SEC Info - Duncan Energy Partners L/P - S-1/A

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Administrative Matters Administrative Services Agreement Amendments to Our Partnership Agreement Appendix A Form of First Amended and Restated Agreement of Limited Partnership of Duncan Energy Partners L.P Appendix B Glossary of Terms Assumptions and Considerations Balance Sheet at October 31, 2006 Balance Sheet at September 30, 2006 Books and Reports Business Capital Contributions Capitalization Cash Distribution Policy and Restrictions on Distributions Cash Distributions Certain Relationships and Related Party Transactions Change of Management Provisions Combined Balance Sheets at September 30, 2006, December 31, 2005 and 2004 Common Units Eligible for Future Sale Compensation of Directors of DEP Holdings Conflicts of Interest and Business Opportunity Agreements Conflicts of Interest, Business Opportunity Agreements and Fiduciary Duties Contractual Obligations Contribution, Conveyance and Assumption Agreement Critical Accounting Policies and Estimates Description of Material Provisions of Our Partnership Agreement Description of Our Common Units Dilution Directors and Executive Officers Disposition of Common Units Distributions of Available Cash Distributions of Cash upon Liquidation Duncan Energy Partners L.P Employees Environmental Matters Estimated Cash Available to Pay Distributions Executive Compensation Experts Factors Affecting Comparability of Future Results Fiduciary Duties Forward-Looking Statements General Governance Matters How We Evaluate Our Operations How We Make Cash Distributions Indemnification Index to Financial Statements Industry Overview Inflation Introduction Issuance of Additional Securities Legal Proceedings Limited Call Right Limited Liability Limited Partner Status Liquidation and Distribution of Proceeds Liquidity and Capital Resources Management Management S Discussion and Analysis of Financial Condition and Results of Operations Material Tax Consequences Meetings; Voting Merger, Sale or Other Disposition of Assets Mont Belvieu Caverns Limited Liability Company Agreement Natural Gas Pipelines & Services Segment Natural Gas Supply and Outlook NGL & Petrochemical Storage Services Segment NGL Pipeline Services Segment Non-Citizen Assignees; Redemption Notes to Combined Financial Statements and Supplemental Schedule Notes to Unaudited Pro Forma Condensed Combined Financial Statements Note to Balance Sheet Off-Balance Sheet Arrangements Offering, The Omnibus Agreement Organization and Duration Other Items Our Business Strategy Our Competitive Strengths Our Initial Distribution Rate Our Operations Our Partnership Our Relationship with EPCO and Enterprise Products Partners Overview Partnership Status Petrochemical Pipeline Services Segment Power of Attorney Purpose Quantitative and Qualitative Disclosures about Market Risk Recent Accounting Developments Registration Rights Regulation of Operations Reimbursement of Expenses Related Party Transactions Related Party Transactions with Enterprise Products Partners Relationships with TEPPCO Partners Relationships with Unconsolidated Affiliate Report of Independent Registered Public Accounting Firm Resolution of Conflicts of Interest Results of Operations Right to Inspect Our Books and Records Risk Factors Risks Inherent in an Investment in Us Risks Inherent in Our Business Seasonality Security Ownership of Certain Beneficial Owners and Management Selected Historical and Pro Forma Financial and Operating Data Selling Unitholder State, Local and Other Tax Considerations Statements of Combined Cash Flows for the Nine Months Ended September 30, 2006 and 2005 (unaudited) and Years Ended December 31, 2005, 2004 and 2003 Statements of Combined Operations and Comprehensive Income for the Nine Months Ended September 30, 2006 and 2005 (unaudited) and Years Ended December 31, 2005, 2004 and 2003 Statements of Combined Owners Net Investment for the Nine Months Ended September 30, 2006 and Years Ended December 31, 2005, 2004 and 2003 Status as Limited Partner Summary Summary Historical and Pro Forma Financial and Operating Data Summary of Certain Risk Factors Summary of Conflicts of Interest, Business Opportunity Agreements and Fiduciary Duties Supplies Table of Contents Tax Consequences of Unit Ownership Tax-Exempt Organizations and Other Investors Tax Risks Tax Treatment of Operations Termination or Dissolution The Offering Title to Properties Transfer Agent and Registrar Transfer of General Partner Interest Transfer of Ownership Interests in Our General Partner Transfer of Units Unaudited Pro Forma Combined Available Cash Unaudited Pro Forma Condensed Combined Balance Sheet at September 30, 2006 Unaudited Pro Forma Condensed Combined Financial Statements Unaudited Pro Forma Condensed Statement of Combined Operations for the Nine Months Ended September 30, 2006 Unaudited Pro Forma Condensed Statement of Combined Operations for the Year Ended December 31, 2005 Underwriting Uniformity of Units Use of Proceeds Validity of the Common Units Voting Rights Where You Can Find More Information Withdrawal or Removal of Our General Partner
1	1st Page
"	Table of Contents
"	Summary
"	Duncan Energy Partners L.P
"	The Offering
"	Summary of Conflicts of Interest, Business Opportunity Agreements and Fiduciary Duties
"	Summary of Certain Risk Factors
"	Summary Historical and Pro Forma Financial and Operating Data
"	Risk Factors
"	Risks Inherent in Our Business
"	Risks Inherent in an Investment in Us
"	Tax Risks
"	Use of Proceeds
"	Capitalization
"	Dilution
"	Cash Distribution Policy and Restrictions on Distributions
"	General
"	Our Initial Distribution Rate
"	Unaudited Pro Forma Combined Available Cash
"	Estimated Cash Available to Pay Distributions
"	Assumptions and Considerations
"	How We Make Cash Distributions
"	Distributions of Available Cash
"	Distributions of Cash upon Liquidation
"	Selected Historical and Pro Forma Financial and Operating Data
"	Management S Discussion and Analysis of Financial Condition and Results of Operations
"	Overview
"	Our Operations
"	How We Evaluate Our Operations
"	Natural Gas Supply and Outlook
"	Factors Affecting Comparability of Future Results
"	Results of Operations
"	Liquidity and Capital Resources
"	Contractual Obligations
"	Off-Balance Sheet Arrangements
"	Inflation
"	Seasonality
"	Critical Accounting Policies and Estimates
"	Recent Accounting Developments
"	Related Party Transactions
"	Other Items
"	Quantitative and Qualitative Disclosures about Market Risk
"	Business
"	Our Partnership
"	Our Relationship with EPCO and Enterprise Products Partners
"	Our Business Strategy
"	Our Competitive Strengths
"	Industry Overview
"	NGL & Petrochemical Storage Services Segment
"	Natural Gas Pipelines & Services Segment
"	Petrochemical Pipeline Services Segment
"	NGL Pipeline Services Segment
"	Supplies
"	Employees
"	Environmental Matters
"	Regulation of Operations
"	Title to Properties
"	Legal Proceedings
"	Management
"	Governance Matters
"	Directors and Executive Officers
"	Executive Compensation
"	Compensation of Directors of DEP Holdings
"	Security Ownership of Certain Beneficial Owners and Management
"	Certain Relationships and Related Party Transactions
"	Related Party Transactions with Enterprise Products Partners
"	Relationships with TEPPCO Partners
"	Relationships with Unconsolidated Affiliate
"	Contribution, Conveyance and Assumption Agreement
"	Omnibus Agreement
"	Mont Belvieu Caverns Limited Liability Company Agreement
"	Administrative Services Agreement
"	Conflicts of Interest, Business Opportunity Agreements and Fiduciary Duties
"	Conflicts of Interest and Business Opportunity Agreements
"	Fiduciary Duties
"	Description of Our Common Units
"	Transfer Agent and Registrar
"	Transfer of Units
"	Description of Material Provisions of Our Partnership Agreement
"	Organization and Duration
"	Purpose
"	Power of Attorney
"	Cash Distributions
"	Capital Contributions
"	Limited Liability
"	Voting Rights
"	Issuance of Additional Securities
"	Amendments to Our Partnership Agreement
"	Merger, Sale or Other Disposition of Assets
"	Termination or Dissolution
"	Liquidation and Distribution of Proceeds
"	Withdrawal or Removal of Our General Partner
"	Transfer of General Partner Interest
"	Transfer of Ownership Interests in Our General Partner
"	Change of Management Provisions
"	Limited Call Right
"	Meetings; Voting
"	Status as Limited Partner
"	Non-Citizen Assignees; Redemption
"	Indemnification
"	Resolution of Conflicts of Interest
"	Reimbursement of Expenses
"	Books and Reports
"	Right to Inspect Our Books and Records
"	Registration Rights
"	Common Units Eligible for Future Sale
"	Material Tax Consequences
"	Partnership Status
"	Limited Partner Status
"	Tax Consequences of Unit Ownership
"	Tax Treatment of Operations
"	Disposition of Common Units
"	Uniformity of Units
"	Tax-Exempt Organizations and Other Investors
"	Administrative Matters
"	State, Local and Other Tax Considerations
"	Selling Unitholder
"	Underwriting
"	Validity of the Common Units
"	Experts
"	Where You Can Find More Information
"	Forward-Looking Statements
"	Index to Financial Statements
"	Unaudited Pro Forma Condensed Combined Financial Statements
"	Introduction
"	Unaudited Pro Forma Condensed Statement of Combined Operations for the Nine Months Ended September 30, 2006
"	Unaudited Pro Forma Condensed Statement of Combined Operations for the Year Ended December 31, 2005
"	Unaudited Pro Forma Condensed Combined Balance Sheet at September 30, 2006
"	Notes to Unaudited Pro Forma Condensed Combined Financial Statements
"	Report of Independent Registered Public Accounting Firm
"	Combined Balance Sheets at September 30, 2006, December 31, 2005 and 2004
"	Statements of Combined Operations and Comprehensive Income for the Nine Months Ended September 30, 2006 and 2005 (unaudited) and Years Ended December 31, 2005, 2004 and 2003
"	Statements of Combined Cash Flows for the Nine Months Ended September 30, 2006 and 2005 (unaudited) and Years Ended December 31, 2005, 2004 and 2003
"	Statements of Combined Owners Net Investment for the Nine Months Ended September 30, 2006 and Years Ended December 31, 2005, 2004 and 2003
"	Notes to Combined Financial Statements and Supplemental Schedule
"	Balance Sheet at September 30, 2006
"	Note to Balance Sheet
"	Balance Sheet at October 31, 2006
"	Appendix A Form of First Amended and Restated Agreement of Limited Partnership of Duncan Energy Partners L.P
"	Appendix B Glossary of Terms

TABLE OF CONTENTS


SUMMARY			1
Duncan Energy Partners L.P.			1
The Offering			5
Summary of Conflicts of Interest, Business Opportunity Agreements and Fiduciary Duties			8
Summary of Certain Risk Factors			11
Summary Historical and Pro Forma Financial and Operating Data			13
RISK FACTORS			21
Risks Inherent in Our Business			21
Risks Inherent in an Investment in Us			33
Tax Risks			40
USE OF PROCEEDS			42
CAPITALIZATION			43
DILUTION			44
CASH DISTRIBUTION POLICY AND RESTRICTIONS ON DISTRIBUTIONS			46
General			46
Our Initial Distribution Rate			48
Unaudited Pro Forma Combined Available Cash			50
Estimated Cash Available to Pay Distributions			53
Assumptions and Considerations			55
HOW WE MAKE CASH DISTRIBUTIONS			59
Distributions of Available Cash			59
Distributions of Cash upon Liquidation			59
SELECTED HISTORICAL AND PRO FORMA FINANCIAL AND OPERATING DATA			60
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			66
Overview			66
Our Operations			67
How We Evaluate Our Operations			69
Natural Gas Supply and Outlook			71
Factors Affecting Comparability of Future Results			71
Results of Operations			73
Liquidity and Capital Resources			77
Contractual Obligations			81
Off-Balance Sheet Arrangements			83
Inflation			83
Seasonality			83
Critical Accounting Policies and Estimates			84
Recent Accounting Developments			86
Related Party Transactions			88
Other Items			89
Quantitative and Qualitative Disclosures about Market Risk			89


BUSINESS			91
Our Partnership			91
Our Relationship with EPCO and Enterprise Products Partners			91
Our Business Strategy			92
Our Competitive Strengths			92
Industry Overview			93
NGL & Petrochemical Storage Services Segment			95
Natural Gas Pipelines & Services Segment			98
Petrochemical Pipeline Services Segment			103
NGL Pipeline Services Segment			105
Supplies			106
Employees			107
Environmental Matters			107
Regulation of Operations			109
Title to Properties			110
Legal Proceedings			110
MANAGEMENT			111
General			111
Governance Matters			111
Directors and Executive Officers			114
Executive Compensation			116
Compensation of Directors of DEP Holdings			119
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			120
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS			121
Our Relationship with EPCO and Enterprise Products Partners			121
Related Party Transactions with Enterprise Products Partners			121
Relationships with TEPPCO Partners			123
Relationships with Unconsolidated Affiliate			123
Contribution, Conveyance and Assumption Agreement			124
Omnibus Agreement			124
Mont Belvieu Caverns Limited Liability Company Agreement			125
Administrative Services Agreement			126
CONFLICTS OF INTEREST, BUSINESS OPPORTUNITY AGREEMENTS AND FIDUCIARY DUTIES			130
Conflicts of Interest and Business Opportunity Agreements			130
Fiduciary Duties			133
DESCRIPTION OF OUR COMMON UNITS			135
Transfer Agent and Registrar			135
Transfer of Units			135
DESCRIPTION OF MATERIAL PROVISIONS OF OUR PARTNERSHIP AGREEMENT			137
Organization and Duration			137
Purpose			137
Power of Attorney			137
Cash Distributions			137
Capital Contributions			137

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Limited Liability			138
Voting Rights			138
Issuance of Additional Securities			139
Amendments to Our Partnership Agreement			140
Merger, Sale or Other Disposition of Assets			142
Termination or Dissolution			142
Liquidation and Distribution of Proceeds			143
Withdrawal or Removal of Our General Partner			143
Transfer of General Partner Interest			144
Transfer of Ownership Interests in Our General Partner			144
Change of Management Provisions			144
Limited Call Right			145
Meetings; Voting			145
Status as Limited Partner			146
Non-Citizen Assignees; Redemption			146
Indemnification			146
Resolution of Conflicts of Interest			147
Reimbursement of Expenses			147
Books and Reports			148
Right to Inspect Our Books and Records			148
Registration Rights			148
COMMON UNITS ELIGIBLE FOR FUTURE SALE			149
MATERIAL TAX CONSEQUENCES			150
Partnership Status			150
Limited Partner Status			151
Tax Consequences of Unit Ownership			152
Tax Treatment of Operations			156
Disposition of Common Units			157
Uniformity of Units			159
Tax-Exempt Organizations and Other Investors			160
Administrative Matters			160
State, Local and Other Tax Considerations			162
SELLING UNITHOLDER			164
UNDERWRITING			165
VALIDITY OF THE COMMON UNITS			170
EXPERTS			170
WHERE YOU CAN FIND MORE INFORMATION			170
FORWARD-LOOKING STATEMENTS			171
INDEX TO FINANCIAL STATEMENTS			F-1
APPENDIX A — FORM OF FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF DUNCAN ENERGY PARTNERS L.P.			A-1
APPENDIX B — GLOSSARY OF TERMS			B-1
Form of Underwriting Agreement
Amended Limited Liability Company Agreement
Opinion of Andrews Kurth LLP
Opinion of Andrews Kurth LLP
Form of Contribution, Conveyance and Assumption Agreement
Form of Contribution, Conveyance and Assumption Agreement
Form of Contribution, Conveyance and Assumption Agreement
Form of Amended Limited Liability Company Agreement
Form of Amended Limited Liability Company Agreement
Form of Fourth Amended Administrative Services Agreement
Form of Omnibus Agreement
List of Subsidiaries
Consent of Deloitte & Touche LLP

You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with

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different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition and results of operations may have changed since that date.

Until , 2007 (25 days after the date of this prospectus), all dealers that buy, sell or trade our common units, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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SUMMARY

This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the historical and pro forma financial statements and the notes to those financial statements. You should read “Risk Factors” for important information about risks that you should consider before buying our common units. The information presented in this prospectus assumes an initial public offering price per unit of $20.00 and that the underwriters’ option to purchase additional common units is not exercised, unless otherwise noted.

All references in this prospectus to “we,” “us,” “Duncan Energy Partners,” the “Partnership” and “our” refer to Duncan Energy Partners L.P. and its subsidiaries. All references in this prospectus to “we,” “us,” “our” or the “Company,” when used in a historical context, are intended to mean and include the combined business and operations of Duncan Energy Partners Predecessor. Duncan Energy Partners Predecessor reflects ownership of 100% of the assets being contributed, but we will own only a 66% interest in these assets after their contribution in connection with this offering. For all references in this prospectus to the terms “our general partner,” “DEP Holdings,” “Enterprise Products Partners,” “Enterprise Products OLP,” “Enterprise Products GP,” “Enterprise GP Holdings,” “EPE Holdings,” “EPCO,” “Mont Belvieu Caverns,” “Acadian Gas,” “Sabine Propylene,” “Lou-Tex Propylene,” “South Texas NGL,” “TEPPCO Partners,” “TEPPCO GP” and “Evangeline,” please read Appendix B — Glossary of Terms. Please also read Appendix B — Glossary of Terms for a glossary of industry terms used in this prospectus.

Duncan Energy Partners L.P.

We are a Delaware limited partnership formed by Enterprise Products Partners in September 2006 to own, operate and acquire a diversified portfolio of midstream energy assets. We are engaged in the business of gathering, transporting, marketing and storing natural gas and transporting and storing natural gas liquids, or NGLs, and petrochemicals. Our assets were previously owned by Enterprise Products Partners and are part of its integrated midstream energy asset network, or “value chain,” which includes natural gas gathering, processing, transportation and storage; NGL fractionation (or separation), transportation, storage and import and export terminaling; crude oil transportation; and offshore production platform services. After this offering, we will own 66% of the equity interests in the subsidiaries that hold our operating assets, and affiliates of Enterprise Products Partners will continue to own the remaining 34%. We believe our relationship with Enterprise Products Partners will enable us to maintain stable cash flows and optimize our scale, strategic location and pipeline connections.

Our operations are organized into the following four business segments:


	•	NGL & Petrochemical Storage Services. Our 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. Our 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. The Acadian Gas system links natural gas supplies from onshore and offshore Gulf of Mexico developments (including offshore pipelines, continental shelf and deepwater production) with local gas distribution companies, electric generation plants and industrial customers, including those in the Baton Rouge-New Orleans-Mississippi River corridor. 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. Our 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

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		Sorrento, 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. Our NGL Pipeline Services segment consists 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. We acquired a 223-mile segment of the system in August 2006, and we are in the process of acquiring and constructing other segments of the pipeline. The system became operational and began transporting NGLs in January 2007 after undergoing modifications, extensions and interconnections. Additional expansions are scheduled to be completed during the remainder of 2007.

Our Relationship With Enterprise Products Partners

Enterprise Products Partners is a North American midstream energy company that provides a wide range of services to producers and consumers of natural gas, NGLs and crude oil. Enterprise Products Partners’ value chain is an integrated midstream energy asset network that links producers of natural gas, NGLs and crude oil from some of the largest supply basins in the United States, Canada and the Gulf of Mexico with domestic consumers and international markets. For the year ended December 31, 2005, Enterprise Products Partners had revenues of $12.3 billion, operating income of $663 million and net income of $420 million. For the nine months ended September 30, 2006, Enterprise Products Partners had revenues of $10.6 billion, operating income of $653.7 million and net income of $468.4 million. After giving effect to this offering, we will continue to have a number of commercial relationships, including transportation and storage agreements, with Enterprise Products Partners and its affiliates. In addition, in the event we propose to sell any equity interests in our operating subsidiaries or material assets of those entities, other than sales of inventory and other assets in the ordinary course of business, Enterprise Products OLP will have a right of first refusal to purchase those interests or assets.

We believe our relationship with EPCO and Enterprise Products Partners will provide us access to an experienced management team and commercial relationships throughout the energy industry. However, this relationship is also a source of potential conflicts. For example, Enterprise Products Partners, EPCO and their affiliates are not restricted from competing with us and may generally acquire, construct or dispose of midstream or other assets in the future without any obligation to offer us the opportunity to purchase or construct those assets or participate in these activities. Please read “Conflicts of Interest, Business Opportunity Agreements and Fiduciary Duties” and “Certain Relationships and Related Party Transactions” for more information on these commercial and other relationships.

Formation Transactions

At the closing of this offering, the following transactions will occur:


	•	Enterprise Products OLP will contribute to us 66% of the equity interests in Mont Belvieu Caverns, Acadian Gas, Sabine Propylene, Lou-Tex Propylene and South Texas NGL;

	•	We will issue to Enterprise Products OLP 7,301,571 common units representing an approximate 35.2% limited partner interest in us (or an approximate 25.8% limited partner interest if the underwriters exercise in full their option to purchase additional common units), and we will issue a 2% general partner interest to our general partner, DEP Holdings, LLC;


	•	We will borrow approximately $200 million under our new credit agreement, which will be used to fund a portion of our payment to Enterprise Products Partners in connection with the transactions described above;


	•	We will sell 13,000,000 common units to the public in this offering representing an approximate 62.8% limited partner interest in us (or an approximate 72.2% limited partner interest if the underwriters exercise in full their option to purchase additional common units), and will use the net proceeds from this offering as described under “Use of Proceeds;”

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	•	We will become party to an existing administrative services agreement among EPCO and certain of its affiliates;

	•	We will enter into various new transportation, storage and operating agreements with Enterprise Products OLP and its affiliates; and


	•	We will enter into an omnibus agreement with Enterprise Products OLP, pursuant to which Enterprise Products OLP will agree to (i) indemnify us for certain environmental liabilities, tax liabilities and title and right-of-way defects occurring or existing before the closing and (ii) reimburse us for our 66% share of excess construction costs, if any, above our current estimated cost to complete planned expansions on the South Texas NGL pipeline and Mont Belvieu Caverns brine-related facilities. In addition, we will grant Enterprise Products OLP a right of first refusal on the equity interests in certain of our operating subsidiaries and on the material assets of these entities, other than sales of inventory and other assets in the ordinary course of business, and a preemptive right with respect to equity securities issued by certain of our subsidiaries, other than as consideration in an acquisition or in connection with a loan or debt financing.

Management and Ownership

As is common with publicly traded limited partnerships and in order to maximize operational flexibility, we will conduct our operations through subsidiaries.

Our general partner will manage our operations and activities. Some of the executive officers and non-independent directors of our general partner also serve as executive officers or directors of Enterprise Products GP, EPE Holdings and TEPPCO GP. Please read “Management.” Our general partner will not receive any management fee or other compensation in connection with its management of our business but will be entitled to be reimbursed for all direct and indirect expenses incurred on our behalf. Neither our general partner nor the board of directors of our general partner will be elected by our unitholders. Unlike shareholders in a corporation, our unitholders will not elect or remove the board of directors of our general partner.

Our principal executive offices are located at 1100 Louisiana Street, 10th Floor, Houston, Texas 77002, and our telephone number is (713) 381-6500. Our website is located at http://www.deplp.com. Information on our website or any other website is not incorporated by reference into this prospectus and does not constitute a part of this prospectus.

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Our Structure

The following diagram depicts our organizational structure after giving effect to this offering and the related transactions assuming no exercise of the underwriters’ option to purchase additional common units.

Ownership of Duncan Energy Partners L.P.


					% of
	General Partner				Total
	Units		Common Units		Ownership
Public common units		—		13,000,000		62.8	%
Enterprise Products Partners and its affiliates		—		7,301,571		35.2	%
General partner interest		414,318		—		2.0	%

Total		414,318		20,301,571		100.0	%

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The Offering


Common units offered		13,000,000 common units.

Common units subject to the underwriters’ option to purchase additional common units		If the underwriters exercise their option to purchase additional units in full, we will issue 1,950,000 additional common units to the public and redeem 1,950,000 common units from Enterprise Products OLP, who may be deemed to be a selling unitholder in this offering. Please read “Selling Unitholder.”

Common units outstanding after this offering		20,301,571 common units.

Use of proceeds		We will use the net proceeds from this offering of approximately $243.4 million (based on an assumed offering price of $20.00 per unit), after deducting the underwriting discount and a $1.0 million structuring fee, but before estimated expenses associated with the offering and related formation transactions, to:

		• distribute approximately $212.3 million to Enterprise Products OLP as a portion of the cash consideration and reimbursement for capital expenditures relating to the assets contributed to us;

		• provide approximately $28.2 million to fund our share of estimated capital expenditures to complete planned expansions to the South Texas NGL pipeline system and brine production and above-ground storage projects at Mont Belvieu subsequent to the closing of this offering; and

		• pay approximately $2.9 million of other estimated net expenses associated with this offering and related formation transactions described on page 2.

		In addition, we will borrow approximately $200 million under our new $300 million credit agreement, and we will distribute $198.9 million of these borrowings to Enterprise Products OLP in partial consideration for the assets contributed to us upon the closing of this offering.

		If the underwriters exercise their option to purchase additional common units, we will use all of the net proceeds from the sale of those common units to redeem an equal number of common units from Enterprise Products OLP. For the resulting beneficial ownership, read “Security Ownership of Certain Beneficial Owners and Management.”


Cash distributions		We will make initial quarterly distributions of $0.40 per common unit to the extent we have sufficient cash from operations after establishment of cash reserves and payment of fees and expenses, including reimbursement of expenses to our general partner. Our ability to pay cash distributions at this initial distribution rate is subject to various restrictions and other factors described in more detail under the caption “Cash Distribution Policy and Restrictions on Distributions.” We must distribute all of our cash on hand at the end of each quarter, less reserves established by our general partner.

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		We refer to this cash as “available cash,” and we define its meaning in our partnership agreement as summarized in “How We Make Cash Distributions — Distributions of Available Cash — Definition of Available Cash.” The amount of available cash may be greater than or less than the aggregate amount associated with payment of the expected initial quarterly distribution on all common units. In general, we will pay 98% of any cash distributions we make each quarter to our unitholders and the remaining 2% to our general partner.

		Unlike many publicly traded limited partnerships, our general partner is not entitled to any incentive distributions and we do not have any subordinated units.

		We believe that, based on the assumptions and considerations described in “Cash Distribution Policy and Restrictions on Distributions — Assumptions and Considerations,” we will have sufficient available cash to pay the full initial quarterly distribution on all our common units and our general partner interest for each quarter during the four quarters ending December 31, 2007. We estimate that our pro forma available cash for the year ended December 31, 2005 would have been sufficient to pay only 30% of the initial quarterly distributions on our common units and our general partner interest during that period. We estimate that our pro forma available cash for the four quarters ended September 30, 2006 would not have been sufficient to pay any distributions on our common units and our general partner interest.

		We will pay investors in this offering a prorated distribution for the first quarter during which we are a publicly traded partnership. This distribution will be paid for the period beginning on the first day our common units are publicly traded and ending on the last day of that fiscal quarter. Therefore, we will pay investors in this offering a distribution for the period from the closing date of this offering to and including March 31, 2007. We expect to pay this cash distribution on or about May 15, 2007.


Limited call right		If at any time our general partner and its affiliates own 80% or more of our outstanding common units, our general partner has the right, but not the obligation, to purchase all of the remaining common units at a price not less than the then-current market price of the common units.


Issuance of additional units		We can issue an unlimited number of units without the consent of our unitholders. Please read “Common Units Eligible For Future Sale” and “Description of Material Provisions of Our Partnership Agreement — Issuance of Additional Securities.”

Limited voting rights		Our general partner will manage all of our operations. Unlike the holders of common stock of a corporation, you will have only limited voting rights on matters affecting our business and you will have no right to elect our general partner or its officers or directors. Our general partner may not be removed except by a vote of the holders of at least 662/3% of the outstanding common units, including common units owned by our general partner and its affiliates. Upon completion of this offering, affiliates of our

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		general partner will own approximately 36.0% of our outstanding common units (or approximately 26.4% of our outstanding common units if the underwriters’ option to purchase additional common units is exercised in full). Please read “Description of Material Provisions of Our Partnership Agreement — Withdrawal or Removal of Our General Partner.”


Estimated ratio of taxable income to distributions		We estimate that if you own the common units you purchase in this offering through the record date for distributions for the period ending December 31, 2009, you will be allocated, on a cumulative basis, an amount of federal taxable income for that period that will be less than 20% of the cash distributed with respect to that period. For example, if you receive an annual distribution of $1.60 per common unit, we estimate that your average allocated federal taxable income per year will be no more than $0.32 per common unit. Please read “Material Tax Consequences” in this prospectus for the basis of this estimate.


Material tax consequences		For a discussion of other material federal income tax consequences that may be relevant to prospective unitholders who are individual citizens or residents of the United States, please read “Material Tax Consequences.”


Exchange listing		Our common units have been approved for listing, subject to official notice of issuance, on the New York Stock Exchange under the symbol “DEP.”

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Summary of Conflicts of Interest, Business Opportunity Agreements and Fiduciary Duties

The following diagram summarizes the current organizational structure of EPCO, affiliates of Dan L. Duncan and our affiliates at December 31, 2006.

General. Conflicts of interest exist and may arise in the future as a result of the relationships among us, Enterprise Products Partners, Enterprise GP Holdings, TEPPCO Partners and our and their respective general partners and affiliates. Our general partner is controlled indirectly by Enterprise Products Partners. Mr. Dan L. Duncan has the ability to elect, remove and replace the directors and officers of our general partner and the general partners of Enterprise Products Partners, Enterprise GP Holdings and TEPPCO Partners. The assets of Enterprise Products Partners, Enterprise GP Holdings, TEPPCO Partners and us overlap in certain areas, which may result in various conflicts of interest in the future.

The directors and officers of our general partner have fiduciary duties to manage our business in a manner beneficial to us and our partners. Some of the executive officers and non-independent directors of our general partner also serve as executive officers or directors of Enterprise Products GP, EPE Holdings and TEPPCO GP. As a result, they have fiduciary duties to manage the business of each of those entities in a manner beneficial to such entities and their respective partners. Consequently, these directors and officers may

8

encounter situations in which their fiduciary obligations to Enterprise Products Partners, Enterprise GP Holdings or TEPPCO Partners, on the one hand, and us, on the other hand, are in conflict. For a more detailed description of the conflicts of interest involving our general partner, please read “Conflicts of Interest, Business Opportunity Agreements and Fiduciary Duties.”

It is not possible to predict the nature or extent of these potential future conflicts of interest at this time, nor is it possible to determine how we will address and resolve any such future conflicts of interest. However, the resolution of these conflicts may not always be in our best interest or that of our unitholders.

Business Opportunity Agreements under our Administrative Services Agreement. At or prior to the closing of this offering, we and our general partner will become party to an existing administrative services agreement with EPCO, Enterprise Products Partners and its general partner, Enterprise GP Holdings and its general partner, TEPPCO Partners and its general partner, and certain affiliated entities. The administrative services agreement will address potential conflicts that may arise among us and our general partner, Enterprise Products Partners and its general partner, Enterprise GP Holdings and its general partner, TEPPCO Partners and its general partner, and the EPCO Group, which includes EPCO and its affiliates but does not include the aforementioned entities and their controlled affiliates.

The administrative services agreement will provide, among other things, that:


	•	if a business opportunity to acquire certain equity securities (which we define to include general partner interests in publicly traded partnerships and similar interests and any associated incentive distribution rights, limited partner interests or similar interests owned by the owner of such general partner interest or its affiliates), is presented to the EPCO Group, us, and our general partner, Enterprise Products Partners and its general partner, or Enterprise GP Holdings and its general partner, Enterprise GP Holdings will have the first right to pursue the acquisition. In the event that Enterprise GP Holdings abandons the acquisition, Enterprise Products Partners will have the second right to pursue such acquisition either for itself or, if desired by Enterprise Products Partners in its sole discretion, for our benefit. In the event that Enterprise Products Partners affirmatively directs the acquisition to us, we may pursue such acquisition. In the event that Enterprise Products Partners abandons the acquisition for itself and for us, the EPCO Group may pursue the acquisition without any further obligation to any other party or offer such opportunity to other affiliates; and


	•	if any business opportunity not covered by the preceding bullet point is presented to the EPCO Group, us and our general partner, Enterprise Products Partners and its general partner, or Enterprise GP Holdings and its general partner, Enterprise Products Partners will have the first right to pursue such opportunity either for itself or, if desired by Enterprise Products Partners in its sole discretion, for our benefit. In the event that Enterprise Products Partners affirmatively directs the business opportunity to us, we may pursue such business opportunity. In the event Enterprise Products Partners abandons the business opportunity for itself and for us, Enterprise GP Holdings will have the second right to pursue such business opportunity. In the event Enterprise GP Holdings abandons the business opportunity, the EPCO Group may pursue the business opportunity without any further obligation to any other party or offer such opportunity to other affiliates.

None of the EPCO Group, we and our general partner, Enterprise Products Partners and its general partner, or Enterprise GP Holdings and its general partner will have any obligation to present business opportunities to TEPPCO Partners, its general partner or their controlled affiliates, nor will TEPPCO Partners, its general partner or their controlled affiliates have any obligation to present business opportunities to the EPCO Group, us and our general partner, Enterprise Products Partners and its general partner, or Enterprise GP Holdings and its general partner. For a more detailed description of these provisions, please read “Certain Relationships and Related Party Transactions — Administrative Services Agreement.”

Shared Personnel. DEP Holdings, as our general partner, will manage our operations and activities. Under the administrative services agreement, EPCO will provide all employees and administrative, operational and other services for us. All of our general partner’s executive officers will, and certain other EPCO employees assigned to our operations may, also perform services for EPCO, Enterprise Products Partners,

9

Enterprise GP Holdings, TEPPCO Partners and their affiliates. The services performed by these shared personnel will generally be limited to non-commercial functions, including but not limited to human resources, information technology, financial and accounting services and legal services. We have adopted policies and procedures intended to protect and prevent inappropriate disclosure by shared personnel of commercial and other non-public information relating to us, EPCO, Enterprise Products Partners, Enterprise GP Holdings and TEPPCO Partners.

Because our general partner’s executive officers allocate time among EPCO, us, Enterprise Products Partners, Enterprise GP Holdings and TEPPCO Partners, these officers face conflicts regarding the allocation of their time, which may adversely affect our business, results of operations and financial condition.

Compensation Arrangements. Dan L. Duncan, as the control person of EPCO, our general partner and the general partners of Enterprise Products Partners, Enterprise GP Holdings and TEPPCO Partners, is responsible for establishing the compensation arrangements for all EPCO employees, including employees who provide services to us, Enterprise Products Partners, Enterprise GP Holdings and TEPPCO Partners.

Fiduciary Duties. Our partnership agreement limits the liability and reduces the fiduciary duties of our general partner and its affiliates to our unitholders. Our partnership agreement also restricts the remedies available to unitholders for actions that might otherwise constitute a breach of our general partner’s and its affiliates’ fiduciary duty owed to unitholders. By purchasing our common units, you are treated as having consented to various actions contemplated in the partnership agreement and conflicts of interest that might otherwise constitute a breach of fiduciary or other duties under applicable state law. Please read “Conflicts of Interest, Business Opportunity Agreements and Fiduciary Duties — Fiduciary Duties” for a description of the fiduciary duties imposed on our general partner by Delaware law, the material modifications of these duties contained in our partnership agreement and certain legal rights and remedies available to unitholders.

For a description of our other relationships with our affiliates, please read “Certain Relationships and Related Party Transactions.”

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Summary of Certain Risk Factors

An investment in our common units involves risks associated with our business, our partnership structure and the tax characteristics of our common units. The following list of risk factors is not exhaustive. For more information about these and other risks, please read “Risk Factors” beginning on page 21. These risks include, among others:

Risks Inherent in Our Business


	•	We may not have sufficient cash from operations to enable us to pay our expected initial quarterly distribution on our common units.

	•	A decrease in demand for natural gas, NGLs, NGL products or petrochemical products by the petrochemical, refining or heating industries could materially adversely affect our results of operations, cash flows and financial position.

	•	Because of the natural decline in gas production from existing wells, our success depends on our ability to obtain access to new sources of natural gas, which is dependent on factors beyond our control. Any decrease in supplies of natural gas could adversely affect our business and operating results.

	•	A natural disaster, catastrophe or other event could result in severe personal injury, property damage and environmental damage, which could curtail our operations and otherwise materially adversely affect our cash flow and, accordingly, affect the market price of our common units.

	•	We may not be able to make acquisitions or to make acquisitions on economically acceptable terms, which may limit our ability to grow.

	•	Federal, state or local regulatory measures could materially adversely affect our business, results of operations, cash flows and financial condition.

	•	Environmental costs and liabilities and changing environmental regulation could materially affect our results of operations, cash flows and financial condition.

	•	We depend on Enterprise Products Partners and certain other key customers for a significant portion of our revenues. The loss of any of these key customers could result in a decline in our revenues and cash available to pay distributions to you.

	•	Successful development of LNG import terminals outside our areas of operations could reduce the demand for our services.

	•	We do not own all of the land on which our pipelines and facilities are located, which could disrupt our operations.

Risks Inherent in an Investment in Us


	•	Affiliates of our general partner, including Enterprise Products Partners, Enterprise GP Holdings and TEPPCO Partners, may compete with us, and business opportunities may be directed by contract to Enterprise Products Partners and Enterprise GP Holdings before us under the administrative services agreement.

	•	Our general partner and its affiliates own a controlling interest in us and have conflicts of interest and limited fiduciary duties, which may permit them to favor their own interests to your detriment.

	•	Our general partner has a limited call right that may require you to sell your common units at an undesirable time or price.

	•	Our partnership agreement limits our general partner’s fiduciary duties to unitholders and restricts the remedies available to unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty.

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	•	An affiliate of Enterprise Products Partners will have the power to appoint and remove our directors and management.

	•	Unitholders have limited voting rights and are not entitled to elect our general partner or its directors, which could lower the trading price of our common units.


	•	You will experience immediate and substantial dilution of $5.64 per common unit.


	•	We may issue additional units without your approval, which would dilute your ownership interests.

	•	Cost reimbursements to EPCO and its affiliates will reduce cash available for distribution to you.

Tax Risks


	•	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 Internal Revenue Service, or the IRS, were to treat us as a corporation or if we were to become subject to entity-level taxation for state tax purposes, then our cash distributions to you would be substantially reduced.

	•	If the IRS contests the federal income tax positions we take, the market for our common units may be adversely impacted, and the costs of any contest will reduce our cash distributions to you.

	•	You may be required to pay taxes on your share of our income even if you do not receive any cash distributions from us.

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Summary Historical and Pro Forma Financial and Operating Data

Duncan Energy Partners L.P. was formed on September 29, 2006; therefore, it does not have any historical financial statements prior to its formation. The following tables set forth, for the periods and at the dates indicated, the summary historical combined financial and operating data of Duncan Energy Partners Predecessor, which was derived from the books and records of Enterprise Products Partners.

The summary historical combined financial data for the nine months ended September 30, 2006 and for the years ended December 31, 2005, 2004 and 2003 and combined balance sheet data at September 30, 2006 and at December 31, 2005 and 2004 is derived from and should be read in conjunction with the audited combined financial statements of Duncan Energy Partners Predecessor included elsewhere in this prospectus beginning on page F-13. The summary historical combined financial data for the nine months ended September 30, 2005 and combined balance sheet data at September 30, 2005 is derived from the unaudited condensed combined financial statements of Duncan Energy Partners Predecessor. The operating data for all periods are unaudited. The summary unaudited pro forma combined financial data of Duncan Energy Partners was derived from and should be read in conjunction with our unaudited pro forma condensed combined financial statements included in this prospectus beginning on page F-2. The following information should also be read together with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Enterprise Products Partners, through its subsidiaries, has owned controlling interests and operated the underlying assets of Mont Belvieu Caverns, Acadian Gas, Lou-Tex Propylene and Sabine Propylene for several years. Enterprise Products Partners will retain a 34% ownership interest in each of these four entities (as well as South Texas NGL). Enterprise Products Partners will own our general partner, DEP Holdings, which owns a 2% general partner interest in us, and therefore indirectly has the ability to control us. In addition, Enterprise Products Partners will own approximately 36.0% of our common units after completion of this offering, or approximately 26.4% of our outstanding common units if the underwriters exercise their option to purchase additional common units in full. For financial reporting purposes, the ownership interests of Enterprise Products Partners are deemed to represent the parent (or sponsor) interest in our pro forma results of our operations and financial position.

The summary unaudited pro forma combined financial data for the nine months ended September 30, 2006 and for the year ended December 31, 2005 assume the pro forma transactions noted herein occurred at the beginning of each period presented or on September 30, 2006 for the balance sheet data. These transactions include:


	•	The August 2006 purchase of a pipeline by Enterprise Products Partners for approximately $97.7 million in cash, the subsequent contribution of this pipeline to South Texas NGL, and estimated additional costs of $37.7 million required to modify this pipeline and to acquire and construct additional pipelines in order to place this system into operation in January 2007. The pro forma financial data does not reflect estimated additional capital expenditures of $28.6 million that will be made by South Texas NGL in 2007 to complete planned expansions to this system. We will retain cash in an amount equal to our 66% share (approximately $18.9 million) of these estimated capital expenditures from the net proceeds of this offering in order to fund our share of the planned expansion costs. The pro forma combined results of operations data does not reflect any results attributable to the historical activities of this pipeline.


	•	The expenditure of $21.3 million in connection with the construction of additional brine production capacity and above-ground storage reservoirs at Mont Belvieu. The pro forma financial data does not reflect estimated additional capital expenditures of $14.1 million that will be made by Mont Belvieu Caverns subsequent to December 31, 2006 to complete these projects. We will retain cash in an amount equal to our 66% share (approximately $9.3 million) of these additional capital expenditures from the net proceeds of this offering in order to fund our share of the planned expansion costs.


	•	The contribution of a 66% interest in certain entities, which are wholly-owned subsidiaries of Enterprise Products Partners, and the retention by Enterprise Products Partners of a 34% interest in these entities.

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	•	The revision of related party storage contracts between us and Enterprise Products Partners to (1) increase certain storage fees paid by Enterprise Products Partners and (2) reflect the allocation to Enterprise Products Partners of all storage measurement gains and losses relating to products under these agreements, and the execution of a limited liability company agreement for Mont Belvieu Caverns providing for the special allocation and other agreements relating to other measurement gains and losses to Enterprise Products Partners.

	•	The assignment to us of certain third-party agreements that effectively reduce tariff rates received by us for the transport of propylene volumes.

Our unaudited pro forma, as adjusted financial data also gives effect to the following:


	•	our borrowing of $200 million under a new revolving credit facility;

	•	our issuance and sale of 13,000,000 common units to the public in this offering;

	•	our payment of estimated underwriting discounts and commissions, a structuring fee and other offering expenses; and

	•	our use of net proceeds from the borrowing and this offering as consideration for the contributed ownership interests in Mont Belvieu Caverns, Acadian Gas, Lou-Tex Propylene, Sabine Propylene and South Texas NGL from Enterprise Products Partners.

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The following table presents the summary historical combined financial and operating data of Duncan Energy Partners Predecessor and our summary unaudited pro forma combined financial information for the annual periods indicated (dollars in thousands, except per unit amounts):


									Duncan Energy Partners L.P.
									For the Year Ended
	Duncan Energy Partners Predecessor								December 31, 2005
	For the Year Ended December 31,								Pro			Pro Forma
	2003		2004			2005			Forma			As Adjusted

Combined Results of Operations Data:(1)
Revenues	$	668,234	$	748,931		$	953,397		$	946,568		$	946,568
Costs and expenses:
Operating costs and expenses		609,774		685,544			909,044			905,989			905,989
General and administrative expenses		6,138		5,442			4,483			6,983			6,983

Total costs and expenses		615,912		690,986			913,527			912,972			912,972

Equity in income of unconsolidated affiliates		131		231			331			331			331

Operating income		52,453		58,176			40,201			33,927			33,927

Interest expense							(532	)		(532	)		(13,807	)
Other income (expense), net		1		(52	)

Total other income (expense)		1		(52	)		(532	)		(532	)		(13,807	)

Income before parent interest		52,454		58,124			39,669			33,395			20,120
Parent’s share of income													(14,274	)

Income from continuing operations		52,454		58,124			39,669		$	33,395		$	5,846

Cumulative effect of change in accounting principle							(582	)

Net income	$	52,454	$	58,124		$	39,087

Earnings per unit — public, basic and diluted												$	0.45

Combined Balance Sheet Data (at period end):(1)
Total assets	$	581,816	$	590,487		$	642,840
Owners’ net investment		524,127		509,719			527,767
Other Combined Financial Data:(1)
Net cash flows provided by operating activities	$	64,732	$	79,463		$	40,568
Cash flows used in investing activities		340		6,931			19,503
Cash flows used in (provided by) financing activities (2)		64,392		72,532			21,065
Gross operating margin		76,473		81,985			64,142		$	60,368		$	60,368
EBITDA		70,336		76,498			59,072			53,380			39,106
Operating Data:(1)
Natural Gas Pipelines & Services, net:
Natural gas throughput volumes (Bbtus/d)		600		645			640			640			640
Petrochemical Pipeline Services, net:
Petrochemical transportation volumes (MBbls/d)		40		39			33			33			33

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The following table presents the summary historical combined financial and operating data of Duncan Energy Partners Predecessor and our summary unaudited pro forma combined financial information for the interim periods indicated (dollars in thousands, except per unit amounts):


	Duncan Energy					Duncan Energy Partners L.P.
	Partners Predecessor					For the Nine Months
	For the Nine Months					Ended September 30, 2006
	Ended September 30,					Pro			Pro Forma
	2005		2006			Forma			As Adjusted

Combined Results of Operations Data:(1)
Revenues	$	649,404	$	740,102		$	733,434		$	733,434
Costs and expenses:
Operating costs and expenses		614,328		697,979			696,511			696,511
General and administrative expenses		3,799		2,469			4,344			4,344

Total costs and expenses		618,127		700,448			700,855			700,855

Equity in income of unconsolidated affiliates		280		624			624			624

Operating income		31,557		40,278			33,203			33,203

Interest expense										(9,930	)
Other income				6			6			6

Total other income (expense)				6			6			(9,924	)

Income before provision for income taxes and parent interest		31,557		40,284			33,209			23,279
Provision for income taxes				(21	)		(21	)		(21	)

Income before parent interest		31,557		40,263			33,188			23,258
Parent’s share of net income										(15,733	)

Income from continuing operations		31,557		40,263		$	33,188		$	7,525

Cumulative effect of change in accounting principle				9

Net income	$	31,557	$	40,272

Earnings per unit — public, basic and diluted									$	0.58

Combined Balance Sheet Data (at period end):(1)
Total assets	$	617,402	$	747,155		$	799,675		$	828,963
Total debt										200,000
Parent’s interest in the Partnership										305,233
Owners’ net investment		520,727		662,131			716,465
Partners’ equity — public										240,520
Other Combined Financial Data:(1)
Net cash flows provided by operating activities	$	37,226	$	62,301
Cash flows used in investing activities		16,669		58,226
Cash flows used in financing activities(2)		20,557		4,075
Gross operating margin		49,611		58,198		$	52,998		$	52,998
EBITDA		45,810		55,761			48,677			32,944
Operating Data:(1)
Natural Gas Pipelines & Services, net:
Natural gas throughput volumes (Bbtus/d)		657		773			773			773
Petrochemical Pipeline Services, net:
Petrochemical transportation volumes (MBbls/d)		34		36			36			36

The non-GAAP financial measures of gross operating margin and earnings before interest, income taxes, depreciation and amortization, which we refer to as “EBITDA,” are presented in the summary historical financial data for Duncan Energy Partners Predecessor and in our pro forma financial data. For a description of these non-GAAP financial measures and reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures, please read “— Non-GAAP Financial Measures.”

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The following information is provided to highlight significant trends and other information regarding Duncan Energy Partners Predecessor’s historical operating results, financial position and other financial data. Each section below represents a footnote to the tables above:

(1) We view the combined financial data of Duncan Energy Partners Predecessor from the financial statements of Mont Belvieu Caverns, Acadian Gas, Lou-Tex Propylene and Sabine Propylene, which were derived from the accounts and records of Enterprise Products Partners. Enterprise Products Partners did not own certain of the businesses for all periods presented in this section. As a result, the summary selected data reflects the following information:


	•	Enterprise Products Partners owned Mont Belvieu Caverns and Lou-Tex Propylene for all periods presented. Our pro forma balance sheet data reflects assumed capital expenditures of $21.3 million by Mont Belvieu Caverns in connection with the construction of additional brine production capacity and above-ground storage reservoirs. Our pro forma financial data does not reflect estimated additional capital expenditures of $14.1 million that will be made by Mont Belvieu Caverns subsequent to December 31, 2006 to complete these projects. We will retain cash in an amount equal to our 66% share (approximately $9.3 million) of these additional capital expenditures from the net proceeds of this offering in order to fund our share of the planned expansion costs.


	•	Enterprise Products Partners acquired Acadian Gas in April 2001; therefore, the selected data includes Acadian Gas from the date of its acquisition. No financial data was available from the seller for periods prior to April 2001.

	•	Enterprise Products Partners constructed the pipeline owned by Sabine Propylene and placed it in service in November 2001; therefore, the selected data includes Sabine Propylene from November 2001 to present.


	•	In August 2006, Enterprise Products Partners purchased a 223-mile pipeline extending from Corpus Christi, Texas to Pasadena, Texas from ExxonMobil Pipeline Company. The total purchase price for this asset was approximately $97.7 million in cash. This pipeline system will be owned by South Texas NGL (along with others being constructed and to be acquired) and will be used to transport NGLs from two Enterprise Products Partners’ facilities located in South Texas to Mont Belvieu, Texas. The total estimated cost to acquire and construct the additional pipelines is $66.3 million. Our pro forma balance sheet data reflects assumed capital expenditures of $37.7 million, including approximately $8 million spent to acquire a 10-mile pipeline from an affiliate of TEPPCO Partners, to make this pipeline system operational in January 2007. We expect that it will cost an additional $28.6 million to complete planned expansions of the South Texas NGL pipeline after the closing of this offering, of which our 66% share will be approximately $18.9 million. This expenditure is not reflected in the pro forma financial data because we expect to use cash on hand from the proceeds of this offering to fund this cost.

Duncan Energy Partners Predecessor’s historical financial information does not reflect any transactions related to the NGL pipeline asset acquired in August 2006 or subsequent capital expenditures for the construction and acquisition of related pipelines. Furthermore, the pro forma adjustments are limited to those required to present an estimate of owners’ net investment immediately prior to this offering. The pro forma results of operations data does not reflect any results attributable to the historical activities of these NGL pipelines.

ExxonMobil has informed us that no discrete and separable financial information existed for the pipeline we acquired in August 2006, which was comprised of two separately operated pipelines prior to our purchase. The seller had previously utilized these pipelines for a different product and the pipeline was out of service when we acquired it. The 10-mile pipeline acquired from an affiliate of TEPPCO Partners was used as a feeder line for NGL products and operated by different management. We understand no financial statement information is available for this minor component asset. There is no meaningful financial data available regarding the prior use of these pipelines by the sellers that would be meaningful to our investors. In addition, such data, if available, would not assist investors in understanding either the evolution of the business (which is a new NGL transportation network) nor the track record of management (which will be different).

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(2) Duncan Energy Partners Predecessor operated within the Enterprise Products Partners cash management program for all periods presented. Cash flows used in financing activities represent transfers of excess cash from Duncan Energy Partners Predecessor to Enterprise Products Partners equal to cash provided by operations less cash used in investing activities. Conversely, cash flows provided by financing activities represent contributions from Enterprise Products Partners.

For additional information regarding our combined results of operations and liquidity and capital resources, please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Non-GAAP Financial Measures

We include in this prospectus the non-GAAP financial measures of gross operating margin and EBITDA, and provide reconciliations of these non-GAAP measures to their most directly comparable measure or measures calculated and presented in accordance with GAAP.

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

We define total (or combined) segment gross operating margin as operating income before: (1) depreciation, amortization and accretion expense; (2) gains and losses on the sale of assets; and (3) general and administrative expenses. Gross operating margin is exclusive of other income and expense transactions, provision for income taxes, minority interest, extraordinary charges and the cumulative effect of changes in accounting principles. Gross operating margin by segment is calculated by subtracting segment operating costs and expenses (net of the adjustments noted above) from segment revenues, with both segment totals before the elimination of any intersegment and intrasegment transactions. Our combined revenues reflect the elimination of all material intercompany transactions.

We include equity earnings from Evangeline, a subsidiary of Acadian Gas, in our measurement of the Natural Gas Pipelines & Services segment gross operating margin and operating income. Our equity investments in midstream energy operations such as those conducted by Evangeline are a vital component of our long-term business strategy and important to the operations of Acadian Gas. This method of operation enables us to achieve favorable economies of scale relative to our level of investment and also lowers our exposure to business risks compared the profile we would have on a stand-alone basis. Our equity investments are within the same industry as our combined operations; therefore, we believe treatment of earnings from our equity method investee as a component of gross operating margin and operating income is appropriate.

EBITDA. We define EBITDA as net income or loss plus interest expense, provision for income taxes and depreciation, accretion and amortization expense. EBITDA is commonly used as a supplemental financial measure by management and by external users of our financial statements, such as investors, commercial banks, research analysts and rating agencies, to assess: (1) the financial performance of our assets without regard to financing methods, capital structures or historical cost basis; (2) the ability of our assets to generate cash sufficient to pay interest cost and support our indebtedness; (3) our operating performance and return on capital as compared to those of other companies in the midstream energy industry, without regard to financing and capital structure; and (4) the viability of projects and the overall rates of return on alternative investment opportunities. Because EBITDA excludes some, but not all, items that affect net income or loss and because these measures may vary among other companies, the EBITDA data presented in this prospectus may not be comparable to similarly titled measures of other companies. The GAAP measure most directly comparable to EBITDA is net cash provided by operating activities.

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The following tables present (1) a reconciliation of the non-GAAP financial measure of gross operating margin to the GAAP financial measure of operating income and (2) a reconciliation of the non-GAAP financial measure of EBITDA to the GAAP financial measure of net income (income from continuing operations with regards to our pro forma information) on a historical and pro forma basis, as applicable, for each of the periods presented (dollars in thousands). With regards to EBITDA measures determined using the historical financial information of Duncan Energy Partners Predecessor, EBITDA is also reconciled to the GAAP financial measure of net cash provided by operating activities.


										Duncan Energy Partners L.P.
										For the Year Ended
										December 31, 2005
	Duncan Energy Partners Predecessor											Pro Forma
	For the Year Ended December 31,									Pro		As
	2003			2004			2005			Forma		Adjusted

Reconciliation of GAAP “operating income” to non-GAAP “gross operating margin”
Operating income	$	52,453		$	58,176		$	40,201		$	33,927	$	33,927
Adjustments to reconcile operating income to gross operating margin:
Depreciation, amortization and accretion in operating costs and expenses		17,882			18,374			19,453			19,453		19,453
Loss (gain) on sale of assets in operating costs and expenses					(7	)		5			5		5
General and administrative costs		6,138			5,442			4,483			6,983		6,983

Total gross operating margin	$	76,473		$	81,985		$	64,142		$	60,368	$	60,368

Reconciliation of non-GAAP “EBITDA” to GAAP “net income” (or GAAP “income from continuing operations” with respect to pro forma data) and GAAP “net cash provided by operating activities”
Net income (income from continuing operations with respect to pro forma data)	$	52,454		$	58,124		$	39,087		$	33,395	$	5,846
Additions to income to derive EBITDA:
Interest expense								532			532		13,807
Depreciation, accretion and amortization		17,882			18,374			19,453			19,453		19,453

EBITDA	$	70,336		$	76,498		$	59,072		$	53,380	$	39,106

Adjustments to EBITDA to derive net cash provided by operating activities (add or subtract as indicated by sign of number):
Cumulative effect of change in accounting principle								582
Interest expense								(532	)
Equity in income of unconsolidated affiliates		(131	)		(231	)		(331	)
Loss (gain) on sale of assets					(7	)		5
Changes in fair market value of financial instruments		2			5			52
Net effect of changes in operating accounts		(5,475	)		3,198			(18,280	)

Net cash provided by operating activities	$	64,732		$	79,463		$	40,568

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							Duncan Energy
							Partners L.P.
							For the Nine Months
	Duncan Energy						Ended September 30, 2006
	Partners Predecessor									Pro
	For the Nine Months									Forma
	Ended September 30,						Pro			As
	2005			2006			Forma			Adjusted

Reconciliation of GAAP “operating income” to non-GAAP “gross operating margin”
Operating income	$	31,557		$	40,278		$	33,203		$	33,203
Adjustments to reconcile operating income to gross operating margin:
Depreciation, amortization and accretion in operating costs and expenses		14,253			15,468			15,468			15,468
Loss (gain) on sale of assets in operating costs and expenses		2			(17	)		(17	)		(17	)
General and administrative costs		3,799			2,469			4,344			4,344

Total gross operating margin	$	49,611		$	58,198		$	52,998		$	52,998

Reconciliation of non-GAAP “EBITDA” to GAAP “net income” (or GAAP “income from continuing operations” with respect to pro forma data) and GAAP “net cash provided by operating activities”
Net income (income from continuing operations with respect to pro forma data)	$	31,557		$	40,272		$	33,188		$	7,525
Additions to income to derive EBITDA:
Interest expense											9,930
Provision for income taxes					21			21			21
Depreciation, accretion and amortization		14,253			15,468			15,468			15,468

EBITDA	$	45,810		$	55,761		$	48,677		$	32,944

Adjustments to EBITDA to derive net cash provided by operating activities (add or subtract as indicated by sign of number):
Provision for income taxes					(21	)
Cumulative effect of change in accounting principle					(9	)
Equity in income of unconsolidated affiliates		(280	)		(624	)
Deferred income tax expense					21
Loss (gain) on sale of assets		2			(17	)
Changes in fair market value of financial instruments		(355	)		65
Net effect of changes in operating accounts		(7,951	)		7,125

Net cash provided by operating activities	$	37,226		$	62,301

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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 prospectus in evaluating an investment in our common units.

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 you could lose all or part of your investment.

Risks Inherent in Our Business

We may not have sufficient available cash to enable us to pay our expected initial quarterly distribution on our common units after establishment of cash reserves and payment of fees and expenses, including reimbursement of expenses to our general partner.

We may not have sufficient available cash each quarter to pay our expected initial quarterly distribution. The amount of cash we can distribute on our common 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 prices we obtain for our transportation and storage services;


	•	the volumes of natural gas, NGLs and propylene our customers transport or store;


	•	the prices of, level of production of, and demand for, natural gas, propylene and NGLs in the markets we serve;


	•	the level of competition from other midstream energy companies, as well as from alternative fuels;


	•	the level of our operating costs, including reimbursement of expenses to our general partner; and


	•	prevailing economic and market conditions.

In addition, the actual amount of cash we will have available for distribution will depend on other factors such as:


	•	the level of our capital expenditures;

	•	the restrictions on distributions contained in our credit agreement and our debt service requirements;

	•	the cost of acquisitions, if any;

	•	fluctuations in our working capital needs;

	•	our ability to borrow to make distributions to our unitholders; and

	•	the amount, if any, of cash reserves established by our general partner.

Please read “Cash Distribution Policy and Restrictions on Distributions” for a discussion of how we determine our available cash.


	On a pro forma historical basis, we would not have had sufficient cash available for distributions to pay the expected initial quarterly distribution on all common units for the year ended December 31, 2005 and the four quarters ended September 30, 2006.

The amount of available cash we will need to pay our expected initial quarterly distribution for four quarters on the common units and the 2% general partner interest to be outstanding immediately after this offering is approximately $33.1 million. Pro forma combined available cash to make distributions generated during fiscal 2005 and the four quarters ended September 30, 2006 would have been approximately $9.9 million and a deficit of $14.1 million, respectively. These amounts would have been sufficient to allow us

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to pay only 30% of the initial quarterly distributions on the common units and the 2% general partner interest during 2005. These amounts would not have been sufficient to allow us to pay any distributions on our common units and the general partner interest during the four quarters ended September 30, 2006. For a calculation of our ability to make distributions to unitholders based on our pro forma results in 2005 and for the twelve months ended September 30, 2006, as well as estimated cash available to pay distributions for the four quarters ending December 31, 2007, please read “Cash Distribution Policy and Restrictions on Distributions.”


	The assumptions underlying our estimate of cash available for distribution we include in our “Cash Distribution Policy and Restrictions on Distributions” are inherently uncertain and are subject to significant business, economic, financial, regulatory and competitive risks and uncertainties that could cause actual results to differ materially from those expected.

Our estimate of cash available for distribution set forth in “Cash Distribution Policy and Restrictions on Distributions” is based on assumptions that are inherently uncertain and are subject to significant business, economic, financial, regulatory and competitive risks and uncertainties that could cause actual results to differ materially from those estimated. Furthermore, our estimate of cash available for distribution for the four quarters ending December 31, 2007 is equal to the amount of available cash we need to pay the expected initial quarterly distribution on all common units for such quarters. If we do not achieve the estimated results, we may not be able to pay the full expected initial quarterly distribution or any amount on our common units, in which event the market price of our common units may decline materially.


	The amount of cash we have available for distribution to unitholders depends primarily on our cash flow and not solely on profitability, which may prevent us from making cash distributions during periods when we record net income.

The amount of cash we have available for distribution depends primarily on our cash flow, including cash flow from financial reserves and working capital or other borrowings, and not solely on profitability, which will be affected by non-cash items. As a result, we may make cash distributions during periods when we record losses and may not make cash distributions during periods when we record net income.


	*Changes in demand for and production of hydrocarbon products may materially adversely affect our results of operations, cash flows and financial condition.*

We operate predominantly in the midstream energy sector which includes transporting and storing natural gas, NGLs and propylene. As such, our results of operations, cash flows and financial condition may be materially adversely affected by changes in the prices of these hydrocarbon products and by changes in the relative price levels among these hydrocarbon products. Changes in prices and changes in the relative price levels may impact demand for hydrocarbon products, which in turn may impact production and volumes transported by us and related transportation and storage handling fees. We may also incur price risk to the extent counterparties do not perform in connection with our marketing of natural gas, NGLs and propylene.

In the past, the prices of natural gas have been extremely volatile, and we expect this volatility to continue. The NYMEX daily settlement price for natural gas for the prompt month contract in 2004 ranged from a high of $8.75 per MMBtu to a low of $4.57 per MMBtu. In 2005, the same index ranged from a high of $15.38 per MMBtu to a low of $5.79 per MMBtu. In 2006, the same index ranged from a high of $10.63 per MMBtu to a low of $4.20 per MMBtu.

Generally, the prices of natural gas, NGLs and other hydrocarbon products are subject to fluctuations in response to changes in supply, demand, market uncertainty and a variety of additional factors that are impossible to control. These factors include:


	•	the level of domestic production and consumer product demand;

	•	the availability of imported natural gas;

	•	actions taken by foreign natural gas producing nations;

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	•	the availability of transportation systems with adequate capacity;

	•	the availability of competitive fuels;

	•	fluctuating and seasonal demand for natural gas and NGLs;

	•	the impact of conservation efforts;

	•	the extent of governmental regulation and taxation of production; and

	•	the overall economic environment.


	A decrease in demand for natural gas, NGLs, NGL products or petrochemical products by the petrochemical, refining or heating industries could materially adversely affect our results of operations, cash flows and financial position.

A decrease in demand for natural gas, NGLs, NGL products or petrochemical products by the petrochemical, refining or heating industries, whether because of a general downturn in economic conditions, reduced demand by consumers for the end products made with products we transport, increased competition from petroleum-based products due to pricing differences, adverse weather conditions, increased government regulations affecting prices and production levels of natural gas or other reasons, could materially adversely affect our results of operations, cash flows and financial position. For example:


	•	Ethane. Ethane is primarily used in the petrochemical industry as feedstock for ethylene, one of the basic building blocks for a wide range of plastics and other chemical products. If natural gas prices increase significantly in relation to NGL product prices or if the demand for ethylene falls (and, therefore, the demand for ethane by NGL producers falls), it may be more profitable for natural gas producers to leave the ethane in the natural gas stream to be burned as fuel than to extract the ethane from the mixed NGL stream for sale as an ethylene feedstock.

	•	Propylene. Propylene is sold to petrochemical companies for a variety of uses, principally for the production of polypropylene. Propylene is subject to rapid and material price fluctuations. Any downturn in the domestic or international economy could cause reduced demand for, and an oversupply of propylene, which could cause a reduction in the volumes of propylene that we transport.


	Any decrease in supplies of natural gas could adversely affect our business and operating results. Because of the natural decline in gas production from existing wells, our success depends on our ability to obtain access to new sources of natural gas, which is dependent on factors beyond our control.

Over the past two years that have been reported, gas production from state waters of the Gulf Coast region, which supplies much of our throughput, has declined an average of approximately 2.9% from 133 Bcf for 2003 to 129 Bcf for 2004, according to the Energy Information Administration, or EIA. We cannot give any assurance regarding the gas production industry’s ability to find new sources of domestic supply. Production from existing wells and gas supply basins connected to our pipelines will naturally decline over time, which means that our cash flows associated with the gathering or transportation of gas from these wells and basins will also decline over time. The amount of natural gas reserves underlying these wells may also be less than we anticipate, and the rate at which production from these reserves declines may be greater than we anticipate. Accordingly, to maintain or increase throughput levels on our pipelines, we must continually obtain access to new supplies of natural gas. The primary factors affecting our ability to obtain new sources of natural gas to our pipelines include:


	•	the level of successful drilling activity near our pipelines;

	•	our ability to compete for these supplies;

	•	our ability to connect our pipelines to the suppliers;

	•	the successful completion of new LNG facilities near our pipelines; and

	•	our gas quality requirements.

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The level of drilling activity is dependent on economic and business factors beyond our control. The primary factor that impacts drilling decisions is the price of oil and natural gas. These commodity prices reached record levels during 2006, but current prices have declined in recent months. A sustained decline in natural gas prices could result in a decrease in exploration and development activities in the fields served by our pipelines, which would lead to reduced throughput levels on our pipelines. Other factors that impact production decisions include producers’ capital budget limitations, the ability of producers to obtain necessary drilling and other governmental permits, the availability and cost of drilling rigs and other drilling equipment, and regulatory changes. Because of these factors, even if new natural gas reserves were discovered in areas served by our pipelines, producers may choose not to develop those reserves or may connect them to different pipelines.

Imported LNG is expected to be a significant component of future natural gas supply to the United States. Much of this increase in LNG supplies is expected to be imported through new LNG facilities to be developed over the next decade. Eleven LNG projects have been approved by the FERC to be constructed in the Gulf Coast region and an additional four LNG projects have been proposed for the region. We cannot predict which, if any, of these projects will be constructed. If a significant number of these new projects fail to be developed with their announced capacity, or there are significant delays in such development, or if they are built in locations where they are not connected to our systems or they do not influence sources of supply on our systems, we may not realize expected increases in future natural gas supply available for transportation through our systems.

If we are not able to obtain new supplies of natural gas to replace the natural decline in volumes from existing supply basins, or if the expected increase in natural gas supply through imported LNG is not realized, throughput on our pipelines would decline which could have a material adverse effect on our financial condition, results of operations and ability to make distributions to you.

In accordance with industry practice, we do not obtain independent evaluations of natural gas reserves dedicated to our pipeline systems, including our South Texas NGL pipeline. Accordingly, volumes of natural gas gathered on our pipeline systems in the future could be less than we anticipate, which could adversely affect our cash flow and our ability to make cash distributions to unitholders.

In accordance with industry practice, we do not obtain independent evaluations of natural gas reserves connected to our pipeline systems due to the unwillingness of producers to provide reserve information as well as the cost of such evaluations. Accordingly, we do not have estimates of total reserves dedicated to our systems (or to processing facilities such as those serving Enterprise Products Partners in South Texas) or the anticipated lives of such reserves. If the total reserves or estimated lives of the reserves connected to our pipeline systems, particularly in South Texas, is less than we anticipate and we are unable to secure additional sources of natural gas, then the volumes of natural gas gathered on our South Texas NGL and other pipeline systems in the future could be less than we anticipate. A decline in the volumes of natural gas gathered on our pipeline systems could have an adverse effect on our business, results of operations, financial condition and our ability to make cash distributions to you.


	We will depend in large part on Enterprise Products Partners and the continued success of its business as we operate our assets as part of their value chain, and adverse changes in its related businesses may reduce our revenue, earnings or cash available for distribution.

We will enter into a number of material contracts with Enterprise Products Partners and its subsidiaries relating to transportation, storage and leases, and our cash flows and financial condition will depend in large part on the continued success of Enterprise Products Partners as we operate our assets as part of its value chain. For example, our South Texas NGL system revenues will depend solely on the volumes processed at the South Texas facilities owned by Enterprise Products Partners. Enterprise Products Partners has no obligation to produce any volumes at these facilities. If anticipated volumes are not processed by Enterprise Products Partners at these facilities, our estimated revenues on this system will be reduced.

Any adverse changes in the business of Enterprise Products Partners, due to market conditions, sales of assets or otherwise, or the failure of Enterprise Products Partners to renew any of its material agreements with

24

us, could reduce our revenue, earnings or cash available for distribution. Please read “Certain Relationships and Related Party Transactions” for a summary of certain of these agreements.


	The credit and risk profile of our general partner and its owners could adversely affect our credit ratings and risk profile, which could increase our borrowing costs or hinder our ability to raise capital.

The credit and business risk profiles of a general partner or owners of a general partner may be factors in credit evaluations of a master limited partnership. This is because the general partner controls the business activities of the partnership, including its cash distribution policy and acquisition strategy and business risk profile. Another factor that may be considered is the financial condition of our general partner and its owners, including the degree of their financial leverage and their dependence on cash flow from the partnership to service their indebtedness.

If we were to seek a credit rating in the future, our credit rating may be adversely affected by the leverage of the owners of our general partner, as credit rating agencies such as Standard & Poor’s Ratings Services and Moody’s Investors Service may consider these entities’ leverage because of their ownership interest in and control of us, the strong operational links between them and their affiliates and us, and our reliance on Enterprise Products Partners for a substantial percentage of our revenue. Any such adverse effect on our credit rating would increase our cost of borrowing or hinder our ability to raise money in the capital markets, which would impair our ability to grow our business and make distributions to unitholders.

Affiliates of Enterprise Products Partners, the indirect owner of our general partner, have significant indebtedness outstanding and are dependent principally on the cash distributions from their general partner and limited partner interests in Enterprise Products Partners, Enterprise GP Holdings and TEPPCO Partners to service such indebtedness. Any distributions by Enterprise Products Partners, Enterprise GP Holdings and TEPPCO Partners to such entities will be made only after satisfying their then current obligations to their creditors. Although we have taken certain steps in our organizational structure, financial reporting and contractual relationships to reflect the separateness of us and our general partner from the entities that control our general partner, and other entities controlled by Dan L. Duncan, our credit ratings and business risk profile could be adversely affected if the ratings and risk profiles of Dan L. Duncan or the entities that control our general partner were viewed as substantially lower or more risky than ours.


	A natural disaster, catastrophe or other event could result in severe personal injury, property damage and environmental damage, which could curtail our operations and otherwise materially adversely affect our cash flow and, accordingly, affect the market price of our common units.

Some of our operations involve risks of personal injury, property damage and environmental damage, which could curtail our operations and otherwise materially adversely affect our cash flow. For example, natural gas facilities operate at high pressures, sometimes in excess of 1,100 pounds per square inch. Pipelines may suffer inadvertent damage from construction, and farm and utility equipment. Virtually all of our operations are exposed to potential natural disasters, including hurricanes, tornadoes, storms and floods. The location of our assets and our customers’ assets in the Gulf Coast region makes them particularly vulnerable to hurricane risk.

If one or more facilities that we own or that deliver natural gas or other products to us are damaged by severe weather or any other disaster, accident, catastrophe or event, our operations could be significantly interrupted. Similar interruptions could result from damage to production or other facilities that supply our facilities or other stoppages arising from factors beyond our control. These interruptions might involve significant damage to people, property or the environment, and repairs might take from a week or less for a minor incident to six months or more for a major interruption. Any event that interrupts the revenues generated by our operations, or which causes us to make significant expenditures not covered by insurance, could reduce our cash available for paying distributions and, accordingly, adversely affect the market price of our common units.

EPCO maintains insurance coverage on behalf of us, although insurance will not cover many types of interruptions that might occur and will not cover amounts up to applicable deductibles. As a result of market

25

conditions, premiums and deductibles for certain insurance policies can increase substantially, and in some instances, certain insurance may become unavailable or available only for reduced amounts of coverage. For example, changes in the insurance markets subsequent to the terrorist attacks on September 11, 2001 and the hurricanes in 2005 have made it more difficult for us to obtain certain types of coverage. As a result, EPCO may not be able to renew existing insurance policies on behalf of us or procure other desirable insurance on commercially reasonable terms, if at all. 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 results of operations. In addition, the proceeds of any such insurance may not be paid in a timely manner and may be insufficient if such an event were to occur.


	*Our debt levels may limit our flexibility to obtain additional financing and pursue other business opportunities.*

At the closing of this offering, we expect to have approximately $200 million of indebtedness outstanding under our credit agreement and the ability to borrow up to an additional $100 million, subject to certain conditions and limitations, under the credit agreement. Our significant level of indebtedness could have important consequences to us, including:


	•	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;

	•	covenants contained in our existing and future credit and debt arrangements will require us to meet financial tests that may affect our flexibility in planning for and reacting to changes in our business, including possible acquisition opportunities;

	•	we will need a substantial portion of our cash flow to make principal and interest payments on our indebtedness, reducing the funds that would otherwise be available for operation, future business opportunities and distributions to unitholders; and

	•	our debt level will make us more vulnerable than our competitors with less debt to competitive pressures or a downturn in our business or the economy generally.

Our ability to service our indebtedness 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, some of which are beyond our control. 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 business activities, acquisition, investments or capital expenditures, selling assets, restructuring or refinancing our indebtedness, or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of these remedies on satisfactory terms or at all.


	Our new revolving credit facility will contain operating and financial restrictions, including covenants and restrictions that may be affected by events beyond our control, that may limit our business and financing activities.

The operating and financial restrictions and covenants in our credit agreement and any future financing agreements could restrict our ability to finance future operations or capital needs or to expand or pursue our business activities. For example, our new credit agreement will restrict or limit our ability to:


	•	make distributions if any default or event of default occurs;

	•	incur additional indebtedness or guarantee other indebtedness;

	•	grant liens or make certain negative pledges;

	•	make certain loans or investments;

26


	•	make any material change to the nature of our business, including consolidations, liquidations and dissolutions; or

	•	enter into a merger, consolidation, sale and leaseback transaction or sale of assets.

Our ability to comply with the covenants and restrictions contained in our credit agreement may be affected by events beyond our control, including prevailing economic, financial and industry conditions. If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired. If we violate any of the restrictions, covenants, ratios or tests in our credit agreement, a significant portion of our indebtedness may become immediately due and payable, and our lenders’ commitment to make further loans to us may terminate. We might not have, or be able to obtain, sufficient funds to make these accelerated payments.


	*Restrictions in our revolving credit facility could limit our ability to make distributions upon the occurrence of certain events.*

Our payment of principal and interest on our debt will reduce cash available for distributions on our common units. Our new credit agreement will limit our ability to make distributions upon the occurrence of the following events, among others:


	•	failure to pay any principal, interest, fees, expenses or other amounts when due;

	•	failure of any representation or warranty to be true and correct in any material respect;

	•	failure to perform or otherwise comply with the covenants in the credit agreement;

	•	failure to pay any other material debt;

	•	a bankruptcy or insolvency event involving us, our general partner or any of our subsidiaries;

	•	the entry of, and failure to pay, one or more adverse judgments in excess of a specified amount against which enforcement proceedings are brought or that are not stayed pending appeal;

	•	a change in control of us;

	•	a judgment default or a default under any material agreement if such default could have a material adverse effect on us; and

	•	the occurrence of certain events with respect to employee benefit plans subject to ERISA.

Any subsequent refinancing of our current debt or any new debt could have similar or more restrictive provisions. For more information regarding our credit agreement, please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — New Revolving Credit Facility.”


	*Increases in interest rates could materially adversely affect our business, results of operations, cash flows and financial condition.*

We have significant exposure to increases in interest rates. After giving effect to this offering and the borrowing of approximately $200 million under our new credit agreement, pro forma as of September 30, 2006, we would have approximately $200 million of consolidated debt, of which we expect all will be at variable interest rates. As a result, our results of operations, cash flows and financial condition could be materially adversely affected by significant increases in interest rates.

An increase in interest rates may also cause a corresponding decline in demand for equity investments, in general, and in particular for yield-based equity investments such as our common units. Any such reduction in demand for our common units resulting from other more attractive investment opportunities may cause the trading price of our common units to decline.

27


	*Our hedging activities may have a material adverse effect on our earnings, profitability, cash flows, including its ability to make distributions, and financial condition.*

We utilize derivative financial instruments related to the future price of natural gas and the future price of NGLs with the intent of reducing volatility in our cash flows due to fluctuations in commodity prices. While our hedging activities are designed to reduce commodity price risk, we remain exposed to fluctuations in commodity prices to some extent. The extent of our commodity price exposure is related largely to the effectiveness and scope of our hedging activities. For example, the derivative instruments we utilize are based on posted market prices, which may differ significantly from the actual natural gas prices or NGLs prices that we realize in our operations. Furthermore, our hedges relate to only a portion of the volume of our expected sales and, as a result, we will continue to have direct commodity price exposure to the unhedged portion. Our actual future sales may be significantly higher or lower than estimated at the time we entered into derivative transactions for such period. If the actual amount is higher than estimated, we will have greater commodity price exposure than intended. If the actual amount is lower than the amount that is subject to our derivative financial instruments, we might be forced to satisfy all or a portion of our derivative transactions without the benefit of the cash flow from the sale or purchase of the underlying physical commodity, resulting in a substantial diminution of liquidity.

As a result of these factors, our hedging activities may not be as effective as intended in reducing the volatility of our cash flows, which could adversely affect our ability to make distributions to unitholders. In addition, our hedging activities are subject to the risks that a counterparty may not perform its obligation under the applicable derivative instrument, the terms of the derivative instruments are imperfect, and our hedging procedures may not be properly followed. We cannot assure you that the steps we take to monitor our derivative financial instruments will detect and prevent violations of our risk management policies and procedures, particularly if deception or other intentional misconduct is involved.


	*Our construction of new assets is subject to regulatory, environmental, political, legal and economic risks, which may result in delays, increased costs or decreased cash flows.*

One of the connections between our South Texas NGL pipeline and the Mont Belvieu facility is a pipeline we have leased from TEPPCO Partners. The initial term of this lease will expire on September 15, 2007, and if we are unable to construct our planned replacement pipeline or extend the lease, the operations of our South Texas NGL pipeline will be interrupted. We cannot assure you that any construction will not be delayed due to government permits, weather conditions or other factors beyond our control.

In addition, one of the ways we intend to grow our business is through the construction of new midstream energy assets. The construction of new assets involves numerous operational, regulatory, environmental, political and legal risks beyond our control and may require the expenditure of significant amounts of capital. These potential risks include, among other things, the following:


	•	we may be unable to complete construction projects on schedule or at the budgeted cost due to the unavailability of required construction personnel or materials, accidents, weather conditions or an inability to obtain necessary permits;

	•	we will not receive any material increases in revenues until the project is completed, even though we may have expended considerable funds during the construction phase, which may be prolonged;

	•	we may construct facilities to capture anticipated future growth in production in a region in which such growth does not materialize;

	•	since we are not engaged in the exploration for and development of natural gas reserves, we may not have access to third-party estimates of reserves in an area prior to our constructing facilities in the area. As a result, we may make construct facilities in an area where the reserves are materially lower than we anticipate;

28


	•	where we do rely on third-party estimates of reserves in making a decision to construct facilities, these estimates may prove to be inaccurate because there are numerous uncertainties inherent in estimating reserves; and

	•	we may be unable to obtain rights-of-way to construct additional pipelines or the cost to do so may be uneconomical.

A materialization of any of these risks could adversely affect our ability to achieve growth in the level of our cash flows or realize benefits from expansion opportunities or construction projects.


	*We may not be able to make acquisitions or to make acquisitions on economically acceptable terms, which may limit our ability to grow.*

We will be limited in our ability to make acquisitions by our business opportunity agreements with Enterprise Products Partners and Enterprise GP Holdings. These agreements will entitle them to take business opportunities for the benefit of themselves before allowing us to take them. In addition, our ability to grow depends, in part, on our ability to make acquisitions that result in an increase in the cash generated from operations per unit. 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 maintain and increase over time distributions will be limited.


	*Acquisitions that appear to be accretive may nevertheless reduce our cash from operations on a per unit basis.*

Even if we make acquisitions that we believe will be accretive, these acquisitions may nevertheless reduce our cash from operations on a per unit basis. 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;

	•	a decrease in our liquidity as a result of our using a significant portion of our available cash or borrowing capacity to finance the acquisition;

	•	a significant increase in our interest expense or financial leverage if we incur additional debt to finance the acquisition;

	•	the assumption of unknown liabilities for which we are not indemnified or for which our indemnity is inadequate;

	•	an inability to hire, train or retain qualified personnel to manage and operate our growing business and assets;

	•	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 you 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.

29


	*Federal, state or local regulatory measures could materially affect our business, results of operations, cash flows and financial condition.*

The Surface Transportation Board, or STB, regulates transportation on interstate propylene pipelines. The current version of the Interstate Commerce Act, or ICA, and its implementing regulations give the STB authority to regulate the rates we charge for service on the propylene pipelines and generally requires that our rates and practices be just and reasonable and nondiscriminatory. The rates we charge for movements on our propylene pipelines may be subject to challenge and any successful challenge to those rates could adversely affect our revenues. Our interstate propylene pipelines formerly were regulated by the FERC, and we cannot guarantee that the FERC will not reassert jurisdiction over those facilities in the future.

The intrastate natural gas pipeline transportation services we provide are subject to various Louisiana state laws and regulations that apply to the rates we charge and the terms and conditions of the services we offer. Although state regulation typically is less onerous than FERC regulation, the rates we charge and the provision of our services may be subject to challenge. In addition, the transportation and storage services furnished by our intrastate natural gas facilities on behalf of interstate natural gas pipelines or certain local distribution companies are regulated by the FERC pursuant to Section 311 of the Natural Gas Policy Act of 1978, or NGPA. Pursuant to the NGPA, we are required to offer those services on an open and nondiscriminatory basis at a fair and equitable rate. Such FERC-regulated NGPA Section 311 rates also may be subject to challenge and successful challenges may adversely affect our revenues.

Although our natural gas gathering systems are generally exempt from FERC regulation under the Natural Gas Act of 1938, FERC regulation still significantly affects our natural gas gathering business. In recent years, the FERC has pursued pro-competition policies in its regulation of interstate natural gas pipelines. If the FERC does not continue this approach, it could have an adverse effect on the rates we are able to charge in the future. In addition, the distinction between FERC-regulated transmission service and federally unregulated gathering services is the subject of regular litigation, so, in such a circumstance, the classification and regulation of some of our gathering facilities may be subject to change based on future determinations by the FERC and the courts. Additional rules and legislation pertaining to these matters are considered and adopted from time to time. We cannot predict what effect, if any, such regulatory changes and legislation might have on our operations, but we could be required to incur additional capital expenditures.

For a general overview of federal, state and local regulation applicable to our assets, please read “Business — Regulation of Operations.”

Our partnership status may be a disadvantage to us in calculating our cost of service for rate-making purposes.

In May 2005, the FERC issued a policy statement permitting the inclusion of an income tax allowance in the cost of service-based rates of a pipeline organized as a tax pass-through partnership entity to reflect actual or potential income tax liability on public utility income, if the pipeline proves that the ultimate owner of its interests has an actual or potential income tax liability on such income. The policy statement also provides that whether a pipeline’s owners have such actual or potential income tax liability will be reviewed by the FERC on a case-by-case basis. In August 2005, the FERC also dismissed requests for rehearing of its new policy statement. On December 16, 2005, the FERC issued its first significant case-specific review of the income tax allowance issue in another company’s rate case. The FERC reaffirmed its new income tax allowance policy and directed the subject pipeline to provide certain evidence necessary for the pipeline to determine its income tax allowance. The new tax allowance policy and the December 16 order have been appealed to the United States Court of Appeals for the District of Columbia Circuit. As a result, the ultimate outcome of these proceedings is not certain and could result in changes to the FERC’s treatment of income tax allowances in cost of service. Depending upon how the policy statement on income tax allowances is applied in practice to pipelines organized as pass-through entities, and whether it is ultimately upheld or modified on judicial review, these decisions might adversely affect us.

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	*Environmental costs and liabilities and changing environmental regulation could materially affect our results of operations, cash flows and financial condition.*

Our operations are subject to extensive federal, state and local regulatory requirements relating to environmental affairs, health and safety, waste management and chemical and petroleum products. These include, for example, (1) the federal Clean Air Act and comparable state laws and regulations that impose obligations related to air emissions, (2) the federal Resource Conservation and Recovery Act, or RCRA, and comparable state laws that impose requirements for the discharge of waste from our facilities and (3) the Comprehensive Environmental Response Compensation and Liability Act of 1980, or CERCLA, also known as “Superfund,” and comparable state laws that regulate the clean up of hazardous substances that may have been released at properties currently or previously owned or operated by us or locations to which we have sent waste for disposal. Governmental authorities have the power to enforce compliance with applicable regulations and permits and to subject violators to administrative, civil and criminal penalties, including substantial fines, the imposition of remedial requirements, and the issuance of orders enjoining future operations. Certain environmental laws, including CERCLA and analogous state laws and regulations, impose strict, joint and several liability for costs required to cleanup and restore sites where hazardous substances or hydrocarbons have been disposed or otherwise released. Moreover, third parties, including neighboring landowners, may also have the right to pursue legal actions to enforce compliance or to recover for personal injury and property damage allegedly caused by the release of hazardous substances, hydrocarbons or other waste products into the environment.

We will make expenditures in connection with environmental matters as part of normal capital expenditure programs. However, future environmental law developments, such as stricter laws, regulations, permits or enforcement policies, could significantly increase some costs of our operations, including the handling, manufacture, use, emission or disposal of substances and wastes.


	*Our pipeline integrity program may impose significant costs and liabilities on us.*

Pursuant to the Pipeline Safety Improvement Act of 2002, the United States Department of Transportation, or 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.” The regulations require operators to:


	•	perform ongoing assessments of pipeline integrity;

	•	identify and characterize applicable 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.

At this time, we cannot predict the ultimate costs of compliance with this rule because those costs will depend on the number and extent of any repairs found to be necessary as a result of the pipeline integrity testing that is required by the rule. We will continue our pipeline integrity testing programs to assess and maintain the integrity of our pipelines. The results of these tests could cause us to incur significant and unanticipated capital and operating expenditures for repairs or upgrades deemed necessary to ensure the continued safe and reliable operation of our pipelines.


	We are subject to strict regulations at many of our facilities regarding employee safety, and failure to comply with these regulations could adversely affect our ability to make distributions to you.

The workplaces associated with our pipelines are subject to the requirements of the federal Occupational Safety and Health Act, or OSHA, and comparable state statutes that regulate the protection of the health and safety of workers. In addition, 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

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to employees, state and local governmental authorities and local residents. The failure to comply with OSHA requirements or general industry standards, keep adequate records or monitor occupational exposure to regulated substances could have a material adverse effect on our business, financial condition, results of operations and ability to make distributions to you.


	We depend on Enterprise Products Partners and certain other key customers for a significant portion of our revenues. The loss of any of these key customers could result in a decline in our revenues and cash available to make distributions to you.

We rely on a limited number of customers for a significant portion of revenues. For the year ended December 31, 2005 and the nine months ended September 30, 2006, Enterprise Products Partners and its affiliates accounted for approximately 9% and 12% of our total combined revenues, respectively. We expect Enterprise Products Partners and its affiliates will account for an increased percentage of our total revenues after this offering. In addition, several of our assets will also rely on only one or two customers for the asset’s cash flow. For example, the only shipper on our South Texas NGL pipeline is Enterprise Products Partners; the only customers on our Lou-Tex Propylene pipeline are ExxonMobil and Shell; the only customer on our Sabine Propylene pipeline is Shell; and the only shipper on the pipeline held by Evangeline is Entergy. In order for new customers to use these pipelines, we or the new shippers would be required to construct interim pipeline connections.

Our contracts with affiliates include storage leases between Mont Belvieu Caverns and certain subsidiaries of Enterprise Products Partners and TEPPCO Partners that will reflect amendments to prior agreements effective concurrently with the closing of this offering. The effect of these amendments will be to decrease the total fees payable to us. Although we believe the current agreements will generally reflect current market rates, these agreements will be entered into with affiliates and not through arms’ length negotiations. Please read “Certain Relationships and Related Party Transactions — Related Party Transactions with Enterprise Products Partners” for a description of our affiliate contracts.

We may be unable to negotiate extensions or replacements of these contracts and those with other key customers on favorable terms. The loss of all or even a portion of the contracted volumes of these customers, as a result of competition, creditworthiness or otherwise, could have a material adverse effect on our financial condition, results of operations and ability to make distributions to you, unless we are able to contract for comparable volumes from other customers at favorable rates.


	*We are exposed to the credit risks of our key customers, and any material nonpayment or nonperformance by our key customers could reduce our ability to make distributions to our unitholders.*

We are subject to risks of loss resulting from nonpayment or nonperformance by our customers. Any material nonpayment or nonperformance by our key customers could reduce our ability to make distributions to our unitholders. Furthermore, some of our customers may be highly leveraged and subject to their own operating and regulatory risks. We generally do not require collateral for our accounts receivable. If we fail to adequately assess the creditworthiness of existing or future customers, unanticipated deterioration in their creditworthiness and any resulting increase in nonpayment or nonperformance by them could have a material adverse effect on our business, results of operations, financial condition and ability to make cash distributions to you.


	*We depend on the leadership and involvement of Dan L. Duncan and other key personnel for the success of our and our subsidiaries’ businesses.*

We depend on the leadership, involvement and services of Dan L. Duncan, the founder of EPCO and the Chairman of our general partner. Mr. Duncan has been integral to the success of Enterprise Products Partners and the success of EPCO, and will be integral to our success, due in part to his ability to identify and develop business opportunities, make strategic decisions and attract and retain key personnel. The loss of his leadership and involvement or the services of any members of our senior management team could have a material adverse effect on our business, results of operations, cash flows and financial condition.

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	*Successful development of LNG import terminals outside our areas of operations could reduce the demand for our services.*

Development of new, or expansion of existing, LNG facilities outside our areas of operations could reduce the need for customers to transport natural gas from supply basins connected to our pipelines. This could reduce the amount of gas transported by our pipelines for delivery off-system to other intrastate or interstate pipelines serving these customers. If we are not able to replace these volumes with volumes to other markets or other regions, throughput on our pipelines would decline which could have a material adverse effect on our financial condition, results of operations and ability to make distributions to you.


	*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 are located, and we are therefore subject to the risk of increased costs to maintain necessary land use. We obtain the rights to construct and operate certain of our pipelines and related 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 right-of-way contracts or otherwise, or increased costs to renew such rights, could have a material adverse effect on our business, results of operations, financial condition and ability to make distributions to you.


	*Mergers among our customers or competitors could result in lower volumes being shipped on our pipelines, thereby reducing the amount of cash we generate.*

Mergers among our existing customers or competitors could provide strong economic incentives for the combined entities to utilize systems other than ours and we could experience difficulty in replacing lost volumes and revenues. Because most of our operating costs are fixed, a reduction in volumes would result in not only a reduction of revenues, but also a decline in net income and cash flow of a similar magnitude, which would reduce our ability to meet our financial obligations and make distributions to you.


	*Because of our lack of asset and geographic diversification, adverse developments in our pipeline operations would reduce our ability to make distributions to our unitholders.*

We rely on the revenues generated from our pipelines and related assets. Furthermore, our assets are concentrated in Texas and Louisiana. Due to our lack of diversification in asset type and location, an adverse development in our business or our operating areas would have a significantly greater impact on our financial condition and results of operations than if we maintained more diverse assets and operating areas.


	*Terrorist attacks aimed at our facilities or our customers’ facilities could adversely affect our business, results of operations, cash flows and financial condition.*

Since the September 11, 2001 terrorist attacks on the United States, the United States government has issued warnings that energy assets, including our nation’s pipeline infrastructure, may be the future target of terrorist organizations. Any terrorist attack on our facilities or pipelines or those of our customers could have a material adverse effect on our business.

Risks Inherent in an Investment in Us


	Enterprise Products Partners, EPCO and their affiliates may compete with us, and business opportunities may be directed by contract to those affiliates prior to us under the administrative services agreement.

Our partnership agreement will not prohibit Enterprise Products Partners, EPCO and their affiliates, other than our general partner, from owning and operating natural gas and NGL pipeline and storage assets or engaging in businesses that otherwise compete directly or indirectly with us. In addition, Enterprise Products Partners and EPCO may acquire, construct or dispose of additional midstream or other natural gas assets in the future, without any obligation to offer us the opportunity to purchase or construct any of these assets.

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Under the administrative services agreement that we will enter into at or prior to the closing of this offering, if any business opportunity, other than a business opportunity to acquire general partner interests and other related equity securities in a publicly traded partnership, is presented to EPCO and its affiliates, us and our general partner, Enterprise Products Partners and its general partner, or Enterprise GP Holdings and its general partner, then Enterprise Products Partners will have the first right to pursue such opportunity for itself or, in its sole discretion, to affirmatively direct the opportunity to us. If Enterprise Products Partners abandons the business opportunity for itself or for us, then Enterprise GP Holdings will have the second right to pursue such opportunity. If any business opportunity to acquire general partner interests and other related equity securities in a publicly traded partnership is presented, then Enterprise GP Holdings will have the right to pursue such opportunity before Enterprise Products Partners is given the opportunity to pursue it for itself or to direct it to us. Accordingly, we will be limited by contract in our ability to take certain business opportunities for our partnership. Please read “Conflicts of Interest, Business Opportunity Agreements and Fiduciary Duties.”


	Our general partner and its affiliates own a controlling interest in us and have conflicts of interest and limited fiduciary duties, which may permit them to favor their own interests to your detriment.

Following the offering, Enterprise Products OLP will own indirectly a 2% general partner interest and directly approximately 36.0% of our outstanding common units (or approximately 26.4% of our outstanding common units if the underwriters’ option to purchase additional common units is exercised in full) and will own and control our general partner, which controls us. Although our general partner has a fiduciary duty to manage us in a manner beneficial to us and our unitholders, the directors and officers of our general partner have a fiduciary duty to manage it and our general partner in a manner beneficial to Enterprise Products Partners and its affiliates. Furthermore, certain directors and officers of our general partner may be directors or officers of affiliates of our general partner. Conflicts of interest may arise between Enterprise Products Partners and its affiliates, including our general partner, on the one hand, and us and our unitholders, on the other hand. As a result of these conflicts, our general partner may favor its own interests and the interests of its affiliates over the interests of our unitholders. Please read “— Our partnership agreement limits our general partner’s fiduciary duties to unitholders and restricts the remedies available to unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty.” These potential conflicts include, among others, the following situations:


	•	Enterprise Products Partners, EPCO and their affiliates may engage in substantial competition with us on the terms set forth in an amended and restated administrative services agreement. Please read “— Enterprise Products Partners, EPCO and their affiliates may engage in competition with us, and business opportunities may be directed by contract to those affiliates prior to us under an amended and restated administrative services agreement.”

	•	Neither our partnership agreement nor any other agreement requires EPCO, Enterprise Products Partners, Enterprise GP Holdings and TEPPCO Partners or their affiliates (other than our general partner) to pursue a business strategy that favors us. Directors and officers of EPCO and the general partners of Enterprise Products Partners, Enterprise GP Holdings and TEPPCO Partners and their affiliates have a fiduciary duty to make decisions in the best interest of their shareholders or unitholders, 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 EPCO, Enterprise Products Partners, Enterprise GP Holdings and TEPPCO Partners and their affiliates, in resolving conflicts of interest, which has the effect of limiting its fiduciary duty to our unitholders.

	•	Some of the officers of EPCO who provide services to us also may devote significant time to the business of Enterprise Products Partners, Enterprise GP Holdings and TEPPCO Partners, and will be compensated by EPCO for such services.

	•	Our partnership agreement limits the liability and reduces the fiduciary duties of our general partner, while also restricting the remedies available to our unitholders for actions that, without these limitations, might constitute breaches of fiduciary duty. By purchasing common units, unitholders will

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		be deemed to have consented to some actions and conflicts of interest that might otherwise constitute a breach of fiduciary or other duties under applicable law.


	•	Our general partner determines the amount and timing of asset purchases and sales, operating expenditures, capital expenditures, borrowings, repayments of indebtedness, issuances of additional partnership securities and cash reserves, each of which can affect the amount of cash that is available for distribution to our unitholders.

	•	Our general partner determines which costs, including allocated overhead, incurred by it and its affiliates are reimbursable by us.

	•	Enterprise Products Partners or TEPPCO Partners may propose to contribute additional assets to us and, in making such proposal, the directors of those entities have a fiduciary duty to their unitholders and not to our unitholders.


	•	Our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered on terms that are fair and reasonable 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 obligations.


	•	Our general partner may exercise its rights to call and purchase all of our common units if at any time it and its affiliates own 80% or more of the outstanding common units.


	•	Our general partner controls the enforcement of obligations owed to us by it and its affiliates, including the administrative services agreement.

	•	Our general partner decides whether to retain separate counsel, accountants or others to perform services for us.

Please read “Certain Relationships and Related Party Transactions” and “Conflicts of Interest, Business Opportunity Agreements and Fiduciary Duties.”


	*We may be limited in our ability to consummate transactions, including acquisitions with affiliates of our general partner.*

We will have inherent conflicts of interest with affiliates of our general partner, including Enterprise Products Partners and TEPPCO Partners. These conflicts may cause the audit and conflicts committees of these entities not to approve, or unitholders of these entities to dispute, any transactions that may be proposed or consummated between or among us and these affiliates. This may inhibit or prevent us from consummating transactions, including acquisitions, with them.


	*We do not have any officers or employees and rely solely on officers of our general partner and employees of EPCO and its affiliates.*

Certain of the executive officers and directors of our general partner are also officers and/or directors of EPCO, the general partner of Enterprise GP Holdings, the general partner of Enterprise Products Partners, the general partner of TEPPCO or other affiliates of EPCO. These relationships may create conflicts of interest regarding corporate opportunities and other matters. The resolution of any such conflicts may not always be in our or our unitholders’ best interests. In addition, these overlapping executive officers and directors allocate their time among EPCO, Enterprise GP Holdings, Enterprise Products Partners, TEPPCO Partners, us and other affiliates of EPCO. These officers and directors face potential conflicts regarding the allocation of their time, which may adversely affect our business, results of operations and financial condition.


	*An affiliate of Enterprise Products Partners will have the power to appoint and remove our directors and management.*

Because Enterprise Products OLP owns 100% of DEP Holdings, it will have the ability to elect all the members of the board of directors of our general partner. Our general partner will have control over all

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decisions related to our operations. Furthermore, the goals and objectives of Enterprise Products OLP relating to us may not be consistent with those of a majority of the public unitholders.


	*Our general partner has a limited call right that may require you to sell your common units at an undesirable time or price.*

If at any time our general partner and its affiliates own 80% or more of the outstanding common units, our general partner will have the right, which it may assign to any of its affiliates or to us, but not the obligation, to acquire all, but not less than all, of the common units held by unaffiliated persons at a price equal to the greater of:


	•	the average of the daily closing prices of the common units over the 20 trading days preceding the date three days before notice of exercise of the call right is first mailed and

	•	the highest price paid by our general partner or any of its affiliates for common units during the 90-day period preceding the date such notice is first mailed.

As a result, you may be required to sell your common units at a price that is less than the initial offering price in this offering or, because of the manner in which the purchase price is determined, at a price less than the then current market price of the common units. In addition, this call right may be exercised at an otherwise undesirable time or price and you may not receive any return on your investment. You may also incur a tax liability upon a sale of your common units. Our general partner is not obligated to obtain a fairness opinion regarding the value of the common units to be repurchased by it upon exercise of the call right. There is no restriction in our partnership agreement that prevents our general partner from issuing additional common units or other equity securities and exercising its call right. If our general partner exercised its call right, the effect would be to take us private and, if the common units were subsequently deregistered, we might no longer be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Following this offering, affiliates of our general partner will own approximately 36.0% of the outstanding common units (approximately 26.4% of the outstanding common units if the underwriters exercise their option to purchase additional common units in full).

For additional information about the call right, please read “Description of Material Provisions of Our Partnership Agreement — Limited Call Right.”


	Our partnership agreement limits our general partner’s fiduciary duties to unitholders and restricts the remedies available to unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty.

Our partnership agreement contains provisions that reduce the standards to which our general partner would otherwise be held by state fiduciary duty law. 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 limited call right, its rights to vote or transfer the common units it owns, its registration rights and the determination of whether to consent to any merger or consolidation of the partnership or amendment to the partnership agreement;


	•	provides in the absence of bad faith by the audit and conflicts committee or our general partner, the resolution, action or terms made, taken or provided in connection with a potential conflict of interest transaction will be conclusive and binding on all persons (including all partners) and will not constitute a breach of the partnership agreement or any standard of care or duty imposed by law;


	•	provides the general partner shall not be liable to the partnership or any partner for its good faith reliance on the provisions of the partnership agreement to the extent it has duties, including fiduciary duties, and liabilities at law or in equity;

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	•	generally provides that affiliate transactions and resolutions of conflicts of interest not approved by the audit and conflicts committee of the board of directors of our general partner must be on terms no less favorable to us than those generally provided to or available from unrelated third parties or be “fair and reasonable” to us;


	•	provides that it shall be presumed that the resolution of any conflicts of interest by our general partner or the audit and conflicts committee was not made in bad 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; and


	•	provides that our general partner and its officers and directors will not be liable for monetary damages to us or our limited partners 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 those other persons 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.

By purchasing a common unit, a unitholder will become bound by the provisions of our partnership agreement, including the provisions described above. Please read “Description of Our Common Units — Transfer of Units.”


	*Unitholders have limited voting rights and are not entitled to elect our general partner or its directors, which could lower the trading price of our common units.*

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 will have no right to elect our general partner or its board of directors on an annual or other continuing basis. The board of directors of our general partner, including the independent directors, is chosen entirely by its owners and not by the unitholders. Furthermore, even if our unitholders were dissatisfied with the performance of our general partner, they will, practically speaking, have no ability to remove 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 control premium in the trading price.

The vote of the holders of at least 662/3% of all outstanding common units is required to remove our general partner. Following the closing of this offering, Enterprise Products Partners and its affiliates will own approximately 36.0% of our outstanding common units (or approximately 26.4% of our outstanding common units if the underwriters exercise their option to purchase additional common units in full).


	*You will experience immediate and substantial dilution of $5.64 per unit.*

The assumed initial public offering price of $20.00 per unit exceeds the pro forma net tangible book value of $14.36 per common unit. Based on this assumed initial public offering price, you will incur immediate and substantial dilution of $5.64 per unit. This dilution results primarily because the assets sold and contributed by our general partner and its affiliates are recorded at their historical cost, and not their fair value, in accordance with GAAP. Please read “Dilution.”


	*We may issue additional units without your approval, which would dilute your ownership interests.*

At any time, we may issue an unlimited number of limited partner interests of any type without the approval of our unitholders. Our partnership agreement does not give our unitholders the right to approve our issuance of equity securities ranking junior to the common units at any time. In addition, our partnership agreement does not prohibit the issuance by our subsidiaries of equity securities, which may effectively rank senior to the common units.

The issuance by us of additional common units or other equity securities will have the following effects:


	•	the ownership interest of unitholders immediately prior to the issuance will decrease;

	•	the amount of cash distributions on each common unit may decrease;

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	•	the relative voting strength of each previously outstanding common unit may be diminished;

	•	the ratio of taxable income to distributions may increase; and

	•	the market price of the common units may decline.


	*Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units.*

Our partnership agreement restricts unitholders’ voting rights by providing that any common 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 common unitholders to call meetings or to acquire information about our operations, as well as other provisions limiting common unitholders’ ability to influence the manner or direction of management.


	*We have a holding company structure in which our subsidiaries conduct our operations and own our operating assets, which may affect our ability to make distributions to you.*

We are a partnership holding company and our operating subsidiaries conduct all of our operations and own all of our operating assets. We have no significant assets other than the ownership interests in our subsidiaries and joint ventures. As a result, our ability to make distributions to our unitholders depends on the performance of our subsidiaries and joint ventures and their ability to distribute funds to us. The ability of our subsidiaries and joint ventures to make distributions to us may be restricted by, among other things, the provisions of existing and future indebtedness, applicable state partnership and limited liability company laws and other laws and regulations, including FERC policies. For example, all cash flows from Evangeline are currently used to service its debt.

Affiliates of Enterprise Products Partners currently own a minority equity interest in all of our subsidiaries and will have a right of first refusal to acquire these subsidiaries or their material assets if we desire to sell them, other than inventory and other assets sold in the ordinary course of business. These rights may adversely affect our ability to dispose of these assets. In addition, our ownership interest in Mont Belvieu Caverns may be diluted, and the cash flow from our NGL & Petrochemical Storage Services segment may be reduced, if we do not contribute our proportionate share of any future costs to fund expansion projects at Mont Belvieu Caverns.


	*We do not have the same flexibility as other types of organizations to accumulate cash and equity to protect against illiquidity in the future.*

Unlike a corporation, our partnership agreement requires us to make quarterly distributions to our unitholders of all available cash reduced by any amounts of reserves for commitments and contingencies, including capital and operating costs and debt service requirements. The value of our common units and other limited partner interests may decrease in direct correlation with decreases in the amount we distribute per common unit. Accordingly, if we experience a liquidity problem in the future, we may not be able to issue more equity to recapitalize.


	*Cost reimbursements to EPCO and its affiliates will reduce cash available for distribution to you.*

Prior to making any distribution on the common units, we will reimburse EPCO and its affiliates for all expenses they incur on our behalf, including allocated overhead. These amounts will include all costs incurred in managing and operating us, including costs for rendering administrative staff and support services to us, and overhead allocated to us by EPCO. Please read “Cash Distribution Policy and Restrictions on Distributions,” “Certain Relationships and Related Party Transactions” and “Conflicts of Interest, Business Opportunity Agreements and Fiduciary Duties — Conflicts of Interest and Business Opportunity Agreements.” The

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payment of these amounts, including allocated overhead, to EPCO and its affiliates could adversely affect our ability to make distributions to you.


	*Unitholders may not have limited liability if a court finds that unitholder action constitutes control of our business.*

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 states in which we do business. You could have unlimited liability for our obligations 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

	•	your right to act with other unitholders to remove or replace our general partner, to approve some amendments to our partnership agreement or to take other actions under our partnership agreement constituted “control” of our business.

Please read “Description of Material Provisions of Our Partnership Agreement — Limited Liability” for a discussion of the implications of the limitations of liability on a unitholder.


	*Unitholders may have liability to repay distributions.*

Under certain circumstances, unitholders may have to repay amounts wrongfully returned or distributed to them. Under Section 17-607 of the Delaware Revised Uniform Limited Partnership Act (the “Delaware Act”), we may not make a distribution to you if the distribution would cause our liabilities to exceed the fair value of our assets. 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. Delaware law provides that for a period of three years from the date of an 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. A purchaser of common units who becomes a limited partner is liable for the obligations of the transferring limited partner to make contributions to the partnership that are known to such purchaser of common units at the time it became a limited partner and for unknown obligations if the liabilities could be determined from our partnership agreement.


	*Our general partner’s interest in us and the 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, there is no restriction in our partnership agreement on the ability of DEP Holdings or Enterprise Products OLP to transfer their equity interests in our general partner or our general partner to a third party. The new equity owner of our general partner would then be in a position to replace the board of directors and officers of our general partner with their own choices and to influence the decisions taken by the board of directors and officers of our general partner.


	*There is no existing market for our common units, and a trading market that will provide you with adequate liquidity may not develop.*

Prior to this offering, there has been no public market for the common units. After this offering, there will be 13,000,000 publicly traded common units, assuming no exercise of the underwriters’ option to purchase additional common units. We do not know the extent to which investor interest will lead to the development of a trading market or how liquid that market might be. You may not be able to resell your common units at or above the initial public offering price. Additionally, the lack of liquidity may result in wide bid-ask spreads, contribute to significant fluctuations in the market price of the common units and limit the number of investors who are able to buy the common units.

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The initial public offering price for the common units will be determined by negotiations between us and the representatives of the underwriters and may not be indicative of the market price of the common units that will prevail in the trading market. The market price of our common units may decline below the initial public offering price.

Tax Risks

You should read “Material Tax Consequences” for a more complete discussion of the expected material federal income tax consequences of owning and disposing of common units.

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 distributions to you would be substantially reduced.

The anticipated after-tax benefit of an investment in the common units depends largely on our being treated as a partnership for federal income tax purposes. We have not requested, and do not plan to request, a ruling from the IRS on this or any other matter affecting us.

If we were treated as a corporation for federal income tax purposes, we would pay federal income tax on our income at the corporate tax rate, which is currently a maximum of 35%. Distributions to you would generally be taxed again as corporate distributions, and no income, gains, losses, deductions or credits would flow through to you. Because a tax would be imposed upon us as a corporation, our cash available for distribution to you would be substantially reduced. Thus, treatment of us as a corporation would result in a material reduction in the anticipated cash flow and after-tax return to you, likely causing a substantial reduction in the value of the common units.

Current law may change, causing us to be treated as a corporation for federal income tax purposes or otherwise subjecting us to a material amount of entity-level taxation. In addition, because of widespread state budget deficits and other reasons, several states, including Texas, are evaluating ways to enhance state-tax collections. For example, our operating subsidiaries will be subject to a newly revised Texas franchise tax (the “Texas Margin Tax”) on the portion of their revenue that is generated in Texas beginning for tax reports due on or after January 1, 2008. Specifically, the Texas Margin Tax will be imposed at a maximum effective rate of 0.7% of the operating subsidiaries’ gross revenue that is apportioned to Texas. If any additional state were to impose a tax upon us or the operating subsidiaries as an entity, the cash available for distribution to you would be reduced.


	If the IRS contests the federal income tax positions we take, the market for our common units may be adversely impacted, and the costs of any contest will reduce our cash distributions to you.

We have not requested any 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 our counsel’s conclusions expressed in this prospectus. 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, because the costs of any contest with the IRS will be borne indirectly by our unitholders and our general partner, any such contest will result in a reduction in cash available for distribution.


	*You may be required to pay taxes on your share of our income even if you do not receive any cash distributions from us.*

You will be required to pay federal income taxes and, in some cases, state and local income taxes on your share of our taxable income, whether or not you receive cash distributions from us. You may not receive cash distributions from us equal to your share of our taxable income or even equal to the actual tax liability that results from your share of our taxable income.

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	*Tax gain or loss on the disposition of our common units could be different than expected.*

If you sell your common units, you will recognize gain or loss equal to the difference between the amount realized and your tax basis in those common units. Prior distributions to you in excess of the total net taxable income you were allocated for a common unit, which decreased your tax basis in that common unit, will, in effect, become taxable income to you if the common unit is sold at a price greater than your tax basis in that common unit, even if the price you receive is less than your original cost. A substantial portion of the amount realized, whether or not representing gain, may be ordinary income to you.


	*Tax-exempt entities 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 (“IRAs”), other retirement plans, and non-U.S. persons raises issues unique to them. For example, virtually all of our income allocated to organizations that are exempt from federal income tax, including IRAs 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 tax returns and pay tax on their share of our taxable income. If you are a tax-exempt entity or a non-U.S. person you should consult your tax advisor before investing in our common units.


	We will treat each purchaser of common units as having the same tax benefits without regard to the common units purchased. The IRS may challenge this treatment, which could result in a decrease in the value of the common units.

Because we cannot match transferors and transferees of common units, we will adopt depreciation and amortization positions that may not conform with all aspects of existing Treasury regulations. A successful IRS challenge to those positions could decrease the amount of tax benefits available to you. It also could affect the timing of these tax benefits or the amount of gain from your sale of common units and could have a negative impact on the value of our common units or result in audit adjustments to your tax returns. Please read “Material Tax Consequences — Uniformity of Units” for a further discussion of the effect of the depreciation and amortization positions we will adopt.


	*The sale or exchange of 50% or more of our capital and profits interests 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 is a sale or exchange of 50% or more of the total interests in our capital and profits within a twelve month period. Our termination would, among other things, result in the closing of our taxable year for all unitholders and could result in a deferral of depreciation deductions allowable in computing our taxable income. Please read “Material Tax Consequences — Disposition of Common Units — Constructive Termination” for a discussion of the consequences of our termination for federal income tax purposes.


	*You may be subject to state and local taxes and return filing requirements as a result of investing in our common units.*

In addition to federal income taxes, you 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. You may 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, you may be subject to penalties for failure to comply with those requirements. We will initially own property or conduct business in Louisiana and Texas. We may own property or conduct business in other states or foreign countries in the future. It is your responsibility to file all federal, state and local tax returns. 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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USE OF PROCEEDS

We expect to receive net proceeds from this offering of approximately $243.4 million (based on an assumed offering price of $20.00 per unit), after deducting underwriting discounts and commissions and a $1.0 million structuring fee, but before estimated net expenses associated with the offering and related formation transactions.

We intend to use the net proceeds from this offering to:


	•	distribute approximately $212.3 million to Enterprise Products OLP as a portion of the cash consideration and reimbursement for capital expenditures relating to the assets contributed to us;


	•	provide approximately $28.2 million to fund our 66% share of estimated capital expenditures to complete planned expansions to the South Texas NGL pipeline system and brine production and above-ground storage projects at Mont Belvieu subsequent to the closing of this offering; and


	•	pay approximately $2.9 million of other estimated net expenses associated with this offering and related formation transactions described on page 2.

The portion of net proceeds that we retain to fund planned expansions (and the amount that we plan to distribute to Enterprise Products OLP) assumes that, prior to the closing date of this offering, South Texas NGL and Mont Belvieu Caverns will have recorded $59 million of a total estimated additional cost of $101.7 million to complete our acquisition and construction of the South Texas NGL pipeline system and our completion of brine production and above-ground storage projects at Mont Belvieu. The amounts actually distributed or retained at the closing of this offering will be increased or decreased by an amount equal to 66% of the difference between:

(1) $101.7 million (the estimated total additional costs); and


	(2)	the actual construction and acquisition costs paid with respect to (i) the South Texas NGL pipeline (excluding the original pipeline purchase costs of approximately $97.7 million) and (ii) the Mont Belvieu brine production and above-ground storage projects, prior to the contribution of interests in South Texas NGL and Mont Belvieu Caverns to us at the closing of this offering.

Of the $59 million in total estimated costs noted above, as of December 31, 2006, we had recorded $19.6 million of the estimated additional costs for construction and acquisition of the South Texas NGL pipeline system and $21.3 million of the estimated additional costs related to the Mont Belvieu brine production and above-ground storage projects.

If the offering price is more or less than the assumed $20.00 per unit price, the amount that we will actually distribute to Enterprise Products OLP will also be increased or decreased by all of the difference in such net proceeds from this offering.

Concurrently with the closing of this offering, we will also borrow approximately $200 million under our new $300 million credit agreement. We will distribute $198.9 million of these borrowings to Enterprise Products OLP in partial consideration for the assets contributed to us upon the closing of this offering. For a description of our credit agreement, please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — New Revolving Credit Facility.”

If the underwriters exercise their option to purchase additional common units, we will use all of the net proceeds from the sale of those common units to redeem an equal number of common units from Enterprise Products OLP, which may be deemed a selling unitholder in this offering. Please read “Selling Unitholder” and “Security Ownership of Certain Beneficial Owners and Management.”

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CAPITALIZATION

The following table sets forth:


	•	the cash and capitalization of our predecessor, Duncan Energy Partners Predecessor, as of September 30, 2006 on a combined historical basis;

	•	our pro forma cash and capitalization as of September 30, 2006, after, giving effect to:


	•	the August 2006 purchase of a pipeline by Enterprise Products Partners for approximately $97.7 million in cash, the subsequent contribution of this pipeline to South Texas NGL and the payment of estimated additional costs of $37.7 million required to modify this pipeline and to acquire and construct additional pipelines in order to place this pipeline system into operation in January 2007;


	•	the payment of estimated additional costs of $21.3 million required to expand our Mont Belvieu brine production capacity and above-ground storage reservoirs;


	•	the contribution of a 66% interest in certain entities which are wholly-owned subsidiaries of Enterprise Products Partners, and the retention by Enterprise Products Partners of a 34% interest in these entities;

	•	the revision of related party storage contracts between us and Enterprise Products Partners to (1) increase certain storage fees paid by Enterprise Products Partners and (2) reflect the allocation to Enterprise Products Partners of all storage measurement gains and losses relating to products under these agreements, and the execution of a limited liability company agreement for Mont Belvieu Caverns providing for the special allocation and other agreements relating to other measurement gains and losses to Enterprise Products Partners; and

	•	the assignment to us of certain third-party agreements that effectively reduce tariff rates received by us for the transport of propylene volumes; and


	•	our unaudited pro forma, as adjusted cash and capitalization as of September 30, 2006, after giving effect to the transactions described above, this offering, the borrowing of approximately $200 million under a new $300 million credit agreement by us in connection with our acquisition of ownership interests in our subsidiaries from Enterprise Products Partners, and the application of the net proceeds from this offering and the borrowings as described under “Use of Proceeds.”

This table is derived from, and should be read together with, the historical combined financial statements of Duncan Energy Partners Predecessor and our unaudited pro forma condensed combined financial information included elsewhere in this prospectus. You should also read this table in conjunction with “Summary — Duncan Energy Partners L.P. — Formation Transactions,” “Use of Proceeds,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.


	As of September 30, 2006
					Pro Forma,
	Historical		Pro Forma		As Adjusted
	(Dollars in thousands)

Cash	$	—	$	—	$	28,188	(a)

Debt		—		—		200,000
Owner’s net investment — predecessor		662,131		716,465		—
Parent’s interest in Partnership		—		—		305,233
Partnership equity — common units — public		—		—		240,520

Total capitalization	$	662,131	$	716,465	$	745,753


	(a)	Represents cash retained for our 66% share of estimated 2007 capital expenditures to complete planned expansions of our South Texas NGL pipeline and Mont Belvieu brine-related facilities.

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DILUTION

Dilution is the amount by which the offering price paid by purchasers of our common units sold in this offering will exceed the pro forma net tangible book value per common unit after the offering. Assuming an initial public offering price of $20.00 per common unit, on a pro forma basis as of September 30, 2006, after giving effect to the offering of 13,000,000 common units, our net tangible book value was $297.5 million, or $14.36 per common unit. This amount includes equity from new investors of $240.5 million and the parent’s interest in common units and the general partner interest of $61.6 million less the Partnership’s 66% share of intangible assets. Purchasers of our common units in this offering will experience substantial and immediate dilution in net tangible book value per common unit for financial accounting purposes, as illustrated in the following table.


Assumed initial public offering price per common unit			$	20.00
Pro forma net tangible book value per common unit before the offering(1)	$	60.68
Decrease in net tangible book value per common unit attributable to purchasers in the offering		46.32

Less: Pro forma net tangible book value per common unit after the offering(2)				14.36

Immediate dilution in net tangible book value per common unit to purchasers in the offering			$	5.64


(1)		Determined by dividing the net tangible book value of the contributed net assets of $468.2 million, net of subsidiary ownership interests retained by parent of $243.6 million, by the number of common units (7,301,571 common units and the 2% general partner interest, which has a dilutive effect equivalent to 414,318 common units) to be issued to our general partner and its affiliates for their contribution of assets and liabilities to us. Our general partner’s dilutive effect equivalent was determined by multiplying the total number of common units deemed to be outstanding (i.e., the total number of common units outstanding of 20,301,571 divided by 98%) by our general partner’s 2% general partner interest.


(2)		Determined by dividing our pro forma net tangible book value of $297.5 million, which reflects the application of the assumed net proceeds of this offering, by the total number of common units (20,301,571 common units and the 2% general partner interest, which has a dilutive effect equivalent to 414,318 common units) to be outstanding after the offering. The following table shows our calculation of pro forma net tangible book value (dollars in thousands):


Pro forma net book value, including Parent interest	$	302,155
Less: 66% share of intangible assets attributable to parent’s interest in common units and the general partner interest and new investors		(4,636	)

Pro forma net tangible book value, including Parent interest	$	297,519

The following table sets forth the number of common units that we will issue and the total consideration contributed to us by our general partner and its affiliates and by the purchasers of common units in this offering (dollars in thousands):


	Common Units					Total
	Acquired					Consideration
	Number		Percent			Amount		Percent

Parent’s interest in common units and general partner interest (1)(2)		7,715,889		37.2	%	$	61,635		20.4	%
New investors		13,000,000		62.8	%		240,520		79.6	%

Total		20,715,889		100.0	%	$	302,155		100.0	%


(1)		Upon the consummation of this offering, Enterprise Products OLP and our general partner will own an aggregate of 7,301,571 common units and a 2% general partner interest having a dilutive effect equivalent to 414,318 common units.

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(2)		The assets contributed by Enterprise Products OLP were recorded at historical cost in accordance with GAAP. Book value of the consideration provided by our general partner and Enterprise Products OLP, as of September 30, 2006, after giving effect to the application of the net proceeds of the offering and the retention of a 34% equity interest in the contributed subsidiaries is as follows (dollars in thousands):


Pro forma owners’ net investment	$	716,465
Less: Payment to Parent from the net proceeds of the offering and borrowings under the credit agreement		(411,232	)
Less: Parent retention of 34% of the equity interests in contributed subsidiaries of the Partnership		(243,598	)

Total consideration for Parent’s interest in common units and general partner interest	$	61,635

For financial reporting purposes, the parent’s retained interest in the subsidiaries of $243.6 million and the carryover basis in the common units and the general partner interest as part of this offering is presented outside the Partnership equity from the new public investors.

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CASH DISTRIBUTION POLICY
AND RESTRICTIONS ON DISTRIBUTIONS

You should read the following discussion of our cash distribution policy in conjunction with the specific assumptions included in this section. For detailed information regarding the factors and assumptions upon which our cash distribution policy is based, please read “— Assumptions and Considerations” below. In addition, you should read “Forward-Looking Statements” and “Risk Factors” for information regarding statements that do not relate strictly to historical or current facts and certain risks inherent in our business.

For additional information regarding our historical and pro forma financial information, you should refer to the audited historical combined financial statements of Duncan Energy Partners Predecessor for the years ended December 31, 2003, 2004 and 2005 and the nine months ended September 30, 2006, our unaudited historical financial statements for the nine months ended September 30, 2005, and our unaudited pro forma condensed combined financial information at September 30, 2006 and for the year ended December 31, 2005 and nine months ended September 30, 2006 included elsewhere in this prospectus.

General

Rationale for Our Cash Distribution Policy

Our partnership agreement requires us to distribute all of our available cash on a quarterly basis. Available cash is defined to mean generally, for each fiscal quarter, all cash and cash equivalents on the date of determination of available cash for such quarter, less the reserves that our general partner determines are necessary or appropriate to provide for the conduct of our business, to comply with applicable law, any of our debt instruments or other agreements or to provide for future distributions to our unitholders for any one or more of the upcoming four quarters. We intend to fund a portion of our capital expenditures with additional borrowings under our new revolving credit facility or the issuance of additional units. We may also borrow to make distributions to unitholders, for example, in circumstances where we believe that the distribution level is sustainable over the long term, but short-term factors have caused available cash from operations to be insufficient to pay the distribution at the current level. Our partnership agreement will not restrict our ability to borrow to pay distributions. It is the current policy of the board of directors of our general partner, however, that we should maintain or increase our level of quarterly cash distributions only when, in its judgment, we can sustain such distribution levels over a long-term period. Our cash distribution policy reflects a basic judgment that our unitholders will be better served by us distributing our available cash, after expenses and reserves, rather than retaining it. Also, because we are not subject to an entity-level federal income tax, we have more cash to distribute to you than would be the case if we were subject to federal income tax.

Restrictions and Limitations on Cash Distributions and Our Ability to Change Our Cash Distribution Policy

There is no guarantee that unitholders will receive quarterly distributions from us. Our distribution policy is subject to certain restrictions and may be changed at any time, including:


	•	Our cash distribution policy will be subject to restrictions on distributions under our new credit facility. Specifically, our revolving credit facility contains certain material financial tests, such as a Consolidated Debt to Consolidated EBITDA ratio, or leverage ratio, not to exceed 4.75 to 1.00 and a Consolidated EBITDA to Consolidated Interest Expense ratio, or interest coverage ratio, of not less than 2.75 to 1.00, and other covenants that we must satisfy. Should we be unable to satisfy these restrictions under our revolving credit facility, or if we otherwise default under our revolving credit facility, we would be prohibited from making a distribution to you notwithstanding our stated cash distribution policy. These financial tests and covenants are described in the prospectus under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — New Revolving Credit Facility.”


	•	Our general partner will have the authority to establish cash reserves for the prudent conduct of our business and for future cash distributions to our unitholders, and the establishment of those reserves

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		could result in a reduction in cash distributions to you from levels we currently anticipate pursuant to our stated cash distribution policy. Any determination to establish reserves made by our general partner in the absence of bad faith will be binding on the unitholders. Over a period of time, if we do not set aside sufficient cash reserves or make sufficient cash expenditures to maintain our asset base, we will be unable to pay distributions at the current level from cash generated from operations and would therefore expect to reduce our distributions. We will not be able to increase our current level of distributions without making accretive acquisitions or capital expenditures that grow our asset base. A significant decrease in throughput volumes or in the demand for or production of hydrocarbon products from current levels would adversely affect our ability to pay distributions. If our asset base decreases and we do not reduce our distributions, a portion of the distributions you receive may be considered a return of part of your investment in us as opposed to a return on your investment.


	•	While our partnership agreement requires us to distribute all of our available cash, our partnership agreement, including our cash distribution policy contained therein, may be amended with the consent of the general partner and a vote of the holders of a majority of our common units. Following completion of this offering, our public unitholders will own 64.0% of our common units and Enterprise Products Partners (our parent and sponsor) will own the remainder.


	•	Even if our cash distribution policy is not amended, modified or revoked, the amount of distributions we pay under our cash distribution policy and the decision to make any distribution is determined by our general partner, taking into consideration the terms of our partnership agreement. Enterprise Products OLP owns our general partner.

	•	Under Section 17-607 of the Delaware Revised Uniform Limited Partnership Act, we may not make a distribution to our partners if the distribution would cause our liabilities to exceed the fair value of our assets.

We may lack sufficient cash to pay distributions to our unitholders due to a number of factors, including:


	•	A reduction in throughput volumes on our pipelines would decrease our cash receipts from pipeline transportation revenues, which would reduce cash available to pay distributions.

	•	An increase in operating expenses, general and administrative costs and state and federal income taxes would increase our cash outlays for such items, which would reduce cash available to pay distributions.

	•	Principal repayments (to the extent not refinanced) and interest payments on any current or future debt would generally be made from cash generated by operating activities, which would reduce cash available to pay distributions.

	•	Capital expenditures reduce cash available to pay distributions to the extent such amounts are funded from cash generated by operating activities.

	•	To the extent not funded by borrowings under our revolving credit facility, working capital needs for such items as inventory or prepaid items reduce cash available to pay distributions.

Please read “Risk Factors” for additional discussion of these factors.

Our Ability to Grow Depends on Our Ability to Access External Growth Capital

Our partnership agreement requires us to distribute all of our available cash to our unitholders. As a result, we expect to rely primarily upon external financing sources, including commercial bank borrowings and the issuance of debt and equity securities, to fund acquisition capital expenditures. To the extent we are unable to finance growth externally, our cash distribution policy will significantly impair our ability to grow. To the extent we issue additional units in connection with any acquisitions or other 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 or our revolving credit facility on our ability to issue additional units, including units ranking senior to the common units. The incurrence of additional

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commercial borrowings or other debt to finance any future growth would result in increased interest expense, which in turn may impact the amount of available cash that we have to distribute to our unitholders.

Our Initial Distribution Rate

Upon completion of this offering, the board of directors of our general partner will adopt a cash distribution policy pursuant to which we will declare an initial distribution of $0.40 per unit per quarter (pro rated for the first quarter during which we are a publicly traded partnership), or $1.60 per unit per year, to be paid no later than 45 days after the end of each fiscal quarter. This equates to an aggregate cash distribution of approximately $8.3 million per quarter, or $33.1 million per year, based on the units outstanding immediately after completion of this offering. If the underwriters’ option to purchase additional units is exercised, an equivalent number of common units will be redeemed from Enterprise Products OLP. Accordingly, the exercise of the underwriters’ option to purchase additional units will not affect the total amount of units outstanding or the amount of cash needed to pay the initial distribution rate on all units. Our ability to make cash distributions at the initial distribution rate pursuant to this policy will be subject to the factors described above under the caption “— General — Restrictions and Limitations on Cash Distributions and Our Ability to Change Our Cash Distribution Policy.”

As of the date of this offering, our general partner will be entitled to 2% of all distributions that we make prior to our liquidation. The general partner’s initial 2% interest in these distributions may be reduced if we issue additional units in the future and our general partner does not contribute a proportionate amount of capital to us to maintain its initial 2% general partner interest. Our general partner is not obligated to contribute a proportionate amount of capital to us to maintain its current general partner interest.

The following table sets forth the estimated aggregate distribution amounts payable on our common units and general partner interest during the year following the closing of this proposed offering at our initial distribution rate of $0.40 per common unit per quarter (or $1.60 per common unit on an annualized basis).


	Initial Quarterly Distribution
Units	One Quarter		Four Quarters
	(Dollars in thousands)

Common units held by parent (Enterprise Products OLP)	$	2,141	$	8,562
Common units held by public unitholders (non-parent)		5,980		23,920
General partner interest		166		663

Total	$	8,287	$	33,145

These distributions will not be cumulative. Consequently, if distributions on our common units are not paid with respect to any fiscal quarter at the expected initial quarterly distribution, our unitholders will not be entitled to receive such payments in the future. We will pay distributions on or about the 15th of each February, May, August and November to holders of record on or about the 1st of each such month. If the distribution date does not fall on a business day, we will make the distribution on the business day immediately preceding the indicated distribution date. On or before May 15, 2007 to the extent we have available cash in accordance with the terms of our partnership agreement, we will pay a distribution to our unitholders equal to the initial quarterly distribution prorated for the portion of the quarter ending March 31, 2007 that we are public.

We do not have a legal obligation to pay distributions at our initial distribution rate or at any other rate except as provided in our partnership agreement. Our distribution policy is consistent with the terms of our partnership agreement, which requires that we distribute all of our available cash quarterly. Under our partnership agreement, available cash is defined to mean generally, for each fiscal quarter, all cash and cash equivalents on the date of determination of available cash for such quarter, less the reserves that our general partner determines are necessary or appropriate to provide for the conduct of our business, to comply with applicable law, any of our debt instruments or other agreements or to provide for future distributions to our unitholders for any one or more of the upcoming four quarters.

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In the sections that follow, we present in detail the basis for our belief that we will be able to fully fund our initial quarterly distribution of $0.40 per common unit per quarter for the four quarters ending December 31, 2007. In those sections we present two tables, including:


	•	Our “Unaudited Pro Forma Combined Available Cash,” in which we present the amount of pro forma available cash that we would have had available for distribution to our limited partners and parent with respect to the year ended December 31, 2005 and four quarters ended September 30, 2006 based on our pro forma financial statements included in this prospectus. Our calculation of pro forma available cash in this table should only be viewed as a general indication of the amount of available cash that we might have generated had we been in existence in an earlier period.

	•	Our “Estimated Cash Available to Pay Distributions,” in which we present our estimate of available cash to pay distributions for the four quarters ending December 31, 2007, which supports our belief that we will be able to fully fund our initial annual distribution of $1.60 per common unit during such period.

If we had completed the transactions contemplated in this prospectus on January 1, 2005, our pro forma available cash to pay distributions for the year ended December 31, 2005 would have been $9.9 million. This amount would have been insufficient by approximately $23.2 million to pay the initial annual distribution of $33.1 million on all our common units and general partner interest. Likewise, our pro forma available cash to pay distributions for the four quarters ended September 30, 2006 would have been a deficit of $14.1 million. This amount would have been insufficient by approximately $47.2 million to pay the initial annual distribution amount of $33.1 million on all our common units and general partner interest.

The pro forma financial information does not reflect certain changes in operating assumptions and expected results that affect our projections for the four quarters ending December 31, 2007, including principally:


	•	The commencement of operations within our NGL Pipeline Services segment. The South Texas NGL pipeline became operational in January 2007 and is expected to generate an additional $16.4 million of Estimated Consolidated Adjusted EBITDA during the four quarters ending December 31, 2007. For a definition of Estimated Consolidated Adjusted EBITDA, please read “—Estimated Cash Available to Pay Distributions;” and


	•	The funding of growth capital expenditures with sources other than cash from operations. Because we had no external financing of capital projects in the year ended December 31, 2005 and the four quarters ended September 30, 2006, pro forma available cash was reduced by $19.5 million and $61.1 million for capital expenditures in those respective periods. We expect that, in the future, growth capital expenditures will be funded with sources other than cash from operations, such as proceeds from this offering, borrowings under our new revolving credit facility, debt or equity financings, or contributions from Enterprise Products OLP.

Therefore, we believe that we will have sufficient cash available to pay quarterly distributions of $0.40 per unit on all our common units and our general partner interest during the four quarters ending December 31, 2007. See “— Assumptions and Considerations” for the specific assumptions underlying this belief.

The tables used in this section, “Unaudited Pro Forma Combined Available Cash” and “Estimated Cash Available to Pay Distributions,” have been prepared by, and are the responsibility of our management. Our independent registered public accounting firm has neither examined, compiled or otherwise applied procedures to such information presented herein and, accordingly do not express an opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with the prospective financial information. Such independent registered public accounting firm’s reports included elsewhere in this prospectus relate to the appropriately described historical financial information. Such reports do not extend to the tables and related information and should not be read to do so. In addition, such tables and information were not prepared with a view toward compliance with published guidelines of the Securities and Exchange Commission or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, and were not prepared in accordance with accounting principles generally accepted in the United States of America nor

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were procedures applied for auditing standards of the Public Company Accounting Oversight Board (United States).

Unaudited Pro Forma Combined Available Cash

The pro forma financial statements, upon which our pro forma combined available cash for distributions is based, do not purport to present our results of operations had the transactions contemplated in this prospectus actually been completed as of the dates indicated. Furthermore, cash available for distribution is a cash accounting concept, while our pro forma financial statements have been prepared on an accrual basis. We derived the amounts of pro forma combined available cash for distribution in the manner described in the table below. As a result, the amount of pro forma combined available cash for distribution should be viewed as only a general indication of the amount of cash available for distribution that we might have generated had we been formed in earlier periods.

The following table illustrates, on a pro forma basis, for the year ended December 31, 2005 and for the four quarters ended September 30, 2006, the amount of cash that would have been available for distribution to the holders of our common units (including Enterprise Products Partners) and our general partner assuming that this offering had been consummated at the beginning of each such period. The pro forma adjustments in the following table give effect to (i) the contribution of 66% of the ownership interests in Mont Belvieu Caverns, Acadian Gas, Sabine Propylene and Lou-Tex Propylene, (ii) the revision of related party storage contracts with Enterprise Products Partners, including terms relating to the allocation of measurement gains and losses, (iii) the execution of a limited liability company agreement with Mont Belvieu Caverns providing for special allocations to Enterprise Products Partners, and (iv) the assignment of certain third-party propylene transportation agreements, as if they had occurred at the beginning of the periods presented.

50

Duncan Energy Partners L.P.
Unaudited Pro Forma Combined Available Cash
(Dollars in thousands, except per unit amounts)


				Pro Forma
	Pro Forma			Four Quarters
	Year Ended			Ended
	December 31,			September 30,
	2005			2006

Cash Provided by Operating Activities(a)	$	40,568		$	65,643
Adjustments to derive Consolidated Adjusted EBITDA(a):
Interest expense		532			532
Equity income of unconsolidated affiliates		331			675
Net effect of changes in operating accounts(b)		18,280			3,204
Changes in fair market value of financial instruments for Acadian Gas		(52	)		(472	)
Non-cash gain (loss) on sale of assets		(5	)		14

Consolidated Adjusted EBITDA		59,654			69,596
Pro forma increase in storage revenues(c)		11,610			12,902
Pro forma decrease in operating expense due to allocation of measurement losses by parent(d)		3,055

			in		Show		and
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Delaware	4922	20-5639997
(State or Other Jurisdiction of Incorporation or Organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)


	Per Common Unit	Total

Initial public offering price	$	$
Underwriting discount(1)	$	$
Proceeds to us (before expenses)	$	$


Robert V. Jewell David C. Buck Andrews Kurth LLP 600 Travis, Suite 4200 Houston, Texas 77002 (713) 220-4200		Joshua Davidson Sean T. Wheeler Baker Botts L.L.P. One Shell Plaza, 910 Louisiana Houston, Texas 77002 (713) 229-1234


	•	We may not have sufficient cash from operations to enable us to pay distributions on our common units.

	•	Changes in demand for and production of hydrocarbon products may materially adversely affect our results of operations, cash flows and financial condition.

	•	We depend on Enterprise Products Partners L.P. and certain other key customers for a significant portion of our revenues. The loss of any of these key customers could result in a decline in our revenues and cash from operations available to pay distributions to our unitholders.

	•	Our general partner and its affiliates, including Enterprise Products Partners L.P., will have conflicts of interest and limited fiduciary duties, which may permit them to favor their own interests to your detriment.

	•	Affiliates of our general partner, including Enterprise Products Partners L.P., Enterprise GP Holdings L.P. and TEPPCO Partners L.P., may compete with us and be entitled to pursue certain business opportunities before us. This arrangement may limit our ability to grow.

	•	Our general partner has a limited call right that may require you to sell your common units at an undesirable time or price.

	•	Unitholders have limited voting rights and are not entitled to elect our general partner or its directors.

	•	You will experience immediate and substantial dilution of $5.64 per unit in the net tangible book value of your common units.

	•	You may be required to pay taxes on income from us even if you do not receive any cash distributions from us.


(1)		Excludes a fee payable to Lehman Brothers of $1,000,000 in consideration of advice rendered by Lehman Brothers regarding the structure of this offering and our partnership.


Lehman Brothers	UBS Investment Bank


Citigroup	Goldman, Sachs & Co.


Morgan Stanley	Wachovia Securities

Duncan Energy Partners L/P · S-1/A · On 1/22/07

Filed On 1/22/07 6:15am ET · SEC File 333-138371 · Accession Number 950134-7-927

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