of default described above and other defaults or events
  of default described therein for the period commencing on September 18, 2008 and
  ending on the earliest of (i) December 11, 2008, (ii) the occurrence of any
  default or event of default under the credit agreement other than certain
  defaults and events of default indicated in the Forbearance Agreement, or
  (iii) our failure to comply with any of the terms of the Forbearance Agreement
  (the "Forbearance Period").  On December 11, 2008, the lenders agreed
  to extend the Forbearance Period until December 18, 2008 pursuant to a First
  Amendment to Forbearance Agreement and Amendment to Credit Agreement (the "First
  Amendment"), and on December 18, 2008, the lenders agreed to extend the
  Forbearance Period until March 18, 2009 pursuant to a Second Amendment to
  Forbearance Agreement and Amendment Credit Agreement (the "Second
  Amendment").
  On March 18,
  2009, we and the requisite lenders entered into the Third Amendment to
  Forbearance Agreement and Amendment to Credit Agreement (the "Third Amendment"),
  dated as of March 17, 2009.  The Third Amendment extends the
  Forbearance Period until the earliest of (i) April 8, 2009, (ii) the occurrence
  of any default or event of default under the credit agreement other than certain
  defaults and events of default indicated in the Forbearance Agreement, as
  amended by the First Amendment, the Second Amendment and the Third
  Amendment, or (iii) our failure to comply with any of the terms of the
  Forbearance Agreement, as amended by the First Amendment, the Second Amendment
  and the Third Amendment (the "Extended Forbearance Period").  We are
  working with our lenders to obtain a waiver of the events of default under our
  credit agreement in connection with the transactions related to the Settlement
  Agreement however, there can be no assurance that such a waiver will be
  obtained.
  Prior to
  the execution of the Forbearance Agreement, the credit agreement was comprised
  of a $350 million revolving credit facility and a $250 million term loan
  facility.  The Forbearance Agreement permanently reduced our revolving
  credit facility under the credit agreement from $350 million to $300 million and
  prohibited us from borrowing additional funds under our revolving credit
  facility during the Forbearance Period.   Under the Forbearance
  Agreement, we agreed to pay the lenders executing the Forbearance Agreement a
  fee equal to 0.25% of the aggregate commitments under the credit agreement after
  giving affect to the above described commitment reduction.  The Second
  Amendment further permanently reduced our revolving credit facility under the
  credit agreement from $300 million to $220 million.  The Third Amendment
  prohibits us from borrowing additional funds under our revolving credit facility
  during the Extended Forbearance Period.  In addition, under the Second
  Amendment, we agreed to pay the lenders executing the Second Amendment a fee
  equal to 0.375% of the aggregate commitments under the credit agreement after
  the above described commitment reduction.  As of March 13, 2009, we
  had $448.1 million in outstanding borrowings under our credit facility
  (including $198.1 million under its revolving credit facility and $250 million
  under its term loan facility) with an aggregate unused credit availability of
  approximately $21.9 million under our credit facility.  As described
  above, we are prohibited from borrowing additional funds under our credit
  agreement during the Extended Forbearance Period.
  51
  Table of Contents
  Prior to
  the events of default, indebtedness under the credit agreement bore interest at
  our option, at either (i) the higher of the administrative agent's prime
  rate or the federal funds rate plus 0.5%, plus an applicable margin that ranges
  from 0.50% to 1.75%, depending on our total leverage ratio and senior secured
  leverage ratio, or (ii) LIBOR plus an applicable margin that ranges from
  1.50% to 2.75%, depending upon our total leverage ratio and senior secured
  leverage ratio.  During the Forbearance Period indebtedness under the
  credit agreement bore interest at our option, at either (i) the
  administrative agent's prime rate or the federal funds rate plus 0.50%, plus an
  applicable margin that ranges from 2.75% to 3.75%, depending upon our total
  leverage ratio, or (ii) LIBOR plus an applicable margin that ranges from
  4.25% to 5.25%, depending upon our total leverage ratio.  Pursuant to
  the Second Amendment, commencing on December 12, 2008, indebtedness under the
  credit agreement bears interest at our option, at either (i) the
  administrative agent's prime rate or the federal funds rate plus 5.0% per annum,
  with a prime rate or federal funds rate floor of 4.0% per annum, or
  (ii) LIBOR plus 6.0% per annum, with a LIBOR floor of 3.0% per
  annum.  During the three months ended June 30, 2008, the weighted
  average interest rate incurred by us was 4.62% resulting in interest expense of
  approximately $4.3 million.  During the three months ended December
  31, 2008, the weighted average interest rate incurred by us was
  7.72
  %
  resulting in interest expense of approximately
  $8.9
  million.
  Under the
  Forbearance Agreement, as amended by the First Amendment, the Second Amendment,
  and the Third Amendment, the lender's forbearance is subject to certain
  conditions as described therein, including, among other items, periodic
  deliverables and minimum liquidity, minimum receipts and maximum disbursement
  requirements.
  Under the
  credit agreement, we are subject to certain limitations, including limitations
  on our ability to grant liens, incur additional indebtedness, engage in a
  merger, consolidation or dissolution, enter into transactions with affiliates,
  sell or otherwise dispose of our assets, businesses and operations, materially
  alter the character of its business, and make acquisitions, investments and
  capital expenditures. Under the terms of the Forbearance Agreement, as amended
  by the First Amendment, the Second Amendment, and the Third Amendment, and due
  to the current events of default that exist under the credit agreement, we are
  prohibited from making distributions of available cash to our unitholders and
  will continue to be prohibited from making any such distributions as long as any
  such events of default exist.  The credit agreement requires us to
  maintain a leverage ratio (the ratio of our consolidated funded indebtedness to
  our consolidated adjusted EBITDA, in each case as defined in the credit
  agreement), determined as of the last day of each
  quarter for the
  four-quarter period ending on the date of determination, of not more than 5.00
  to 1.00 and, on a temporary basis, from the date of the consummation of certain
  acquisitions until the last day of the third consecutive fiscal quarter
  following such acquisitions, not more than 5.50 to 1.00; provided, that after
  the issuance of senior unsecured notes, the leverage ratio limitation will be
  modified by a requirement that we maintain a senior secured leverage ratio of
  not more than 4.00 to 1.00 and a total leverage ratio of not more than 5.50 to
  1.00, subject to temporary increases of the senior secured leverage ratio to not
  more than 4.50 to 1.00 and the total leverage ratio of not more than 6.00 to
  1.00 following the consummation of certain acquisitions as described above. As
  of June 30, 2008 and December 31, 2008, our leverage ratio was 3.97 to 1.00
  and 4.82 to 1.00, respectively.
  The credit agreement also requires us
  to maintain an interest coverage ratio (the ratio of our consolidated EBITDA to
  our consolidated interest expense, in each case as defined in the credit
  agreement) of not less than 2.75 to 1.00 determined as of the last day of
  each
  quarter for the
  four-quarter period ending on the date of determination. As of June 30, 2008
  and December 31, 2008, our interest coverage ratio was
  6.49
  to 1.00 and 3.61 to 1.00,
  respectively.
  The
  credit agreement specifies a number of events of default (many of which are
  subject to applicable cure periods), including, among others, failure to pay any
  principal when due or any interest or fees within three business days of the due
  date, failure to perform or otherwise comply with the covenants in the credit
  agreement, failure of any representation or warranty to be true and correct in
  any material respect, failure to pay debt, a change of control of us, our
  general partner or the Private Company, and other customary
  defaults.  Because events of default exist under the credit agreement,
  the lenders are able to accelerate the maturity of the credit agreement and
  exercise other rights and remedies, including taking available cash in our bank
  accounts.  The lenders have agreed to forbear from exercising such
  rights during the Extended Forbearance Period subject to certain limitations and
  conditions contained in the Forbearance Agreement, as amended by the First
  Amendment, the Second Amendment, and the Third Amendment.  If we are
  unable to obtain further forbearance from our lenders or a permanent waiver of
  the events of default under our credit agreement, we may be forced to sell
  assets, make a bankruptcy filing or take other action that could have a material
  adverse effect on our business, the price of our common units and our results of
  operations.
  52
  Table of Contents
  Contractual
  Obligations
  . In addition to the credit facility described above, we
  entered into the Amended Omnibus Agreement with the Private Company pursuant to
  which the Private Company provided all employees and support services necessary
  to run our business. The services included, without limitation, operations,
  marketing, maintenance and repair, legal, accounting, treasury, insurance
  administration and claims processing, risk management, health, safety and
  environmental, information technology, human resources, credit, payroll,
  internal audit, taxes and engineering. Due to the Change of Control, the Private
  Company is no longer obligated to provide these services pursuant to the Amended
  Omnibus Agreement.  Pursuant to the Order entered by the Bankruptcy
  Court, the Private Company agreed to continue providing such services until
  November 30, 2008.   While the Private Company has continued to
  provide such services as of the date of the filing of this report, there can be
  no assurance that it will continue to provide such services to us or that we
  could replace any of these services if the Private Company stops providing
  them.
  Pursuant
  to the Settlement Agreement, the Private Company will reject the Amended Omnibus
  Agreement as part of the Bankruptcy Cases and we will enter into a shared
  services agreement with the Private Company pursuant to which the Private
  Company will provide certain operational services for us.  There can
  be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see "Item
  2. Management's Discussion and Analysis of Financial Condition and Results of
  Operations—Settlement with the Private Company").
  If the Private
  Company stops providing these services we may incur increased costs to replace
  these services and our financial results may suffer.  As of June 30,
  2008, the Private Company was still obligated to provide services to us under
  the Amended Omnibus Agreement and we were obligated to pay our general partner
  and the Private Company a fixed administrative fee, in the amount of $7.0
  million per year, for the provision by our general partner and the Private
  Company of various general and administrative services pursuant to the Amended
  Omnibus Agreement.  We are no longer obligated to pay this fee due to
  the termination of certain provisions of the Amended Omnibus Agreement in
  connection with the Change of Control.
  A summary
  of our contractual cash obligations over the next several fiscal years, as of
  June 30, 2008, was as follows:
  Payments
        Due by Period
  Contractual
        Obligations
  Total
  Less
        than 1 year
  1-3
        years
  4-5
        years
  More
        than 5 years
  (in
        millions)
  Omnibus
        Agreement obligations (1)
  $
  2.9
  $
  2.9
  $
  -
  $
  -
  $
  -
  Debt
        obligations (2)
  421.9
  421.9
  -
  -
  -
  Capital
        lease obligations
  1.7
  1.1
  0.6
  -
  -
  Operating
        lease obligations
  13.9
  3.9
  6.5
  3.2
  0.3
  (1)
  As
        of June 30, 2008, the Private Company was still obligated to provide
        services to us under the Amended Omnibus Agreement and we were obligated
        to pay our general partner and the Private Company a fixed administrative
        fee, in the amount of $7.0 million per year, for the provision by our
        general partner and the Private Company of various general and
        administrative services pursuant to the Amended Omnibus
        Agreement.  Due to the Change of Control, the Private Company is
        no longer obligated to operate our assets or perform other administrative
        services pursuant to the Amended Omnibus Agreement.  Pursuant to
        the Order entered by the Bankruptcy Court, the Private Company agreed to
        continue providing such services until November 30,
        2008.   While the Private Company has continued to provide
        such services as of the date of the filing of this report, there can be no
        assurance that it will continue to provide such services to us or that we
        could replace any of these services if the Private Company stops providing
        them. For a description of this agreement, see Note 8 of the Notes to
        the Consolidated Financial Statements included in Item 1 of this Quarterly
        Report.
  Pursuant
        to the Settlement Agreement, the Private Company will reject the Amended
        Omnibus Agreement as part of the Bankruptcy Cases and we will enter into a
        shared services agreement with the Private Company pursuant to which the
        Private Company will provide certain operational services for
        us.  There can be no assurance
  that
        the conditions to effectiveness in the Settlement Agreement will be
        completed and that the transactions contemplated thereby will be
        consummated
  (see "Item 2. Management's Discussion and Analysis of
        Financial Condition and Results of Operations—Settlement with the Private
        Company").
  (2)
  Represents
        required future principal repayments of borrowings under our credit
        facility, all of which is variable rate debt. All amounts outstanding
        under the credit facility mature in July 2012.  See Note 4 of
        the Notes to the Consolidated Financial Statements included in Item 1 of
        this Quarterly Report.  Events of default have occurred and are
        continuing under our credit agreement, which prohibit us from borrowing
        under the credit facility to fund working capital needs or to pay
        distributions to our unitholders, among other things.   The
        lenders under such facility may, among other remedies, declare all
        outstanding amounts under the credit agreement immediately due and payable
        and exercise all other rights and remedies available to the lenders under
        the credit agreement and related loan documents.  Due to these
        events of default and the corresponding rights of the lenders, the amount
        outstanding under the credit facility has been classified as a current
        obligation.
  53
  Table of Contents
  Recent
  Accounting Pronouncements
  For
  information regarding recent accounting developments that may affect our future
  financial statements, see Note 12 of the Notes to the Consolidated Financial
  Statements included in Item 1 of this Quarterly Report.
  Item 3.
  Quantitative
  and Qualitative Disclosures about Market
        Risk
  We are
  exposed to market risk due to variable interest rates under our credit
  facility.
  As of
  March 13, 2009 we had $448.1 million outstanding under our credit facility
  that was subject to a variable interest rate.  Interest rate swap
  agreements are used to manage a portion of the exposure related to changing
  interest rates by converting floating-rate debt to fixed-rate debt. In August
  2007, we entered into interest rate swap agreements with an aggregate notional
  value of $80.0 million that mature on August 20, 2010. Under the terms of
  the interest rate swap agreements, we will pay fixed rates of 4.9% and will
  receive three-month LIBOR with quarterly settlement. The fair market value of
  the August 2007 interest rate swaps at June 30, 2008 was a liability of $2.5
  million.  In March 2008, we entered into interest rate swap agreements
  with an aggregate notional value of $100.0 million that mature on March 31,
  2011.  Under the terms of the interest rate swap agreements, we will
  pay fixed rates of 2.6% to 2.7% and will receive three-month LIBOR with
  quarterly settlement.  The fair market value of the March 2008
  interest rate swaps at June 30, 2008 was a net asset of $3.0
  million.  The interest rate swaps do not receive hedge accounting
  treatment under SFAS 133. Changes in the fair value of the interest rate swaps
  are recorded in interest expense in the statements of operations.  In
  addition, the interest rate swap agreements contain cross-default provisions to
  events of default under the credit agreement. Due to events related to the
  Bankruptcy Filings, all of these interest rate swap positions
  were terminated in the third quarter of 2008, and we have recorded a $1.5
  million liability as of September 30, 2008 with respect to these
  positions.
  Prior to
  the events of default, indebtedness under the credit agreement bore interest at
  our option, at either (i) the higher of the administrative agent's prime
  rate or the federal funds rate plus 0.5%, plus an applicable margin that ranges
  from 0.50% to 1.75%, depending on our total leverage ratio and senior secured
  leverage ratio, or (ii) LIBOR plus an applicable margin that ranges from
  1.50% to 2.75%, depending upon our total leverage ratio and senior secured
  leverage ratio.  During the Forbearance Period indebtedness under the
  credit agreement bore interest at our option, at either (i) the
  administrative agent's prime rate or the federal funds rate plus 0.50%, plus an
  applicable margin that ranges from 2.75% to 3.75%, depending upon our total
  leverage ratio, or (ii) LIBOR plus an applicable margin that ranges from
  4.25% to 5.25%, depending upon our total leverage ratio.  Pursuant to
  the Second Amendment, commencing on December 12, 2008, indebtedness under the
  credit agreement bears interest at our option, at either (i) the
  administrative agent's prime rate or the federal funds rate plus 5.0% per annum,
  with a prime rate or federal funds rate floor of 4.0% per annum, or
  (ii) LIBOR plus 6.0% per annum, with a LIBOR floor of 3.0% per
  annum.  During the three months ended June 30, 2008, the weighted
  average interest rate incurred by us was 4.62% resulting in interest expense of
  approximately $4.3 million.  During the three months ended December
  31, 2008, the weighted average interest rate incurred by us was
  7.72%
  resulting in interest expense of approximately $
  8.9
  million
  . Due to the
  Forbearance Agreement and the Second Amendment, we expect our interest expense
  to continue to increase as compared to our interest expense prior to the
  Bankruptcy Filings.  Changes in economic conditions could result in
  higher interest rates, thereby increasing our interest expense and reducing our
  funds available for capital investment, operations or distributions to our
  unitholders. Additionally, if domestic interest rates continue to increase, the
  interest rates on any of our future credit facilities and debt offerings could
  be higher than current levels, causing our financing costs to increase
  accordingly. Based on current borrowings, an increase or decrease of 100 basis
  points in the interest rate will result in increased or decreased, respectively,
  annual interest expenses of $4.5 million.
  Item 4T.
  Controls
  and
  Procedures
  Evaluation of
  disclosure controls and procedures.
  Our general partner's management,
  including the Chief Executive Officer and Chief Financial Officer of our general
  partner, evaluated as of the end of the period covered by this report, the
  effectiveness of our disclosure controls and procedures as defined in
  Rule 13a-15(e) under the Securities Exchange Act of 1934. Based on
  that evaluation, the Chief Executive Officer and Chief Financial Officer of our
  general partner concluded that our disclosure controls and procedures, as of
  June 30, 2008, were effective.
  Changes in
  internal control over financial reporting.
  There were no changes in our internal control over financial reporting that
  occurred during the quarter ended June 30, 2008 that have materially affected,
  or are reasonably likely to materially affect, our internal control over
  financial reporting.  However, since the completion of the second quarter
  of 2008, the Private Company has made the Bankruptcy Filings, and a subcommittee
  of our Board conducted an internal review, both as discussed elsewhere in this
  report.  One of the findings by counsel for such subcommittee was that
  certain senior executive officers of the Partnership's general partner, who were
  also senior executive officers of the Private Company, showed at least some
  indifference to known or easily discoverable facts and had access to and
  reviewed financial information from which they could have developed an earlier
  understanding of the nature and significance of the trading activities that led
  to the Private Company's liquidity problems.  For a discussion of the
  internal review, please see "Item 2. Management's Discussion and Analysis of
  Financial Condition and Results of Operations − Impact of the Bankruptcy of the
  Private Company and Certain of its Subsidiaries and Related Events − Internal
  Review."
  After
  completion of the internal review, a plan was developed with the advice of the
  Audit Committee of the Board to further strengthen our processes and
  procedures.  This plan includes, among other things, reevaluating
  executive officers and accounting and finance personnel (including a realignment
  of officers as described elsewhere in this report) and hiring, as deemed
  necessary, additional accounting and finance personnel or consultants;
  reevaluating our internal audit function and determining whether to expand the
  duties and responsibilities of such group; evaluating the comprehensive training
  programs for all management personnel covering, among other things, compliance
  with controls and procedures, revising the reporting structure so that the Chief
  Financial Officer reports directly to the Audit Committee, and increasing the
  business and operational oversight role of the Audit Committee.
  Since the
  completion of the second quarter of 2008, the Private Company has made the
  Bankruptcy Filings discussed elsewhere in this report.  We and our
  general partner rely upon the Private Company for our personnel, including those
  related to designing and implementing internal controls and disclosure controls
  and procedures.  Staff reductions by the Private Company or other
  departures by the Private Company's employees that provide services to us could
  have a material adverse effect on internal controls and the effectiveness of
  disclosure controls and procedures.  Management is in the process of
  evaluating any such potential impact and is preparing a transition plan that may
  include, among other items, hiring additional personnel and the redesign and
  implementation of internal controls and disclosure controls and procedures as
  needed.
  Pursuant to the Amended
  Omnibus Agreement with the Private Company, the Private Company operated our
  assets and performed other administrative services for us such as accounting,
  legal, regulatory, development, finance, land and engineering.  Due to
  the Change of Control of our general partner, the Private Company is no longer
  obligated to operate our assets or perform other administrative services
  pursuant to the Amended Omnibus Agreement.  The Private Company agreed
  to continue providing such services until at least November 30, 2008 pursuant to
  the Order entered by the Bankruptcy Court.  While the Private
  Company has continued to provide such services as of the date of the filing
  of this report, there can be no assurance that it will continue to provide such
  services to us or that we could replace any of these services if the Private
  Company stops providing them.  If the Private Company stops providing
  these services we may incur increased costs to replace these services and our
  financial results may suffer.
  Pursuant
  to the Settlement Agreement, the Private Company will reject the Amended Omnibus
  Agreement as part of the Bankruptcy Cases and we will enter into a shared
  services agreement with the Private Company pursuant to which the Private
  Company will provide certain operational services for us.  There can
  be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see "Item
  2. Management's Discussion and Analysis of Financial Condition and Results of
  Operations—Settlement with the Private Company").  In addition, if the
  terms of this shared services agreement are not as favorable as the terms under
  the Amended Omnibus Agreement,
  it could
  have a material adverse effect on our business, financial condition, results of
  operations, cash flows, ability to make distributions to our unitholders, the
  trading price of our common units and our ability to conduct our
  business.
  54
  Table of Contents
  PART II.
  OTHER INFORMATION
  Item 1.
  Legal
        Proceedings
  On July 21,
  2008, we received a letter from the staff of the SEC giving notice that the SEC
  is conducting an inquiry relating to us and requesting, among other things, that
  we voluntarily preserve, retain and produce to the SEC certain documents and
  information relating primarily to our disclosures respecting the Private
  Company's liquidity issues, which were the subject of our July 17, 2008 press
  release.  On October 22, 2008, we received a subpoena from the SEC
  pursuant to a formal order of investigation requesting certain documents
  relating to, among other things, the Private Company's liquidity
  issues.  We have been cooperating, and intend to continue cooperating,
  with the SEC in its investigation.
  On July
  23, 2008, we and our general partner each received a Grand Jury subpoena from
  the United States Attorney's Office in Oklahoma City, Oklahoma, requiring, among
  other things, that we and our general partner produce financial and other
  records related to our July 17, 2008 press release.  We have been
  informed that the U.S. Attorneys' Offices for the Western District of Oklahoma
  and the Northern District of Oklahoma are in discussions regarding the
  subpoenas, and no date has been set for a response to the
  subpoenas.  We and our general partner intend to cooperate fully with
  this investigation if and when it proceeds.
  Between
  July 21, 2008 and September 4, 2008, the following class action complaints were
  filed:
  1.
  Poelman v. SemGroup Energy
  Partners, L.P., et al
  ., Civil Action No. 08-CV-6477, in the United States
  District Court for the Southern District of New York (filed July 21,
  2008).  The plaintiff voluntarily dismissed this case on August 26,
  2008;
  2.
  Carson v. SemGroup Energy Partners,
  L.P. et al
  .
  ,
  Civil Action No. 08-cv-425, in the Northern District of Oklahoma (filed July 22,
  2008);
  3.
  Charles D. Maurer SIMP Profit
  Sharing Plan f/b/o Charles D. Maurer v. SemGroup Energy Partners, L.P. et
  al.
  , Civil Action No. 08-cv-6598, in the United States District Court for
  the Southern District of New York (filed July 25, 2008);
  4.
  Michael Rubin v. SemGroup Energy
  Partners, L.P. et al.
  , Civil Action No. 08-cv-7063, in the United States
  District Court for the Southern District of New York (filed August 8,
  2008);
  5.
  Dharam V. Jain v. SemGroup Energy
  Partners, L.P. et al.
  , Civil Action No. 08-cv-7510, in the United States
  District Court for the Southern District of New York  (filed August 25,
  2008); and
  6.
  William L. Hickman v. SemGroup
  Energy Partners, L.P. et al.
  , Civil Action No. 08-cv-7749, in the United
  States District Court for the Southern District of New York (filed September 4,
  2008).
  The
  Carson
  case was
  filed as a putative class action on behalf of all purchasers of our common units
  between February 20, 2008 and July 17, 2008.  Plaintiff alleges
  violations of Sections 10(b) and 20(a) of the Securities Exchange Act and SEC
  Rule 10b-5, resulting in damages to members of the putative class. 
  Plaintiff's specific allegations include that, despite an obligation to do so,
  the Defendants failed to disclose between February 20, 2008 and May 8, 2008 that
  the Private Company was engaged in high-risk crude oil hedging transactions that
  could affect its ability to continue as a going concern or that the Private
  Company was suffering from liquidity problems.  Plaintiff seeks class
  certification, damages, interest, fees, and costs.
  The
  Maurer
  case was
  filed as a putative class action on behalf of all persons who purchased our
  common units pursuant to or traceable to the February 12, 2008 Registration
  Statement and Prospectus.  Plaintiff alleges violations of Section 11 of
  the Securities Act, resulting in damages to members of the putative class. 
  Plaintiff's specific allegations include that, despite an obligation to do so,
  the Defendants failed to disclose in connection with the secondary offering in
  February 2008 that the Private Company was engaged in high-risk crude oil
  hedging transactions that could affect its ability to continue as a going
  concern or that the Private Company was suffering from liquidity problems. 
  Plaintiff seeks class certification, damages, interest, fees, and
  costs.
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  The
  Rubin, Jain,
  and
  Hickman
  cases were filed as
  putative class actions on behalf of all purchasers of our common units between
  July 17, 2007 and July 17, 2008.  Plaintiffs allege violations of Sections
  11, 12(a)(2), and 15 of the Securities Act and violations of Sections 10(b) and
  20(a) of the Exchange Act and SEC Rule 10b-5, resulting in damages to members of
  the putative class.  Plaintiff's specific allegations include that, despite
  an obligation to do so, the Defendants failed to disclose between July 17, 2007
  and July 17, 2008 the adverse financial condition and lack of liquidity of the
  Private Company that was caused by the Private Company's speculative and
  unauthorized hedging and trading in crude oil.  Plaintiffs seek class
  certification, rescission of the sale of common units under Section 12(a)(2) of
  the Securities Act, damages, interest, fees, and costs.
  Pursuant
  to a motion filed with the MDL Panel, the
  Maurer
  case has been
  transferred to the Northern District of Oklahoma and consolidated with the
  Carson
  case.  The
  Rubin, Jain,
  and
  Hickman
  cases have also been
  transferred to the Northern District of Oklahoma.
  A hearing
  on motions for appointment as lead plaintiff was held in the
  Carson
  case on October 17,
  2008.  At that hearing, the court granted a motion to consolidate the
  Carson
  and
  Maurer
  cases for pretrial
  proceedings, and the consolidated litigation is now pending as
  In Re: SemGroup Energy Partners,
  L.P. Securities Litigation
  , Case No. 08-CV-425-GKF-PJC. The court entered
  an order on October 27, 2008, granting the motion of Harvest Fund Advisors LLC
  to be appointed lead plaintiff in the consolidated litigation.  On January
  23, 2009, the court entered a Scheduling Order providing, among other things,
  that the lead plaintiff may file a consolidated amended complaint within 70 days
  of the date of the order, and that defendants may answer or otherwise respond
  within 60 days of the date of the filing of a consolidated amended
  complaint.
  We intend to
  vigorously defend these actions.  There can be no assurance regarding the
  outcome of the litigation.  An estimate of possible loss, if any, or
  the range of loss cannot be made and therefore we have not accrued a loss
  contingency related to these actions. However, the ultimate resolution of these
  actions could have a material adverse effect on our business, financial
  condition, results of operations, cash flows, ability to make distributions to
  our unitholders, the trading price of the our common units and our ability to
  conduct our business.
  We may
  become the subject of additional private or government actions regarding these
  matters in the future.  Litigation may be time-consuming, expensive
  and disruptive to normal business operations, and the outcome of litigation is
  difficult to predict.  The defense of these lawsuits may result in the
  incurrence of significant legal expense, both directly and as the result of our
  indemnification obligations.  The litigation may also divert
  management's attention from our operations which may cause our business to
  suffer.  An unfavorable outcome in any of these matters may have a
  material adverse effect on our business, financial condition, results of
  operations, cash flows, ability to make distributions to our unitholders, the
  trading price of the our common units and our ability to conduct our
  business.
  All or a
  portion of the defense costs and any amount we may be required to pay to satisfy
  a judgment or settlement of these claims may not be covered by
  insurance.
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  Table of Contents
  Item 1A.
  Risk
        Factors
  Limited partner interests are
  inherently different from the capital stock of a corporation, although many of
  the business risks to which we are subject are similar to those that would be
  faced by a corporation engaged in a similar business. You should carefully
  consider the following risk factors together with all of the other information
  included in this report. If any of the following risks were actually to occur,
  our business, financial condition, or results of operations could be materially
  adversely affected. In that case, we might not be able to pay distributions on
  our common units, the trading price of our common units could decline and our
  unitholders could lose all or part of their investment.
  Risks
  Related to the Bankruptcy Filings
  The
  Bankruptcy Filings may affect the Private Company's  ability to make
  payments to us and may have a material adverse effect on our results of
  operations and our ability to make distributions to our
  unitholders.
  On July 22,
  2008, the Private Company made the Bankruptcy Filings.  The Private
  Company and its subsidiaries continue to operate their businesses and own and
  manage their properties as debtors-in-possession under the jurisdiction of the
  Bankruptcy Court and in accordance with the applicable provisions of the
  Bankruptcy Code.  None of we, our general partner, our subsidiaries
  nor our general partner's subsidiaries are debtors in the Bankruptcy
  Cases.
  We are party
  to various agreements with the Private Company and its subsidiaries, including
  subsidiaries that are debtors in the Bankruptcy Cases.  Under the
  Throughput Agreement, we provide certain crude oil gathering, transportation,
  terminalling and storage services to a subsidiary of the Private Company that is
  a debtor in the Bankruptcy Cases.  Under the Terminalling Agreement,
  we provide certain liquid asphalt cement terminalling and storage services to a
  subsidiary of the Private Company that is a debtor in the Bankruptcy
  Cases.  For the six months ended June 30, 2008 and the year ended
  December 31, 2008, we derived approximately 88% and approximately
  73%
  ,
  respectively, of our revenues, excluding fuel surcharge revenues related to fuel
  and power consumed to operate our liquid asphalt cement storage tanks, from
  services we provided to the Private Company and its subsidiaries.  The
  Private Company is obligated to pay us minimum monthly fees totaling $76.1
  million annually and $58.9 million annually in respect of the minimum
  commitments under the Throughput Agreement and the Terminalling Agreement,
  respectively, regardless of whether such services are actually used by the
  Private Company.  As of the date of the filing of this report,
  payments by the Private Company made under the Throughput Agreement for services
  rendered to the Private Company since September have been made based upon actual
  usage rather than the contractual minimum monthly storage amounts in such
  agreement.  As of the date of the filing of this report, payments by
  the Private Company made under the Terminalling Agreement have continued to be
  made based upon the contractual minimum monthly storage amounts in such
  agreement.  However, on February 6, 2009, the Private Company filed a
  motion in the Bankruptcy Court requesting approval of the sale of the Private
  Company's asphalt related assets, or in the event of an unsuccessful auction,
  the rejection of the Terminalling Agreement and the winding down of its asphalt
  business.
  Pursuant
  to the Settlement Agreement, the Private Company will reject the Terminalling
  Agreement and the Throughput Agreement as part of the Bankruptcy Cases and we
  will receive the Private Company's asphalt assets that are connected to our
  asphalt assets. In addition, pursuant to the Settlement Agreement, we will enter
  into a new throughput agreement and new terminalling agreement with the Private
  Company pursuant to which we will provide certain crude oil gathering,
  transportation, terminalling and storage services and asphalt terminalling and
  storage services to the Private Company.
  We expect
  revenues from services provided to the Private Company under this new throughput
  agreement and new terminalling agreement to be substantially less than prior
  revenues from services provided to the Private Company as the new agreements
  will be based upon actual volumes gathered, transported, terminalled and stored
  instead of certain minimum volumes and may be at reduced rates when compared to
  the Throughput Agreement and Terminalling Agreement.
  There can be
  no assurance that the conditions to effectiveness in the Settlement Agreement
  will be completed and that the transactions contemplated thereby will be
  consummated (see "Item 2. Management's Discussion and Analysis of Financial
  Condition and Results of Operations—Settlement with the Private Company").
  See "─The Private Company may reject the contracts it has with us
  as part of the Bankruptcy Cases, which could have a material adverse effect on
  our results of operations, cash flows and ability to make distributions to our
  unitholders."
  We have been
  pursuing opportunities to provide crude oil terminalling and storage services
  and crude oil gathering and transportation services to third
  parties.  Although average rates for the new third-party crude oil
  terminalling and storage and transportation and gathering contracts are
  comparable with those previously received from the Private Company, the volumes
  being terminalled, stored, transported and gathered have decreased as compared
  to periods prior to the Bankruptcy Filings, which has negatively impacted total
  revenues.  As an example, fourth quarter total revenues are approximately
  $9.2 million less than second quarter 2008 total revenues, in each
  case excluding fuel surcharge revenues related to fuel and power consumed to
  operate our liquid asphalt cement storage tanks.
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  There can be
  no assurance that our efforts to increase the percentage of revenues derived
  from third parties will be successful.  If the Private Company is
  unable to make to us the payments required by it under the Throughput Agreement
  or the Terminalling Agreement for any reason, including the Bankruptcy Filings,
  our revenues would decline to the extent such revenues have not been replaced by
  third party revenues, our ability to make distributions to our unitholders
  would be reduced and we may be forced to make a bankruptcy filing, any of which
  would likely have a material adverse effect on the trading price of our common
  units.
  In addition,
  the Private Company's customers may be less likely to enter into business
  transactions with the Private Company while it is in bankruptcy, and the Private
  Company may choose to curtail its operations or liquidate its assets as part of
  its bankruptcy proceedings.  As a result, unless we are able to
  generate additional third party revenues, we may experience less volumes in our
  system which could have a material adverse effect on our results of operations
  and cash flows.
  We
  may not be able to continue as a going concern.
  The financial
  statements included in this Form 10-Q have been prepared assuming we
  will continue as a going concern, though such an assumption may not be
  true.  Events of default have occurred and are continuing under our
  credit agreement.  Additionally, we earned 88% of our revenues,
  excluding fuel surcharge revenues related to fuel and power consumed to operate
  our liquid asphalt cement storage tanks, for the six months ended June 30, 2008
  from the Private Company, which commenced the Bankruptcy Cases in July 2008, the
  effects of which are more fully described herein.  These factors, as
  well as other events and uncertainties related to the Bankruptcy Filings, raise
  substantial doubt about our ability to continue as a going
  concern.  While it is not feasible to predict the ultimate outcome of
  the events surrounding the Bankruptcy Cases, we have been and could continue to
  be materially and adversely affected by such events and we may be forced to make
  a bankruptcy filing or take other action that could have a material adverse
  effect on our business, the price of our common units and our results of
  operations.  See "Item 2. Management's Discussion and Analysis of
  Financial Condition and Results of Operations" and Note 2 to the unaudited
  consolidated financial statements.
  The
  Private Company may reject the contracts it has with us as part of the
  Bankruptcy Cases, which could have a material adverse effect on our results of
  operations, cash flows and ability to make distributions to our
  unitholders.
  The Private
  Company may reject or attempt to modify the contracts it has with us as part of
  the Bankruptcy Cases.  If the Private Company rejects the contracts it
  has with us, it will be deemed to have breached such
  contracts.  Because of the Bankruptcy Filings, we may not have an
  adequate remedy for such breach.  We may not be able to replace the
  volumes provided by the Private Company under these agreements and any contracts
  we make with third parties may be for prices that are less than those charged
  the Private Company under the Throughput Agreement and the Terminalling
  Agreement, which could have a material adverse effect on our results of
  operations, cash flows and ability to make distributions to our
  unitholders.  On February 6, 2009, the Private Company filed a motion
  in the Bankruptcy Court requesting approval of the sale of its asphalt related
  assets.  There is significant uncertainty as to the revenues related
  to our asphalt assets and there is substantial risk that our asphalt assets
  may be idle during 2009 and subsequent years.  Without revenues from
  our asphalt assets, we may be unable to meet the covenants, including the
  minimum liquidity and minimum receipt requirements, under our Forbearance
  Agreement with our senior secured lenders pursuant to which such lenders have
  agreed to forbear from exercising their rights and remedies arising from the
  events of default under our credit agreement.
  Pursuant
  to the Settlement Agreement, among other things, the Private Company will reject
  the Throughput Agreement and the Terminalling Agreement and we will receive
  the Private Company's asphalt assets that are connected to our asphalt assets
  (unless
  the Private Company executes a definitive agreement to sell substantially all of
  its asphalt assets or business as a going concern to a third-party purchaser and
  we enter into a terminalling and storage agreement with such
  purchaser)
  .  There can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see "Item
  2. Management's Discussion and Analysis of Financial Condition and Results of
  Operations—Settlement with the Private Company").  Even if we acquire
  such asphalt assets, we may not be able to enter into agreements to provide
  terminalling and storage services for such assets.  In addition,
  if the Private Company sells its asphalt assets to a third party the
  Partnership will need to negotiate a new terminalling and storage
  contract with the winner of the auction and such agreement may not be on as
  favorable terms as the Terminalling Agreement.
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  The
  Private Company may assert claims against us in the Bankruptcy Cases which could
  have a material adverse effect on our cash flows and ability to make
  distributions to our unitholders.
  Under
  bankruptcy law, a debtor-in-possession, such as the Private Company, may seek to
  avoid certain prepetition transfers if such transfers were to insiders and
  occurred within one year before the bankruptcy filing.  For purposes
  of avoidance under bankruptcy law, title to real property that is perfected more
  than thirty days after the transfer is deemed to have been transferred as of the
  date of perfection.  In addition, a debtor-in-possession, such as the
  Private Company, may seek to avoid prepetition transfers of real property that
  were not perfected as of the bankruptcy filing date against a hypothetical bona
  fide purchaser of such real property.
  Through a
  series of transactions we acquired certain real property from the Private
  Company during the one-year period preceding the Bankruptcy
  Filings.  Deeds to approximately 27 asphalt facilities transferred to
  us by the Private Company as part of the Acquired Asphalt Assets either were not
  recorded within thirty days of such transfer or were not recorded as of the
  Bankruptcy Filings.  In addition, a deed to the Acquired Storage
  Assets was not recorded as of the Bankruptcy Filings.  Although we
  have title to such properties, the Private Company may in its bankruptcy
  proceedings seek to avoid the transfers of these properties.  We have
  defenses against these actions based upon bankruptcy law and state law and
  intend to vigorously defend against any such action.  However, there
  can be no assurance regarding the outcome of any potential
  litigation.  If the Private Company succeeds in such litigation, we
  may be required to return the affected properties to the Private Company or pay
  an amount equal to the value of such properties, which would have a material
  adverse effect on our business, financial condition, results of operations, cash
  flows, ability to make distributions to our unitholders, the trading price of
  the our common units and our ability to conduct our business.  We
  would then have unsecured claims in the Bankruptcy Court for the amounts
  originally paid for such properties.   An estimate of possible
  loss, if any, or the range of loss cannot be made and therefore we have not
  accrued a loss contingency related to this matter. However, the ultimate
  resolution of this matter could have a material adverse effect on our business,
  financial condition, results of operations, cash flows, ability to make
  distributions to our unitholders, the trading price of the our common units and
  our ability to conduct our business.
  Pursuant
  to the Settlement Agreement, the Private Company will release certain of its
  claims related to this real property including the real property claims
  discussed above (see "Item 2. Management's Discussion and Analysis of Financial
  Condition and Results of Operations—Settlement with the Private
  Company").
  There may
  be additional claims that are not released by the Settlement
  Agreement.  In addition,
  there can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be
  consummated
  .
  We
  did not make a distribution for the second quarter, third quarter or fourth
  quarter of 2008, do not expect to make a distribution for the first quarter of
  2009 at this time and may not make distributions in the future.
  We did not
  make a distribution to our common unitholders, subordinated unitholders or
  general partner attributable to the results of operations for the quarters ended
  June 30, 2008, September 30, 2008 or December 31, 2008, due to the existing
  events of default under our credit agreement and the uncertainty of our future
  cash flows relating to the Bankruptcy Filings.  Even though we did not
  pay a distribution for the second, third or fourth quarters of 2008 and we
  do not currently expect to pay a distribution for the first quarter of
  2009, our unitholders will be liable for taxes on their share of our taxable
  income.  See "—Tax Risks to Common Unitholders—Our unitholders have
  been and will be required to pay taxes on their share of our taxable income even
  if they have not or do not receive any cash distributions from us." Our
  partnership agreement provides that, during the subordination period, which we
  are currently in, our common units have the right to receive distributions of
  available cash from operating surplus in an amount equal to the minimum
  quarterly distribution of $0.3125 per common unit per quarter, plus any
  arrearages in the payment of the minimum quarterly distribution on the common
  units from prior quarters, before any distributions of available cash from
  operating surplus may be made on the subordinated units.  If the
  events of default under our credit agreement are not waived by our lenders or
  our business operations, expenses, including interest expense, and prospects do
  not improve, we will not be able to make quarterly distributions to our
  unitholders in the future.
  We
  are exposed to the credit risk of the Private Company and the material
  nonperformance by the Private Company could reduce our ability to make
  distributions to our unitholders.
  We are party
  to the Terminalling Agreement with the Private Company pursuant to which we
  provide certain liquid asphalt cement terminalling and storage services to the
  Private Company. We are also party to the Throughput Agreement with the Private
  Company pursuant to which we provide certain crude oil gathering,
  transportation, terminalling and storage services to the Private
  Company.  The Private Company has defaulted under its credit
  facilities and its indenture relating to its senior notes.  Moody's
  and Fitch Ratings have withdrawn their ratings of the Private Company due to the
  Bankruptcy Filings.  Any material nonperformance under the Throughput
  Agreement or the Terminalling Agreement by the Private Company could materially
  and adversely impact our ability to operate and make distributions to our
  unitholders.  On February 6, 2009, the Private Company filed a motion
  in the Bankruptcy Court requesting approval of the sale of the Private Company's
  asphalt related assets, or in the event of an unsuccessful auction, the
  rejection of the Terminalling Agreement and the winding down of its asphalt
  business.
  Pursuant
  to the Settlement Agreement, the Private Company will reject the Terminalling
  Agreement and the Throughput Agreement as part of the Bankruptcy Cases and we
  will receive the Private Company's asphalt assets that are connected to our
  asphalt assets.  In addition, pursuant to the Settlement Agreement, we
  will enter into a new throughput agreement with the Private Company pursuant to
  which we will provide certain crude oil gathering, transportation, terminalling
  and storage services to the Private Company.  There can be no
  assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see "Item
  2. Management's Discussion and Analysis of Financial Condition and Results of
  Operations—Settlement with the Private Company").
  See "─The Private
  Company may reject the contracts it has with us as part of the Bankruptcy Cases,
  which could have a material adverse effect on our results of operations, cash
  flows and ability to make distributions to our unitholders."
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  Though we
  have no indebtedness rated by any credit rating agency, we may have rated debt
  in the future. Credit rating agencies such as Moody's and Fitch Ratings may
  consider the Private Company's debt ratings when assigning ours, because of the
  Private Company's ownership interest in us, the strong operational links between
  the Private Company and us, and our reliance on the Private Company for a
  substantial portion of our revenues. Due to the Private Company's default
  of its indebtedness and the uncertainty related to the Bankruptcy Filings, we
  could experience an increase in our borrowing costs or difficulty accessing
  capital markets if we are able to access them at all. Such a development could
  adversely affect our ability to grow our business and to make distributions to
  unitholders.
  We
  do not have employees and rely solely on the employees of the Private
  Company.  The Private Company is no longer obligated to provide
  services to us, which may adversely affect our financial results, our ability to
  operate and our ability to make distributions to our unitholders.
  As is the
  case with many publicly traded partnerships, we do not directly employ any
  persons responsible for managing or operating us or for providing services
  relating to day-to-day business affairs.  Pursuant to the Amended
  Omnibus Agreement with the Private Company, the Private Company operated our
  assets and performed other administrative services for us such as accounting,
  legal, regulatory, development, finance, land and engineering.  Due to
  the Change of Control of our general partner, the Private Company is no longer
  obligated to operate our assets or perform other administrative services
  pursuant to the Amended Omnibus Agreement.  The Private Company agreed
  to continue providing such services until at least November 30, 2008 pursuant to
  the Order entered by the Bankruptcy Court.  While the Private
  Company has continued to provide such services as of the date of the filing
  of this report, there can be no assurance that it will continue to provide such
  services to us or that we could replace any of these services if the Private
  Company stops providing them.  If the Private Company stops providing
  these services we may incur increased costs to replace these services and our
  financial results may suffer.
  Pursuant to
  the Settlement Agreement, the Private Company will reject the Amended Omnibus
  Agreement as part of the Bankruptcy Cases and we will enter into a shared
  services agreement with the Private Company pursuant to which the Private
  Company will provide certain operational services for us.  There can
  be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see "Item
  2. Management's Discussion and Analysis of Financial Condition and Results of
  Operations—Settlement with the Private Company").  In addition, if the
  terms of this shared services agreement are not as favorable as the terms under
  the Amended Omnibus Agreement,
  it could
  have a material adverse effect on our business, financial condition, results of
  operations, cash flows, ability to make distributions to our unitholders, the
  trading price of our common units and our ability to conduct our
  business
  .
  In addition
  ,
  in connection with the Bankruptcy
  Filings, the Private Company may reduce
  a substantial number of its employees, some of whom may provide general and
  administrative and operating services to us.  Any reductions in
  critical personnel who provide services to us and any increased costs to replace
  such personnel could have a material adverse effect on our ability to conduct
  our business and our results of operations.
  Beginning
  April 1, 2009, we will begin to directly employ a number of persons responsible
  for managing our operations and for providing services relating
  to our day-to-day business affairs.  Subject to the consummation
  of the transactions contemplated by the Settlement Agreement, we may
  directly employ additional persons responsible for providing services relating
  to our asphalt assets.
  Our costs
  may increase as we directly employ individuals associated with our operations
  which could have a material adverse effect on our business, financial condition,
  results of operations, cash flows, ability to make distributions to our
  unitholders, the trading price of our common units and our ability to conduct
  our business.
  Certain
  of our officers are also officers of the Private Company.
  Prior to the
  events surrounding the Bankruptcy Filings, the officers of our general partner
  were also employees and officers or directors of the Private
  Company.  Messrs. Foxx and Stallings resigned the positions each
  officer held with SemGroup, L.P. in July 2008.  Mr. Brochetti had
  previously resigned from his position with SemGroup, L.P. in March
  2008.
  Mr.
  Parsons left the employment of SemGroup, L.P. in March 2009.
  Messrs. Foxx, Brochetti, Stallings, and Parsons remain as officers
  of our general partner.  Mr. Schwiering continues to serve as an
  officer of the Private Company and may have conflicts of interest and may
  favor the Private Company's interests over our interests when conducting our
  operations.
  Our
  interests may be adverse to the Private Company's interests due to the
  Bankruptcy Filings.
  We are a
  creditor in the Bankruptcy Cases due to amounts owed to us by the Private
  Company prior to the Bankruptcy Filings.  In addition, if the Private
  Company fails to make its payments under the Throughput Agreement or the
  Terminalling Agreement or otherwise fails to perform under the contracts we have
  with the Private Company, we may have additional potential claims against the
  Private Company's bankruptcy estate.
  Any
  claims made by us against the Private Company in the Bankruptcy Cases will be
  subject to the claim allowance procedure provided in the Bankruptcy Code and
  Bankruptcy Rules.  If an objection is filed, the Bankruptcy Court
  would determine the extent to which any claim that is objected to is allowed and
  the priority of such claims.  We are uncertain regarding the ultimate
  amount of damages for breaches of contract or other claims that it will be able
  to establish in the bankruptcy proceedings and we cannot predict the amounts, if
  any, that it will collect or the timing of any such collection, but such losses
  could be substantial and could have a material adverse effect on our ability to
  conduct our business and our results of operations.
  Pursuant
  to the Settlement Agreement, the Private Company will reject the Terminalling
  Agreement and the Throughput Agreement.  We will have a $35 million
  unsecured claim relating to rejection of the Terminalling Agreement in the
  Bankruptcy Cases.  In addition, we will have a $20 million unsecured
  claim against the Private Company relating to rejection of the Throughput
  Agreement.  There can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see "Item
  2. Management's Discussion and Analysis of Financial Condition and Results of
  Operations—Settlement with the Private Company").
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  As a
  result of these items, our interests may be adverse to the Private Company's
  interests.  The Private Company provides administrative, legal,
  regulatory, development, finance, land and engineering services for
  us.  The Private Company is also responsible for obtaining and
  renewing environmental and other permits related to our liquid asphalt cement
  operations.  In addition, we rely upon the Private Company's personnel
  for the design and implementation of our internal controls.  The
  progress of the Bankruptcy Cases may influence the Private Company's decision to
  continue providing any of these services, which could have a material adverse
  effect on our ability to conduct our business and results of
  operations.
  We
  do not have title to all of the intellectual property relating to our
  business.
  Pursuant to
  the Amended Omnibus Agreement, we licensed the use of certain trade names and
  marks, including the name "SemGroup."  This license terminated
  automatically upon the change of control of our general partner.  The
  termination of the explicit rights to use this intellectual property under the
  Amended Omnibus Agreement may adversely affect our ability to operate or grow
  our business and our results of operations.  In addition, we may be
  subject to claims for trademark or other intellectual property infringement due
  to our continued use of these intellectual property rights.
  Pursuant
  to the Settlement Agreement, we will enter into a license agreement with the
  Private Company pursuant to which we may use the trade names and mark until
  December 31, 2009.  In addition, pursuant to the Settlement Agreement,
  the Private Company has agreed to waive all claims relating to infringement of
  the trade names and mark prior to the entering into this license
  agreement.
  There can
  be no assurance that the conditions to effectiveness in the Settlement Agreement
  will be completed and that the transactions contemplated thereby will be
  consummated
  (see "Item 2. Management's Discussion and Analysis of
  Financial Condition and Results of Operations—Settlement with the Private
  Company").
  Our
  liquid asphalt cement operations are dependent upon the Private Company and may
  be materially and adversely affected by the  Bankruptcy
  Filings.
  We provide
  liquid asphalt cement terminalling and storage services to the Private
  Company.  The Private Company processes, distributes and markets
  liquid asphalt cement and finished asphalt products to third party
  customers.  Pursuant to the Amended Omnibus Agreement, the Private
  Company has agreed, so long as the Terminalling Agreement is in effect, not to
  engage in, or acquire or invest in an entity that engages in, the business of
  terminalling and storing liquid asphalt cement within 50 miles of our liquid
  asphalt cement facilities and we have agreed, so long as the Terminalling
  Agreement is in effect, not to engage in, or acquire or invest in an entity that
  engages in, the business of processing, marketing and distributing liquid
  asphalt cement and finished asphalt products within 50 miles of our liquid
  asphalt cement facilities.  As a result, subject to certain
  exceptions, we are contractually prohibited from marketing or distributing
  liquid asphalt cement directly to third party customers while the Terminalling
  Agreement is in effect.  In addition, the Private Company is
  responsible for obtaining all environmental and other permits related to our
  liquid asphalt cement operations.  The Private Company's failure to
  obtain, renew or maintain compliance under these permits may materially
  adversely effect our operations.
  The
  asphalt industry in the United States is characterized by a high degree of
  seasonality. Much of this seasonality is due to the impact that weather
  conditions have on road construction schedules, particularly in cold weather
  states. Refineries produce liquid asphalt cement year round, but the peak
  asphalt demand season is during the warm weather months when most of the road
  construction activity in the United States takes place. As a result, liquid
  asphalt cement is typically purchased from refineries at low prices in the low
  demand winter months and then processed and sold at higher prices in the peak
  summer demand season.  Although there remains some liquid asphalt
  cement in our asphalt storage tanks that was not sold during the summer of 2008,
  the Private Company, as of the date of the filing of this report, has not
  purchased any significant volumes of additional liquid asphalt cement during the
  recent winter months.  Any significant decrease in the amount of
  revenues that we receive from our liquid asphalt cement terminalling and storage
  operations could have a material adverse effect on our cash flows, financial
  condition and results of operations.
  On
  February 6, 2009, the Private Company filed a motion in the Bankruptcy Court
  requesting approval of the sale of its asphalt related assets.  There
  is significant uncertainty as to our revenues related to our asphalt assets and
  there is substantial risk that our asphalt assets may be idle during 2009 and
  subsequent years, which would adversely effect our financial condition and
  results of operations.  Without revenues from our asphalt assets, we
  may be unable to meet the covenants, including the minimum liquidity and minimum
  receipt requirements, under our Forbearance Agreement with our senior secured
  lenders pursuant to which such lenders have agreed to forbear from exercising
  their rights and remedies arising from the events of default under our credit
  agreement.
  Pursuant
  to the Settlement Agreement, we will receive the Private Company's asphalt
  assets that are connected to our asphalt assets
  (unless
  the Private Company executes a definitive agreement to sell substantially all of
  its asphalt assets or business as a going concern to a third-party purchaser and
  we enter into a terminalling and storage agreement with such
  purchaser)
  .  There can be no assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see "Item
  2. Management's Discussion and Analysis of Financial Condition and Results of
  Operations—Settlement with the Private Company").  Even if we acquire
  such asphalt assets, we may not be able to enter into agreements to provide
  terminalling and storage services for such assets.  In
  addition,
  if the Private Company sells its asphalt assets to a third
  party, we will need to negotiate a new terminalling and storage contract
  with the purchaser of such assets and such agreement may not be on as
  favorable terms as the Terminalling Agreement.  Any significant
  decrease in the amount of revenues that we receive from our liquid asphalt
  cement terminalling and storage operations could have a material adverse effect
  on our cash flows, financial condition and results of operations.
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  Events
  of default currently exist under our credit agreement.
  Events of
  default have occurred and are continuing under our credit
  agreement.  We are therefore prohibited from borrowing under our
  credit facility to fund working capital needs or to pay distributions to our
  unitholders, among other things.  In addition, the Private Company's
  actions related to the Bankruptcy Filings as well as the Private Company's
  liquidity issues and any corresponding impact upon us may result in additional
  events of default under our credit agreement.  As a result, we are
  operating on cash flows received from operations and from a $25 million
  borrowing under our credit facility on July 8, 2008 prior to the occurrence of
  the events of default.  If we are unable to sustain our sources of
  revenue generation and reestablish our relationships within the credit markets,
  we do not expect such cash flows to be sufficient to operate our business over
  the long-term.  As of March 13, 2009, we have approximately
  $33.9 million of cash that we are using to operate our
  business.  No cure periods are applicable to the existing events of
  default.  These events of default have not been waived and are
  continuing under our credit agreement.
  Under the
  Forbearance Agreement, as amended by the First Amendment, the Second
  Amendment and the Third Amendment, the lender's forbearance is subject
  to certain conditions as described therein, including, among other items,
  periodic deliverables and minimum liquidity, minimum receipts and maximum
  disbursement requirements.  If we fail to meet these conditions or are
  unable to obtain further forbearance from our lenders or a permanent waiver of
  the events of default under our credit agreement, we may be forced to sell
  assets, make a bankruptcy filing or take other action that could have a material
  adverse effect on our business, the price of our common units and our results of
  operations.
  The
  Forbearance Agreement, as amended by the First Amendment, the Second Amendment
  and Third Amendment, permanently reduced our revolving credit facility under the
  credit agreement from $350 million to $220 million.  In addition, our
  interest expense has increased due to the events of default that exist under our
  credit agreement and our entering into the Forbearance Agreement, as amended by
  the First Amendment, the Second Amendment and the Third
  Amendment.  For example, the weighted average interest rate incurred
  by us during the three months ended June 30, 2008 was 4.62% resulting in
  interest expense of approximately $4.3 million as compared to a weighted average
  interest rate incurred by us of
  7.72
  %
  during the three months ended December 31, 2008 resulting in interest
  expense of approximately $
  8.9
  million.  This increased interest expense may have a material adverse
  effect on our cash flows and results of operations.
  Due to the
  events of default, upon the expiration or termination of any applicable
  forbearance period, the lenders may, among other remedies, declare all
  outstanding amounts under the credit agreement immediately due and payable and
  exercise all other rights and remedies available to the lenders under the credit
  agreement and related loan documents, including taking available cash in our
  bank accounts.  A vote of lenders having more than 50% of the sum of
  (i) the aggregate revolver commitments and (ii) the outstanding term loan are
  required to exercise such a remedy.  If the lenders exercise such a
  remedy, we may be forced to make a bankruptcy filing or take other
  actions.  We are also prohibited from making cash distributions to our
  unitholders while the events of default exist.  Certain lenders under
  our credit facility are also lenders under the Private Company's credit
  facility.  The progress of the Private Company's bankruptcy
  proceedings may influence the decisions of these lenders relating to our credit
  facility which could adversely affect us.
  The
  Change of Control of the Private Company may lead to additional uncertainty
  regarding our future operations and cash flows.
  On
  December 15, 2008, Red Apple, which is chaired by John Catsimatidis, announced
  that it controls five of the nine seats on the management committee of the
  general partner of the Private Company and therefore effectively controls the
  Private Company.  Mr. Catsimatidis has indicated that Red Apple does
  not intend to liquidate the Private Company and that it plans on filing a new
  reorganization plan for the Private Company with the Bankruptcy
  Court.  As of the date of the filing of this report, Red Apple has not
  filed a reorganization plan.  There is no assurance that any
  reorganization plan will be submitted by Red Apple or that if a reorganization
  plan is submitted by Red Apple that the Bankruptcy Court will approve such plan
  or that continued performance by the Private Company under the Throughput
  Agreement or the Terminalling Agreement will be part of any such
  plan.  In addition, the Private Company Change of Control may lead to
  additional uncertainty regarding our continued relationship with the Private
  Company.
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  We
  are subject to an SEC inquiry and a Federal Grand Jury subpoena.
  On July
  21, 2008, we received a letter from the staff of the SEC giving notice that the
  SEC is conducting an inquiry relating to us and requesting, among other things,
  that we voluntarily preserve, retain and produce to the SEC certain documents
  and information relating primarily to our disclosures respecting the Private
  Company's liquidity issues, which were the subject of our July 17, 2008 press
  release.  On October 22, 2008, we received a subpoena from the SEC
  pursuant to a formal order of investigation requesting certain documents
  relating to, among other things, the Private Company's liquidity
  issues.  We have been cooperating, and intend to continue cooperating,
  with the SEC in its investigation.
  On July
  23, 2008, we and our general partner each received a Grand Jury subpoena from
  the United States Attorney's Office in Oklahoma City, Oklahoma, requiring, among
  other things, that we and our general partner produce financial and other
  records related to our July 17, 2008 press release.  We have been
  informed that the U.S. Attorneys' Offices for the Western District of Oklahoma
  and the Northern District of Oklahoma are in discussions regarding the
  subpoenas, and no date has been set for a response to the
  subpoenas.  We and our general partner intend to cooperate fully with
  this investigation if and when it proceeds.
  In the
  event that either the SEC inquiry or the Grand Jury investigation leads to
  action against any of our current or former directors or officers, or the
  Partnership itself, the trading price of our common units may be adversely
  impacted.  In addition, the SEC inquiry and the Grand Jury
  investigation may result in the incurrence of significant legal expense, both
  directly and as the result of our indemnification
  obligations.   These matters may also divert management's
  attention from our operations which may cause our business to
  suffer.  If we are subject to adverse findings in either of these
  matters, we could be required to pay damages or penalties or have other remedies
  imposed upon us which could have a material adverse effect on our business,
  financial condition, results of operations, cash flows and ability to make
  distributions to our unitholders.  All or a portion of the defense
  costs and any amount we may be required to pay in connection with the resolution
  of these matters may not be covered by insurance.
  We
  have been named as a party in lawsuits and may be named in additional litigation
  in the future, all of which could result in an unfavorable outcome and have a
  material adverse effect on our business, financial condition, results of
  operations, cash flows, ability to make distributions to our unitholders, the
  trading price of our common units and our ability to conduct our
  business.
  Between
  July 21, 2008 and September 4, 2008, the following class action complaints were
  filed:
  1.
  Poelman v. SemGroup Energy
  Partners, L.P., et al
  ., Civil Action No. 08-CV-6477, in the United States
  District Court for the Southern District of New York (filed July 21,
  2008).  The plaintiff voluntarily dismissed this case on
  August 26, 2008;
  2.
  Carson v. SemGroup Energy Partners,
  L.P. et al
  .
  ,
  Civil Action No. 08-cv-425, in the Northern District of Oklahoma (filed July 22,
  2008);
  3.
  Charles D. Maurer SIMP Profit
  Sharing Plan f/b/o Charles D. Maurer v. SemGroup Energy Partners, L.P. et
  al.
  , Civil Action No. 08-cv-6598, in the United States District Court for
  the Southern District of New York (filed
  July 25, 2008);
  4.
  Michael Rubin v. SemGroup Energy
  Partners, L.P. et al.
  , Civil Action No. 08-cv-7063, in the United States
  District Court for the Southern District of New York (filed August 8,
  2008);
  5.
  Dharam V. Jain v. SemGroup Energy
  Partners, L.P. et al.
  , Civil Action No. 08-cv-7510, in the United States
  District Court for the Southern District of New York  (filed August 25,
  2008); and
  6.
  William L. Hickman v. SemGroup
  Energy Partners, L.P. et al.
  , Civil Action No. 08-cv-7749, in the United
  States District Court for the Southern District of New York (filed September 4,
  2008).
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  The
  Carson
  case was filed as a
  putative class action on behalf of all purchasers of our common units between
  February 20, 2008 and July 17, 2008.  Plaintiff alleges violations of
  Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5, resulting in
  damages to members of the putative class.  Plaintiff's specific allegations
  include that, despite an obligation to do so, the Defendants failed to disclose
  between February 20, 2008 and May 8, 2008 that the Private Company was engaged
  in high-risk crude oil hedging transactions that could affect its ability to
  continue as a going concern or that the Private Company was suffering from
  liquidity problems.  Plaintiff seeks class certification, damages,
  interest, fees, and costs.
  The
  Maurer
  case was filed as a
  putative class action on behalf of all persons who purchased our common units
  pursuant to or traceable to the February 12, 2008 Registration Statement and
  Prospectus.  Plaintiff alleges violations of Section 11 of the Securities
  Act, resulting in damages to members of the putative class.  Plaintiff's
  specific allegations include that, despite an obligation to do so, the
  Defendants failed to disclose in connection with the secondary offering in
  February 2008 that the Private Company was engaged in high-risk crude oil
  hedging transactions that could affect its ability to continue as a going
  concern or that the Private Company was suffering from liquidity problems. 
  Plaintiff seeks class certification, damages, interest, fees, and
  costs.
  The
  Rubin, Jain,
  and
  Hickman
  cases were filed as
  putative class actions on behalf of all purchasers of our common units between
  July 17, 2007 and July 17, 2008.  Plaintiffs allege violations of Sections
  11, 12(a)(2), and 15 of the Securities Act and violations of Sections 10(b) and
  20(a) of the Exchange Act and SEC Rule 10b-5, resulting in damages to members of
  the putative class.  Plaintiff's specific allegations include that, despite
  an obligation to do so, the Defendants failed to disclose between July 17, 2007
  and July 17, 2008 the adverse financial condition and lack of liquidity of the
  Private Company that was caused by the Private Company's speculative and
  unauthorized hedging and trading in crude oil.  Plaintiffs seek class
  certification, rescission of the sale of common units under Section 12(a)(2) of
  the Securities Act, damages, interest, fees, and costs.
  Pursuant to a
  motion filed with the MDL Panel, the
  Maurer
  case has been
  transferred to the Northern District of Oklahoma and consolidated with the
  Carson
  case.  The
  Rubin, Jain,
  and
  Hickman
  cases have also been
  transferred to the Northern District of Oklahoma.
  A hearing on
  motions for appointment as lead plaintiff was held in the
  Carson
  case on October 17,
  2008.  At that hearing, the court granted a motion to consolidate the
  Carson
  and
  Maurer
  cases for pretrial
  proceedings, and the consolidated litigation is now pending as
  In Re: SemGroup Energy Partners,
  L.P. Securities Litigation
  , Case No. 08-CV-425-GKF-PJC. The court entered
  an order on October 27, 2008, granting the motion of Harvest Fund Advisors LLC
  to be appointed lead plaintiff in the consolidated litigation.  On January
  23, 2009, the court entered a Scheduling Order providing, among other things,
  that the lead plaintiff may file a consolidated amended complaint within 70 days
  of the date of the order, and that defendants may answer or otherwise respond
  within 60 days of the date of the filing of a consolidated amended
  complaint.
  We intend to
  vigorously defend these actions.  There can be no assurance regarding the
  outcome of the litigation.
  We may become
  the subject of additional private or government actions regarding these matters
  in the future.  Litigation may be time-consuming, expensive and
  disruptive to normal business operations, and the outcome of litigation is
  difficult to predict.  The defense of these lawsuits may result in the
  incurrence of significant legal expense, both directly and as the result of our
  indemnification obligations.  The litigation may also divert
  management's attention from our operations which may cause our business to
  suffer.  An unfavorable outcome in any of these matters may have a
  material adverse effect on our business, financial condition, results of
  operations, cash flows, ability to make distributions to our unitholders, the
  trading price of the our common units and our ability to conduct our
  business.
  All or a
  portion of the defense costs and any amount we may be required to pay to satisfy
  a judgment or settlement of these claims may not be covered by
  insurance.
  The
  Private Company may not honor its indemnification obligations, which may expose
  us to increased losses.
  In the
  Amended Omnibus Agreement and other agreements with the Private Company, the
  Private Company has agreed to indemnify us for certain environmental and other
  claims relating to the crude oil and liquid asphalt cement assets that have been
  contributed to us.  Due to the Bankruptcy Filings we may not be able
  to collect any amounts that would otherwise be payable under these
  indemnification provisions if such events were to occur.  Pursuant to
  the Settlement Agreement, the Private Company will reject the Amended Omnibus
  Agreement including the indemnification provisions therein.  If we
  experience an environmental or other loss and the Private Company fails to honor
  its indemnification obligations, we would experience increased losses which may
  have a material adverse effect on our business, financial condition, results of
  operations, cash flows, ability to make distributions to our unitholders, the
  trading price of our common units and our ability to conduct our
  business.
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  Our
  common units were delisted from the Nasdaq and is currently quoted on the Pink
  Sheets, which may make buying or selling our common units more
  difficult
  Effective
  at the opening of business on February 20, 2009, our common units were delisted
  from Nasdaq due to our failure to timely file this Quarterly Report as well as
  our Quarterly Report on Form 10-Q for the quarter ended September 30,
  2008.  Our common units are currently traded on the Pink Sheets, which
  is an over-the-counter securities market, under the symbol
  SGLP.PK.  The fact that our common units are not listed on a national
  securities exchange is likely to make trading such common units more difficult
  for broker-dealers, unitholders and investors, potentially leading to further
  declines in the price of our common units.  In addition, it may limit
  the number of institutional and other investors that will consider investing in
  our common units, which may have an adverse effect on the price of our common
  units.  It may also make it more difficult for us to raise capital in
  the future.
  We
  continue to work to become compliant with our SEC reporting obligations and
  intend to promptly seek the relisting of our common units on Nasdaq as soon as
  practicable after we have become compliant with such reporting
  obligations.  However, there can be no assurances that we will be able
  to relist our common units on Nasdaq or any other national securities exchange
  and we may face a lengthy process to relist our common units if we are able to
  relist them at all.
  If
  our general partner fails to develop or maintain an effective system of internal
  controls, then we may not be able to accurately report our financial results or
  prevent fraud. As a result, current and potential unitholders could lose
  confidence in our financial reporting, which would harm our business and the
  trading price of our common units.
  SemGroup
  Energy Partners G.P., L.L.C., our general partner, has sole responsibility for
  conducting our business and for managing our operations. Effective internal
  controls are necessary for our general partner, on our behalf, to provide
  reliable financial reports, prevent fraud and operate us successfully as a
  public company. If our general partner's efforts to develop and maintain its
  internal controls are not successful, it is unable to maintain adequate controls
  over our financial processes and reporting in the future or it is unable to
  assist us in complying with our obligations under Section 404 of the
  Sarbanes-Oxley Act of 2002, our operating results could be harmed or we may fail
  to meet our reporting obligations.
  We and our
  general partner rely upon the Private Company for our personnel, including those
  related to designing and implementing internal controls and our disclosure
  controls and procedures.  Staff reductions by the Private Company or
  other departures by the Private Company's employees that provide services to us
  could have a material adverse effect on internal controls and the
  effectiveness of our disclosure controls and procedures.  Ineffective
  internal controls could cause us to report inaccurate financial information or
  cause investors to lose confidence in our reported financial information, which
  would likely have a negative effect on the trading price of our common
  units.
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  Table of Contents
  We
  may incur substantial costs as a result of events related to the Bankruptcy
  Filings and we may be unsuccessful in our efforts in effecting a sale of all or
  a portion of our assets.
  Events
  related to the Bankruptcy Filings, the securities litigation and governmental
  investigations, and our efforts to enter into storage contracts with third party
  customers and pursue merger opportunities has resulted in increased expense and
  we expect it to continue to result in increased expense due to the costs related
  to legal and financial advisors as well as other related
  costs.  General and administrative expenses (exclusive of noncash
  compensation expense related to the vesting of the units under the Plan)
  increased by approximately $6.6 million and $7.4 million, or approximately 287%
  and 322%, to approximately $8.9 million for the third quarter of 2008 and $9.7
  million for the fourth quarter of 2008, respectively, compared to $2.3 million
  in the second quarter of 2008.  We expect this increased level of
  general and administrative expenses to continue into 2009.  These
  increased costs may be substantial and could have a material adverse effect on
  our cash flows and results of operations.
  In addition,
  we are currently pursuing various strategic alternatives for our business and
  assets including the possibility of entering into storage contracts with third
  party customers and the sale of all or a portion of our assets.  The
  uncertainty relating to the Bankruptcy Filings and the recent global market and
  economic conditions may make it more difficult to pursue merger opportunities or
  enter into storage contracts with third party customers.  If we are
  unable to contract with third parties or if our efforts to sell all or a portion
  of our assets are unsuccessful, it could have a material adverse effect on our
  cash flows, results of operations and ability to conduct our
  business.
  We may not be
  able to raise sufficient capital to operate or grow our business.
  We are
  currently operating on cash flows received from operations and from a $25
  million borrowing under our credit facility on July 8, 2008 prior to the
  occurrence of the events of default under our credit agreement.  If we
  are unable to sustain our sources of revenue generation and reestablish our
  relationships within the credit markets, we do not expect such cash flows to be
  sufficient to operate our business over the long-term.  As of March
  13, 2009, we have approximately $33.9 million of cash that we are using to
  operate our business.  Our ability to access capital markets may be
  limited due to the Bankruptcy Filings and the related uncertainty of our future
  cash flows.  In addition, we may have difficulty obtaining a credit
  rating or any credit rating that we do obtain may be lower that it otherwise
  would be due to our relationships with the Private Company.  The lack
  of a credit rating or a low credit rating may also adversely impact our ability
  to access capital markets.  If we fail to raise additional capital or
  are unable to obtain further forbearance from our lenders or a permanent waiver
  of the events of default under our credit agreement, we may be forced to sell
  assets, make a bankruptcy filing or take other action that could have a material
  adverse effect on our business, the price of our common units and our results of
  operations.  In addition, if we are unable to access the capital
  markets for acquisitions or expansion projects, it will have a material adverse
  effect on our results of operations and ability to conduct our business and may
  adversely effect the trading price of our common units.
  We
  are not fully insured against all risks incident to our business, and could
  incur substantial liabilities as a result.  In addition, we share some
  insurance policies with the Private Company and claims made by the Private
  Company under such policies or increased costs associated to renew such policies
  due to the Bankruptcy Filings may have a material adverse effect on our
  financial condition and results of operations.
  We may not be
  able to maintain or obtain insurance of the type and amount we desire at
  reasonable rates. As a result of changing market conditions, premiums and
  deductibles for certain of our insurance policies may increase substantially in
  the future. In some instances, certain insurance could become unavailable or
  available only for reduced amounts of coverage. If we were to incur a
  significant liability for which we were not fully insured, it could have a
  material adverse effect on our financial position and ability to make
  distributions to unitholders.
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  We share
  some insurance policies, including our general liability policy, with the
  Private Company. These policies contain caps on the insurer's maximum liability
  under the policy, and claims made by either the Private Company or us are
  applied against the caps and deductibles. The possibility exists that, in an
  event in which we wish to make a claim under a shared insurance policy, our
  claim could be denied or only partially satisfied due to claims made by the
  Private Company against the policy cap. Further, where events occur that would
  entitle both the Private Company and us to benefits under these insurance
  policies, the full deductible may be borne by the first claimant under the
  policy. In addition, claims made by the Private Company could affect our
  premiums and our ability to obtain insurance in the future.  The
  Bankruptcy Filings have had and may continue to have an adverse effect on our
  insurance premiums and coverage.  Our premiums and ability to obtain
  insurance in the future could also be adversely impacted by the Bankruptcy
  Filings if the Private Company fails to renew any shared policies and we are
  required to purchase our own policy, cover any premiums currently being paid by
  the Private Company or if an insurance carrier increases the insurance premiums
  due to the Bankruptcy Filings.  These increased costs could have a
  material adverse effect on our financial condition and results of
  operations.
  Risks
  Related to Our Business
  We
  depend upon the Private Company for a substantial portion of our revenues and
  are therefore indirectly subject to the business risks of the Private
  Company.
  Because we depend upon the Private
  Company for a substantial portion of our revenues, we are indirectly subject to
  the business risks of the Private Company, many of which are similar to the
  business risks we face. In particular, these business risks include the
  following:
  ·
  the
        inability of the Private Company to generate adequate gross margins from
        the purchase, transportation, storage and marketing of petroleum
        products;
  ·
  material
        reductions in the supply of crude oil, liquid asphalt cement and petroleum
        products;
  ·
  a
        material decrease in the demand for crude oil, finished asphalt and
        petroleum products in the markets served by the Private
        Company;
  ·
  the
        inability of the Private Company to manage its commodity price risk
        resulting from its ownership of crude oil, liquid asphalt cement and
        petroleum products;
  ·
  contract
        non-performance by the Private Company's customers;
    and
  ·
  various
        operational risks to which the Private Company's business is
        subject.
  In addition, as a result of the
  Bankruptcy Filings, we are also currently subject to the risks described above
  under "—Risks Related to the Bankruptcy Filings."
  The
  Private Company's obligations under the Throughput Agreement and the
  Terminalling Agreement may be reduced or suspended in some circumstances, which
  would reduce our ability to make distributions to our unitholders.
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  In
  addition to the impact of the Bankruptcy Filings described above, some of the
  circumstances under which the Private Company's obligations under the Throughput
  Agreement and the Terminalling Agreement may be permanently reduced are within
  the exclusive control of the Private Company. Any such permanent reduction would
  reduce our ability to make distributions to our unitholders. For example, under
  the Throughput Agreement, if we and the Private Company cannot agree on an
  upfront payment or ratable fee surcharge to cover substantial and unanticipated
  capital expenditures at any of our facilities in order to comply with new laws
  or regulations, and if we are not able to direct the affected crude oil to
  mutually acceptable storage or gathering and transportation assets that we own,
  either party will have the right to remove the affected facility from the
  Throughput Agreement, and the Private Company's minimum monthly payment
  obligation will be correspondingly reduced. The Private Company's minimum
  monthly payment obligation may also be temporarily suspended under the
  Throughput Agreement or the Terminalling Agreement to the extent that the
  occurrence of a force majeure event that is outside the control of the parties
  prevents us from making our services available to the Private Company and the
  affected services under the Throughput Agreement or the Terminalling Agreement,
  as applicable, may be terminated if the force majeure event prevents performance
  for more than twelve months.  Please see "Item 7. Management's Discussion
  and Analysis of Financial Condition and Results of Operation" and "Item 13.
  Certain Relationships and Related Party Transactions" in our 2007 Form
  10-K.
  Pursuant
  to the Settlement Agreement, the Private Company will reject the Terminalling
  Agreement and the Throughput Agreement as part of the Bankruptcy Cases and we
  will receive the Private Company's asphalt assets that are connected to our
  asphalt assets.  In addition, pursuant to the Settlement Agreement, we
  will enter into a new throughput agreement with the Private Company pursuant to
  which we will provide certain crude oil gathering, transportation, terminalling
  and storage services to the Private Company.  There can be no
  assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see "Item
  2. Management's Discussion and Analysis of Financial Condition and Results of
  Operations—Settlement with the Private Company").
  Even if we regain
  compliance under our credit agreement, we may not be able to obtain funding or
  obtain funding on acceptable terms because of the deterioration of the credit
  and capital markets. This may hinder or prevent us from meeting our future
  capital needs.
  Global
  financial markets and economic conditions have been, and continue to be,
  disrupted and volatile. The debt and equity capital markets have been
  exceedingly distressed. These issues, along with significant write-offs in the
  financial services sector, the re-pricing of credit risk and the current weak
  economic conditions have made, and will likely continue to make, it difficult to
  obtain funding.
  In
  particular, the cost of raising money in the debt and equity capital markets has
  increased substantially while the availability of funds from those markets
  generally has diminished significantly. Also, as a result of concerns about the
  stability of financial markets generally and the solvency of counterparties
  specifically, the cost of obtaining money from the credit markets generally has
  increased as many lenders and institutional investors have increased interest
  rates, enacted tighter lending standards, refused to refinance existing debt at
  maturity at all or on terms similar to our current debt and reduced and, in some
  cases, ceased to provide funding to borrowers.  These factors may have
  a material adverse effect on our ability to obtain a permanent waiver of the
  events of default under our credit agreement or to negotiate further forbearance
  with our lenders.
  Due to
  these factors, we cannot be certain that funding will be available if needed and
  to the extent required, on acceptable terms or at all. If funding is not
  available when needed, or is available only on unfavorable terms, we may be
  unable to operate or grow our existing business, make future acquisitions, or
  otherwise take advantage of business opportunities or respond to competitive
  pressures any of which could have a material adverse effect on our financial
  condition and results of operations.  In addition, such financing, if
  available, may be at higher interest rates or result in substantial equity
  dilution.
  We require a
  significant amount of cash to service our indebtedness. Our ability to generate
  cash depends on many factors beyond our control.
  Our
  ability to make payments on and to refinance our indebtedness and to fund any
  future capital expenditures depends on our ability to generate cash in the
  future. This, to a certain extent, is subject to general economic, financial,
  competitive, legislative, regulatory and other factors that are beyond our
  control. We cannot assure you that we will generate sufficient cash flow from
  operations or that future borrowings will be available to us under our credit
  agreement or otherwise at all or in an amount sufficient to enable us to pay our
  indebtedness or to fund our other liquidity needs.
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  We
  may not have sufficient cash from operations following the establishment of cash
  reserves and payment of fees and expenses, including cost reimbursements to our
  general partner, to enable us to make cash distributions to holders of our
  common units and subordinated units.
  Due to the events of default that have
  occurred and are continuing under our credit agreement, we are currently
  prohibited from paying distributions to our unitholders.  Even if we
  regain compliance under our credit agreement or obtain permanent waivers of the
  events of default, we may not have sufficient available cash from operating
  surplus each quarter to enable us to make cash distributions. The amount of cash
  we can distribute on our units principally depends upon the amount of cash we
  generate from our operations, which will fluctuate from quarter to quarter based
  on, among other things, the risks described in this section, including the
  Bankruptcy Filings.
  In addition, the actual amount of cash
  we will have available for distribution will depend on other factors,
  including:
  ·
  the
        level of capital expenditures we
  make;
  ·
  the
        cost of acquisitions;
  ·
  our
        debt service requirements and other
  liabilities;
  ·
  fluctuations
        in our working capital needs;
  ·
  our
        ability to borrow funds and access capital
    markets;
  ·
  restrictions
        contained in our credit facility or other debt agreements, including the
        ability to make distributions while events of default exist under our
        credit facility; and
  ·
  the
        amount of cash reserves established by our general
    partner.
  The
  amount of cash we have available for distribution to holders of our common units
  and subordinated units depends primarily on our cash flow and not solely on
  earnings reflected in our financial statements. Consequently, even if we are
  profitable, we may not be able to make cash distributions to holders of our
  common units and subordinated units.
  Our
  unitholders should be aware that the amount of cash we have available for
  distribution depends primarily upon our cash flow and not solely on earnings
  reflected in our financial statements, which will be affected by non-cash items.
  As a result, we may make cash distributions during periods when we record losses
  for financial accounting purposes and may not make cash distributions during
  periods when we record net earnings for financial accounting
  purposes.
  A
  significant decrease in demand for crude oil and/or finished asphalt products in
  the areas served by our storage facilities and pipelines could reduce our
  ability to make distributions to our unitholders.
  A sustained
  decrease in demand for crude oil and/or finished asphalt products in the areas
  served by our storage facilities and pipelines could significantly reduce our
  revenues and, therefore, reduce our ability to make or increase distributions to
  our unitholders. Factors that could lead to a decrease in market demand for
  crude oil and finished asphalt products include:
  ·
  lower
        demand by consumers for refined products, including finished asphalt
        products, as a result of recession or other adverse economic conditions or
        due to high prices caused by an increase in the market price of crude oil
        or higher fuel taxes or other governmental or regulatory actions that
        increase, directly or indirectly, the cost of gasolines or other refined
        products;
  ·
  a
        shift by consumers to more fuel-efficient or alternative fuel vehicles or
        an increase in fuel economy of vehicles, whether as a result of
        technological advances by manufacturers, governmental or regulatory
        actions or otherwise; and
  ·
  fluctuations
        in demand for crude oil, such as those caused by refinery downtime or
        shutdowns, could also significantly reduce our revenues and, therefore,
        reduce our ability to make distributions to our
      unitholders.
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  Certain
  of our field and pipeline operating costs and expenses are fixed and do not vary
  with the volumes we gather and transport. These costs and expenses may not
  decrease ratably or at all should we experience a reduction in our volumes
  gathered or transmitted by our gathering and transportation operations. As a
  result, we may experience declines in our margin and profitability if our
  volumes decrease.  Due to events related to the Bankruptcy Filings,
  the volumes being terminalled, stored, transported and gathered have decreased
  as compared to periods prior to the Bankruptcy Filings, which has negatively
  impacted total revenues.  As an example, fourth quarter total revenues are
  approximately $9.2 million less than second quarter 2008 total
  revenues, in each case excluding fuel surcharge revenues related to fuel and
  power consumed to operate our liquid asphalt cement storage tanks.  As of
  the date of the filing of this report, we continue to collect the minimum
  revenues from the Private Company under the Terminalling Agreement for
  terminalling and storage services provided for liquid asphalt
  cement.  Our future total revenues may be further impacted if the
  Private Company rejects the Terminalling Agreement or otherwise fails to make
  the minimum payments under the Terminalling Agreement.
  Pursuant
  to the Settlement Agreement, the Private Company will reject the Terminalling
  Agreement and the Throughput Agreement as part of the Bankruptcy Cases and we
  will receive the Private Company's asphalt assets that are connected to our
  asphalt assets.  In addition, pursuant to the Settlement Agreement, we
  will enter into a new throughput agreement with the Private Company pursuant to
  which we will provide certain crude oil gathering, transportation, terminalling
  and storage services to the Private Company.  There can be no
  assurance
  that
  the conditions to effectiveness in the Settlement Agreement will be completed
  and that the transactions contemplated thereby will be
  consummated
  (see "Item 2. Management's Discussion and Analysis of
  Financial Condition and Results of Operations—Settlement with the Private
  Company").
  A
  material decrease in the production of crude oil from the oil fields served by
  our pipelines could materially reduce our ability to make distributions to our
  unitholders.
  The
  throughput on our crude oil pipelines depends on the availability of
  attractively priced crude oil produced from the oil fields served by such
  pipelines, or through connections with pipelines owned by third parties. Crude
  oil production may decline for a number of reasons, including natural declines
  due to depleting wells, a material decrease in the price of crude oil, or the
  inability of producers to obtain necessary drilling or other permits from
  applicable governmental authorities. If we are unable to replace volumes lost
  due to a temporary or permanent material decrease in production from the oil
  fields served by our crude oil pipelines, our throughput could decline, reducing
  our revenue and cash flow and adversely affecting our ability to make
  distributions to our unitholders. The Private Company may also have difficulty
  attracting producers while it is in bankruptcy.  In addition, it is
  difficult to attract producers to a new gathering system if the producer is
  already connected to an existing system. As a result, the Private Company or
  third-party shippers on our pipeline systems may experience difficulty acquiring
  crude oil at the wellhead in areas where there are existing relationships
  between producers and other gatherers and purchasers of crude oil.
  A
  material decrease in the production of liquid asphalt cement could materially
  reduce our ability to make distributions to our unitholders.
  The
  throughput at our liquid asphalt cement terminalling and storage facilities
  depends on the availability of attractively priced liquid asphalt cement
  produced from the various liquid asphalt cement producing refineries. Liquid
  asphalt cement production may decline for a number of reasons, including
  refiners processing more light, sweet crude oil or refiners installing coker
  units that further refine heavy residual fuel oil bottoms such as liquid asphalt
  cement. If we are unable to replace volumes lost due to a temporary or permanent
  material decrease in production from the suppliers of liquid asphalt cement, our
  throughput could decline, reducing our revenue and cash flow and adversely
  affecting our ability to make distributions to our unitholders.
  Our
  debt levels and events of default under the credit agreement may limit our
  ability to make distributions and our flexibility in obtaining additional
  financing and in pursuing other business opportunities.
  Our level of
  debt and the existing events of default under the credit facility could have
  important consequences for us, including the following:
  ·
  our
        ability to obtain additional financing, if necessary, for working capital,
        capital expenditures, acquisitions or other purposes may be impaired or
        such financing may not be available on favorable
    terms;
  ·
  we
        will need a substantial portion of our cash flow to make principal and
        interest payments on our debt, reducing the funds that would otherwise be
        available for operations, future business opportunities and distributions
        to unitholders;
  ·
  our
        debt level will make us more vulnerable to competitive pressures or a
        downturn in our business or the economy generally;
    and
  ·
  our
        debt level may limit our flexibility in responding to changing business
        and economic conditions.
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  Our ability
  to service our debt will depend upon, among other things, our future financial
  and operating performance, which will be affected by prevailing economic
  conditions and financial, business, regulatory and other factors. Our ability to
  service debt under our credit facility also will depend on market interest
  rates, since the interest rates applicable to our borrowings will fluctuate with
  the London Interbank Offered Rate, or LIBOR, or the prime rate, and are higher
  because events of default exist under the credit agreement. If our operating
  results are not sufficient to service our current or future indebtedness, we
  will be forced to take actions such as reducing distributions, reducing or
  delaying our business activities, acquisitions, investments or capital
  expenditures, selling assets, restructuring or refinancing our debt, or seeking
  additional equity capital. We may not be able to effect any of these actions on
  satisfactory terms, or at all.
  Restrictions
  in our credit facility may prevent us from engaging in some beneficial
  transactions or paying distributions to our unitholders.
  Our credit
  facility contains covenants limiting our ability to make distributions to
  unitholders so long as an event of default exists under the credit agreement as
  is currently the case. In addition, our credit facility contains various
  covenants that limit, among other things, our ability to incur indebtedness,
  grant liens or enter into a merger, consolidation or sale of assets.
  Furthermore, our credit facility contains covenants requiring us to maintain
  certain financial ratios and tests. Any subsequent refinancing of our current
  debt may have similar or greater restrictions. Please see "—Risks Related to the
  Bankruptcy Filings—Events of default currently exist under our credit agreement"
  and "Item 2. Management's Discussion and Analysis of Financial Condition and
  Results of Operations—Liquidity and Capital Resources."
  If we borrow funds to make our
  quarterly distributions, our ability to pursue acquisitions and other business
  opportunities may be limited and our operations may be materially
  and
  adversely
  a
  ffected
  .
  Available
  cash for the purpose of making distributions to unitholders includes working
  capital borrowings. If we borrow funds to pay one or more quarterly
  distributions, such amounts will incur interest and must be repaid in accordance
  with the terms of our credit facility. Currently we are prohibited from
  borrowing funds to pay distributions to our unitholders due to the events of
  default that have occurred and are continuing under our credit agreement. If we
  regain compliance under our credit facility or obtain permanent waivers of the
  events of default and are able to again borrow funds to pay distributions to our
  unitholders, any amounts borrowed for distributions to our unitholders will
  reduce the funds available to us for other purposes under our credit facility,
  including amounts available for use in connection with acquisitions and other
  business opportunities.  If we are unable to pursue our growth strategy due
  to our limited ability to borrow funds, our operations may be materially and
  adversely affected.
  We
  face intense competition in our gathering, transportation, terminalling and
  storage activities. Competition from other providers of crude oil gathering,
  transportation, terminalling and storage services that are able to supply the
  Private Company and our other customers with those services at a lower price
  could reduce our ability to make distributions to our unitholders.
  We are
  subject to competition from other crude oil gathering, transportation,
  terminalling and storage operations that may be able to supply the Private
  Company and our other customers with the same or comparable services on a more
  competitive basis. We compete with national, regional and local gathering,
  storage, terminalling and pipeline companies, including the major integrated oil
  companies, of widely varying sizes, financial resources and experience. Some of
  these competitors are substantially larger than us, have greater financial
  resources, and control substantially greater storage capacity than we do. With
  respect to our gathering and transportation services, these competitors include
  TEPPCO Partners, L.P., Plains All American Pipeline, L.P., ConocoPhillips,
  Sunoco Logistics Partners L.P. and National Cooperative Refinery Association,
  among others. With respect to our storage and terminalling services, these
  competitors include BP plc, Enbridge Energy Partners, L.P. and Plains All
  American Pipeline, L.P. Some of these competitors have greater capital resources
  and control greater supplies of crude oil than the Private Company. Several of
  our competitors conduct portions of their operations through publicly traded
  partnerships with structures similar to ours, including Plains All American
  Pipeline, L.P., TEPPCO Partners, L.P., Sunoco Logistics Partners L.P. and
  Enbridge Energy Partners, L.P. Our ability to compete could be harmed by
  numerous factors, including:
  ·
  price
        competition;
  ·
  the
        perception that another company can provide better
    service,
  ·
  the
        uncertainty relating to the Private Company having filed bankruptcy;
        and
  ·
  the
        availability of alternative supply points, or supply points located closer
        to the operations of the Private Company's
    customers.
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  In addition, the Private
  Company owns midstream assets and may engage in competition with us, subject to
  certain restrictions on the Private Company's ability to acquire and construct
  liquid asphalt cement terminalling and storage assets. If we are unable to
  compete with services offered by other midstream enterprises, including the
  Private Company, our ability to make distributions to our unitholders may be
  adversely affected.
  Some
  of our pipeline systems are dependent upon their interconnections with other
  crude oil pipelines to reach end markets.
  Some of our
  pipeline systems are dependent upon their interconnections with other crude oil
  pipelines to reach end markets. Reduced throughput on
  these
  interconnecting pipelines as a result of testing, line repair, reduced operating
  pressures or other causes could result in reduced throughput on our
  pipeline
  systems that would adversely affect our revenue and cash flow and our ability to
  make distributions to our unitholders.
  We
  completed the acquisition of our asphalt assets on February 20, 2008. If our
  assets do not perform as expected, our future financial performance may be
  negatively impacted.
  Our
  acquisition of our asphalt assets significantly increased the size of our
  company and diversified the geographic areas and lines of business in which we
  operate. We cannot assure our unitholders that we will achieve the desired
  profitability from our asphalt assets. In addition, our failure to successfully
  integrate our asphalt assets into our business could adversely affect our
  financial condition and results of operations. We face certain challenges as we
  work to integrate our asphalt assets into our business. In particular, the
  acquisition of our asphalt assets, by adding 46 terminals in 23 states, expanded
  our operations and the types of business in which we engage, significantly
  expanding our geographic scope and increasing the number of employees involved
  in our operations, thereby presenting us with significant challenges as we work
  to manage the increase in scale resulting from the acquisition. Delays in this
  process could have a material adverse effect on our revenues, expenses,
  operating results and financial condition. In addition, events outside of our
  control, including changes in state and federal regulation and laws as well as
  economic trends, also could adversely affect our ability to realize the
  anticipated benefits from the acquisition of our asphalt assets.
  Further, the
  liquid asphalt cement operations may not perform in accordance with our
  expectations, we may lose key employees and our expectations with regards to
  integration and synergies may not be fully realized. Our failure to successfully
  integrate and operate our asphalt assets, and to realize the anticipated
  benefits of the acquisition could adversely affect our operating and financial
  results.
  Prior
  to the Bankruptcy Filings, a principal focus of our business strategy was to
  grow and expand our business through acquisitions. If we are able to pursue this
  strategy in the future but are unable to make acquisitions on economically
  acceptable terms, our future growth may be limited.
  Prior to the
  Bankruptcy Filings, a principal focus of our business strategy was to grow and
  expand our business through acquisitions.  If we are able to stabilize
  our business, we may be able to again pursue this strategy.  Our
  ability to grow depends, in part, on our ability to make acquisitions that
  result in an increase in the cash generated per unit from operations. If we are
  unable to make these accretive acquisitions, either because we are (1) unable to
  identify attractive acquisition candidates or negotiate acceptable purchase
  contracts with them, (2) unable to obtain financing for these acquisitions on
  economically acceptable terms or (3) outbid by competitors, then our future
  growth and ability to increase distributions will be limited. Furthermore, even
  if we do make acquisitions that we believe will be accretive, these acquisitions
  may nevertheless result in a decrease in the cash generated from operations per
  unit.
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  Any
  acquisition involves potential risks, including, among other
  things:
  ·
  mistaken
        assumptions about volumes, revenues and costs, including
        synergies;
  ·
  an
        inability to integrate successfully the businesses we
      acquire;
  ·
  an
        inability to hire, train or retain qualified personnel to manage and
        operate our business and assets;
  ·
  the
        assumption of unknown liabilities;
  ·
  limitations
        on rights to indemnity from the
  seller;
  ·
  mistaken
        assumptions about the overall costs of equity or
    debt;
  ·
  the
        diversion of management's and employees' attention from other business
        concerns;
  ·
  unforeseen
        difficulties operating in new product areas or new geographic areas;
        and
  ·
  customer
        or key employee losses at the acquired
    businesses.
  If we
  consummate any future acquisitions, our capitalization and results of operations
  may change significantly, and our unitholders will not have the opportunity to
  evaluate the economic, financial and other relevant information that we will
  consider in determining the application of these funds and other
  resources.
  Our
  acquisition strategy is based, in part, on our expectation of ongoing
  divestitures of energy assets by industry participants. A material decrease in
  such divestitures would limit our opportunities for future acquisitions and
  could adversely affect our operations and cash flows available for distribution
  to our unitholders.
  Prior
  to the Bankruptcy Filings, our growth strategy included acquiring midstream
  entities or assets that are distinct and separate from our existing
  terminalling, storage, gathering and transportation operations.  If we
  are able to pursue this strategy in the future, it could subject us to
  additional business and operating risks.
  We may
  acquire midstream assets that have operations in new and distinct lines of
  business from our crude oil or our liquid asphalt cement operations. Integration
  of a new business is a complex, costly and time-consuming process. Failure to
  timely and successfully integrate acquired entities' new lines of business with
  our existing operations may have a material adverse effect on our business,
  financial condition or results of operations. The difficulties of integrating a
  new business with our existing operations include, among other
  things:
  ·
  operating
        distinct businesses that require different operating strategies and
        different managerial expertise;
  ·
  the
        necessity of coordinating organizations, systems and facilities in
        different locations;
  ·
  integrating
        personnel with diverse business backgrounds and organizational cultures;
        and
  ·
  consolidating
        corporate and administrative
  functions.
  In addition,
  the diversion of our attention and any delays or difficulties encountered in
  connection with the integration of a new business, such as unanticipated
  liabilities or costs, could harm our existing business, results of operations,
  financial conditions and prospects. Furthermore, new lines of business will
  subject us to additional business and operating risks. For example, we may in
  the future determine to acquire businesses that are subject to significant risks
  due to fluctuations in commodity prices. These new business and operating risks
  could have a material adverse effect on our financial condition or results of
  operations.
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  Expanding
  our business by constructing new assets subjects us to risks that projects may
  not be completed on schedule, and that the costs associated with projects may
  exceed our expectations, which could cause our cash available for distribution
  to our unitholders to be less than anticipated.
  The
  construction of additions or modifications to our existing assets, and the
  construction of new assets, involves numerous regulatory, environmental,
  political, legal and operational uncertainties and requires the expenditure of
  significant amounts of capital. If we undertake these types of projects, they
  may not be completed on schedule or at all or at the budgeted cost. In addition,
  our revenues may not increase immediately upon the expenditure of funds on a
  particular project. Moreover, we may construct facilities to capture anticipated
  future growth in demand in a market in which such growth does not
  materialize.  We acquired certain pipeline and related assets, including a
  130-mile, 8-inch pipeline that originates in Ardmore, Oklahoma and terminates in
  Drumright, Oklahoma from the Private Company in May 2008.  We have
  suspended capital expenditures on this pipeline due to the Bankruptcy
  Filings.  Management currently intends to put the asset into service by
  late 2009 or early 2010 and is exploring various alternatives to complete the
  project.
  We
  are exposed to the credit risks of our third-party customers in the ordinary
  course of our gathering activities. Any material nonpayment or nonperformance by
  our third-party customers could reduce our ability to make distributions to our
  unitholders.
  In addition
  to our dependence on the Private Company, we are subject to risks of loss
  resulting from nonpayment or nonperformance by our third-party customers. Some
  of our customers may be highly leveraged and subject to their own operating and
  regulatory risks. In addition, any material nonpayment or nonperformance by our
  customers could require us to pursue substitute customers for our affected
  assets or provide alternative services. Any such efforts may not be successful
  or may not provide similar fees. These events could reduce our ability to make
  distributions to our unitholders.
  Our
  revenues from third-party customers are generated under contracts that must be
  renegotiated periodically and that allow the customer to reduce or suspend
  performance in some circumstances, which could cause our revenues from those
  contracts to decline and reduce our ability to make distributions to our
  unitholders.
  Some of our
  contract-based revenues from customers other than the Private Company are
  generated under contracts with terms which allow the customer to reduce or
  suspend performance under the contract in specified circumstances, such as the
  occurrence of a catastrophic event to our or the customer's operations. The
  occurrence of an event which results in a material reduction or suspension of
  our customer's performance could reduce our ability to make distributions to our
  unitholders.
  Many of our
  contracts with third-party customers for producer field services have terms of
  one year or less. As these contracts expire, they must be extended and
  renegotiated or replaced. We may not be able to extend, renegotiate or replace
  these contracts when they expire, and the terms of any renegotiated contracts
  may not be as favorable as the contracts they replace. In particular, our
  ability to extend or replace contracts could be harmed by numerous competitive
  factors, such as those described above under "—We face intense competition in
  our gathering, transportation, terminalling and storage activities. Competition
  from other providers of crude oil gathering, transportation, terminalling and
  storage services that are able to supply the Private Company and our other
  customers with those services at a lower price could reduce our ability to make
  distributions to our unitholders." Additionally, we may incur substantial costs
  if modifications to our terminals are required in order to attract substitute
  customers or provide alternative services. If we cannot successfully renew
  significant contracts or must renew them on less favorable terms, or if we incur
  substantial costs in modifying our terminals, our revenues from these
  arrangements could decline and our ability to make distributions to our
  unitholders could suffer.
  We
  may incur significant costs and liabilities as a result of pipeline integrity
  management program testing and any necessary pipeline repair, or preventative or
  remedial measures, which could have a material adverse effect on our results of
  operations.
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  The DOT
  has adopted regulations requiring pipeline operators to develop integrity
  management programs for transportation pipelines located where a leak or rupture
  could do the most harm in "high consequence areas", including high population
  areas, areas that are sources of drinking water, ecological resource areas that
  are unusually sensitive to environmental damage from a pipeline release and
  commercially navigable waterways, unless the operator effectively demonstrates
  by risk assessment that the pipeline could not affect the area. The regulations
  require operators of covered pipelines to:
  ·
  perform
        ongoing assessments of pipeline
  integrity;
  ·
  identify
        and characterize threats to pipeline segments that could impact a high
        consequence area;
  ·
  improve
        data collection, integration and
  analysis;
  ·
  repair
        and remediate the pipeline as necessary;
  and
  ·
  implement
        preventive and mitigating actions.
  In
  addition to these adopted regulations, in September 2006, the DOT proposed
  amendment of existing pipeline safety standards including its integrity
  management programs to broaden the scope of coverage to include certain rural
  onshore hazardous liquid and low-stress pipeline systems found near "unusually
  sensitive areas," including non-populated areas requiring extra protection
  because of the presence of sole source drinking water resources, endangered
  species, or other ecological resources. Also, in December 2006, the Pipeline
  Inspection, Protection, Enforcement and Safety Act of 2006 was enacted. This act
  reauthorizes and amends the DOT's pipeline safety programs and includes a
  provision eliminating the regulatory exemption for hazardous liquid pipelines
  operated at low stress. Adoption of new or more stringent pipeline safety
  regulations affecting our gathering or low-stress pipelines could result in more
  rigorous and costly integrity management planning requirements being imposed on
  those lines, which could have a material adverse effect on our results of
  operations. Please read "Item 1. Business—Regulation—Pipeline Safety" in
  our 2007 Form 10-K for more information.
  Our
  operations are subject to environmental and worker safety laws and regulations
  that may expose us to significant costs and liabilities. Failure to comply with
  these laws and regulations could adversely affect our ability to make
  distributions to our unitholders.
  Our midstream
  crude oil gathering, transportation, terminalling and storage operations,
  together with the liquid asphalt cement terminalling and storage assets that we
  acquired from the Private Company, are subject to stringent federal, state and
  local laws and regulations relating to the protection of the environment.
  Various governmental authorities, including the EPA, have the power to enforce
  compliance with these laws and regulations and the permits issued under them,
  and violators are subject to administrative, civil and criminal penalties,
  including civil fines, injunctions or both. Joint and several strict liability
  may be incurred without regard to fault or the legality of the original conduct
  under CERCLA, RCRA and analogous state laws for the remediation of contaminated
  areas. Private parties, including the owners of properties located near our
  terminalling and storage facilities or through which our pipeline systems pass,
  also may have the right to pursue legal actions to enforce compliance, as well
  as seek damages for non-compliance with environmental laws and regulations or
  for personal injury or property damage. Moreover, new stricter laws, regulations
  or enforcement policies could be implemented that significantly increase our
  compliance costs and the cost of any remediation that may become necessary, some
  of which may be material.
  In performing
  midstream operations and liquid asphalt cement terminalling services, we incur
  environmental costs and liabilities in connection with the handling of
  hydrocarbons and solid wastes. We currently own, operate or lease properties
  that for many years have been used for midstream activities, including
  properties in and around the Cushing Interchange, and with respect to our
  asphalt assets, for liquid asphalt cement terminalling and storage activities.
  Activities by us or prior owners, lessees or users of these properties over whom
  we had no control may have resulted in the spill or release of hydrocarbons or
  solid wastes on or under them. Additionally, some sites we own or operate are
  located near current or former storage, terminal and pipeline operations, and
  there is a risk that contamination has migrated from those sites to ours.
  Increasingly strict environmental laws, regulations and enforcement policies as
  well as claims for damages and other similar developments could result in
  significant costs and liabilities, and our ability to make distributions to our
  unitholders could suffer as a result. Please see "Item
  1—Business—Regulation" in our 2007 Form 10-K for more
  information.
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  In
  addition, the workplaces associated with the storage facilities and pipelines we
  operate are subject to OSHA requirements and comparable state statutes that
  regulate the protection of the health and safety of workers. The OSHA hazard
  communication standard requires that we maintain information about hazardous
  materials used or produced in our operations and that we provide this
  information to employees, state and local government authorities, and local
  residents. Failure to comply with OSHA requirements, including general industry
  standards, recordkeeping requirements and monitoring of occupational exposure to
  regulated substances, could subject us to fines or significant compliance costs
  and adversely affect our ability to make distributions to our
  unitholders.
  Our
  business involves many hazards and operational risks, including adverse weather
  conditions, which could cause us to incur substantial liabilities.
  Our operations are subject to the many
  hazards inherent in the transportation and storage of crude oil and the storage
  of liquid asphalt cement, including:
  ·
  explosions,
        fires, accidents, including road and highway accidents involving our
        tanker trucks;
  ·
  extreme
        weather conditions, such as hurricanes which are common in the
        Gulf Coast and tornadoes and flooding which are common in the
        Midwest;
  ·
  damage
        to our pipelines, storage tanks, terminals and related
        equipment;
  ·
  leaks
        or releases of crude oil into the environment;
    and
  ·
  acts
        of terrorism or vandalism.
  If any of
  these events were to occur, we could suffer substantial losses because of
  personal injury or loss of life, severe damage to and destruction of property
  and equipment, and pollution or other environmental damage resulting in
  curtailment or suspension of our related operations. In addition, mechanical
  malfunctions, faulty measurement or other errors may result in significant costs
  or lost revenues.
  We
  do not own all of the land on which our pipelines and facilities are located,
  which could disrupt our operations.
  We do not own
  all of the land on which our pipelines and facilities have been constructed, and
  we are therefore subject to the possibility of more onerous terms and/or
  increased costs to retain necessary land use if we do not have valid
  rights-of-way or if such rights-of-way or any material real property leases
  lapse or terminate. We obtain the rights to construct and operate our pipelines
  and some of our terminals and storage facilities on land owned by third parties
  and governmental agencies for a specific period of time. Our loss of these
  rights, through our inability to renew leases, right-of-way contracts or
  otherwise, could have a material adverse effect on our business, results of
  operations and financial condition and our ability to make cash distributions to
  you.
  Terrorist
  attacks, and the threat of terrorist attacks, have resulted in increased costs
  to our business. Continued hostilities in the Middle East or other sustained
  military campaigns may adversely impact our results of operations.
  The long-term
  impact of terrorist attacks, such as the attacks that occurred on September 11,
  2001, and the threat of future terrorist attacks on our industry in general, and
  on us in particular, is not known at this time. Increased security measures
  taken by us as a precaution against possible terrorist attacks have resulted in
  increased costs to our business. Uncertainty surrounding continued hostilities
  in the Middle East or other sustained military campaigns may affect our
  operations in unpredictable ways, including disruptions of crude oil supplies
  and markets for our services, and the possibility that infrastructure facilities
  could be direct targets of, or indirect casualties of, an act of
  terror.
  Changes in
  the insurance markets attributable to terrorist attacks may make certain types
  of insurance more difficult for us to obtain. Moreover, the insurance that may
  be available to us may be significantly more expensive than our existing
  insurance coverage. Instability in the financial markets as a result of
  terrorism or war could also affect our ability to raise capital.
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  Risks
  Inherent in an Investment in Us
  Some
  of our general partner's directors are affiliates of certain creditors of the
  Private Company; therefore, such creditors may have different business interests
  than the common unitholders.
  Manchester
  and Alerian are creditors under a loan agreement with SemGroup Holdings, which
  is a subsidiary of the Private Company.  This loan is secured by our
  subordinated units and incentive distribution rights and the membership
  interests in our general partner, owned by SemGroup Holdings.  On July
  18, 2008, Manchester and Alerian declared an event of default under the loan
  agreement and exercised their right under a pledge agreement with SemGroup
  Holdings to direct the vote of the membership interests of our general
  partner.  Manchester and Alerian exercised these voting rights to
  reconstitute our general partner's board of directors.  Manchester
  and/or Alerian may have business interests that are different from the business
  interests of our common unitholders.
  Our
  general partner has sole responsibility for conducting our business and managing
  our operations.  Our general partner has conflicts of interest with us
  and limited fiduciary duties, which may permit it to favor its own interests to
  the detriment of our unitholders.
  Conflicts of
  interest may arise between our general partner, on the one hand, and us and our
  unitholders, on the other hand.  In resolving those conflicts of
  interest, our general partner may favor its own interests and the interests of
  its affiliates over the interests of our unitholders. Although the conflicts
  committee of our general partner's board of directors may review such conflicts
  of interest, our general partner's board of directors is not required to submit
  such matters to the conflicts committee. These conflicts include, among others,
  the following situations:
  ·
  neither
        our partnership agreement nor any other agreement requires the general
        partner or any person who controls the general partner to pursue a
        business strategy that favors us.  Such persons may make these
        decisions in their best interest, which may be contrary to our
        interests;
  ·
  our
        general partner is allowed to take into account the interests of parties
        other than us, such as creditors and the Private Company and their
        affiliates, in resolving conflicts of
  interest;
  ·
  if
        we do not have sufficient available cash from operating surplus, our
        general partner could cause us to use cash from non-operating sources,
        such as asset sales, issuances of securities and borrowings, to pay
        distributions, which means that we could make distributions that
        deteriorate our capital base and that our general partner could receive
        distributions on its subordinated units and incentive distribution rights
        to which it would not otherwise be entitled if we did not have sufficient
        available cash from operating surplus to make such
        distributions;
  ·
  our
        general partner has limited its liability and reduced its fiduciary
        duties, and has also restricted the remedies available to our unitholders
        for actions that, without the limitations, might constitute breaches of
        fiduciary duty;
  ·
  our
        general partner determines the amount and timing of asset purchases and
        sales, borrowings, issuance of additional partnership securities and
        reserves, each of which can affect the amount of cash that is distributed
        to unitholders;
  ·
  our
        general partner determines the amount and timing of any capital
        expenditures and whether a capital expenditure is a maintenance capital
        expenditure, which reduces operating surplus, or an expansion capital
        expenditure, which does not reduce operating surplus. This determination
        can affect the amount of cash that is distributed to our unitholders and
        the ability of the subordinated units to convert to common
        units;
  ·
  our
        general partner may make a determination to receive a quantity of our
        Class B units in exchange for resetting the target distribution levels
        related to its incentive distribution rights without the approval of the
        conflicts committee of our general partner or our
      unitholders;
  ·
  our
        general partner determines which costs incurred by it and its affiliates
        are reimbursable by us and the Private Company determines the allocation
        of shared overhead expenses;
  ·
  our
        partnership agreement does not restrict our general partner from causing
        us to pay it or its affiliates for any services rendered to us or entering
        into additional contractual arrangements with any of these entities on our
        behalf;
  ·
  our
        general partner intends to limit its liability regarding our contractual
        and other obligations and, in some circumstances, is entitled to be
        indemnified by us;
  ·
  our
        general partner may exercise its limited right to call and purchase common
        units if it and its affiliates own more than 80% of the common
        units;
  ·
  our
        general partner controls the enforcement of obligations owed to us by our
        general partner and its affiliates;
  and
  ·
  our
        general partner decides whether to retain separate counsel, accountants or
        others to perform services for us.
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  Our
  partnership agreement limits our general partner's fiduciary duties to holders
  of our common units and subordinated units and restricts the remedies available
  to holders of our common units and subordinated units for actions taken by our
  general partner that might otherwise constitute breaches of fiduciary
  duty.
  Our
  partnership agreement contains provisions that reduce the fiduciary standards to
  which our general partner would otherwise be held by state fiduciary duty laws.
  For example, our partnership agreement:
  ·
  permits
        our general partner to make a number of decisions in its individual
        capacity, as opposed to in its capacity as our general partner. This
        entitles our general partner to consider only the interests and factors
        that it desires, and it has no duty or obligation to give any
        consideration to any interest of, or factors affecting, us, our affiliates
        or any limited partner. Examples include the exercise of its right to
        receive a quantity of our Class B units in exchange for resetting the
        target distribution levels related to its incentive distribution rights,
        the exercise of its limited call right, the exercise of its rights to
        transfer or vote the units it owns, the exercise of its registration
        rights and its determination whether or not to consent to any merger or
        consolidation of the partnership or amendment to the partnership
        agreement;
  ·
  provides
        that our general partner will not have any liability to us or our
        unitholders for decisions made in its capacity as a general partner so
        long as it acted in good faith, meaning it believed the decision was in
        the best interests of our
  partnership;
  ·
  generally
        provides that affiliated transactions and resolutions of conflicts of
        interest not approved by the conflicts committee of the board of directors
        of our general partner acting in good faith and not involving a vote of
        unitholders must be on terms no less favorable to us than those generally
        being provided to or available from unrelated third parties or must be
        "fair and reasonable" to us, as determined by our general partner in good
        faith. In determining whether a transaction or resolution is "fair and
        reasonable," our general partner may consider the totality of the
        relationships between the parties involved, including other transactions
        that may be particularly advantageous or beneficial to
    us;
  ·
  provides
        that our general partner and its officers and directors will not be liable
        for monetary damages to us, our limited partners or assignees for any acts
        or omissions unless there has been a final and non-appealable judgment
        entered by a court of competent jurisdiction determining that the general
        partner or its officers and directors acted in bad faith or engaged in
        fraud or willful misconduct or, in the case of a criminal matter, acted
        with knowledge that the conduct was criminal;
    and
  ·
  provides
        that in resolving conflicts of interest, it will be presumed that in
        making its decision the general partner acted in good faith, and in any
        proceeding brought by or on behalf of any limited partner or us, the
        person bringing or prosecuting such proceeding will have the burden of
        overcoming such presumption.
  By purchasing
  a common unit, a common unitholder will become bound by the provisions in the
  partnership agreement, including the provisions discussed above.
  The
  Private Company may compete with us, which could adversely affect our existing
  business and limit our ability to acquire additional assets or
  businesses.
  Other than
  the Private Company's agreement not to engage in the business of terminalling
  and storing liquid asphalt cement within 50 miles of our liquid asphalt
  cement
  facilities, neither our partnership agreement nor the Amended Omnibus Agreement
  prohibits the Private Company or any successor to the Private Company or
  acquirer of its assets from owning assets or engaging in
  businesses
  that compete directly or indirectly with us. In addition, subject to the
  restrictions above, the Private Company or any successor to the Private
  Company or acquirer of its assets may acquire, construct or dispose of
  additional
  midstream or other assets in the future, without any obligation to offer us the
  opportunity to purchase or construct any of those assets.  As a
  result,
  competition
  from the Private Company or any successor to the Private Company or
  acquirer of its assets could adversely impact our results of operations and
  cash available for distribution.
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  Our
  agreement not to compete with the Private Company may limit our ability to
  grow.
  Pursuant to
  the Amended Omnibus Agreement, we have agreed that for so long as the
  Terminalling Agreement is in effect, we will not engage in the business of
  processing, marketing and distributing finished asphalt products within 50 miles
  of our liquid asphalt cement facilities. This agreement not to compete with the
  Private Company may limit our ability to grow if we decide to engage in the
  finished asphalt products business.
  Pursuant
  to the Settlement Agreement, the Private Company will reject the Terminalling
  Agreement and the Amended Omnibus Agreement as part of the Bankruptcy Cases and
  we will no longer be limited by these restrictions.  There can be no
  assurance
  that the
  conditions to effectiveness in the Settlement Agreement will be completed and
  that the transactions contemplated thereby will be consummated
  (see "Item
  2. Management's Discussion and Analysis of Financial Condition and Results of
  Operations—Settlement with the Private Company").
  Cost
  reimbursements due to our general partner and its affiliates for services
  provided, which are determined by our general partner, may be substantial and
  will reduce our cash available for distribution to our unitholders.
  Pursuant to
  our partnership agreement, the Private Company receives reimbursement for the
  payment of operating expenses related to our operations and for the provision of
  various general and administrative services for our benefit. Payments for these
  services may be substantial and reduce the amount of cash available for
  distribution to unitholders. In addition, under Delaware partnership law, our
  general partner has unlimited liability for our obligations, such as our debts
  and environmental liabilities, except for our contractual obligations that are
  expressly made without recourse to our general partner. To the extent our
  general partner incurs obligations on our behalf, we are obligated under our
  partnership agreement to reimburse or indemnify our general partner. If we are
  unable or unwilling to reimburse or indemnify our general partner, our general
  partner may take actions to cause us to make payments of these obligations and
  liabilities. Any such payments would reduce the amount of cash otherwise
  available for distribution to our unitholders. Please see "Item 13—Certain
  Relationships and Related Party Transactions, and Director
  Independence—Agreements Related to Our Acquisition of the Asphalt Assets—Amended
  Omnibus Agreement" in our 2007 Form 10-K
  Holders
  of our common units have limited voting rights and are not entitled to elect our
  general partner or its directors.
  Unlike the
  holders of common stock in a corporation, unitholders have only limited voting
  rights on matters affecting our business and, therefore, limited ability to
  influence management's decisions regarding our business. Unitholders did not
  elect our general partner or our general partner's board of directors, and have
  no right to elect our general partner or our general partner's board of
  directors on an annual or other continuing basis. The present board of directors
  of our general partner was chosen by Manchester and Alerian pursuant to their
  rights under the Holdings Credit Agreements to direct the vote of the membership
  interests of our general partner.  Furthermore, if the unitholders are
  dissatisfied with the performance of our general partner, they have little
  ability to remove our general partner. Amendments to our partnership agreement
  may be proposed only by or with the consent of our general partner. As a result
  of these limitations, the price at which the common units will trade could be
  diminished because of the absence or reduction of a takeover premium in the
  trading price.
  Removal
  of our general partner without its consent will dilute and adversely affect our
  common unitholders.
  If our
  general partner is removed without cause during the subordination period and
  units held by our general partner and its affiliates are not voted in favor of
  that removal, all remaining subordinated units will automatically convert into
  common units and any existing arrearages on our common units will be
  extinguished. A removal of our general partner under these circumstances would
  adversely affect our common units by prematurely eliminating their distribution
  and liquidation preference over our subordinated units, which would otherwise
  have continued until we had met certain distribution and performance tests.
  Cause is narrowly defined to mean that a court of competent jurisdiction has
  entered a final, non-appealable judgment finding the general partner liable for
  actual fraud or willful or wanton misconduct in its capacity as our general
  partner. Cause does not include most cases of charges of poor management of the
  business, so the removal of the general partner because of the unitholders'
  dissatisfaction with our general partner's performance in managing our
  partnership will most likely result in the termination of the subordination
  period and conversion of all subordinated units to common units.
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  Control
  of our general partner may be transferred to a third party without unitholder
  consent.
  Our general
  partner may transfer its general partner interest to a third party in a merger
  or in a sale of all or substantially all of its assets without the consent of
  the unitholders. Furthermore, our partnership agreement does not restrict the
  ability of the Private Company, the owner of our general partner, from
  transferring all or a portion of its ownership interest in our general partner
  to a third party, or Manchester and Alerian from transferring all or a portion
  of their loan interest voting rights in the general partner to a third party.
  The new owner of our general partner would then be in a position to replace the
  board of directors and officers of our general partner with its own choices and
  thereby influence the decisions made by the board of directors and
  officers.
  We
  may issue additional units without approval of our unitholders, which would
  dilute our unitholders' ownership interests.
  Our
  partnership agreement does not limit the number or price of additional limited
  partner interests (including any securities of equal or senior rank to our
  common units, and options, rights, warrants and appreciation rights relating to
  any such securities) that we may issue at any time without the approval of our
  unitholders. In addition, because we are a limited partnership, we will not be
  subject to the shareholder approval requirements relating to the issuance of
  securities contained in Nasdaq Marketplace Rule 4350(i). The issuance by us of
  additional common units or other equity securities of equal or senior rank will
  have the following effects:
  ·
  our
        unitholders' proportionate ownership interest in us will
        decrease;
  ·
  the
        amount of cash available for distribution on each unit may
        decrease;
  ·
  because
        a lower percentage of total outstanding units will be subordinated units,
        the risk that a shortfall in the payment of the minimum quarterly
        distribution will be borne by our common unitholders will
        increase;
  ·
  the
        ratio of taxable income to distributions may
    increase;
  ·
  the
        relative voting strength of each previously outstanding unit may be
        diminished; and
  ·
  the
        market price of the common units may
  decline.
  Our
  partnership agreement restricts the voting rights of unitholders, other than our
  general partner and its affiliates, including the Private Company, owning 20% or
  more of our common units.
  Unitholders'
  voting rights are further restricted by the partnership agreement provision
  providing that any units held by a person that owns 20% or more of any class of
  units then outstanding, other than our general partner, its affiliates, their
  transferees and persons who acquired such units with the prior approval of the
  board of directors of our general partner, cannot vote on any matter. Our
  partnership agreement also contains provisions limiting the ability of
  unitholders to call meetings or to acquire information about our operations, as
  well as other provisions.
  Affiliates
  of our general partner may sell common units in the public markets, which sales
  could have an adverse impact on the trading price of the common
  units.
  Executive
  officers and directors of our general partner beneficially own an aggregate of
  575,970 common units and 1,667 subordinated units and the Private Company
  indirectly owns 12,570,504 subordinated units, although such units are
  collateral to a loan between SemGroup Holdings and Manchester and Alerian. All
  of the subordinated units will convert into common units at the end of the
  subordination period and may convert earlier. The sale of these units in the
  public markets could have an adverse impact on the price of the common units or
  on any trading market that may develop.
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  Our
  general partner has a limited call right that may require our unitholders to
  sell their common units at an undesirable time or price.
  If at any
  time our general partner and its affiliates own more than 80% of the common
  units, our general partner will have the right, but not the obligation, which it
  may assign to any of its affiliates or to us, to acquire all, but not less than
  all, of the common units held by unaffiliated persons at a price not less than
  their then-current market price. As a result, our unitholders may be required to
  sell their common units at an undesirable time or price and may not receive any
  return on their investment. Our unitholders also may incur a tax liability upon
  a sale of their units. At the end of the subordination period, assuming no
  additional issuances of common units and no sales of subordinated units, our
  general partner and its affiliates will own 36.8% of the common
  units.
  Common
  units held by persons who are not Eligible Holders will be subject to the
  possibility of redemption.
  The Longview
  system is, and any additional interstate pipelines that we acquire or construct
  may be, subject to the rate regulation of the FERC. Our general partner has the
  right under our partnership agreement to institute procedures, by giving notice
  to each of our unitholders, that would require transferees of common units and,
  upon the request of our general partner, existing holders of our common units to
  certify that they are Eligible Holders. The purpose of these certification
  procedures would be to enable us to utilize a federal income tax expense as a
  component of the pipeline's cost of service upon which tariffs may be
  established under FERC rate-making policies applicable to entities that pass
  through their taxable income to their owners. Eligible Holders are individuals
  or entities subject to United States federal income taxation on the income
  generated by us or entities not subject to United States federal income taxation
  on the income generated by us, so long as all of the entity's owners are subject
  to such taxation. If these tax certification procedures are implemented, we will
  have the right to redeem the common units held by persons who are not Eligible
  Holders at the lesser of the holder's purchase price and the then-current market
  price of the units. The redemption price would be paid in cash or by delivery of
  a promissory note, as determined by our general partner.
  Our
  unitholders' liability may not be limited if a court finds that unitholder
  action constitutes control of our business.
  A general
  partner of a partnership generally has unlimited liability for the obligations
  of the partnership, except for those contractual obligations of the partnership
  that are expressly made without recourse to the general partner. Our partnership
  is organized under Delaware law and we conduct business in a number of other
  states. The limitations on the liability of holders of limited partner interests
  for the obligations of a limited partnership have not been clearly established
  in some of the other states in which we do business.
  Our
  unitholders could be liable for our obligations as if they were a general
  partner if:
  ·
  a
        court or government agency determined that we were conducting business in
        a state but had not complied with that particular state's partnership
        statute; or
  ·
  a
        unitholder's right to act with other unitholders to remove or replace the
        general partner, to approve some amendments to our partnership agreement
        or to take other actions under our partnership agreement constitute
        "control" of our business.
  Unitholders
  may have liability to repay distributions that were wrongfully distributed to
  them.
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  Under
  certain circumstances, unitholders may have to repay amounts wrongfully returned
  or distributed to them. Under Section 17-607 and 17-804 of the Delaware Revised
  Uniform Limited Partnership Act, we may not make a distribution to our
  unitholders if the distribution would cause our liabilities to exceed the fair
  value of our assets. Delaware law provides that for a period of three years from
  the date of the impermissible distribution, limited partners who received the
  distribution and who knew at the time of the distribution that it violated
  Delaware law will be liable to the limited partnership for the distribution
  amount. Substituted limited partners are liable for the obligations of the
  assignor to make contributions to the partnership that are known to the
  substituted limited partner at the time it became a limited partner and for
  unknown obligations if the liabilities could be determined from the partnership
  agreement. Liabilities to partners on account of their partnership interests and
  liabilities that are non-recourse to the partnership are not counted for
  purposes of determining whether a distribution is permitted.
  Tax
  Risks to Common Unitholders
  Our
  unitholders have been and will be required to pay taxes on their share of our
  taxable income even if they have not or do not receive any cash distributions
  from us.
  Because our
  unitholders are treated as partners to whom we will allocate taxable income
  which could be different in amount than the cash we distribute, they will be
  required to pay any federal income taxes and, in some cases, state and local
  income taxes on their share of our taxable income, even if our unitholders
  receive no cash distributions from us. In this regard, we did not pay a
  distribution to our unitholders for the quarters ended June 30, 2008, September
  30, 2008, and December 31, 2008.  In addition, we do not expect to
  make a distribution relating to the first quarter of 2009 and may not be able to
  make distributions in the future.  Thus, our unitholders may not
  receive cash distributions from us equal to their share of our taxable income or
  even equal to the actual tax liability that results from their share of our
  taxable income.
  Our
  tax treatment depends on our status as a partnership for federal income tax
  purposes, as well as our not being subject to a material amount of entity-level
  taxation by individual states. If the IRS were to treat us as a corporation or
  if we were to become subject to a material amount of entity-level taxation for
  state tax purposes, then our cash available for distribution to our unitholders
  would be substantially reduced.
  The
  anticipated after-tax economic benefit of an investment in our common units
  depends largely on us being treated as a partnership for federal income tax
  purposes.  If less than 90% of the gross income of a publicly traded
  partnership, such as us, for any taxable year is "qualifying income" from
  sources such as the transportation, marketing (other than to end users), or
  processing of crude oil, natural gas or products thereof, interest, dividends or
  similar sources, that partnership will be taxable as a corporation under Section
  7704 of the Internal Revenue Code for federal income tax purposes for that
  taxable year and all subsequent years.  In this regard, because the
  income we earn from the Private Company is "qualifying income" any material
  reduction or elimination of that income, or any amendment to the Throughput
  Agreement or the Terminalling Agreement which changes the nature of the services
  provided or the income generated thereunder, may cause our remaining "qualifying
  income" to constitute less than 90% of our gross income.  As a result,
  we could become taxable as a corporation for federal income tax purposes, unless
  we were to transfer the businesses that generate non-qualifying income to one or
  more subsidiaries taxed as corporations and pay entity level income taxes on
  such non-qualifying income.  The IRS has not provided any ruling to us
  on this matter.
  If we were
  treated as a corporation for federal income tax purposes, then we would pay
  federal income tax on our income at the corporate tax rate, which is currently a
  maximum of 35%, and would likely pay state income tax at varying
  rates.  Distributions would generally be taxed again to unitholders as
  corporate distributions and none of our income, gains, losses, deductions or
  credits would flow through to our unitholders.  Because a tax would be
  imposed upon us as an entity, cash available for distribution to our unitholders
  would be substantially reduced.  Treatment of us as a corporation
  would result in a material reduction in the anticipated cash flow and after-tax
  return to unitholders and thus would likely result in a substantial reduction in
  the value of our common units.
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  Current law
  may change, so as to cause us to be treated as a corporation for federal income
  tax purposes or otherwise subject us to entity-level taxation. In addition,
  because of widespread state budget deficits and other reasons, several states
  are evaluating ways  to subject partnerships to entity-level taxation
  through the imposition of state income, franchise and other forms of taxation.
  For example, beginning in 2008 we will be required to pay annually a Texas
  franchise tax at a maximum effective rate of 0.7% of our gross income
  apportioned to Texas with respect to the prior year.  As of June 30,
  2008, we paid $141,000 representing our estimated tax liability related to
  our 2007 gross income apportioned to Texas.  Imposition of such a tax
  on us by Texas and, if applicable, by any other state will reduce the cash
  available for distribution to our unitholders. The partnership agreement
  provides that if a law is enacted or existing law is modified or interpreted in
  a manner that subjects us to taxation as a corporation or otherwise subjects us
  to entity-level taxation for federal, state or local income tax purposes, the
  minimum quarterly distribution amount and the target distribution amounts will
  be adjusted to reflect the impact of that law on us.
  The
  tax treatment of publicly traded partnerships or an investment in our common
  units could be subject to potential legislative, judicial or administrative
  changes and differing interpretations, possibly on a retroactive
  basis.
  The present
  federal income tax treatment of publicly traded partnerships, including us, or
  an investment in our common units may be modified by administrative, legislative
  or judicial interpretation at any time. For example, members of Congress are
  considering substantive changes to the existing federal income tax laws that
  affect certain publicly traded partnerships. Any modification to the federal
  income tax laws and interpretations thereof may or may not be applied
  retroactively. Although the currently proposed legislation would not appear to
  affect our tax treatment as a partnership, we are unable to predict whether any
  of these changes, or other proposals, will ultimately be enacted. Any such
  changes could negatively impact the value of an investment in our common
  units.
  If
  the IRS contests any of the federal income tax positions we take, the market for
  our common units may be adversely affected, and the costs of any contest will
  reduce our cash available for distribution to our unitholders.
  We have not
  requested a ruling from the IRS with respect to our treatment as a partnership
  for federal income tax purposes or any other matter affecting us. The IRS may
  adopt positions that differ from the conclusions of our counsel. It may be
  necessary to resort to administrative or court proceedings to sustain some or
  all of our counsel's conclusions or the positions we take. A court may not agree
  with some or all of our counsel's conclusions or the positions we take. Any
  contest with the IRS may materially and adversely impact the market for our
  common units and the price at which they trade. In addition, the costs of any
  contest with the IRS will be borne indirectly by our unitholders and our general
  partner because the costs will reduce our cash available for
  distribution.
  Tax
  gain or loss on the disposition of our common units could be more or less than
  expected.
  If our
  unitholders sell their common units, they will recognize a gain or loss equal to
  the difference between the amount realized and their tax basis in those common
  units. Prior distributions to our unitholders in excess of the total net taxable
  income our unitholders were allocated for a common unit, which decreased their
  tax basis in that common unit, will, in effect, become taxable income to our
  unitholders if the common unit is sold at a price greater than their tax basis
  in that common unit, even if the price our unitholders receive is less than
  their original cost. A substantial portion of the amount realized, whether or
  not representing gain, may be ordinary income. In addition, if our unitholders
  sell their units, they may incur a tax liability in excess of the amount of cash
  our unitholders receive from the sale.
  Tax-exempt
  entities, regulated investment companies and foreign persons face unique tax
  issues from owning common units that may result in adverse tax consequences to
  them.
  Investment in
  common units by tax-exempt entities, such as individual retirement accounts
  (known as IRAs), regulated investment companies (known as mutual funds), and
  non-U.S. persons raises issues unique to them. For example, virtually all of our
  income allocated to organizations exempt from federal income tax, including
  individual retirement accounts and other retirement plans, will be unrelated
  business taxable income and will be taxable to them. Distributions to non-U.S.
  persons will be reduced by withholding taxes at the highest applicable effective
  tax rate, and non-U.S. persons will be required to file United States federal
  income tax returns and pay tax on their share of our taxable income. If a
  potential unitholder is a tax-exempt entity or a foreign person, it should
  consult its tax advisor before investing in our common units.
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  We
  will treat each purchaser of units as having the same tax benefits without
  regard to the units purchased. The IRS may challenge this treatment, which could
  adversely affect the value of the common units.
  Because we cannot match transferors and
  transferees of common units and because of other reasons, we will adopt
  depreciation and/or amortization positions that may not conform with all aspects
  of existing Treasury regulations and, as a result, our counsel, Baker Botts
  L.L.P., is unable to opine as to the validity of these positions. A successful
  IRS challenge to those positions could adversely affect the amount of tax
  benefits available to our unitholders. It also could affect the timing of these
  tax benefits or the amount of gain from their sale of common units and could
  have a negative impact on the value of our common units or result in audit
  adjustments to our unitholders' tax returns.
  The
  sale or exchange of 50% or more of our capital and profits interests during any
  twelve-month period will result in the termination of our partnership for
  federal income tax purposes.
  We will be considered to have
  terminated for federal income tax purposes if there are one or more transfers of
  interests in our partnership that together represent a sale or exchange of 50%
  or more of the total interests in our capital and profits within a twelve-month
  period. For these purposes,
  ·
  multiple
        transfers of the same interest within a twelve month period will be
        counted only once;
  ·
  if
        the Private Company sells or exchanges its interests in SemGroup Holdings
        or our general partner, the interests held by SemGroup Holdings or our
        general partner, as the case may be, in us will be deemed to have been
        sold or exchanged; and
  ·
  if
        50% or more of the total interests in the Private Company's capital and
        profits are sold or exchanged within a twelve month period, the Private
        Company, SemGroup Holdings and the general partner will be deemed to have
        sold or exchanged all of their interests in
  us.
  Our termination would, among other
  things, result in the closing of our taxable year for all unitholders, which
  would result in us filing two tax returns (and our unitholders could receive two
  Schedules K-1) for one fiscal year and could result in a deferral of
  depreciation deductions allowable in computing our taxable income. In the case
  of a unitholder reporting on a taxable year other than a fiscal year ending
  December 31, the closing of our taxable year may also result in more than twelve
  months of our taxable income or loss being includable in his taxable income for
  the year of termination. Our termination currently would not affect our
  classification as a partnership for federal income tax purposes, but instead, we
  would be treated as a new partnership for tax purposes. If treated as a new
  partnership, we must make new tax elections and could be subject to penalties if
  we are unable to determine that a termination occurred.
  Our
  unitholders likely will be subject to state and local taxes and return filing or
  withholding requirements as a result of investing in our common
  units.
  In addition to federal income taxes,
  our unitholders will likely be subject to other taxes, such as state and local
  income taxes, unincorporated business taxes and estate, inheritance, or
  intangible taxes that are imposed by the various jurisdictions in which we do
  business or own property. Our unitholders likely will be required to file state
  and local income tax returns and pay state and local income taxes in some or all
  of these various jurisdictions. Further, our unitholders may be subject to
  penalties for failure to comply with those requirements. We own property and
  conduct business in Texas, Oklahoma, Kansas, Colorado, New Mexico, Arkansas,
  California, Georgia, Idaho, Illinois, Indiana, Missouri, Michigan, Montana,
  Nebraska, Nevada, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee,
  Utah, Virginia and Washington. Of these states, Texas does not currently impose
  a state income tax on individuals. We may own property or conduct business in
  other states or foreign countries in the future. It is each unitholder's
  responsibility to file all federal, state and local tax returns. Under the tax
  laws of some states where we will conduct business, we may be required to
  withhold a percentage from amounts to be distributed to a unitholder who is not
  a resident of that state. For example, in the case of Oklahoma, we are required
  to either report detailed tax information about our non-Oklahoma resident
  unitholders with an income in Oklahoma in excess of $500 to the taxing
  authority, or withhold an amount equal to 5% of the portion of our distributions
  to unitholders which is deemed to be the Oklahoma share of our income.
  Similarly, we are required to withhold Kansas income tax at a rate of 6.45% on
  each non-Kansas resident unitholder's share of our taxable income that is
  attributable to Kansas (regardless of whether such income is distributed),
  unless the non-Kansas resident unitholder files a tax reporting affidavit with
  us which we, in turn, are required to file with the Kansas Department of
  Revenue. Our counsel has not rendered an opinion on the state and local tax
  consequences of an investment in our common units.
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  We
  prorate our items of income, gain, loss and deduction between transferors and
  transferees of our units each month based upon the ownership of our units on the
  first day of each month, instead of on the basis of the date a particular unit
  is transferred. The IRS may challenge this treatment, which could change the
  allocation of items of income, gain, loss and deduction among our
  unitholders.
  We prorate
  our items of income, gain, loss and deduction between transferors and
  transferees of our units each month based upon the ownership of our units on the
  first day of each month, instead of on the basis of the date a particular unit
  is transferred. The use of this proration method may not be permitted under
  existing Treasury Regulations, and, accordingly, our counsel is unable to opine
  as to the validity of this method. If the IRS were to challenge this method or
  new Treasury regulations were issued, we may be required to change the
  allocation of items of income, gain, loss and deduction among our
  unitholders.
  A
  unitholder whose units are loaned to a "short seller" to cover a short sale of
  units may be considered as having disposed of those units. If so, he would no
  longer be treated for tax purposes as a partner with respect to those units
  during the period of the loan and may recognize gain or loss from the
  disposition.
  Because a
  unitholder whose units are loaned to a "short seller" to cover a short sale of
  units may be considered as having disposed of the loaned units, he may no longer
  be treated for tax purposes as a partner with respect to those units during the
  period of the loan to the short seller and the unitholder may recognize gain or
  loss from such disposition. Moreover, during the period of the loan to the short
  seller, any of our income, gain, loss or deduction with respect to those units
  may not be reportable by the unitholder and any cash distributions received by
  the unitholder as to those units could be fully taxable as ordinary income. Our
  counsel has not rendered an opinion regarding the treatment of a unitholder
  where common units are loaned to a short seller to cover a short sale of common
  units; therefore, unitholders desiring to assure their status as partners and
  avoid the risk of gain recognition from a loan to a short seller are urged to
  modify any applicable brokerage account agreements to prohibit their brokers
  from borrowing their units.
  We
  will adopt certain valuation methodologies that may result in a shift of income,
  gain, loss and deduction between the general partner and the unitholders. The
  IRS may challenge this treatment, which could adversely affect the value of the
  common units.
  When we issue
  additional units or engage in certain other transactions, we determine the fair
  market value of our assets and allocate any unrealized gain or loss attributable
  to our assets to the capital accounts of our unitholders and our general
  partner. Our methodology may be viewed as understating the value of our assets.
  In that case, there may be a shift of income, gain, loss and deduction between
  certain unitholders and the general partner, which may be unfavorable to such
  unitholders. Moreover, under our valuation methods, subsequent purchasers of
  common units may have a greater portion of their Internal Revenue Code Section
  743(b) adjustment allocated to our tangible assets and a lesser portion
  allocated to our intangible assets. Because the determination of value and the
  allocation of value are factual matters, rather than legal matters, our counsel
  is unable to opine as to these matters. The IRS may challenge our valuation
  methods, or our allocation of the Section 743(b) adjustment attributable to our
  tangible and intangible assets, and  allocations of income, gain, loss
  and deduction between the general partner and certain of our
  unitholders.
  A successful
  IRS challenge to these methods or allocations could adversely affect the amount
  of taxable income or loss being allocated to our unitholders. It also could
  affect the amount of gain from our unitholders' sale of common units and could
  have a negative impact on the value of the common units or result in audit
  adjustments to our unitholders' tax returns without the benefit of additional
  deductions.
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  Item 3.
  Defaults
        Upon Senior Securities
  Events of
  default have occurred and are continuing under our credit
  agreement.  We are therefore prohibited from borrowing under our
  credit facility to fund working capital needs or to pay distributions to our
  unitholders, among other things. In addition, the Private Company's actions
  related to the Bankruptcy Filings as well as the Private Company's liquidity
  issues and any corresponding impact upon us may result in additional events of
  default under our credit agreement.  As a result, we are operating on
  cash flows received from operations and from a $25 million borrowing under our
  credit facility on July 8, 2008 prior to the occurrence of the events of
  default.  If we are unable to sustain our sources of revenue
  generation and reestablish our relationships within the credit markets, we do
  not expect such cash flows to be sufficient to operate our business over the
  long-term.  No cure periods are applicable to the existing events of
  default.  As of March 13, 2009, we have approximately $33.9 million of
  cash that we are using to operate our business.  These events of
  default have not been waived and are continuing under our credit
  agreement.  Due to the existing events of default under our credit
  agreement, we are not able to borrow under its credit facility to fund working
  capital needs or for other purposes.
  Effective
  on September 18, 2008, we and the requisite lenders under our credit facility
  entered into the Forbearance Agreement under which the lenders agreed, subject
  to specified limitations and conditions, to forbear from exercising their rights
  and remedies arising from the events of default described above and other
  defaults or events of default described therein for the Forbearance
  Period.  On December 11, 2008, the lenders agreed to extend the
  Forbearance Period until December 18, 2008 pursuant to the First
  Amendment.  On December 18, 2008, we and the requisite lenders entered
  into the Second Amendment under which the lenders agreed, subject to specified
  limitations and conditions, to forbear from exercising their rights and remedies
  arising from the events of default described above and other defaults or events
  of default described therein until March 18, 2009.
  On March
  18, 2009, we and the requisite lenders entered into the Third Amendment under
  which the lenders agreed, subject to specified limitations and conditions, to
  forbear from exercising their rights and remedies arising from the events of
  default described above and other defaults or events of default described
  therein for the Extended Forbearance
  Period.
  Prior to
  the execution of the Forbearance Agreement, the credit agreement was comprised
  of a $350 million revolving credit facility and a $250 million term loan
  facility.  The Forbearance Agreement permanently reduced our revolving
  credit facility under the credit agreement from $350 million to $300 million and
  prohibited us from borrowing additional funds under our revolving credit
  facility during the Forbearance Period.   Under the Forbearance
  Agreement, we agreed to pay the lenders executing the Forbearance Agreement a
  fee equal to 0.25% of the aggregate commitments under the credit agreement after
  giving affect to the above described commitment reduction.  The Second
  Amendment further permanently reduced our revolving credit facility under the
  credit agreement from $300 million to $220 million.  The Third Amendment
  prohibits us from borrowing additional funds under our revolving credit facility
  during the Extended Forbearance Period.  In addition, under the Second
  Amendment, we agreed to pay the lenders executing the Second Amendment a fee
  equal to 0.375% of the aggregate commitments under the credit agreement after
  the above described commitment reduction.  As of March 13, 2009, we
  had $448.1 million in outstanding borrowings under our credit facility
  (including $198.1 million under its revolving credit facility and $250 million
  under its term loan facility) with an aggregate unused credit availability of
  approximately $21.9 million under our credit facility.  As described
  above, we are prohibited from borrowing additional funds under our credit
  agreement during the Extended Forbearance Period.
  Prior to
  the events of default, indebtedness under the credit agreement bore interest at
  our option, at either (i) the higher of the administrative agent's prime
  rate or the federal funds rate plus 0.5%, plus an applicable margin that ranges
  from 0.50% to 1.75%, depending on our total leverage ratio and senior secured
  leverage ratio, or (ii) LIBOR plus an applicable margin that ranges from
  1.50% to 2.75%, depending upon our total leverage ratio and senior secured
  leverage ratio.  During the Forbearance Period indebtedness under the
  credit agreement bore interest at our option, at either (i) the
  administrative agent's prime rate or the federal funds rate plus 0.50%, plus an
  applicable margin that ranges from 2.75% to 3.75%, depending upon our total
  leverage ratio, or (ii) LIBOR plus an applicable margin that ranges from
  4.25% to 5.25%, depending upon our total leverage ratio.  Pursuant to
  the Second Amendment, commencing on December 12, 2008, indebtedness under the
  credit agreement bears interest at our option, at either (i) the
  administrative agent's prime rate or the federal funds rate plus 5.0% per annum,
  with a prime rate or federal funds rate floor of 4.0% per annum, or
  (ii) LIBOR plus 6.0% per annum, with a LIBOR floor of 3.0% per
  annum.  During the three months ended June 30, 2008, the weighted
  average interest rate incurred by us was 4.62% resulting in interest expense of
  approximately $4.3 million.  During the three months ended December
  31, 2008, the weighted average interest rate incurred by us
  was
  7.72
  %
  resulting in interest expense of approximately $
  8.9
  million
  .
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  Under the
  Forbearance Agreement, as amended by the First Amendment, the Second Amendment
  and the Third Amendment, the lender's forbearance is subject to certain
  conditions as described therein, including, among other items, periodic
  deliverables and minimum liquidity, minimum receipts and maximum disbursement
  requirements.  If we fail to meet these conditions or are unable to
  obtain further forbearance from our lenders or a permanent waiver of the events
  of default under our credit agreement, we may be forced to sell assets, make a
  bankruptcy filing or take other action that could have a material adverse effect
  on our business, the price of our common units and our results of
  operations.
  Due to
  the events of default, upon the expiration or termination of any applicable
  forbearance period, the lenders may, among other remedies, declare all
  outstanding amounts under the credit agreement immediately due and payable and
  exercise all other rights and remedies available to the lenders under the credit
  agreement and related loan documents.  A vote of lenders having more
  than 50% of the sum of (i) the aggregate revolver commitments and (ii) the
  outstanding term loan are required to exercise such a remedy.  If the
  lenders exercise such a remedy, we may be forced to make a bankruptcy filing or
  take other actions.  We are also prohibited from making cash
  distributions to our unitholders while the events of default
  exist.  Certain lenders under our credit facility are also lenders
  under the Private Company's credit facility.  The progress of the
  Private Company's bankruptcy proceedings may influence the decisions of these
  lenders relating to our credit facility.
  We use
  interest rate swap agreements to manage a portion of the exposure related to
  changing interest rates by converting floating-rate debt to fixed-rate debt. See
  Note 4 for a description of these interest rate swaps.   The
  interest rate swap agreements contain cross-default provisions to events of
  default under the credit agreement.  Due to events related to the
  Bankruptcy Filings, all of these interest rate swap positions
  were terminated in the third quarter of 2008, and we have recorded a $1.5
  million liability as of September 30, 2008 with respect to these
  positions.
  Item 5.
  Other Information
  On March
  18, 2009, we announced the realignment of the management team of our general
  partner.  Michael J. Brochetti was appointed as our general partner's
  Executive
  Vice President—Corporate Development and Treasurer,
  Alex G. Stallings was appointed as our general partner's Chief Financial Officer
  and Secretary, and James R. Griffin was appointed as our general
  partner's
  Chief Accounting Officer.  Mr. Brochetti had
  previously served as our general partner's Chief Financial Officer; and Mr.
  Stallings had previously served as our general partner's Chief Accounting
  Officer and Secretary; and Mr. Griffin had previously served as our general
  partner's controller.
  Additional
  information regarding Mr. Brochetti's and Mr. Stallings' business experience is
  set forth in Item 10 of our Annual Report on Form 10-K for the fiscal year ended
  December 31, 2007, as filed with the Securities and Exchange Commission on March
  6, 2008, and is incorporated herein by reference.
  In connection with his
  appointment as our general partner's Chief Financial Officer and Secretary, Mr.
  Stallings' annual base salary was increased from $275,000 to $300,000. 
  This increase was approved by the compensation committee of the
  Board.
  James
  R. Griffin has served as controller of our general partner since May of 2007 and
  the Private Company's transactional services controller since September
  2006.  Prior to joining the Private Company, Mr. Griffin served
  in various capacities, most recently as an audit manager, for the public
  accounting firm of PricewaterhouseCoopers LLP, working in its Tulsa, Oklahoma
  office since January 2000.
  In
  connection with his appointment as our general partner's Chief Accounting
  Officer, Mr. Griffin entered into the following agreements: (i) an employment
  agreement substantially in the form attached as Exhibit 10.14 to this quarterly
  report, (ii) a phantom unit agreement substantially in the form attached as
  Exhibit 10.15 to this quarterly report and (iii) our general partner's customary
  indemnification agreement substantially in the form filed as Exhibit 10.7 to our
  Registration Statement on Form S-1 (Reg. No. 333-141196), filed May 25,
  2007.  In addition, prior to his appointment as our general partner's
  Chief Accounting Officer, Mr. Griffin entered into a retention agreement with
  our general partner, a copy of which is attached as Exhibit 10.16 to this
  quarterly report.  Each of the employment agreement, phantom unit
  agreement and retention agreement is discussed in more detail
  below.
  Employment
  Agreement
  Pursuant
  to his employment agreement, Mr. Griffin will be paid an initial annual
  base salary of $210,000. The employment agreement and the corresponding base
  salary amount was approved by the compensation committee of the
  Board.
  The
  employment agreement has a two year term and will renew automatically for
  additional one year terms unless either party gives 90 days prior notice. In
  addition, Mr. Griffin is eligible for discretionary bonus awards and
  long-term incentives which may be made from time to time in the sole discretion
  of the Board. The employment agreement also provides that Mr. Griffin is
  eligible to participate in any employee benefit plans maintained by our general
  partner and is entitled to reimbursement for certain out-of-pocket expenses.
  Mr. Griffin has agreed not to disclose any confidential information
  obtained by him while employed under the agreement. In addition, the employment
  agreement contains payment obligations that may be triggered by a termination
  after a Change of Control as described below.
  Under the
  employment agreement, the General Partner may be required to pay certain amounts
  upon a Change of Control of us or our general partner or upon the termination of
  Mr. Griffin's employment in certain circumstances.
  Except in
  the event of termination for Cause, termination by Mr. Griffin other than
  for Good Reason, or termination after the expiration of the term of the
  employment agreement, the employment agreement provides for payment of any
  unpaid base salary and vested benefits under any incentive plans, a lump sum
  payment equal to twelve months of base salary and continued participation in our
  general partner's welfare benefit programs for the longer of the remainder of
  the term of the employment agreement or one year after termination. Upon such an
  event, Mr. Griffin would be entitled to a lump sum payment of $210,000, in
  addition to continued participation in the General Partner's welfare benefit
  programs and the amounts of unpaid base salary and benefits under any incentive
  plans.
  If within
  one year after a Change of Control occurs Mr. Griffin is terminated by our
  general partner without Cause or Mr. Griffin terminates the agreement for
  Good Reason, he will be entitled to payment of any unpaid base salary and vested
  benefits under any incentive plans, a lump sum payment equal to 24 months of
  base salary and continued participation in our general partner's welfare benefit
  programs for the longer of the remainder of the term of the employment agreement
  or one year after termination. Upon such an event, Mr. Griffin would be
  entitled to a lump sum payment of $420,000, in addition to continued
  participation in our general partner's welfare benefit programs and the amounts
  of unpaid base salary and benefits under any incentive plans.
  For
  purposes of the employment agreement:
  "Cause"
  means (i) conviction of the officer by a court of competent jurisdiction of
  any felony or a crime involving moral turpitude; (ii) the officer's willful
  and intentional failure or willful intentional refusal to follow reasonable and
  lawful instructions of the Board of our general partner; (iii) the
  officer's material breach or default in the performance of his obligations under
  the employment agreement; or (iv) the officer's act of misappropriation,
  embezzlement, intentional fraud or similar conduct involving our general
  partner.
  "Good
  Reason" means (i) a material reduction in the officer's base salary;
  (ii) a material diminution of the officer's duties, authority or
  responsibilities as in effect immediately prior to such diminution; or
  (iii) the relocation of the officer's principal work location to a location
  more than 50 miles from its current location.
  "Change
  of Control" means any of the following events: (i) any person or group
  other than SemGroup, L.P., Manchester Securities Corp., Alerian Finance
  Partners, LP, or their respective affiliates, shall become the beneficial owner,
  by way of merger, consolidation, recapitalization, reorganization or otherwise,
  of 50% or more of the combined voting power of the equity interests in us or in
  our general partner; (ii) our limited partners approve, in one or a series
  of transactions, a plan of complete liquidation of the partnership;
  (iii) the sale or other disposition by either our general partner or us of
  all or substantially all of the assets of our general partner or us in one or
  more transactions to any person other than our general partner and its
  affiliates; or (iv) a transaction resulting in a person other than our
  general partner or an affiliate of our general partner being our general
  partner.
  Phantom
  Unit Agreement
  Pursuant
  to the phantom unit agreement, Mr. Griffin was granted 30,000 phantom units
  under the Plan.  The entering into the phantom unit agreement and the
  granting of these 30,000 phantom units to Mr. Griffin was approved by the
  compensation committee of the Board.
  Phantom
  Units granted to Mr. Griffin pursuant to the phantom unit agreement vest in
  one-third increments over a three year period, subject to earlier vesting on a
  change of control or upon a termination without cause or due to death or
  disability. Mr. Griffin will receive one common unit upon vesting of each
  phantom unit. In addition, the phantom units have distribution equivalent rights
  for each fiscal quarter in which our quarterly cash distribution to our
  subordinated and common unitholders for such quarter equals or exceeds $0.39 per
  unit (or $1.56 per unit on an annualized basis). Pursuant to the distribution
  equivalent right, Mr. Griffin will be entitled to receive a cash payment with
  respect to each phantom unit then outstanding equal to the product of
  (i) the per unit cash distributions paid to our unitholders during such
  fiscal quarter, if any, multiplied by (ii) the number of unvested phantom
  units.
  Retention
  Agreement
  Pursuant
  to the retention agreement, Mr. Griffin is entitled to payments totaling up
  to $180,000 (the "Retention Amount") if he is employed by our general partner on
  certain dates.  Mr. Griffin received 25% of the Retention Amount, or
  $45,000, for continued employment on October 30, 2008.  Mr. Griffin
  will be entitled to receive the remaining 75% of the Retention Amount, or
  $135,000, if (i) he is employed by our general partner on July 31, 2009 or (ii)
  his employment is terminated by our general partner other than for Cause (as
  defined above) or he terminates his employment for Good Reason (as defined
  above) prior to July 31, 2009.  Provided Mr. Griffin meets the terms
  and conditions contained in the retention agreement, he will be entitled to
  these payments in addition to any payments made to him pursuant to his
  employment agreement or otherwise.
  Item 6.
  Exhibits
  The
  information required by this Item 6 is set forth in the Index to Exhibits
  accompanying this quarterly report and is incorporated herein by
  reference.
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  SIGNATURES
  Pursuant
  to the requirements of the Securities Exchange Act of 1934, the registrant has
  duly caused this Report to be signed on its behalf by the undersigned thereunto
  duly authorized.
  SemGroup
        Energy Partners, L.P.
  By:
  SemGroup
        Energy Partners G.P., L.L.C.
  its
        General Partner
  Date:
  March
  23,
        2009
  By:
  /s/
        Alex G. Stallings
  Alex
        G. Stallings
  Chief
        Financial Officer and Secretary
  Date:
  March
        23, 2009
  By:
  /s/
        James R. Griffin
  James
        R. Griffin
  Chief
        Accounting Officer
  Table of Contents
  INDEX
  TO EXHIBITS
  Exhibit
  Number
  Exhibit
        Name
  3.1
  Certificate
        of Limited Partnership of SemGroup Energy Partners, L.P. (the
        "Partnership"), dated February 22, 2007 (filed as Exhibit 3.1 to the
        Partnership's Registration Statement on Form S-1 (Reg. No. 333-141196),
        filed March 9, 2007, and incorporated herein by
    reference).
  3.2
  First
        Amended and Restated Agreement of Limited Partnership of the Partnership,
        dated July 20, 2007 (filed as Exhibit 3.1 to the Partnership's Current
        Report on Form 8-K, filed July 25, 2007, and incorporated herein by
        reference).
  3.3
  Amendment
        No. 1 to First Amended and Restated Agreement of Limited Partnership of
        the Partnership, effective as of July 20, 2007 (filed as Exhibit 3.1 to
        the Partnership's Current Report on Form 8-K, filed on April 14, 2008, and
        incorporated herein by reference).
  3.4
  Amendment
        No. 2 to First Amended and Restated Agreement of Limited Partnership of
        the Partnership, dated June 25, 2008 (filed as Exhibit 3.1 to the
        Partnership's Current Report on Form 8-K, filed on June 30, 2008, and
        incorporated herein by reference).
  3.5
  Certificate
        of Formation of SemGroup Energy Partners G.P., L.L.C. (the "General
        Partner"), dated February 22, 2007 (filed as Exhibit 3.3 to the
        Partnership's Registration Statement on Form S-1 (Reg. No. 333-141196),
        filed March 9, 2007, and incorporated herein by
    reference).
  3.6
  Amended
        and Restated Limited Liability Company Agreement of the General Partner,
        dated July 20, 2007 (filed as Exhibit 3.2 to the Partnership's Current
        Report on Form 8-K, filed July 25, 2007, and incorporated herein by
        reference).
  3.7
  Amendment
        No. 1 to Amended and Restated Limited Liability Company Agreement of the
        General Partner, dated June 25, 2008 (filed as Exhibit 3.2 to the
        Partnership's Current Report on Form 8-K, filed on June 30, 2008, and
        incorporated herein by reference).
  3.8
  Amendment
        No. 2 to Amended and Restated Limited Liability Company Agreement of the
        General Partner, dated July 18, 2008 (filed as Exhibit 3.1 to the
        Partnership's Current Report on Form 8-K, filed on July 22, 2008, and
        incorporated herein by reference).
  4.1
  Specimen
        Unit Certificate (included in Exhibit 3.2).
  10.1
  Purchase
        and Sale Agreement, dated as of May 12, 2008, by and between SemCrude,
        L.P. and SemGroup Energy Partners, L.L.C. (filed as Exhibit 2.1 to the
        Partnership's Current Report on Form 8-K, filed May 15, 2008, and
        incorporated herein by reference).
  10.2
  Purchase
        and Sale Agreement, dated as of May 20, 2008, by and between SemGroup
        Energy Partners, L.L.C. and SemCrude, L.P. (filed as Exhibit 2.1 to the
        Partnership's Current Report on Form 8-K, filed May 23, 2008, and
        incorporated herein by reference).
  10.3
  Form
        of Phantom Unit Grant Agreement (filed as Exhibit 10.1 to the
        Partnership's Current Report on Form 8-K, filed on June 24, 2008, and
        incorporated herein by reference)
  10.4
  Form
        of Phantom Unit Grant Agreement (filed as Exhibit 10.2 to the
        Partnership's Current Report on Form 8-K, filed on June 24, 2008, and
        incorporated herein by reference)
  10.5
  Agreed
        Order of the United States Bankruptcy Court for the District of Delaware
        Regarding Motion by SemGroup Energy Partners, L.P. (i) to Compel Debtors
        to Provide Adequate Protection and (ii) to Modify the Automatic Stay
        (filed as Exhibit 99.1 to the Partnership's Current Report on Form 8-K,
        filed on September 9, 2008, and incorporated herein by
        reference).
  10.6
  Forbearance
        Agreement and Amendment to Credit Agreement, dated September 12, 2008 but
        effective as of September 18, 2008, by and among SemGroup Energy Partners,
        L.P., Wachovia Bank, National Association, as Administrative Agent, L/C
        Issuer and Swing Line Lender, and the Lenders party thereto (filed as
        Exhibit 10.1 to the Partnership's Current Report on Form 8-K, filed on
        September 22, 2008, and incorporated herein by
    reference).
  10.7
  First
        Amendment to Forbearance Agreement and Amendment to Credit Agreement,
        dated as of December 11, 2008, by and among SemGroup Energy Partners,
        L.P., Wachovia Bank, National Association, as Administrative Agent, L/C
        Issuer and Swing Line Lender, and the Lenders party thereto (filed as
        Exhibit 10.1 to the Partnership's Current Report on Form 8-K, filed on
        December 12, 2008, and incorporated herein by
    reference).
  10.8
  Second
        Amendment to Forbearance Agreement and Amendment to Credit Agreement,
        dated as of December 18, 2008, by and among SemGroup Energy Partners,
        L.P., Wachovia Bank, National Association, as Administrative Agent, L/C
        Issuer and Swing Line Lender, and the Lenders party thereto (filed as
        Exhibit 10.1 to the Partnership's Current Report on Form 8-K, filed on
        December 19, 2008, and incorporated herein by
    reference).
  10.9
  Third
        Amendment to Forbearance Agreement and Amendment to Credit Agreement,
        dated as of March 17, 2009, by and among SemGroup Energy Partners, L.P.,
        Wachovia Bank, National Association, as Administrative Agent, L/C Issuer
        and Swing Line Lender, and the Lenders party thereto (filed as Exhibit
        10.1 to the Partnership's Current Report on Form 8-K, filed on March 19,
        2009, and incorporated herein by reference).
  10.10
  Amendment
        to the SemGroup Energy Partners G.P., L.L.C. Long Term Incentive Plan
        (filed as Exhibit 10.1 to the Partnership's Current Report on Form 8-K,
        filed on December 23, 2008, and incorporated herein by
        reference).
  10.11
  Form
        of Director Restricted Common Unit Agreement (filed as Exhibit 10.2 to the
        Partnership's Current Report on Form 8-K, filed on December 23, 2008, and
        incorporated herein by reference).
  10.12
  Form
        of Director Restricted Subordinated Unit Agreement (filed as Exhibit 10.3
        to the Partnership's Current Report on Form 8-K, filed on December 23,
        2008, and incorporated herein by reference).
  10.13
  Term
        Sheet, dated as of March 6, 2009 (filed as Exhibit 10.1 to the
        Partnership's Current Report on Form 8-K, filed on March 10, 2009, and
        incorporated herein by reference.
  10.14*
  Form
        of Employment Agreement.
  10.15*
  Form
        of Phantom Unit Agreement.
  10.16*
  Retention
        Agreement.
  31.1*
  Certifications
        of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.
  31.2*
  Certifications
        of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.
  32.1*
  Certification
        of Chief Executive Officer and Chief Financial Officer pursuant to 18
        U.S.C., Section 1350, as adopted pursuant to Section 906 of the
        Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551, this Exhibit
        is furnished to the SEC and shall not be deemed to be
      "filed."
  *
  Filed
        herewith.