Natural gas continues to be a critical component of energy consumption in the United States. According to the Energy Information Administration, or the EIA, total annual domestic consumption of natural gas is expected to increase from approximately 22.4 trillion cubic feet, or Tcf, (61.4 Bcf/d) in 2004 to approximately 26.9 Tcf (73.7 Bcf/d) in 2030, representing an average annual growth rate of over 1.12% per year.

The industrial and electricity generation sectors are the largest users of natural gas in the United States. During the last three years, these sectors accounted for approximately 61% of the total natural gas consumed in the United States. In 2004, natural gas represented approximately 24% of all end-user domestic energy requirements.

During the last five years, the United States has on average consumed approximately 22.5 Tcf per year, with average annual domestic production of approximately 19.1 Tcf during the same period. Driven by growth in natural gas demand and high natural gas prices, domestic natural gas production is projected to increase from 18.9 Tcf per year to 20.4 Tcf per year between 2004 and 2010.

The Company’s operations are organized into the following four business segments:

- NGL & Petrochemical Storage Services. The Company’s NGL & Petrochemical Storage Services segment consists of 33 salt dome caverns located in Mont Belvieu, Texas, with an underground storage capacity of approximately 100 MMBbls, and certain related assets. These assets receive, store and deliver NGLs and petrochemical products for industrial customers located along the upper Texas Gulf Coast, which has the largest concentration of petrochemical plants and refineries in the United States.

- Natural Gas Pipelines & Services. The Company’s Natural Gas Pipelines & Services segment consists of the Acadian Gas system, which is an onshore natural gas pipeline system that gathers, transports, stores and markets natural gas in Louisiana. In the aggregate, the Acadian Gas system includes over 1,000 miles of high-pressure transmission lines and lateral and gathering lines with an aggregate throughput capacity of approximately one Bcf/d and a leased storage facility with approximately three Bcf of storage capacity.

- Petrochemical Pipeline Services. The Company’s Petrochemical Pipeline Services segment consists of two petrochemical pipeline systems with an aggregate of 284 miles of pipeline. The Lou-Tex propylene pipeline system consists of a 263-mile pipeline used to transport chemical-grade propylene between Sorento, Louisiana and Mont Belvieu, Texas. The Sabine propylene pipeline system consists of a 21-mile pipeline used to transport polymer-grade propylene from Port Arthur, Texas to a pipeline interconnect in Cameron Parish, Louisiana on a transport-or-pay basis.

- NGL Pipeline Services. The Company’s NGL Pipeline Services segment will consist of a 290-mile pipeline system used to transport NGLs from two Enterprise Products Partners’ facilities located in South Texas to Mont Belvieu, Texas and related interconnections. The Company acquired a 223-mile segment of the system in August 2006. This system is not in operation, but it is currently undergoing modifications, extensions and interconnections that should allow it to transport NGLs beginning in January 2007.

Combined operating costs and expenses were $478.6 million for the first six months of 2006 compared to $377.8 million for the first six months of 2005.

Gross operating margin from the NGL & Petrochemical Storage Services segment was $8.9 million for the first six months of 2006 compared to $5.7 million for the first six months of 2005.

Gross operating margin from the Natural Gas Pipelines & Services segment was $10.9 million for the first six months of 2006 versus $9.1 million for the first six months of 2005, an increase of $1.8 million.

Gross operating margin from the Petrochemical Pipeline Services segment was $15.9 million for the first six months of 2006 versus $17.1 million for the first six months of 2005.