10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 _____________________________________________________

Form 10-K

 _____________________________________________________

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number: 001-35262

 _____________________________________________________

REGENCY ENERGY PARTNERS LP

(Exact name of registrant as specified in its charter)

 _____________________________________________________

Delaware	16-1731691
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2001 Bryan Street Suite 3700, Dallas, Texas	75201
(Address of principal executive offices)	(Zip Code)

(214) 750-1771

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report): None

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Units of Limited Partner Interests	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

 _____________________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ý    No  ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.    Yes  ¨    No  ý

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such file).    Yes  ý    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer, accelerated filer and small reporting company” in Rule 12b-2 of the Exchange Act.    ý  Large accelerated filer    ¨  Accelerated filer ¨  Non-accelerated filer (Do not check if a smaller reporting company)  ¨  Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

As of June 30, 2011, the aggregate market value of the registrant’s common units held by non-affiliates of the registrant was $3,092,104,793 based on the closing sale price on such date as reported on the NASDAQ Global Select Market.

There were 157,437,608 common units outstanding as of February 15,2012.

DOCUMENTS INCORPORATED BY REFERENCE

None

REGENCY ENERGY PARTNERS LP

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, 2011

TABLE OF CONTENTS

		PAGE
	Cautionary Statement about Forward-Looking Statements
PART I
Item 1	Business	1
Item 1A	Risk Factors	16
Item 1B	Unresolved Staff Comments	35
Item 2	Properties	35
Item 3	Legal Proceedings	35
Item 4	Mine Safety Disclosures	35
PART II
Item 5	Market for Registrant’s Common Units, Related Unitholders Matters and Issuer Purchases of Equity Securities	35
Item 6	Selected Financial Data	37
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
Item 7A	Quantitative and Qualitative Disclosure about Market Risk	62
Item 8	Financial Statements and Supplementary Data	63
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	63
Item 9A	Controls and Procedures	63
Item 9B	Other Information	64
PART III
Item 10	Directors, Executive Officers and Corporate Governance	64
Item 11	Executive Compensation	68
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters	78
Item 13	Certain Relationships and Related Transactions, and Director Independence	80
Item 14	Principal Accountant Fees and Services	81
PART IV
Item 15	Exhibit and Financial Statement Schedules	82

i

Introductory Statement

References in this report to the “Partnership,” “we,” “our,” “us” and similar terms refer to Regency Energy Partners LP and its subsidiaries. We use the following definitions in this annual report on Form 10-K:

Name	Definition or Description
/d	Per day
Alinda Investors	Alinda Gas Pipelines I, L.P. and Alinda Gas Pipelines II, L.P.
ACESA	The American Clean Energy and Security Act of 2009
AOCI	Accumulated Other Comprehensive Income
APM	Anadarko Pecos Midstream LLC
Bbls	Barrels
Bcf	One billion cubic feet
BTU	A unit of energy needed to raise the temperature of one pound of water by one degree Fahrenheit
CDM	CDM Resource Management LLC, a wholly-owned subsidiary of the Partnership
CERCLA	Comprehensive Environmental Response, Compensation and Liability Act
CFTC	Commodity Futures Trading Commission
CM	Chesapeake West Texas Processing, L.L.C.
DHS	U.S. Department of Homeland Security
DOT	U.S. Department of Transportation
EFS Haynesville	EFS Haynesville, LLC, a wholly-owned subsidiary of GECC
EIA	Energy Information Administration
ELG	Edwards Lime Gathering LLC
EPA	Environmental Protection Agency
EPD	Enterprise Products Partners L.P.
ERISA	Employee Retirement Income Security Act of 1974
ETC	Energy Transfer Company, the name assumed by La Grange Acquisition, L.P. for conducting business and shared services, a wholly-owned subsidiary of ETP
ETE	Energy Transfer Equity, L.P.
ETE GP	ETE GP Acquirer LLC
ETP	Energy Transfer Partners, L.P.
FASB	Financial Accounting Standards Board
FASB ASC	FASB Accounting Standards Codification
FERC	Federal Energy Regulatory Commission
Finance Corp.	Regency Energy Finance Corp., a wholly-owned subsidiary of the Partnership
GAAP	Accounting principles generally accepted in the United States of America
GE	General Electric Company
GE EFS	General Electric Energy Financial Services, a unit of GECC, combined with Regency GP Acquirer, L.P. and Regency LP Acquirer, L.P.
GECC	General Electric Capital Corporation, an indirect wholly-owned subsidiary of GE
General Partner	Regency GP LP, the general partner of the Partnership, or Regency GP LLC, the general partner of Regency GP LP, which effectively manages the business and affairs of the Partnership through Regency Employees Management LLC
GPM	Gallons per minute
GP Seller	Regency GP Acquirer, L.P.
Gulf States	Gulf States Transmission LLC, a wholly-owned subsidiary of the Partnership
HLPSA	Hazardous Liquid Pipeline Safety Act
HPC	RIGS Haynesville Partnership Co., a general partnership, and its wholly-owned subsidiary, Regency Intrastate Gas LP

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Name	Definition or Description
ICA	Interstate Commerce Act
IDRs	Incentive Distribution Rights
IPO	Initial Public Offering of Securities
IRC	Internal Revenue Code
IRS	Internal Revenue Service
Kayne Anderson	Kayne Anderson Capital Advisors, L.P.
KMP	Kinder Morgan Energy Partners, L.P.
LDH	LDH Energy Asset Holdings LLC
LIBOR	London Interbank Offered Rate
Lone Star	Lone Star NGL LLC, a joint venture that is 70% owned by ETP and 30% owned by the Partnership
LTIP	Long-Term Incentive Plan
MBbls	One thousand barrels
MEP	Midcontinent Express Pipeline LLC
MLP	Master Limited Partnership
MMbtu	One million BTUs
MMcf	One million cubic feet
MQD	Minimum Quarterly Distribution ($0.35 per common unit)
NGA	Natural Gas Act of 1938
NGLs	Natural gas liquids, including ethane, propane, normal butane, iso butane and natural gasoline
NGPA	Natural Gas Policy Act of 1978
NGPSA	Natural Gas Pipeline Safety Act of 1968, as amended
NPDES	National Pollutant Discharge Elimination System
NYMEX	New York Mercantile Exchange
NASDAQ	NASDAQ Global Select Market
NYSE	New York Stock Exchange
OSHA	Occupational Safety and Health Act
Partnership	Regency Energy Partners LP
PHMSA	DOT's Pipeline and Hazardous Material Safety Administration
PTO	Paid time off
Ranch JV	Ranch Westex JV LLC, a joint venture that is 1/3 owned by the Partnership, 1/3 owned by APM and 1/3 owned by CM
RCRA	Resource Conservation and Recovery Act
Regency HIG	Regency Haynesville Intrastate Gas LLC, a wholly-owned subsidiary of the Partnership
RFS	Regency Field Services LLC, a wholly-owned subsidiary of the Partnership
RGS	Regency Gas Services LP, a wholly-owned subsidiary of the Partnership
RIG	Regency Intrastate Gas LP
RIGS	Regency Intrastate Gas System
SEC	Securities and Exchange Commission
Series A Preferred Units	Series A convertible redeemable preferred units
Services Co.	ETE Services Company, LLC
TCEQ	Texas Commission on Environmental Quality
TRRC	Texas Railroad Commission
WTI	West Texas Intermediate Crude
Zephyr	Zephyr Gas Services LLC, a wholly-owned subsidiary of the Partnership

iii

Cautionary Statement about Forward-Looking Statements

Certain matters discussed in this report include “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. Statements using words such as “anticipate,” “believe,” “intend,” “project,” “plan,” “expect,” “continue,” “estimate,” “goal,” “forecast,” “may” or similar expressions help identify forward-looking statements. Although we believe our forward-looking statements are based on reasonable assumptions and current expectations and projections about future events, we cannot give assurances that such expectations will prove to be correct. Forward-looking statements are subject to a variety of risks, uncertainties and assumptions, including without limitation the following:

• volatility in the price of oil, natural gas and NGLs;

• declines in the credit markets and the availability of credit for us as well as for producers connected to our pipelines and our gathering and processing facilities, and for customers of our contract compression and contract treating businesses;

• the level of creditworthiness of, and performance by, our counterparties and customers;

• our access to capital to fund organic growth projects and acquisitions, and our ability to obtain debt or equity financing on satisfactory terms;

• our use of derivative financial instruments to hedge commodity and interest rate risks;

• the amount of collateral required to be posted from time-to-time in our transactions;

• changes in commodity prices, interest rates and demand for our services;

• changes in laws and regulations impacting the midstream sector of the natural gas industry, including those that relate to climate change and environmental protection and safety;

• weather and other natural phenomena;

• industry changes including the impact of consolidations and changes in competition;

• regulation of transportation rates on our natural gas pipelines;

• our ability to obtain indemnification related to cleanup liabilities and to clean up any hazardous materials release on satisfactory terms;

• our ability to obtain required approvals for construction or modernization of our facilities and the timing of production from such facilities; and

• the effect of accounting pronouncements issued periodically by accounting standard setting boards.

If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may differ materially from those anticipated, estimated, projected or expected.

Other factors that could cause our actual results to differ from our projected results are discussed in Item 1A of this annual report.

Each forward-looking statement speaks only as of the date of the particular statement and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

iv

Part I

Item 1. Business

OVERVIEW

We are a growth-oriented publicly-traded Delaware limited partnership formed in 2005 engaged in the gathering and processing, contract compression, treating and transportation of natural gas and the transportation, fractionation and storage of NGLs. We focus on providing midstream services in some of the most prolific natural gas producing regions in the United States, including the Eagle Ford, Haynesville, Barnett, Fayetteville, Marcellus, Bone Spring, and Avalon shales as well as the Permian Delaware basin and the mid-continent region. Our assets are primarily located in Texas, Louisiana, Arkansas, Pennsylvania, California, Mississippi, Alabama, West Virginia and the mid-continent region of the United States, which includes Kansas, Colorado and Oklahoma.

We divide our operations into five business segments:

• Gathering and Processing. We provide “wellhead-to-market” services to producers of natural gas, which include transporting raw natural gas from the wellhead through gathering systems, processing raw natural gas to separate NGLs and selling or delivering the pipeline-quality natural gas and NGLs to various markets and pipeline systems.

• Joint Ventures. We own investments in four joint ventures:

◦ a 49.99% general partner interest in HPC, which owns RIGS, a 450-mile intrastate pipeline that delivers natural gas from northwest Louisiana to downstream pipelines and markets;

◦ a 50% membership interest in MEP, which owns an interstate natural gas pipeline with approximately 500 miles stretching from southeast Oklahoma through northeast Texas, northern Louisiana and central Mississippi to an interconnect with the Transcontinental Gas Pipe Line system in Butler, Alabama;

◦ a 30% membership interest in Lone Star, an entity owning a diverse set of midstream energy assets including NGL pipelines, storage, fractionation and processing facilities located in the states of Texas, Mississippi and Louisiana; and

◦ a 33.33% membership interest in Ranch JV, which, upon completion of construction in 2012, will process natural gas delivered from the NGLs-rich Bone Spring and Avalon shale formations in west Texas.

• Contract Compression. We own and operate a fleet of compressors used to provide turn-key natural gas compression services for customer specific systems.

• Contract Treating. We own and operate a fleet of equipment used to provide treating services, such as carbon dioxide and hydrogen sulfide removal, natural gas cooling, dehydration and BTU management, to natural gas producers and midstream pipeline companies.

• Corporate and Others. Our Corporate and Others segment comprises a small regulated pipeline and our corporate offices.

See Note 16 in the Notes to our Consolidated Financial Statements for additional financial information about our segments.

1

The following map depicts the geographic areas of our operations:

2

ORGANIZATIONAL STRUCTURE

The chart below depicts our organizational and ownership structure as of December 31, 2011:

INDUSTRY OVERVIEW

General. The midstream natural gas industry is the link between exploration and production of raw natural gas and the delivery of its components to end-user markets. It consists of natural gas gathering, compression, dehydration, processing, amine treating, fractionation and transportation. Raw natural gas produced from the wellhead is gathered and often delivered to a plant located near the production, where it is treated, dehydrated and/or processed. Natural gas processing involves the separation of raw natural gas into pipeline quality natural gas, principally methane and mixed NGLs. Natural gas treating entails the removal of impurities, such as water, sulfur compounds, carbon dioxide and nitrogen. Pipeline-quality natural gas is delivered by interstate and intrastate pipelines to markets. Mixed NGLs are typically transported via NGL pipelines or by truck to fractionators, which separate the NGLs into their components, such as ethane, propane, normal butane, isobutane and natural gasoline. The NGL components are then sold to end users.

Natural Gas Gathering. A gathering system typically consists of a network of small diameter pipelines and, if necessary, a compression system which together collects natural gas from points near producing wells and transports it to processing or treating plants or larger diameter pipelines for further transportation.

Compression. Ideally designed gathering systems are operated at pressures that maximize the total throughput volumes from all connected wells. Natural gas compression is a mechanical process in which a volume of gas at a lower pressure is boosted, or compressed, to a desired higher pressure, allowing the gas to flow into a higher pressure downstream pipeline to be transported to market. Since natural gas wells produce gas at progressively lower field pressures as they age, this raw natural gas must be compressed to deliver the remaining production at higher pressures in the existing connected gathering system. This field compression is typically used to lower the suction (entry) pressure, while maintaining or increasing the discharge (exit) pressure to the gathering system which allows the well production to flow at a lower receipt pressure while providing sufficient pressure to deliver gas into a higher pressure downstream pipeline.

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Dehydration. Dehydration removes water from the natural gas stream, which can form ice when combined with natural gas and cause corrosion when combined with carbon dioxide or hydrogen sulfide.

Processing. Natural gas processing involves the separation of natural gas into pipeline quality natural gas and a mixed NGL stream. The principal component of natural gas is methane, but most natural gas also contains varying amounts of heavier hydrocarbon components, or NGLs. Natural gas is described as lean or rich depending on its content of NGLs. Most natural gas produced by a well is not suitable for long-haul pipeline transportation or commercial use because it contains NGLs and impurities. Removal and separation of individual hydrocarbons by processing is possible because of differences in weight, boiling point, vapor pressure and other physical characteristics.

Amine Treating. The amine treating process involves a continuous circulation of a liquid chemical called amine that physically contacts with the natural gas. Amine has a chemical affinity for hydrogen sulfide and carbon dioxide that allows it to absorb these impurities from the gas. After mixing in the contact vessel, the gas and amine are separated, and the impurities are removed from the amine by heating. The treating plants are sized according to the amine circulation rate in terms of GPM.

Fractionation. NGL fractionation facilities separate mixed NGL streams into discrete NGL products: ethane, propane, normal butane, isobutane and natural gasoline. 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. Propane is used both as a petrochemical feedstock in the production of propylene and as a heating fuel, an engine fuel and an industrial fuel. Normal butane is used as a petrochemical feedstock in the production of butadiene (a key ingredient in synthetic rubber) and as a blend stock for motor gasoline. Isobutane is typically fractionated from mixed butane (a stream of normal butane and isobutane in solution), principally for use in enhancing the octane content of motor gasoline. Natural gasoline, a mixture of pentanes and heavier hydrocarbons, is used primarily as motor gasoline blend stock or petrochemical feedstock.

Transportation. Natural gas transportation consists of moving pipeline-quality natural gas from gathering systems, processing or treating plants and other pipelines and delivering it to wholesalers, end users, local distribution companies and other pipelines.

Storage. Natural gas can be injected into underground storage facilities which are located near market centers that do not have a ready supply of locally produced natural gas.

INDUSTRY OUTLOOK

See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—General Trends and Outlook”.

GATHERING AND PROCESSING OPERATIONS

General. We operate gathering and processing assets in four geographic regions of the United States: north Louisiana, the mid-continent region of the United States, south Texas and west Texas. We contract with producers to gather raw natural gas from individual wells or central receipt points, which may have multiple wells behind them, located near our processing plants, treating facilities and/or gathering systems. Following the execution of a contract, we connect wells and central receipt points to our gathering lines through which the raw natural gas flows to a processing plant, treating facility or directly to interstate or intrastate gas transportation pipelines. At our processing plants and treating facilities, we remove impurities from the raw natural gas stream and extract the NGLs. We also perform a producer service function, whereby we purchase natural gas from producers at gathering systems and plants and sell this gas at downstream outlets.

All raw natural gas flowing through our gathering and processing facilities is supplied under gathering and processing contracts having terms ranging from month-to-month to the life of the oil and gas lease. For a description of our contracts, read “—Our Contracts” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Operations.”

The pipeline-quality natural gas remaining after separation of NGLs through processing is either returned to the producer or sold, for our own account or for the account of the producer, at the tailgates of our processing plants for delivery to interstate or intrastate gas transportation pipelines.

4

The following table sets forth information regarding our gathering systems and processing plants as of December 31, 2011:

Region	Pipeline Length (Miles)	Plants	Compression (Horsepower)
North Louisiana	442	6	116,734
South Texas	565	2	82,133
West Texas	806	1	50,945
Mid-Continent	3,470	1	30,060
Total	5,283	10	279,872

North Louisiana Region. Our north Louisiana assets gather, compress, treat and dehydrate natural gas in five Parishes (Claiborne, Union, DeSoto, Lincoln and Ouachita) of north Louisiana and Shelby County, Texas. Our assets also include two cryogenic natural gas processing facilities, a refrigeration plant located in Bossier Parish, a conditioning plant located in Webster Parish, an amine treating plant in DeSoto Parish, and an amine treating plant in Lincoln Parish.

Through the gathering and processing systems described above and their interconnections with RIGS in north Louisiana described in “Joint Venture Operations,” we offer producers wellhead-to-market services, including natural gas gathering, compression, processing, treating and transportation.

South Texas Region. Our south Texas assets gather, compress, treat and dehydrate natural gas in LaSalle, Webb, Karnes, Atascosa, McMullen, Frio and Dimmitt counties. Some of the natural gas produced in this region can have significant quantities of hydrogen sulfide and carbon dioxide that require treating to remove these impurities. The pipeline systems that gather this gas are connected to third-party processing plants and our treating facilities that include an acid gas reinjection well located in McMullen County, Texas.

The natural gas supply for our south Texas gathering systems is derived from a combination of natural gas wells located in a mature basin that generally have long lives and predictable gas flow rates and the NGLs-rich Eagle Ford shale formation, which lies directly under our existing south Texas gathering system infrastructure.

One of our treating plants consists of inlet gas compression, a 60 MMcf/d amine treating unit, a 55 MMcf/d amine treating unit and a 40 ton (per day) liquid sulfur recovery unit. This plant removes hydrogen sulfide from the natural gas stream, recovers condensate, delivers pipeline quality gas at the plant outlet and reinjects acid gas. In January 2012, we completed an expansion of the treating plant, adding an incremental 20 MMcf/d of treating capacity to the facility.

In June 2011, we entered into agreements to provide gas and condensate gathering services for a producer in the Eagle Ford shale and to construct facilities to perform these services, including a wellhead gathering system, at an expected cost of approximately $450 million. The expansion will be owned and operated by us and will connect with our existing gathering system. The expansion is scheduled to be completed in phases by 2014. Upon its completion, our entire south Texas system will be capable of gathering, compressing, treating and transporting up to 1 Bcf/d of natural gas and 26,500 Bbls/d of condensate to downstream outlets.

We own a 60% interest in ELG that includes a treating plant in Atascosa County with a 500 GPM amine treater, pipeline interconnect facilities and approximately 13 miles of ten inch diameter pipeline. Talisman Energy USA Inc. and Statoil Texas Onshore Properties LP own the remaining 40% interest. We operate this plant and the pipeline for the joint venture while our joint venture partner operates a lean gas gathering system in the Edwards Lime natural gas trend that delivers to this system.

West Texas Region. Our west Texas gathering system assets offer wellhead-to-market services to producers in Ward, Winkler, Reeves, and Pecos counties which surround the Waha Hub, one of Texas' major NGLs-rich natural gas market areas. As a result of the proximity of our system to the Waha Hub, the Waha gathering system has a variety of market outlets for the natural gas that we gather and process, including several major interstate and intrastate pipelines serving California, the mid-continent region of the United States and Texas natural gas markets. The NGL market outlets include Lone Star's west Texas NGL pipeline.

We offer producers four different levels of natural gas compression on the Waha gathering system, as compared to the two levels typically offered in the industry. By offering multiple levels of compression, our gathering system is often more cost-effective for our producers, since the producer is typically not required to pay for a level of compression that is higher than the level they require.

The Waha processing plant is a cryogenic natural gas processing plant that processes raw natural gas gathered in the Waha gathering system. The Waha processing plant also includes an amine treating facility, which removes carbon dioxide and hydrogen sulfide from raw natural gas gathered before moving the natural gas to the processing plant. The acid gas is injected underground.

5

Mid-Continent Region. Our mid-continent region includes natural gas gathering systems located primarily in Kansas and Oklahoma. Our mid-continent gathering assets are extensive systems that gather, compress and dehydrate low-pressure gas from approximately 1,500 wells. These systems are geographically concentrated, with each central facility located within 90 miles of the others. We operate our mid-continent gathering systems at low pressures to maximize the total throughput volumes from the connected wells. Wellhead pressures are therefore adequate to allow for flow of natural gas into the gathering lines without the cost of wellhead compression.

We also own the Hugoton gathering system that has approximately 1,875 miles of pipeline extending over nine counties in Kansas and Oklahoma. This system is operated by a third party.

Our mid-continent systems are located in two of the largest and most prolific natural gas producing regions in the United States, the Hugoton Basin in southwest Kansas and the Anadarko Basin in western Oklahoma. These mature basins have continued to provide generally long-lived, predictable production volume.

JOINT VENTURES OPERATIONS

We own a 49.99% general partner interest in HPC, which owns RIGS, a 450-mile intrastate pipeline that delivers natural gas from northwest Louisiana to downstream pipelines and markets.

We own a 50% membership interest in MEP, a joint venture entity operated by an affiliate of KMP. MEP owns an interstate natural gas pipeline with approximately 500 miles stretching from southeast Oklahoma through northeast Texas, northern Louisiana and central Mississippi to an interconnect with the Transcontinental Gas Pipe Line system in Butler, Alabama.

We own a 30% membership interest in Lone Star, an entity owning a diverse set of midstream energy assets including NGL pipelines, storage, fractionation and processing facilities located in Texas, Mississippi and Louisiana.

We own a 33.33% membership interest in Ranch JV, which, upon completion of construction in the 4th quarter of 2012, will process natural gas delivered from the NGLs-rich Bone Spring and Avalon shale formations in west Texas.

CONTRACT COMPRESSION OPERATIONS

The natural gas contract compression segment services include designing, sourcing, owning, installing, operating, servicing, repairing and maintaining compressors and related equipment for which we guarantee our customers 98% mechanical availability for land installations and 96% mechanical availability for over-water installations. We focus on meeting the complex requirements of field-wide compression applications, as opposed to targeting the compression needs of individual wells within a field. These field-wide applications include compression for natural gas gathering and natural gas processing. We believe that we improve the stability of our cash flow by focusing on field-wide compression applications because such applications generally involve long-term installations of multiple large horsepower compression units. Our contract compression operations are primarily located in Texas, Louisiana, Arkansas, Pennsylvania and California.

CONTRACT TREATING OPERATIONS

We own and operate a fleet of equipment used to provide treating services, such as carbon dioxide and hydrogen sulfide removal, natural gas cooling, dehydration and BTU management, to natural gas producers and midstream pipeline companies. Our contract treating operations are primarily located in Texas, Louisiana and Arkansas.

CORPORATE AND OTHERS OPERATIONS

Our Corporate and Others segment comprises a small interstate natural gas pipeline and our corporate offices. The interstate natural gas pipeline consists of 10 miles of pipeline that extends from Harrison County, Texas to Caddo Parish, Louisiana.

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OUR CONTRACTS

The table below provides the margin by product in percentages for the years ended December 31, 2011 and 2010 for all of our operating segments including our proportional shares in our unconsolidated affiliates:

Margin by Product	2011		2010
Net Fee	83	%	76	%
NGLs	9		13
Gas	5		5
Condensate	3		6
Total	100	%	100	%

Gathering and Processing Contracts. We contract with producers to gather raw natural gas from individual wells or central receipt points located near our gathering systems and processing plants. Following the execution of a contract with the producer, we connect the producer's wells or central receipt points to our gathering lines through which the natural gas is delivered to a processing plant owned and operated by us or a third party. We obtain supplies of raw natural gas for our gathering and processing facilities under contracts having terms ranging from month-to-month to life of the lease. We categorize our processing contracts in increasing order of commodity price risk as fee-based, percentage-of-proceeds or keep-whole contracts. The following is a summary of our most common contractual arrangements:

• Fee-Based Arrangements. Under these arrangements, we are generally paid a fixed cash fee for performing the gathering and processing service. This fee is directly related to the volume of natural gas that flows through our systems and is not directly dependent on commodity prices. A sustained decline in commodity prices, however, could result in a decline in volumes and, thus, a decrease in our fee revenues. These arrangements provide stable cash flows, but minimal, if any, upside in higher commodity price environments.

• Percent-of-Proceeds Arrangements. Under these arrangements, we generally gather raw natural gas from producers at the wellhead or central receipt points, transport it through our gathering system, process it and sell the processed gas and NGLs at prices based on published index prices. In this type of arrangement, we retain the sales proceeds less amounts remitted to producers and the retained sales proceeds constitute our margin. These arrangements provide upside in high commodity price environments, but result in lower margins in low commodity price environments. Under these arrangements, our margins typically cannot be negative. The price paid to producers is based on an agreed percentage of one of the following: (1) the actual sale proceeds; (2) the proceeds based on an index price; or (3) the proceeds from the sale of processed gas or NGLs or both. Under this type of arrangement, our margin correlates directly with the prices of natural gas and NGLs (although there is often a fee-based component to these contracts in addition to the commodity sensitive component).

• Keep-Whole Arrangements. Under these arrangements, we process raw natural gas to extract NGLs and pay to the producer the full thermal equivalent volume of raw natural gas received from the producer in processed gas or its cash equivalent. We are generally entitled to retain the processed NGLs and to sell them for our account. Accordingly, our margin is a function of the difference between the value of the NGLs produced and the cost of the processed gas used to replace the thermal equivalent value of those NGLs. The profitability of these arrangements is subject not only to the commodity price risk of natural gas and NGLs, but also to the price of natural gas relative to NGL prices. These arrangements can provide large profit margins in favorable commodity price environments, but also can be subject to losses if the cost of natural gas exceeds the value of its thermal equivalent of NGLs. Many of our keep-whole contracts include provisions that reduce our commodity price exposure, including (1) embedded discounts to the applicable natural gas index price under which we may reimburse the producer an amount in cash for the thermal equivalent volume of raw natural gas acquired from the producer, (2) fixed cash fees for ancillary services, such as gathering, treating, and compression, or (3) the ability to bypass processing in unfavorable price environments.

We also perform a producer service function. We purchase natural gas from producers or gas marketers at receipt points or plant tailgates, including points on HPC's RIGS, and we sell the natural gas to other market participants, often after transporting the gas to delivery points on HPC's RIGS or other transportation pipeline systems.

Joint Ventures Contracts. We own a 49.99% general partner interest in HPC, a 50% membership interest in MEP and a 30% membership interest in Lone Star. HPC and MEP, through their respective pipeline systems, provide natural gas transportation services pursuant to contracts with natural gas shippers. These contracts are primarily fee-based. HPC's long-term firm transportation contracts will expire between 2012 and 2022; and MEP's long-term firm service agreements will expire between 2012 and 2021.

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Lone Star owns and operates approximately 1,400 miles of NGL pipelines, two cryogenic refinery off-gas processing plants, one fractionation facility, and two NGL storage facilities with aggregate working storage capacity of approximately 47 million Bbls. Lone Star also has a non-operating interest in an additional cryogenic processing plant. Revenue is principally generated from fees charged to customers under dedicated contracts, take-or-pay contracts and commodity pricing. Under a dedicated contract, the customer agrees to deliver the total output from particular processing plants that are connected to the NGL pipeline. Take-or-pay contracts have minimum throughput commitments requiring the customer to pay regardless of whether a fixed volume is transported. Transportation fees are market-based, negotiated with customers and competitive with regional regulated pipelines.

Compression Contracts. We generally enter into a new contract with respect to each distinct application for which we will provide contract compression services. Our compression contracts typically have an initial term between one and five years, after which the contract continues on a month-to-month basis until renewal or cancellation. Our customers generally pay a fixed monthly fee, or, in rare cases, a fee based on the volume of natural gas actually compressed. We are not responsible for acts of force majeure and our customers are generally required to pay our monthly fee for fixed fee contracts, or a minimum fee for throughput contracts, even during periods of limited or disrupted production. We are generally responsible for the costs and expenses associated with operation and maintenance of our compression equipment, such as providing necessary lubricants, although certain fees and expenses are the responsibility of the customers under the terms of their contracts. For example, all fuel gas is provided by our customers without cost to us, and in many cases customers are required to provide all water and electricity. We also are reimbursed by our customers for certain ancillary expenses such as trucking, crane and installation labor costs, depending on the terms agreed to in a particular contract.

Treating Contracts. Our treating contracts are application specific, having an initial term between one and three years, after which the contract continues on a month-to-month basis. Our customers generally pay a fixed monthly fee that not only includes the amine plant, but may also include additional equipment as required by the application. We are not responsible for acts of force majeure and our customers are generally required to pay our monthly fee even during periods of limited or disrupted production. We are generally responsible for the costs and expenses associated with the operation and maintenance of our treating equipment, such as providing the necessary makeup fluids, filters and charcoal. However, our customers are typically responsible for all fuel, gas and electricity without cost to us. Our fees include costs for all mobilization, installation, commissioning and startup.

COMPETITION

Gathering and Processing. We face strong competition in each region in acquiring new gas supplies. Our competitors in acquiring new gas supplies and in processing new natural gas supplies include major integrated oil companies, major interstate and intrastate pipelines and other natural gas gatherers that gather, process and market natural gas. Competition for natural gas supplies is primarily based on the reputation, efficiency and reliability of the gatherer and the pricing arrangements offered by the gatherer.

Many of our competitors have capital resources and control supplies of natural gas substantially greater than ours. Our major competitors for gathering and related services in each region include:

• North Louisiana: CenterPoint Energy Field Services and DCP Midstream’s PELICO Pipeline, LLC (Pelico), ETP, KMP and Chesapeake Midstream Partners, L.P.;

• South Texas: Enterprise Products Partners LP, DCP Midstream Partners, L.P, KMP, ETP and Copano Energy, L.L.C;

• West Texas: Southern Union Gas Services, Enterprise Products Partners LP and Targa Resources Partners L.P.; and

• Mid-Continent: DCP Midstream Partners, L.P., ONEOK Partners L.P. and Penn Virginia Resource Partners, L.P.

Joint Ventures. We own a 49.99% general partner interest in HPC, which owns RIGS, a 450-mile intrastate pipeline that delivers natural gas from northwest Louisiana to downstream pipelines and markets. Competitors in natural gas transportation differentiate themselves by the price of transportation, the nature of the markets accessible from a transportation pipeline and the type of service provided. HPC's major competitors in the natural gas transportation business are DCP Midstream Partners, L.P., CenterPoint Energy Transmission, Gulf South Pipeline, L.P., Texas Gas Transmission, LLC, ETP and Enterprise Products Partners LP.

We own a 50% membership interest in MEP, which owns the approximate 500-mile Midcontinent Express natural gas pipeline system. An affiliate of KMP owns a 50% interest in MEP and acts as the operator of MEP. Capacity on the MEP pipeline system is 99% contracted under long-term firm service agreements. The majority of volume is contracted to producers moving supply from the Barnett shale and Oklahoma supply basins. These agreements provide the pipeline with fixed monthly reservation revenues for the primary term of such contracts. Although there are other pipeline competitors providing transportation from these supply basins, the MEP pipeline system was designed and constructed to realize economies of scale and offers its shippers competitive fuel rates and variable costs to transport gas supplies from these midcontinent supply areas to pipelines serving Eastern markets. MEP's competitors include Gulf Crossing Pipeline, Centerpoint Energy Gas Transmission and Natural Gas Pipeline Co. of America.

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We own a 30% membership interest in Lone Star which owns and operates approximately 1,400 miles of NGL pipelines, two cryogenic refinery off-gas processing plants, one fractionation facility, two NGL storage facilities and has a non-operating interest in an additional cryogenic processing plant. In markets served by its NGL pipelines, Lone Star competes with other pipeline companies and barge, rail and truck fleet operations. Lone Star also faces competition with other storage facilities based on fees charged and the ability to receive and distribute the customer's products.

Contract Compression. We believe that the superior mechanical availability of our standardized compressor fleet is the primary basis on which we compete and a significant distinguishing factor from our competition. All of our competitors attempt to compete on the basis of price. We believe our pricing is competitive because of the superior mechanical availability we deliver, the quality of our compression units, as well as the technical expertise we provide to our customers. We believe our focus on addressing customers' more complex natural gas compression needs related primarily to field-wide compression applications differentiates us from many of our competitors who target smaller horsepower projects related to individual wellhead applications. The natural gas contract compression services business is highly competitive. We face competition from large national and multinational companies with greater financial resources and, on a regional basis, from numerous smaller companies. Our main competitors in the natural gas contract compression business, based on horsepower, are Exterran Holdings, Inc., Compressor Systems, Inc., USA Compression, Valerus Compression Services LP, and J-W Energy Company.

Contract Treating. The natural gas treating business is highly competitive. We face competition from large national and multinational companies with greater financial resources and, on a regional basis, from numerous smaller companies. Our main competitors in the natural gas treating business are KMP, Valerus Compression Services LP, TransTex Gas Services, LP, Cardinal Midstream LLC, SouthTex Treaters, Interstate Treating Inc., Exterran Holdings, Inc., Thomas Russell Co. and Spartan Energy Group.

RISK MANAGEMENT

To manage commodity price and interest rate risks, we have implemented a risk management program under which we seek to:

• match sales prices of commodities (especially NGLs) with purchases under our contracts;

• manage our portfolio of contracts to reduce commodity price risk;

• optimize our portfolio by active monitoring of basis, swing, and fractionation spread exposure; and

• hedge a portion of our exposure to commodity prices.

As a result of our gathering and processing contract portfolio, we derive a portion of our earnings from a long position in NGLs, natural gas and condensate, resulting from the purchase of natural gas for our account or from the payment of processing charges in kind. This long position is exposed to commodity price fluctuations in both the NGLs and natural gas markets. Operationally, we mitigate this price risk by generally purchasing natural gas and NGLs at prices derived from published indices, rather than at a contractually fixed price and by selling natural gas and NGLs under similar pricing mechanisms. In addition, we optimize the operations of our processing facilities on a daily basis, for example by rejecting ethane in processing when recovery of ethane as an NGL is uneconomical. We hedge this commodity price risk by entering into a series of swap contracts or put option contracts for individual NGLs, natural gas and WTI. Our hedging positions are maintained within limits established by the Audit and Risk Committee of the Board of Directors. Read “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” for information regarding the status of these contracts. As a matter of policy, we do not acquire forward contracts or derivative products for the purpose of speculating on price changes.

Neither our contract compression business nor our contract treating business has direct exposure to natural gas commodity price risk because we do not take title to the natural gas we compress or treat and because the natural gas we use as fuel for our compressors is supplied by our customers or treating units without cost to us.

REGULATION

Industry Regulation

Intrastate Natural Gas Pipeline Regulation. HPC owns RIGS, an intrastate pipeline regulated by the Louisiana Department of Natural Resources, Office of Conservation (DNR). The DNR is generally responsible for regulating intrastate pipelines and gathering facilities in Louisiana and has authority to review and authorize natural gas transportation transactions and the construction, acquisition, abandonment and interconnection of physical facilities. RIGS transports interstate natural gas in Louisiana for many of its shippers pursuant to Section 311 of the NGPA. To the extent that RIGS transports natural gas in interstate service, its rates and terms and conditions of service are subject to the jurisdiction of FERC, including its non-discrimination requirements. FERC has substantial enforcement authority to impose administrative, civil and criminal penalties of up to $1 million per day per violation and to order the disgorgement of unjust profits for non-compliance.

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Under Section 311 of the NGPA, rates charged for transportation services must be fair and equitable. FERC approved RIGS' NGPA Section 311 rates as fair and equitable effective February 1, 2010, under a settlement. As part of the settlement and consistent with FERC policy, RIGS is required to justify its current rates or propose new rates every five years. Accordingly, RIGS must make a rate filing on or before February 1, 2015. At that that time, RIGS' rates will be in effect, but subject to refund with interest until FERC has determined that the rates are fair and equitable.

FERC continually proposes and implements new rules and regulations affecting Section 311 transportation. FERC Order No. 735 became effective as of April 1, 2010, and required the public disclosure of the primary commercial terms of RIGS' contracts through a quarterly transactional report filing. Such regulations increase administration costs for HPC and require the public disclosure of commercial information that was previously not public for intrastate pipelines. However, since the new regulations were required of all intrastate pipelines providing Section 311 service, including our competitors, we do not believe the new regulations place RIGS at a competitive disadvantage.

On October 21, 2010, the FERC issued a Notice of Inquiry regarding the applicability of the FERC's buy-sell rules to intrastate pipelines that provide Section 311 transportation service, including whether the FERC should impose capacity release requirements on such pipelines that offer firm transportation service. FERC's interstate pipeline rules prohibit shippers on interstate pipelines from buying gas from a party at one point, transporting that gas using its interstate pipeline capacity, and re-selling the same quantity of gas to the same party at a different point (an illegal “buy-sell” transaction). The intrastate pipeline market has not been subject to such rules in the past and the FERC, through the notice of inquiry, asked market participants to comment on whether the rules should apply to shippers on Section 311 pipelines. The notice of inquiry also asked commenters to indicate whether some form of capacity release requirements should be imposed on intrastate pipelines providing firm Section 311 transportation service. We cannot predict the outcome of this notice of inquiry, but it could lead to a proposed rulemaking that would impose greater regulatory requirements on intrastate pipelines that provide Section 311 services, including RIGS.

Under FERC Order No. 720, certain major non-interstate pipelines, including gathering pipelines, were required to post on their internet websites receipt and delivery point capacities and scheduled flow information on a daily basis. In October 2011, the United States Court of Appeals for the Fifth Circuit vacated FERC Order No. 720 as it applied to non-interstate pipelines. The Court of Appeals found that FERC had no authority under the Natural Gas Act to promulgate such rules.

Interstate Natural Gas Pipeline Regulation. FERC also has broad regulatory authority over the business and operations of interstate natural gas pipelines. Under the NGA, rates charged for interstate natural gas transmission must be just and reasonable. Gulf States and MEP hold FERC-approved tariffs setting forth cost-based rates and terms and conditions of service for shippers wishing to secure capacity for interstate transportation service. Rates charged on MEP are largely governed by long-term negotiated rate agreements, an arrangement approved by FERC in its July 25, 2008 order granting MEP the certificate of public convenience and necessity to build, own and operate these facilities. MEP and Gulf States are NGA-jurisdictional interstate pipelines subject to FERC’s broad regulatory oversight. FERC’s authority extends to:

• rates and charges for natural gas transportation and related services;

• certification and construction of new facilities;

• extension or abandonment of services and facilities;

• maintenance of accounts and records;

• relationships between the pipeline and its energy affiliates;

• terms and conditions of service;

• depreciation and amortization policies;

• accounting rules for ratemaking purposes;

• acquisition and disposition of facilities;

• initiation and discontinuation of service;

• prevention of market manipulation in connection with interstate sales, purchase or transportation of natural gas; and

• information posting requirements.

FERC regularly conducts audits of interstate pipelines and has multiple means to receive complaints of alleged violations of its rules, including anonymous complaints through a toll-free hotline. Any failure to comply with the laws and regulations governing interstate transportation service could result in the imposition of significant administrative, civil and criminal penalties. FERC has authority to impose civil penalties of up to $1 million per day per violation.

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Gathering Pipeline Regulation. Section 1(b) of the NGA exempts natural gas gathering facilities from FERC jurisdiction under the NGA. We own a number of natural gas pipelines that we believe meet the traditional tests that FERC has used to establish a pipeline’s status as a gatherer not subject to FERC’s interstate pipeline jurisdiction. The distinction between FERC-regulated transmission facilities and federally unregulated gathering facilities is the subject of substantial, on-going litigation. As a result, the classification and regulation of one or more of our gathering systems may be subject to change based on future determinations by FERC, the courts or the U.S. Congress.

State regulation of gathering facilities generally includes various safety, environmental and, in some circumstances, nondiscriminatory take requirements and, in other instances, complaint-based rate regulation. We are subject to state ratable take and common purchaser statutes. The ratable take statutes generally require gatherers to take, without undue discrimination, natural gas production that may be tendered to the gatherer for handling. Similarly, common purchaser statutes generally require gatherers that purchase gas to purchase without undue discrimination as to source of supply or producer. These statutes are designed to prohibit discrimination in favor of one producer over another or one source of supply over another. These statutes have the effect of restricting our right as an owner of gathering facilities to decide with whom we contract to purchase or gather natural gas.

In addition, many of the producing states have adopted some form of complaint-based regulation that generally allows natural gas producers and shippers to file complaints with state regulators in an effort to resolve grievances relating to natural gas gathering access and rate discrimination. Our gathering operations could be adversely affected should they be subject in the future to the application of state or federal regulation of rates and services. Our gathering operations also may be subject to safety and operational regulations relating to the design, installation, testing, construction, operation, replacement and management of gathering facilities. Additional rules, ordinances and legislation pertaining to these matters may be considered or adopted from time to time at either the federal, state or local level. We cannot predict what effect, if any, such changes might have on our operations, but we and our competitors could be required to incur additional capital expenditures and increased costs depending on future legislative and regulatory changes.

Regulation of NGL and Crude Oil Transportation. We have a pipeline in Louisiana that transports NGLs in interstate commerce pursuant to a FERC-approved tariff. Under the ICA, the Energy Policy Act of 1992, and rules and orders promulgated thereunder, the transportation tariff is required to be just and reasonable and not unduly discriminatory or confer any undue preference. FERC has established an indexing system of transportation rates for oil, NGLs and other products that allows for an annual inflation based increase in the cost of transporting these liquids to shipper. Any failure on our part to comply with the laws and regulations governing interstate transmission of NGLs could result in the imposition of administrative, civil and criminal penalties and could have a material adverse effect on our results of operations.

Lone Star has pipelines that transport NGLs in intrastate commerce pursuant to state common carrier regulation. We also have or are constructing pipelines that are subject to state common carrier regulation for the transportation of NGLs, crude oil or condensate. Under state common carrier regulation, pipelines must charge rates that are non-discriminatory and operate pursuant to a tariff.

Sales of Natural Gas and NGLs. Our ability to sell gas in interstate markets is subject to FERC authority and oversight. The price at which we buy and sell natural gas currently is not subject to federal regulation and, for the most part, is not subject to state regulation. The price at which we sell NGLs is not subject to state or federal regulation. However, with regard to our physical purchases and sales of these energy commodities, our gathering or transportation of these energy commodities, and any related hedging activities that we undertake, we are required to observe anti-market manipulation laws and related regulations enforced by FERC and/or the CFTC.

The prices at which we sell natural gas are affected by many competitive factors, including the availability, terms and cost of pipeline transportation. As noted above, the price and terms of access to pipeline transportation are subject to extensive federal and state regulation. FERC has also imposed new rules requiring wholesale purchasers and sellers of natural gas to report certain aggregated annual volume and other information beginning in 2009.

We also have firm and interruptible transportation contracts with interstate pipelines that are subject to FERC regulation. As a shipper on an interstate pipeline, we are subject to FERC requirements related to use of interstate capacity. Any failure on our part to comply with the FERC’s regulations or an interstate pipeline’s tariff could result in the imposition of administrative, civil and criminal penalties and the disgorgement of unjust profits.

Sales of crude oil, natural gas, condensate and NGLs are not currently regulated. Prices of these products are set by the market rather than by regulation.

Anti-Market Manipulation Requirements. Under the Energy Policy Act of 2005, FERC possesses regulatory oversight over natural gas markets, including the purchase, sale and transportation activities of non-interstate pipelines and other natural gas market participants. The CFTC also holds authority to monitor certain segments of the physical and futures energy commodities market

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pursuant to the Commodity Exchange Act. With regard to our physical purchases and sales of natural gas, NGLs and crude oil, our gathering (of natural gas) or transportation of these energy commodities, and any related hedging activities that we undertake, we are required to observe these anti- market manipulation laws and related regulations enforced by FERC and/or the CFTC. These agencies hold substantial enforcement authority, including the ability to assess civil penalties of up to $1 million per day per violation in connection with the sale, purchase or transportation of natural gas, to order disgorgement of profits and to recommend criminal penalties. Should we violate the anti-market manipulation laws and regulations, we could also be subject to related third party damage claims by, or among others, sellers, royalty owners and taxing authorities.

Anti-Terrorism Regulations. We may be subject to future anti-terrorism requirements of the DHS. The DHS has issued its National Infrastructure Protection Plan calling for broadened efforts to “reduce vulnerability, deter threats, and minimize the consequences of attacks and other incidents” as they relate to pipelines, processing facilities and other infrastructure. The precise parameters of DHS regulations and any related sector-specific requirements are not currently known, and there can be no guarantee that any final anti-terrorism rules that might be applicable to our facilities will not impose costs and administrative burdens on our operations.

Eminent Domain. Gas utilities, common carrier pipelines, intrastate pipelines and interstate pipelines typically have eminent domain authority granted by the state or federal government. In 2011, the Texas Supreme Court issued a decision impacting the ability of common carriers to acquire land through the use of eminent domain. The decision could require common carrier pipelines to prove “public use” separately in each condemnation proceeding along the entire route of a pipeline. Several parties have requested the court's reconsideration of the decision. The decision could impact our ability to acquire right-of-way using condemnation for the construction of new common carrier pipeline projects in the state of Texas.

Local Laws and Regulations. With the rapid expansion of natural gas development in shale plays, local governmental authorities are seeking to impose additional regulatory requirements on natural gas market participants, including producers, gatherers, and pipeline companies, which may result in additional cost burdens and permitting requirements for new and existing facilities.

Environmental Matters

General. Our operation of processing plants, pipelines and associated facilities, including compression, in connection with the gathering and processing of natural gas and the transportation of NGLs is subject to stringent and complex federal, state and local laws and regulations, including those governing, among other things, air emissions, wastewater discharges, the use, management and disposal of hazardous and nonhazardous materials and wastes, and the cleanup of contamination. Noncompliance with such laws and regulations, or incidents resulting in environmental releases, could cause us to incur substantial costs, penalties, fines and other criminal sanctions, third party claims for personal injury or property damage, investments to retrofit or upgrade our facilities and programs, or curtailment of operations. As with the industry generally, compliance with existing and anticipated environmental laws and regulations increases our overall cost of doing business, including our cost of planning, constructing and operating our plants, pipelines and other facilities. Included in our construction and operation costs are capital cost items necessary to maintain or upgrade our equipment and facilities to remain in compliance with environmental laws and regulations.

We have implemented procedures to ensure that all governmental environmental approvals for both existing operations and those under construction are updated as circumstances require. We believe that our operations and facilities are in substantial compliance with applicable environmental laws and regulations and that the cost of compliance with such laws and regulations will not have a material adverse effect on our business, results of operations and financial condition. We cannot be certain, however, that identification of presently unidentified conditions, more rigorous enforcement by regulatory agencies, enactment of more stringent laws and regulations or other unanticipated events will not arise in the future and give rise to material environmental liabilities that could have a material adverse effect on our business, financial condition or results of operations.

Hazardous Substances and Waste Materials. To a large extent, the environmental laws and regulations affecting our operations relate to the release of hazardous substances and waste materials into soils, groundwater and surface water and include measures to prevent, minimize or remediate contamination of the environment. These laws and regulations generally regulate the generation, storage, treatment, transportation and disposal of hazardous substances and waste materials and may require investigatory and remedial actions at sites where such material has been released or disposed. For example, CERCLA, also known as the “Superfund” law, and comparable state laws, impose liability without regard to fault or the legality of the original conduct on certain classes of persons that contributed to a release of a “hazardous substance” into the environment. These persons include the owner and operator of the site where a release occurred and companies that disposed or arranged for the disposal of the hazardous substance that has been released into the environment. Under CERCLA, these persons may be subject to joint and several liability, without regard to fault, for, among other things, the costs of investigating and remediating the hazardous substances that have been released into the environment, for damages to natural resources and for the costs of certain health studies. CERCLA and comparable state law also authorize the federal EPA, its state counterparts, and, in some instances, third parties to take actions in response to threats to the public health or the environment and to seek to recover from the responsible classes of persons the costs they incur. It is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly

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caused by hazardous substances or other pollutants released into the environment. Although “petroleum” as well as natural gas and NGLs are excluded from CERCLA's definition of a “hazardous substance,” in the course of our ordinary operations we generate wastes that may fall within that definition or that may be subject to other waste disposal laws and regulations. We may be responsible under CERCLA or state laws for all or part of the costs required to clean up sites at which such substances or wastes have been disposed. We have not received any notification that we may be potentially responsible for cleanup costs under CERCLA or comparable state laws.

We also generate both hazardous and nonhazardous wastes that are subject to requirements of the federal RCRA, and comparable state statutes. We are not currently required to comply with a substantial portion of the RCRA requirements at many of our facilities because the minimal quantities of hazardous wastes generated there make us subject to less stringent management standards. From time to time, the EPA has considered the adoption of stricter handling, storage and disposal standards for nonhazardous wastes, including crude oil and natural gas wastes. It is possible that some wastes generated by us that are currently classified as nonhazardous may in the future be designated as “hazardous wastes,” resulting in the wastes being subject to more rigorous and costly disposal requirements, or that the full complement of RCRA standards could be applied to facilities that generate lesser amounts of hazardous waste. Changes in applicable regulations may result in a material increase in our capital expenditures or plant operating and maintenance expense.

We currently own or lease sites that have been used over the years by prior owners and by us for natural gas gathering, processing and transportation. Solid waste disposal practices within the midstream gas industry have improved over the years with the passage and implementation of various environmental laws and regulations. Nevertheless, some hydrocarbons and wastes have been disposed of or released on or under various sites during the operating history of those facilities that are now owned or leased by us. Notwithstanding the possibility that these dispositions may have occurred during the ownership of these assets by others, these sites may be subject to CERCLA, RCRA and comparable state laws. Under these laws, we could be required to remove or remediate previously disposed wastes (including wastes disposed of or released by prior owners or operators) or contamination (including soil and groundwater contamination) or to prevent the migration of contamination.

Air Emissions. Our operations are subject to the federal Clean Air Act and comparable state laws and regulations. These laws and regulations regulate emissions of air pollutants from various industrial sources, including our processing plants, and also impose various monitoring and reporting requirements. Such laws and regulations may require that we obtain pre-approval for the construction or modification of certain projects or facilities, such as our processing plants and compression facilities, expected to produce air emissions or to result in the increase of existing air emissions, that we obtain and strictly comply with air permits containing various emissions and operational limitations, or that we utilize specific emission control technologies to limit emissions. We will be required to incur capital expenditures in the future for air pollution control equipment in connection with obtaining and maintaining operating permits and approvals for air emissions. In addition, our processing plants, pipelines and compression facilities are subject to increasingly stringent regulations, including regulations that require the installation of control technology or the implementation of work practices to control hazardous air pollutants. Moreover, the Clean Air Act requires an operating permit for major sources of emissions and this requirement applies to some of our facilities. We believe that our operations are in substantial compliance with the federal Clean Air Act and comparable state laws. The EPA and state agencies are continually proposing new rules and regulations that could impact our existing operations and the costs and timing of new infrastructure development. Specifically, EPA has recently proposed new source performance standards (NSPS) for the oil and gas source category. New Subpart OOOO would expand the NSPS oil and gas source category to include all segments of the oil and gas industry. It would impose new controls for emissions of volatile organic compounds (VOCs) on well completions, pneumatic devices, compressors, storage vessels and equipment leaks. In addition, EPA has also recently proposed revisions to Subparts HH and HHH that would further reduce emissions of hazardous air pollutants from storage tanks and tri-ethylene glycol dehydrators at major sources. If passed, these new regulations would significantly increase our cost of compliance.

On October 19, 2010, the EPA adopted new national emission standards for hazardous air pollutants for existing stationary spark ignition reciprocating internal combustion engines that are either located at area sources of hazardous air pollutant emissions or that have a site rating of less than or equal to 500 brake horsepower and are located at major sources of hazardous air pollutant emissions. All engines subject to these “Quad Z” regulations are required to comply by October 19, 2013. Many of our facilities, including our leased compressors are impacted by these new rules. We will incur increased costs resulting from the replacement of existing equipment to bring engines into compliance with the new emission requirements. Petitions have been filed in the court of appeals for review and reconsideration of the new rules, but we cannot predict the outcome of those proceedings.

2008 Ozone NAAQS Designations. EPA Region 6 is proposing to modify the Governor of Texas' recommended designations for the 2008 ozone National Ambient Air Quality Standards (NAAQS). EPA's proposal expands the Dallas-Ft Worth and Houston-Galveston-Brazoria Counties nonattainment areas to include three additional counties. If EPA's proposal is adopted, the state of Texas will be under an obligation to develop a state implementation plan to control new and existing sources of ozone precursor emissions in those counties, which would significantly increase the cost of operations in those counties. In addition, new sources

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would be required to offset emissions and the major source threshold for construction permits would be lower than otherwise, triggering more stringent control technology and impacts reviews.

New TCEQ Rule. On January 26, 2011, the TCEQ adopted a new Section 106.352. Oil and Gas Handling and Production Facilities Permit by Rule (“PBR”), which is applicable to oil and gas facilities in the Barnett shale area of Texas and provides an authorization for activities that produce more than a de minimis level of emissions. The PBR requires additional recordkeeping and reporting requirements, additional best management practices, increased emissions modeling, increased stack testing and an increase in project/facility registrations, all of which would increase our capital and operating costs in the Barnett shale in Texas. Additionally, only one PBR may be claimed or registered for each combination of dependent facilities at an oil and gas site, which is defined as all facilities that are located on contiguous or adjacent properties, under common control and designated under the same two digit standard industrial classification (SIC) code. The construction of new facilities or modification of existing facilities at an oil and gas site will subject the existing, operationally-dependent, unmodified facilities to a protectiveness review and to emissions limits for its planned maintenance, startup and shutdown activities, which may require the installation of additional emissions control equipment thereby increasing the costs of new projects and increasing capital expenditures in the Barnett shale in Texas. Currently, our facilities located in the Barnett shale are part of our Compressor Segment, and most compliance costs resulting from the PBR will be borne by our customers. Oil and gas handling and production facilities not located in the Barnett shale regions remain subject to the provisions of the PBR that was in place prior to the adoption of new Section 106.352.

Clean Water Act. The Clean Water Act and comparable state laws impose restrictions and strict controls regarding the discharge of pollutants, including NGL-related wastes, into waters of the United States. Pursuant to the Clean Water Act and similar state laws, a NPDES, or state permit, or both, must be obtained to discharge pollutants into federal and state waters. In addition, the Clean Water Act and comparable state laws require that individual permits or coverage under general permits be obtained by subject facilities for discharges of storm water runoff. We believe that we are in substantial compliance with Clean Water Act permitting requirements as well as the conditions imposed thereunder, and that our continued compliance with such existing permit conditions will not have a material adverse effect on our business, financial condition or results of operations.

Endangered Species Act. The Endangered Species Act restricts activities that may affect endangered or threatened species or their habitat. We may operate in areas that are currently designated as a habitat for endangered or threatened species, the discovery of previously unidentified endangered species, or the designation of additional species as endangered or threatened, which could cause us to incur additional costs, to develop habitat conservation plans, to become subject to expansion or operating restrictions, or bans in the affected areas.

Climate Change. On December 15, 2009, the EPA published its findings that emissions of carbon dioxide, methane and other greenhouse gases present an endangerment to public health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the Earth's atmosphere and other climatic changes. These findings allow the EPA to adopt and implement regulations that would restrict emissions of greenhouse gases under existing provisions of the federal Clean Air Act. Accordingly, the EPA adopted two sets of regulations addressing greenhouse gas emissions under the Clean Air Act. The first limits emissions of greenhouse gases from motor vehicles beginning with the 2012 model year. The EPA has asserted that these final motor vehicle greenhouse gas emission standards trigger Clean Air Act construction and operating permit requirements for stationary sources, commencing when the motor vehicle standards took effect on January 2, 2011. On June 3, 2010, the EPA published its final rule to address the permitting of greenhouse gas emissions from stationary sources under the Prevention of Significant Deterioration (“PSD”) and Title V permitting programs. This rule “tailors” these permitting programs to apply to certain stationary sources of greenhouse gas emissions in a multi-step process, with the largest sources first subject to permitting. It is widely expected that facilities required to obtain PSD permits for their greenhouse gas emissions will be required to also reduce those emissions according to “best available control technology” standards for greenhouse gases, which are currently being developed on a case-by-case basis. Any regulatory or permitting obligation that limits emissions of greenhouse gases could require us to incur costs to reduce or sequester emissions of greenhouse gases associated with our operations and also could adversely affect demand for the natural gas and other hydrocarbon products that we transport, process, or otherwise handle in connection with our services.

In addition, on October 30, 2009, the EPA published a final rule requiring the reporting of greenhouse gas emissions from specified large greenhouse gas sources in the United States on an annual basis, beginning in 2011 for emissions occurring after January 1, 2010. On November 30, 2010, the EPA revised its greenhouse gas reporting rule to include onshore oil and natural gas production, processing, transmission, storage and distribution facilities. Under the new rules, reporting of greenhouse gas emissions from such facilities, including many of our facilities, is required on an annual basis, with reporting beginning in 2012 for emissions occurring in 2011.

Various pieces of legislation to reduce emissions of, or to create cap and trade programs for, greenhouse gases have been proposed by the U.S. Congress over the past several years, but no proposal has yet passed. More than one-third of the states have already taken legal measures to reduce emissions of greenhouse gases, primarily through the planned development of greenhouse gas

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emission inventories and/or regional greenhouse gas cap and trade programs. The passage of legislation that limits emissions of greenhouse gases from our equipment and operations could require us to incur costs to reduce the greenhouse gas emissions from our own operations, and it could also adversely affect demand for our transportation, storage and midstream services.

Some have suggested that one consequence of climate change could be increased severity of extreme weather, such as increased hurricanes and floods. If such effects were to occur, our operations could be adversely affected in various ways, including damages to our facilities from powerful winds or rising waters, or increased costs for insurance. Another possible consequence of climate change is increased volatility in seasonal temperatures. The market for our NGLs and natural gas is generally improved by periods of colder weather and impaired by periods of warmer weather, so any changes in climate could affect the market for the fuels that we produce. Despite the use of the term “global warming” as a shorthand for climate change, some studies indicate that climate change could cause some areas to experience temperatures substantially colder than their historical averages. As a result, it is difficult to predict how the market for our fuels could be affected by increased temperature volatility, although if there is an overall trend of warmer temperatures, it would be expected to have an adverse effect on our business.

Employee Health and Safety. We are subject to the requirements of the federal OSHA and comparable state laws that regulate the protection of the health and safety of workers. In addition, the OSHA hazard communication standard requires that information be maintained about hazardous materials used or produced in operations and that this information be provided to employees, state and local government authorities and citizens. We believe that our operations are in substantial compliance with the OSHA requirements including general industry standards, recordkeeping requirements, and monitoring of occupational exposure to regulated substances.

Safety Regulations. Those pipelines through which we transport mixed NGLs (exclusively to other NGL pipelines) are subject to regulation by the DOT, under the HLPSA, relating to the design, installation, testing, construction, operation, replacement and management of pipeline facilities. The HLPSA requires any entity that owns or operates liquids pipelines to comply with the regulations under the HLPSA, to permit access to and allow copying of records and to submit certain reports and provide other information as required by the Secretary of Transportation. We believe our liquids pipelines are in substantial compliance with applicable HLPSA requirements. The DOT is continually proposing new pipeline safety rules that may impact our businesses and increase our operating costs.

Our interstate, intrastate and certain of our gathering pipelines are also are subject to regulation by the DOT under the NGPSA, which covers natural gas, crude oil, carbon dioxide, NGLs and petroleum products pipelines, and under the Pipeline Safety Improvement Act of 2002, as amended. Pursuant to these authorities, the DOT has established a series of rules that require pipeline operators to develop and implement “integrity management programs” for natural gas pipelines located in areas where the consequences of potential pipeline accidents pose the greatest risk to people and their property. Similar rules are also in place for operators of hazardous liquid pipelines. The DOT's integrity management rules establish requirements relating to the design, installation, testing, construction, operation, inspection, replacement and management of pipeline facilities. We believe that our pipeline operations are in substantial compliance with applicable NGPSA requirements.

The DOT enacted new control room management regulations as directed by the Pipeline Inspection, Protection, Enforcement and Safety Act of 2006. The rules require operators of hazardous liquids pipelines, gas pipelines and LNG facilities with at least one control room to develop and implement written control room management procedures. We believe we are in substantial compliance with the new rules as of the required compliance date of August 1, 2011.

On January 3, 2012, the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, became effective. Under the new law, the DOT and other federal agencies are required to conduct a number of studies or develop rules over the next two years regarding the expansion of integrity management, use of automatic and remote-controlled shut-off valves, leak detection systems, sufficiency of existing regulation of gathering pipelines, use of excess flow valves, verification of maximum allowable operating pressure, incident notification, and other pipeline-safety related rules. The new law also increases civil penalties for violations, The DOT has already sought comments on potential rules that address many areas of the newly adopted legislation. Any new regulations could impact our businesses and increase our operating costs.

The states administer federal pipeline safety standards under the NGPSA and have the authority to conduct pipeline inspections, to investigate accidents and to oversee compliance and enforcement, safety programs and record maintenance and reporting. Congress, the DOT and individual states may pass additional pipeline safety requirements, but such requirements, if adopted, would not be expected to affect us disproportionately relative to other companies in our industry.

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EMPLOYEES

As of December 31, 2011, our General Partner employed 729 employees, of whom 627 were field operating employees and 102 were mid-and senior-level management and staff. None of these employees are represented by a labor union and there are no outstanding collective bargaining agreements to which our General Partner is a party. Our General Partner believes that it has good relations with its employees.

AVAILABLE INFORMATION

We file or furnish annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any related amendments and supplements thereto with the SEC. From time to time, we may also file registration and related statements pertaining to equity or debt offerings. You may read and copy any materials we file or furnish with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information regarding the Public Reference Room by calling the SEC at 1-800-732-0330. In addition, the SEC maintains an Internet website at http://www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

We make our SEC filings available to the public, free of charge and as soon as practicable after they are filed with the SEC, through its Internet website located at http://www.regencyenergy.com. Our annual reports are filed on Form 10-K, our quarterly reports are filed on Form 10-Q and current-event reports are filed on Form 8-K; we also file amendments to reports filed or furnished pursuant to Section 13(a) or Section 15(d) of the Exchange Act. References to our website addressed in this report are provided as a convenience and do not constitute, and should not be viewed as, an incorporation by reference of the information contained on, or available through, our website. Therefore, such information should not be considered part of this report.

Item 1A. Risk Factors

In addition to risks and uncertainties in the ordinary course of business that are common to all businesses, important factors that are specific to our business, our structure as a limited partnership and our tax treatment could materially impact our future performance and results of operations. We have provided below a list of these risk factors that should be reviewed when considering an investment in our securities. These are not all of the risks we face as there are other factors currently considered immaterial or unknown to us that may impact our future operations.

RISKS RELATED TO OUR BUSINESS

We may not have sufficient cash from operations to enable us to pay our current quarterly distribution following the establishment of cash reserves and payment of fees and expenses, including reimbursement of fees and expenses of our General Partner.

We may not have sufficient available cash from operating surplus each quarter to pay our MQD. The amount of cash we can distribute to our unitholders depends principally on the amount of cash we generate from our operations, which will fluctuate from quarter to quarter based on, among other things:

• prevailing economic conditions;

• the fees we charge and the margins we realize for our services and sales;

• the prices of, level of, production of, and demand for natural gas and NGLs;

• the volumes of natural gas we gather, process and transport; and

• the amounts of our operating costs, including reimbursement of fees and expenses of our General Partner.

In addition, the actual amount of cash we will have available for distribution will depend on other factors, some of which are beyond our control, including:

• our debt service requirements;

• our obligation to pay distributions on our Series A Preferred Units;

• fluctuation in our working capital needs;

• our ability to borrow funds and access capital markets;

• restrictions contained in our debt agreements;

• the cost of acquisitions, if any;

• the amounts of cash reserves established by our General Partner; and

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• our ability to maintain commodity hedge prices from year to year.

You should be aware that the amount of cash we have available for distribution depends primarily upon our cash flow, not net income (loss) per GAAP. As a result, we may make cash distributions during periods when we record losses for financial accounting purposes and may not be able to make cash distributions during periods when we record net earnings for financial accounting purposes.

Our cash flow is affected by supply and demand for natural gas and NGL products and by natural gas and NGL prices, and decreases in these prices could adversely affect our results of operations and financial condition. Natural gas, NGLs and other commodity prices are volatile, and an unfavorable change in these prices could adversely affect our cash flow and operating results.

We are subject to risks due to frequent and often substantial fluctuations in commodity prices. NGLs prices generally fluctuate on a basis that correlates to fluctuations in crude oil prices as well as global demand of petrochemical products. In the past, the prices of natural gas, NGLs and crude oil have been extremely volatile, and this volatility could continue. Volatility in crude oil, natural gas and NGL prices can impact our customers’ activity levels and spending for our products and services, as well as our margins under our keep-whole and percentage-of-proceeds natural gas gathering and processing contracts. The markets and prices for natural gas and NGLs depend upon factors beyond our control. These factors include demand for oil, natural gas and NGLs, which fluctuates with changes in market and economic conditions and other factors, including:

• the impact of weather on the demand for oil, natural gas and NGLs;

• the level of domestic oil and natural gas production;

• the availability of imported oil, natural gas and NGLs;

• actions taken by foreign oil and gas producing nations;

• the availability of local transportation systems;

• the price, availability and marketing of competitive fuels;

• the demand for electricity;

• the impact of energy conservation efforts; and

• the extent of governmental regulation and taxation.

Our natural gas gathering and processing businesses operate under two types of contractual arrangements that expose our cash flows to increases and decreases in the price of natural gas and NGLs: percentage-of-proceeds and keep-whole arrangements. Under percentage-of-proceeds arrangements, we generally purchase natural gas from producers and retain from the sale an agreed percentage of pipeline-quality gas and NGLs resulting from our processing activities (in cash or in-kind) at market prices. Under keep-whole arrangements, we receive the NGLs removed from the natural gas during our processing operations as the fee for providing our services in exchange for replacing the thermal content removed as NGLs with a like thermal content in pipeline-quality gas or its cash equivalent. Under these types of arrangements our revenues and our cash flows increase or decrease as the prices of natural gas and NGLs fluctuate. The relationship between natural gas prices and NGL prices may also affect our profitability. When natural gas prices are low relative to NGLs prices, it is more profitable for us to process natural gas under keep-whole arrangements. When natural gas prices are high relative to NGLs prices, it is less profitable for us and our customers to process natural gas both because of the higher value of natural gas and of the increased cost (principally that of natural gas as a feedstock and a fuel) of separating the mixed NGLs from the natural gas. As a result, we may experience periods in which higher natural gas prices relative to NGL prices reduce our processing margins or reduce the volume of natural gas processed at some of our plants.

Because of the natural decline in production from existing wells, our success depends on our ability to obtain new supplies of natural gas, which involves factors beyond our control. Any decrease in supplies or the price of natural gas in our areas of operation could adversely affect our business and operating results.

Our gathering and processing and transportation pipeline systems are dependent on the level of production from natural gas wells that supply our systems and from which production will naturally decline over time. As a result, our cash flows associated with these wells will also decline over time. In order to maintain or increase throughput volume levels on our gathering and transportation pipeline systems and the asset utilization rates at our natural gas processing plants, we must continually obtain new supplies. The primary factors affecting our ability to obtain new supplies of natural gas and attract new customers to our assets are: the level of successful drilling activity near our systems and our ability to compete with other gathering and processing companies for volumes from successful new wells.

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The level of natural gas drilling activity is dependent on economic and business factors beyond our control. The primary factor that impacts drilling decisions is natural gas prices. A sustained decline in natural gas prices, as has occurred over the past year, could result in a decrease in exploration and development activities in the fields served by our gathering and processing facilities and pipeline transportation systems, which would lead to reduced utilization of these assets. Recently some producers have indicated that they will focus their exploration and production efforts on geographic areas with oil and NGL-rich natural gas products. Other factors that impact production decisions include producers' capital budget limitations, the ability of producers to obtain necessary drilling and other governmental permits and regulatory changes.

Because of these factors, even if additional natural gas reserves were discovered in areas served by our assets, producers may choose not to develop those reserves. If we were not able to obtain new supplies of natural gas to replace the natural decline in volumes from existing wells due to reductions in drilling activity or competition, throughput volumes on our pipelines and the utilization rates of our processing facilities would decline, which could have a material adverse effect on our business, results of operations and financial condition.

Our natural gas contract compression operations significantly depend upon the continued demand for and production of natural gas and crude oil. Demand may be affected by, among other factors, natural gas prices, crude oil prices, weather, demand for energy, and availability of alternative energy sources. Any prolonged, substantial reduction in the demand for natural gas or crude oil would, in all likelihood, depress the level of production activity and result in a decline in the demand for our contract compression services and products. Lower natural gas prices or crude oil prices over the long-term could result in a decline in the production of natural gas or crude oil, respectively, resulting in reduced demand for our natural gas contract compression services. Additionally, production from natural gas sources such as longer-lived tight sands, shales and coalbeds constitute an increasing percentage of our compression services business. Such sources are generally less economically feasible to produce in lower natural gas price environments, and a reduction in demand for natural gas may cause such sources of natural gas to be uneconomic to drill and produce, which could in turn negatively impact the demand for our compression services.

The profitability of certain activities in our NGLs and refined products storage business, our NGLs transportation business and our off-gas processing and fractionating business are largely dependent upon market demand for NGLs and refined products, which has been volatile, and competition in the market place, both of which are factors that are beyond our control.

Our NGLs and refined products storage revenues are primarily derived from fixed capacity arrangements between us and our customers. However, a portion of our revenues are derived from fungible storage and throughput arrangements, under which our revenues are more dependent upon demand for storage from our customers. Demand for these services may fluctuate as a result of changes in commodity prices. Our NGLs and refined products storage assets are primarily located in the Mont Belvieu area, which is a significant storage distribution and trading complex with multiple industry participants, any one of which could compete for the business of our existing and potential customers. Any loss of business from existing customers or our inability to attract new customers could have an adverse effect on our results of operations.

Revenues from our NGLs transportation systems are exposed to risks due to fluctuations in demand for transportation as a result of unfavorable commodity prices and competition from nearby pipelines. We receive substantially all of our transportation revenues through dedicated contracts under which the customer agrees to deliver the total output from particular processing plants that are connected only to our transportation system. We may not be able to renew these contracts or execute new customer contracts on favorable terms if NGLs prices decline and demand for our transportation services decreases. Any loss of existing customers due to decreased demand for our services or competition from other transportation service providers could have a negative impact on our revenues and have an adverse effect on our results of operations.

Revenues from our off-gas processing and fractionating system in south Louisiana are exposed to risks due to the low concentration of suppliers near our facilities and the possibility that connected refineries may not provide us with sufficient off-gas for processing at our facilities. The connected refineries may also experience outages due to maintenance issues and severe weather, such as hurricanes. We receive revenues primarily through customer agreements that are a combination of keep-whole and percent-of-proceeds arrangements, as well as from transportation and fractionation fees. Consequently, a large portion of our off-gas processing and fractionation revenues are exposed to risks due to fluctuations in commodity prices. In addition, a decline in NGL prices could cause a decrease in demand for our off-gas processing and fractionation services and could have an adverse effect on our results of operations.

Many of our customers’ drilling activity levels and spending for transportation on our gathering and pipeline systems may be impacted by commodity prices and the credit markets.

Many of our customers finance their drilling activities through cash flow from operations, the incurrence of debt or the issuance of equity. Any combination of a reduction of cash flow resulting from declines in natural gas prices, a reduction in borrowing bases under reserve-based credit facilities and the lack of availability of debt or equity financing may result in a significant reduction

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in our customers' spending for natural gas drilling activity, which could result in lower volumes being transported on our gathering and pipeline systems. A significant reduction in drilling activity could have a material adverse effect on our operations.

We depend on certain key producers and other customers for a significant portion of our supply of natural gas, contract compression and contract treating revenues. The loss of, or reduction in, any of these key producers or customers could adversely affect our business and operating results.

We rely on a limited number of producers and other customers for a significant portion of our natural gas supplies and our contracts for compression services. These contracts have terms that range from month-to-month to life of lease. As these contracts expire, we will have to negotiate extensions or renewals or replace the contracts with those of other suppliers. We may be unable to obtain new or renewed contracts on favorable terms, if at all. The loss of all or even a portion of the volumes of natural gas supplied by these producers and other customers, as a result of competition or otherwise, could have a material adverse effect on our business, results of operations and financial condition.

We do not control all of the actions by our joint ventures.

Our joint ventures, including HPC, MEP, Lone Star and Ranch JV, have their own governing boards. We exercise some control over the joint ventures because our approval is required for most significant decisions, but we do not control all of the decisions of these boards.

We may be required to make additional capital contributions to our equity joint ventures.

All of our equity joint ventures may request that we make additional capital contributions to support their capital expenditure programs. If such capital contributions are required, we may not be able to obtain the financing necessary to satisfy our obligations. In the event that we elect not to participate in future capital contributions, our ownership interest in the joint ventures will be diluted.

Our contract compression segment depends on particular suppliers and is vulnerable to parts and equipment shortages and price increases, which could have a negative impact on our results of operations.

The principal manufacturers of components for our natural gas compression equipment include Caterpillar, Inc. for engines, Air-X-Changers for coolers, and Ariel Corporation for compressors and frames. Our reliance on these suppliers involves several risks, including price increases and a potential inability to obtain an adequate supply of required components in a timely manner. We also rely primarily on one vendor, Standard Equipment Corp., a subsidiary of ETP, to package and assemble our compression units. We do not have long-term contracts with these suppliers or packagers, and a partial or complete loss of certain of these sources could have a negative impact on our results of operations and could damage our customer relationships. In addition, since we expect any increase in component prices for compression equipment or packaging costs will be passed on to us, a significant increase in their pricing could have a negative impact on our results of operations.

Our contract treating segment depends on particular suppliers and is vulnerable to parts and equipment shortages and price increases, which could have a negative impact on our results of operations.

Our contract treating segment's ability to manufacture new equipment used to provide treating services, and to obtain replacement components, depends on particular suppliers and is sensitive to equipment shortages and price increases. Spitzer Industries, the principal manufacturer and packager of amine plants, determines the cost of our contract treating equipment based primarily on the price and availability of commodities (i.e. steel), components and labor. If a significant increase in the cost of manufacturing were to occur, our contract treating segment could see a reduced rate of return on its capital investments absent offsetting increases in revenue rates.

In accordance with industry practice, we do not obtain independent evaluations of natural gas reserves dedicated to our gathering systems. Accordingly, volumes of natural gas gathered on our gathering systems in the future could be less than we anticipate, which could adversely affect our business and operating results.

We do not obtain independent evaluations of natural gas reserves connected to our gathering 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 the anticipated lives of such reserves. If the total reserves or estimated lives of the reserves connected to our gathering systems are less than we anticipate and we are unable to secure additional sources of natural gas, then the volumes of natural gas gathered on our gathering systems in the future could be less than we anticipate. A decline in the volumes of natural gas gathered on our gathering systems could have an adverse effect on our business, results of operations and financial condition.

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In our gathering and processing operations, we purchase raw natural gas containing significant quantities of NGLs, process the raw natural gas and sell the processed gas and NGLs. If we are unsuccessful in balancing the purchase of raw natural gas with its component NGLs and our sales of pipeline quality gas and NGLs, our exposure to commodity price risks will increase.

We purchase from producers and other customers a substantial amount of the natural gas that flows through our natural gas gathering and processing systems and our RIGS transportation pipeline for resale to third parties, including natural gas marketers and utilities. We may not be successful in balancing our purchases and sales. In addition, a producer could fail to deliver promised volumes or could deliver volumes in excess of contracted volumes, a purchaser could purchase less than contracted volumes, or the natural gas price differential between the regions in which we operate could vary unexpectedly. Any of these actions could cause our purchases and sales not to be balanced. If our purchases and sales are not balanced, we will face increased exposure to commodity price risks and could have increased volatility in our operating results.

Our results of operations and cash flow may be adversely affected by risks associated with our hedging activities.

In performing our functions in our gathering and processing segment, we are a seller of natural gas and NGLs and are exposed to commodity price risk associated with movements in commodity prices. As a result of the volatility of commodity prices and interest rates, we have executed swap contracts or put options settled against ethane, propane, normal butane, natural gas, natural gasoline and west Texas intermediate crude market prices. We continually monitor our hedging and contract portfolio and expect to adjust our hedge position as conditions warrant. For more information about our risk management activities, read “Item 7A. Quantitative and Qualitative Disclosures about Market Risk.” Even though our management monitors our hedging activities, these activities can result in substantial losses. Such losses could occur under various circumstances, including any circumstance in which a counterparty does not perform its obligations under the applicable hedging arrangement, the hedging arrangement is imperfect, or our hedging policies and procedures are not followed or do not work as planned.

The adoption of derivatives legislation by the United States Congress could have an adverse effect on our ability to use derivative instruments to reduce the effect of commodity price, interest rate and other risks associated with our business.

The United States Congress adopted the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, which, among other provisions, establishes federal oversight and regulation of the over-the-counter derivatives market and entities that participate in that market. This legislation requires the CFTC and the SEC to promulgate rules and regulations implementing the legislation within 360 days from the date of enactment. The CFTC has also proposed regulations to set position limits for certain futures and option contracts in the major energy markets, although it is not possible at this time to predict whether or when the CFTC will adopt those rules or include comparable provisions in its rulemaking under the new legislation. The legislation may also require us to comply with margin requirements and with certain clearing and trade-execution requirements in connection with our derivative activities, although the application of those provisions to us is uncertain at this time. The legislation may also require the counterparties to our derivative instruments to spin off some of their derivatives activities to a separate entity, which may not be as creditworthy as the current counterparty. The new legislation and any new regulations could significantly increase the cost of derivative contracts (including through requirements to post collateral, which could adversely affect our available liquidity), materially alter the terms of derivative contracts, reduce the availability of derivatives to protect against risks we encounter, reduce our ability to monetize or restructure existing derivative contracts, and increase our exposure to less creditworthy counterparties. If we reduce our use of derivatives as a result of the legislation and regulations, our results of operations may become more volatile and our cash flows may be less predictable.

To the extent that we intend to grow internally through construction of new, or modification of existing, facilities, we may not be able to manage that growth effectively, which could decrease our cash flow and adversely affect our results of operations.

A principal focus of our strategy is to continue to grow by expanding our business both internally and through acquisitions. Our ability to grow internally will depend on a number of factors, some of which will be beyond our control. We may not be able to finance the construction or modifications on satisfactory terms. In general, the construction of additions or modifications to our existing systems, and the construction of new midstream assets involve numerous regulatory, environmental, political and legal uncertainties beyond our control. Any project that we undertake may not be completed on schedule, at budgeted cost or at all. Construction may occur over an extended period, and we are not likely to receive a material increase in revenues related to such project until it is completed. Moreover, our revenues may not increase immediately upon the completion of construction because the anticipated growth in gas production that the project was intended to capture does not materialize, our estimates of the growth in production prove inaccurate or for other reasons. For example, producers in the area may decrease their activity levels in the area near HPC due to the declines in the price for natural gas. To the extent producers in the area are unable to execute their expected drilling programs, the return on our investment from this project may not be as attractive as we anticipate. For any of these reasons, newly constructed or modified midstream facilities may not generate our expected investment return and that, in turn, could adversely affect our cash flows and results of operations. In addition, our ability to undertake to grow in this fashion will depend on our ability to hire, train, and retain qualified personnel to manage and operate these facilities when completed.

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We may have difficulty financing our planned capital expenditures, including in our joint ventures, which could adversely affect our results and growth.

We expect that we will distribute all of our available cash to our unitholders and will rely primarily upon external financing sources, including borrowings under our credit facility and the issuance of debt and equity securities, to fund our acquisitions and expansion capital expenditures. If we are not able to obtain adequate financing from the capital markets, our ability to grow and our results of operations could be adversely impacted. To access amounts under our credit facility for joint venture capital expenditures or additional investments, we may need to amend to our credit facility, and we cannot assure you that we can obtain any such amendment.

Our leverage may limit our ability to borrow additional funds, make distributions, comply with the terms of our indebtedness or capitalize on business opportunities.

Our leverage is significant in relation to our partners' capital. Our debt to capital ratio, calculated as total debt divided by the sum of total debt and partners' capital, as of December 31, 2011 was 37%. We will be prohibited from making cash distributions during an event of default under any of our indebtedness, and, in the case of the indenture under which our senior notes were issued, the failure to maintain a prescribed ratio of consolidated cash flows (as defined in the indenture) to interest expense. Various limitations in our credit facility, as well as the indentures for our senior notes, may reduce our ability to incur additional debt, to engage in some transactions and to capitalize on business opportunities. Any subsequent refinancing of our current indebtedness or any new indebtedness could have similar or greater restrictions.

Our leverage may adversely affect our ability to fund future working capital, capital expenditures and other general partnership requirements, future acquisition, construction or development activities, or otherwise realize fully the value of our assets and opportunities because of the need to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness or to comply with any restrictive terms of our indebtedness. Our leverage may also make our results of operations more susceptible to adverse economic and industry conditions by limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate and may place us at a competitive disadvantage as compared to our competitors that have less debt.

Increases in interest rates could adversely impact our common unit price and our ability to issue additional equity, in order to make acquisitions, to reduce debt, or for other purposes.

The interest rates on our senior notes are fixed and the loans outstanding under our credit facility bear interest at a floating rate. Interest rates on future credit facilities and debt offerings could be significantly higher than current levels, causing our financing costs to increase accordingly. As with other yield-oriented securities, the market price for our units will be affected by the level of our cash distributions and implied distribution yield. The distribution yield is often used by investors to compare and rank yield-oriented securities for investment decision-making purposes. Therefore, changes in interest rates, either positive or negative, may affect the yield requirements of investors who invest in our units, and a rising interest rate environment could have an adverse effect on our unit price and our ability to issue additional equity in order to make acquisitions, to reduce debt or for other purposes.

Because we distribute all of our available cash to our unitholders, our future growth may be limited.

Since we will distribute all of our available cash to our unitholders, subject to the limitations on restricted payments contained in the indentures governing our senior notes and our credit facility, we will depend on financing provided by commercial banks and other lenders and the issuance of debt and equity securities to finance any significant internal organic growth or acquisitions. If we are unable to obtain adequate financing from these sources, our ability to grow will be limited.

Certain of our assets may become subject to regulation.

Intrastate transportation of NGLs is largely regulated by the state in which such transportation takes place. Lone Star's West Texas Pipeline transports NGLs within the state of Texas and is subject to regulation by the TRRC. This NGLs transportation system offers services pursuant to an intrastate transportation tariff on file with the TRRC. Such services must be provided in a manner that is just, reasonable and non-discriminatory. We believe that this NGLs system does not provide interstate service and thus, is not subject to FERC jurisdiction under the Interstate Commerce Act and the Energy Policy Act of 1992. However, we cannot assure you that the jurisdictional status of this NGLs pipeline system will remain unchanged. If the system should be found to provide FERC-jurisdictional services, the FERC's rate-making methodologies may, among other things, delay the use of rates that reflect increased costs and subject us to potentially burdensome and expensive operational, reporting and other requirements. Any of the foregoing could adversely affect revenues and cash flow related to these assets.

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Our interstate gas transportation operations, including Section 311 service performed by our intrastate pipelines, our sales of gas in interstate commerce, and our shipment of gas on interstate pipelines are subject to FERC regulation; failure to comply with applicable regulation, future changes in regulations or policies, or the establishment of more onerous terms and conditions applicable to natural gas transportation service could adversely affect our business.

FERC has broad regulatory authority over the business and operations of interstate natural gas pipelines, such as the pipelines owned by Gulf States and MEP, both of which hold FERC-approved tariffs setting forth cost- based rates, terms and conditions for services to shippers wishing to take interstate transportation service. Under the NGA, rates charged for, and the terms and conditions of service of, interstate natural gas transmission must be just and reasonable, and amounts collected in excess of just and reasonable rates may be subject to refund with interest. In addition, FERC regulates the rates, terms and conditions of service with respect to Section 311 transportation service provided by HPC (through RIGS). FERC has authority to alter its rules, regulations and policies governing service provided by interstate pipelines and intrastate pipelines providing Section 311 services. We cannot give any assurance regarding the likely future regulations under which Gulf States, MEP or HPC will operate their interstate transportation services or the effect such regulation could have on our businesses or results of operations. In addition, FERC also has broad authority to require compliance with its rules and regulations and to prohibit and penalize manipulative behavior that affects markets. Since our gathering and processing businesses sell natural gas in interstate commerce and ship gas on interstate pipelines, these activities are subject to FERC oversight. Any failure on our part to comply with applicable FERC-administered statutes, rules, regulations and orders could result in the imposition of significant administrative, civil and/or criminal penalties or both, as well as increased operational requirements or prohibitions.

As limited partnership entities, neither we nor our regulated natural gas pipelines may be able to include a full tax allowance in calculating our costs-of-service for rate-making purposes.

Under current policy applied under the NGA and Section 311, FERC permits regulated natural gas pipelines to include, in the cost-of-service used as the basis for calculating the pipeline’s regulated rates, a tax allowance reflecting the actual or potential income tax liability on pipeline income attributable to all partnership or limited liability company interests, if the ultimate owner of the interest has an actual or potential income tax liability on such income. Whether a pipeline’s owners have such actual or potential income tax liability will be reviewed by FERC on a case-by-case basis, and the pipeline is required to demonstrate that such potential income tax liability exists. Although FERC’s policy is generally favorable for pipelines that are organized as, or owned by, tax-pass-through entities, application of the policy in individual rate cases still entails rate risk due to the case-by-case review requirement. The specific terms and application of that policy remain subject to future refinement or change by FERC and the courts. Moreover, we cannot guarantee that this policy will not be altered in the future.

There are uncertainties in the calculation of the return on equity that FERC will authorize a natural gas pipeline to include in its cost-of-service.

An important part of the determination of rates by FERC is the establishment of an authorized return on equity. FERC currently calculates a range of potential returns, based on a discounted cash flow analysis of companies included in a proxy group, and then determines where a pipeline’s risks require it to be placed within this range. FERC policy also currently allows the inclusion of master limited partnerships, or MLPs, in proxy groups used to calculate the appropriate returns on equity under FERC’s discounted cash flow analysis, but FERC limits recognition of certain MLP earnings and allows case-by-case determination by FERC of the appropriateness of any MLP, or indeed any stock corporation, proposed as a member of the pipeline’s proxy group.

A change in the level of regulation or the jurisdictional characterization of some of our assets or business activities by federal, state or local regulatory agencies could affect our operations and revenues.

Our natural gas gathering, processing and intrastate transportation operations are generally exempt from FERC regulation under the NGA, but FERC regulation still affects these businesses and the markets for products derived from these businesses. With the passage of the Energy Policy Act of 2005 (EPACT 2005), FERC has expanded its oversight of natural gas purchasers, natural gas sellers, gatherers, intrastate pipelines and shippers on FERC regulated pipelines by imposing new market monitoring and market transparency rules and rules prohibiting manipulative behavior. In addition, EPACT 2005 substantially increased FERC's penalty authority. In recent years, FERC has adopted rules requiring increased reporting by purchasers and sellers of natural gas and increased transactional reporting requirements for intrastate pipelines. In 2010, FERC also sought formal comments on the applicability of buy-sell prohibitions and capacity release requirements on intrastate pipelines that provide interstate service under NGPA Section 311. We cannot predict the outcome of this proceeding or how FERC will approach future matters such as pipeline rates and rules and policies that may affect purchases or sales of natural gas or rights of access to natural gas transportation capacity.

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In addition, the distinction between FERC-regulated interstate transmission service, on one hand, and intrastate transmission or federally unregulated gathering services, on the other hand, is the subject of regular litigation at FERC and in the courts and of policy discussions at FERC. In such circumstances, the classification and regulation of some of our gathering or our intrastate transportation pipelines may be subject to change based on future determinations by FERC, the courts, or Congress. Such a change could result in increased regulation by FERC, which could adversely affect our business.

Other state and local regulations also affect our business. Our gathering pipelines are subject to ratable take and common purchaser statutes in states in which we operate. Ratable take statutes generally require gatherers to take, without undue discrimination, oil or natural gas production that may be tendered to the gatherer for handling. Similarly, common purchaser statutes generally require gatherers to purchase without undue discrimination as to source of supply or producer. These statutes restrict our right as an owner of gathering facilities to decide with whom we contract to purchase or transport natural gas. Federal law leaves any economic regulation of natural gas gathering to the states. Many states in which we operate have adopted complaint-based regulation of natural gas gathering activities, which allows natural gas producers and shippers to file complaints with state regulators in an effort to resolve grievances relating to natural gas gathering access and rate discrimination. Our intrastate NGL, crude oil, and condensate pipelines are subject to state common carrier regulations, which require just and reasonable rates, non-discriminatory service, and the filing of tariffs. Our common carrier pipeline tariffs contemplate a higher level of service for “anchor shippers”, and if these or any other provisions in our common carrier pipeline tariffs are found to be inconsistent with non-discrimination requirements, then we may be required to modify the rates and/or terms of service in our tariffs and may not be able to provide the level of service contemplated in agreements with “anchor shippers”.

Any new laws, rules, regulations or orders could result in additional compliance costs and/or requirements, which could adversely affect our business. If we fail to comply with any new or existing laws, rules, regulations or orders, we could be subject to administrative, civil and/or criminal penalties, or both, as well as increased operational requirements or prohibitions.

We may be unable to integrate successfully the operations of future acquisitions with our operations, and we may not realize all the anticipated benefits of our past and any future acquisitions.

Integration of acquisitions with our business and operations is a complex, time consuming, and costly process. Failure to integrate acquisitions successfully with our business and operations in a timely manner may have a material adverse effect on our business, financial condition, and results of operations. We cannot assure you that we will achieve the desired profitability from past or future acquisitions. In addition, failure to assimilate future acquisitions successfully could adversely affect our financial condition and results of operations. Our acquisitions involve numerous risks, including:

• operating a significantly larger combined organization and adding operations;

• difficulties in the assimilation of the assets and operations of the acquired business, especially if the assets acquired are in a new business segment or geographic area;

• the risk that natural gas reserves expected to support the acquired assets may not be of the anticipated magnitude or may not be developed as anticipated;

• the loss of significant producers or markets or key employees from the acquired business;

• the availability of local, intrastate and interstate transportation system;

• the diversion of management’s attention from other business concerns;

• the failure to realize expected profitability, growth or synergies and cost savings;

• properly assessing and managing environmental compliance;

• coordinating geographically disparate organizations, systems, and facilities; and

• coordinating or consolidating corporate and administrative functions.

Further, unexpected costs and challenges may arise whenever businesses with different operations or management are combined, and we may experience unanticipated delays in realizing the benefits of an acquisition. If we consummate any future acquisition, our capitalization and results of operation may change significantly, and you may not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in evaluating future acquisitions.

Our industry is highly competitive, and increased competitive pressure could adversely affect our business and operating results.

We compete with similar enterprises in each of our areas of operations. Some of our competitors are large oil, natural gas, gathering and processing and natural gas and NGL pipeline companies that have greater financial resources and access to supplies of natural gas and NGLs than we do. In addition, our customers who are significant producers or consumers of NGLs may develop their

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own processing facilities in lieu of using ours. Similarly, competitors may establish new connections with pipeline systems that would create additional competition for services that we provide to our customers. Our ability to renew or replace existing contracts with our customers at rates sufficient to maintain current revenues and cash flows could be adversely affected by the activities of our competitors.

The natural gas contract compression business is highly competitive, and there are low barriers to entry for individual projects. In addition, some of our competitors are large national and multinational companies that have greater financial and other resources than we do. Our ability to renew or replace existing contracts with our customers at rates sufficient to maintain current revenue and cash flows could be adversely affected by the activities of our competitors and our customers. If our competitors substantially increase the resources they devote to the development and marketing of competitive services or substantially decrease the prices at which they offer their services, we may be unable to compete effectively. Some of these competitors may expand or construct newer or more powerful compressor fleets that would create additional competition for us. In addition, our customers that are significant producers of natural gas and crude oil may purchase and operate their own compressor fleets in lieu of using our natural gas contract compression services. All of these competitive pressures could have a material adverse effect on our business, results of operations, and financial condition.

Any reduction in the capacity of, or the allocations to, our shippers in interconnecting, third-party pipelines could cause a reduction of volumes transported in our pipelines, which would adversely affect our revenues and cash flow.

Users of our pipelines are dependent upon connections to and from third-party pipelines to receive and deliver natural gas and NGLs. Any reduction in the capacities of these interconnecting pipelines due to testing, line repair, reduced operating pressures, or other causes could result in reduced volumes being transported in our pipelines. Similarly, if additional shippers begin transporting volumes of natural gas and NGLs over interconnecting pipelines, the allocations to existing shippers in these pipelines could be reduced, which could also reduce volumes transported in our pipelines. Any reduction in volumes transported in our pipelines would adversely affect our revenues and cash flow.

We are exposed to the credit risks of our key customers, and any material nonpayment or nonperformance by our key customers could adversely affect our cash flow and results of operations.

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. Many of our customers finance their activities through cash flow from operations, the incurrence of debt or the issuance of equity. The combination of reduction of cash flow resulting from declines in commodity prices, a reduction in borrowing bases under reserve based credit facilities (resulting from a decline in commodity prices) and the lack of availability of debt or equity financing may result in a significant reduction in our customers' liquidity and ability to make payment or perform on their obligations to us. Furthermore, some of our customers may be highly leveraged and subject to their own operating and regulatory risks, which increases the risk that they may default on their obligations to us.

Our business involves many hazards and operational risks, some of which may not be fully covered by insurance. If a significant accident or event occurs that is not fully insured, our operations and financial results could be adversely affected.

Our operations are subject to the many hazards inherent in the gathering, processing and transportation of natural gas and the transportation, fractionation and storage of NGLs, including:

• damage to our gathering and processing facilities, pipelines, fractionation and storage related equipment and surrounding properties caused by tornadoes, floods, hurricanes, fires and other natural disasters and acts of terrorism;

• inadvertent damage from construction and farm equipments;

• leaks of natural gas, NGLs and other hydrocarbons or losses of natural gas or NGLs as a result of the malfunction of pipelines, measurement equipment or facilities at receipt or delivery points;

• fires and explosions;

• weather related hazards, such as hurricanes and extensive rains which could delay the construction of assets and extreme cold which could cause freezing of pipelines, limiting throughput.; and

• other hazards, including those associated with high-sulfur content, or sour gas, such as an accidental discharge of hydrogen sulfide gas, that could also result in personal injury and loss of life, pollution and suspension of operations.

These risks could result in substantial losses due to personal injury or loss of life, severe damage to and destruction of property and equipment and pollution or other environmental damage and may result in curtailment or suspension of our related operations. A natural disaster or other hazard affecting the areas in which we operate could have a material adverse effect on our operations.

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We are not insured against all environmental events that might occur. If a significant accident or event occurs that is not insured or fully insured, it could adversely affect our operations and financial condition.

Failure of the natural gas that we ship on our pipelines to meet the specifications of interconnecting interstate pipelines could result in curtailments by the interstate pipelines.

The markets to which the shippers on our pipelines ship natural gas include interstate pipelines. These interstate pipelines establish specifications for the natural gas that they are willing to accept, which include requirements such as hydrocarbon dewpoint, temperature and foreign content including water, sulfur, carbon dioxide and hydrogen sulfide. These specifications vary by interstate pipeline. If the total mix of natural gas shipped by the shippers on our pipeline fails to meet the specifications of a particular interstate pipeline, it may refuse to accept all or a part of the natural gas scheduled for delivery to it. In those circumstances, we may be required to find alternative markets for that gas or to shut-in the producers of the non-conforming gas, potentially reducing our throughput volumes or revenues.

We may incur significant costs and liabilities as a result of pipeline integrity management program testing and any related pipeline repair, or preventative or remedial measures, as well as any future legislative and regulatory initiatives related to pipeline safety.

The DOT has adopted regulations requiring pipeline operators to develop integrity management programs for transportation pipelines and certain gathering lines 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.

In addition, states have adopted regulations similar to existing DOT regulations for intrastate gathering and transmission lines. We currently estimate that we will incur costs of $0.8 million in 2012 to implement pipeline integrity management program testing along certain segments of our pipeline, as required by existing DOT regulations. This estimate does not include the costs, if any, for repair, remediation, preventative or mitigating actions that may be determined to be necessary as a result of the testing program, which could be substantial.

The DOT is continually proposing new pipeline safety rules and issuing pipeline safety advisories that impact our businesses. Additionally, Congress has been engaged in developing more stringent safety laws.

On January 3, 2012, the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, became effective. The new law requires more stringent oversight of pipelines and increased civil penalties for violations of pipeline safety rules. The law requires numerous studies and/or the development of rules over the next two years covering the expansion of integrity management, use of automatic and remote-controlled shut-off valves, leak detection systems, sufficiency of existing regulation of gathering pipelines, use of excess flow valves, verification of maximum allowable operating pressure, incident notification, and other pipeline-safety related rules. The DOT has already sought comments on potential rules that address many areas of the newly adopted legislation. Any regulatory changes could have a material effect on our operations through more stringent and comprehensive safety regulations, increased costs and higher penalties for the violation of those regulations.

We do not own all of the land on which our pipelines and facilities have been constructed, and we are therefore subject to the possibility of increased costs or the inability to retain necessary land use.

We obtain the rights to construct and operate our pipelines on land owned by third parties and governmental agencies. Many of these rights-of-way are perpetual in duration; others have terms ranging from five to ten years. Many are subject to rights of reversion in the case of non-utilization for periods ranging from one to three years. In addition, some of our processing facilities are located on leased premises. Our loss of these rights, through our inability to renew right-of-way contracts or leases or otherwise, could have a material adverse effect on our business, results of operations and financial condition.

In addition, the construction of additions to our existing gathering and transportation assets may require us to obtain new rights-of-way prior to constructing new pipelines. We may be unable to obtain such rights-of-way to connect new natural gas or NGL supplies to our existing pipelines or to capitalize on other attractive expansion opportunities. If the cost of obtaining new rights-of-way increases, then our cash flows and growth opportunities could be adversely affected. Additionally, certain of our pipelines are gas utilities or common carrier pipelines with the statutory right of eminent domain. A recent Texas Supreme Court decision

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could severely limit our ability to use eminent domain to acquire right-of-way for common carrier expansion and growth projects, and potentially gas utility projects. Any such limitations could adversely affect our growth opportunities and cash flows.

We may incur significant costs and liabilities in the future resulting from a failure to comply with new or existing environmental regulations or releases of hazardous materials into the environment.

Our operations are subject to stringent and complex federal, state and local environmental laws and regulations governing, among other things, air emissions, wastewater discharges, the use, management and disposal of hazardous and nonhazardous materials and wastes, and the cleanup of contamination. Noncompliance with such laws and regulations, or incidents resulting in environmental releases, could cause us to incur substantial costs, penalties, fines and other criminal sanctions, third party claims for personal injury or property damage, investments to retrofit or upgrade our facilities and programs, or curtailment of operations. Certain environmental statutes, including CERCLA and comparable state laws, impose strict, joint and several liability for costs required to clean up and restore sites where hazardous substances have been disposed or otherwise released.

There is inherent risk of the incurrence of environmental costs and liabilities in our business due to the necessity of handling natural gas and NGLs, air emissions related to our operations, and historical industry operations and waste disposal practices. For example, an accidental release from one of our pipelines or processing facilities could subject us to substantial liabilities arising from environmental cleanup and restoration costs, claims made by neighboring landowners and other third parties for personal injury and property damage, and fines or penalties for related violations of environmental laws or regulations. Moreover, the possibility exists that stricter laws, regulations or enforcement policies could significantly increase our compliance costs and the cost of any remediation that may become necessary. We may not be able to recover these costs from insurance. We cannot be certain that identification of presently unidentified conditions, more vigorous enforcement by regulatory agencies, enactment of more stringent laws and regulations, or other unanticipated events will not arise in the future and give rise to material environmental liabilities that could have a material adverse effect on our business, financial condition or results of operations.

Climate change legislation or regulations restricting emissions of “greenhouse gases” could result in increased operating costs and reduced demand for the natural gas and other hydrocarbon products that we transport, process, or otherwise handle in connection with our transportation and midstream services.

In December 2009, the EPA published its findings that emissions of carbon dioxide, methane and other greenhouse gases present an endangerment to public health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the Earth's atmosphere and other climatic changes. These findings allow the EPA to adopt and implement regulations that would restrict emissions of greenhouse gases under existing provisions of the federal Clean Air Act. Accordingly, the EPA adopted two sets of regulations addressing greenhouse gas emissions under the Clean Air Act. The first limits emissions of greenhouse gases from motor vehicles beginning with the 2012 model year. The EPA has asserted that these final motor vehicle greenhouse gas emission standards trigger Clean Air Act construction and operating permit requirements for stationary sources, commencing when the motor vehicle standards took effect on January 2, 2011. In June 2010, the EPA published its final rule to address the permitting of greenhouse gas emissions from stationary sources under the Prevention of Significant Deterioration (“PSD”) and Title V permitting programs. This rule “tailors” these permitting programs to apply to certain stationary sources of greenhouse gas emissions in a multi-step process, with the largest sources first subject to permitting. It is widely expected that facilities required to obtain PSD permits for their greenhouse gas emissions will be required to also reduce those emissions according to “best available control technology” standards for greenhouse gases, which are currently being developed on a case-by-case basis. Any regulatory or permitting obligation that limits emissions of greenhouse gases could require us to incur costs to reduce or sequester emissions of greenhouse gases associated with our operations and also could adversely affect demand for the natural gas and other hydrocarbon products that we transport, process, or otherwise handle in connection with our services.

In addition, in October 2009, the EPA published a final rule requiring the reporting of greenhouse gas emissions from specified large greenhouse gas sources in the United States on an annual basis, beginning in 2011 for emissions occurring after January 1, 2010. In November 2010, the EPA revised its greenhouse gas reporting rule to include onshore oil and natural gas production, processing, transmission, storage and distribution facilities. Under these new rules, reporting of greenhouse gas emissions from such facilities, including many of our facilities, is required on an annual basis, with reporting beginning in 2012 for emissions occurring in 2011.

Various pieces of legislation to reduce emissions of, or to create cap and trade programs for, greenhouse gases have been proposed by the U.S. Congress over the past several years, but no proposal has yet passed. More than one-third of the states have already taken legal measures to reduce emissions of greenhouse gases, primarily through the planned development of greenhouse gas emission inventories and/or regional greenhouse gas cap and trade programs. The passage of legislation that limits emissions of greenhouse gases from our equipment and operations could require us to incur costs to reduce the greenhouse gas emissions from our own operations, and it could also adversely affect demand for our transportation, storage and midstream services.

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Some have suggested that one consequence of climate change could be increased severity of extreme weather, such as increased hurricanes and floods. If such effects were to occur, our operations could be adversely affected in various ways, including damages to our facilities from powerful winds or rising waters, or increased costs for insurance. Another possible consequence of climate change is increased volatility in seasonal temperatures. The market for our NGLs and natural gas is generally improved by periods of colder weather and impaired by periods of warmer weather, so any changes in climate could affect the market for the fuels that we produce. Despite the use of the term “global warming” as a shorthand for climate change, some studies indicate that climate change could cause some areas to experience temperatures substantially colder than their historical averages. As a result, it is difficult to predict how the market for our fuels could be affected by increased temperature volatility, although if there is an overall trend of warmer temperatures, it would be expected to have an adverse effect on our business.

We may not have the ability to raise funds necessary to finance any change of control offer required under our senior notes and our Series A Preferred Units or to repay our credit facility upon a change of control.

If a change of control (as defined in the indentures governing our senior notes) occurs, we will be required to offer to purchase our outstanding senior notes at 101% of their principal amount plus accrued and unpaid interest. If a purchase offer obligation arises under these indentures, a change of control could also have occurred under our credit facility, which could result in the acceleration of the indebtedness outstanding thereunder. Further, if a change of control (as defined in our partnership agreement) occurs, we will be required, under certain circumstances, to offer to purchase the Series A Preferred Units at 120% of their liquidation value (as defined in our partnership agreement) for the first five years after their issuance and thereafter at 101% of their liquidation value. Any of our future debt agreements may contain similar restrictions and provisions. If a purchase offer were required under the indentures for our debt (or repayment under our credit facility), we may not have sufficient funds to pay the purchase price of all debt that we are required to purchase or repay.

Our ability to manage and grow our business effectively may be adversely affected if our General Partner loses key management or operational personnel.

We depend on the continuing efforts of our executive officers. The departure of any of our executive officers could have a significant negative effect on our business, operating results, financial condition, and on our ability to compete effectively in the marketplace. Additionally, the General Partner's employees operate some of our business activities. Our General Partner's ability to hire, train, and retain qualified personnel will continue to be important and will become more challenging as we grow and if energy industry market conditions remain positive.

When general industry conditions are good, the competition for experienced operational and field technicians increases as other energy and manufacturing companies' needs for the same personnel increases. Our ability to grow and perhaps even to continue our current level of service to our current customers will be adversely impacted if our General Partner or its affiliates that provide these personnel are unable to successfully hire, train and retain these important personnel.

Terrorist attacks, the threat of terrorist attacks, hostilities in the Middle East, or other sustained military campaigns may adversely impact our results of operations.

The long-term impact of terrorist attacks, such as the attacks that occurred on September 11, 2001, and the magnitude of the threat of future terrorist attacks on the energy transportation industry in general and on us in particular are not known at this time. Uncertainty surrounding hostilities in the Middle East or other sustained military campaigns may affect us in unpredictable ways, including disruptions of natural gas supplies and markets for natural gas and NGLs and the possibility that infrastructure facilities could be direct targets of, or indirect casualties of, an act of terror. Changes in the insurance markets attributable to terrorist attacks may make certain types of insurance more difficult for us to obtain. Moreover, the insurance that may be available to us may be significantly more expensive than our existing insurance coverage. Instability in the financial markets as a result of terrorism or war could also affect our ability to raise capital.

A downgrade of our credit rating could impact our liquidity, access to capital and our costs of doing business, and maintaining credit ratings is under the control of independent third parties.

A downgrade of our credit rating might increase our cost of borrowing and could require us to post collateral with third parties, negatively impacting our available liquidity. Our ability to access capital markets could also be limited by a downgrade of our credit rating and other disruptions. Such disruptions could include:

• economic downturns;

• deteriorating capital market conditions;

• declining market prices for natural gas, NGLs and other commodities;

• terrorist attacks or threatened attacks on our facilities or those of other energy companies; and

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• the overall health of the energy industry, including the bankruptcy or insolvency of other companies.

Credit rating agencies perform independent analysis when assigning credit ratings. The analysis includes a number of criteria including, but not limited to, business composition, market and operational risks, as well as various financial tests. Credit rating agencies continue to review the criteria for industry sectors and various debt ratings and may make changes to those criteria from time to time. Credit ratings are not recommendations to buy, sell or hold investments in the rated entity. Ratings are subject to revision or withdrawal at any time by the rating agencies, and we cannot assure you that we will maintain our current credit ratings.

ETE and an affiliate of GE may sell units in the public or private markets, and these sales could have an adverse impact on the price of our common units.

ETE owns 26,266,791 of our common units and an affiliate of GE owns 13,168,735 of our common units. We have agreed to provide to each of ETE and GE’s affiliate the right to register for resale their common units. We filed a registration statement relating to the resale of GE’s common units that became effective in October 2010. The sale of these common units in the public or private markets could have an adverse impact on the price of our common units or on the trading market for them.

An impairment of goodwill and intangible assets could reduce our earnings.

At December 31, 2011, our consolidated balance sheet reflected $789.8 million of goodwill and $740.9 million of intangible assets. Goodwill is recorded when the purchase price of a business exceeds the fair market value of the tangible and separately measurable intangible net assets. GAAP requires us to test goodwill for impairment on an annual basis or when events or circumstances occur that indicate goodwill might be impaired. Long-lived assets such as intangible assets with finite useful lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. If we determine that any of our goodwill or intangible assets are impaired, we would be required to take an immediate charge to earnings with a correlative effect on partners’ capital and balance sheet leverage as measured by debt to total capitalization.

If we do not make acquisitions on economically acceptable terms, our future growth could be limited.

Our results of operations and our ability to grow and to increase distributions to unitholders will depend in part on our ability to make acquisitions that are accretive to our distributable cash flow per unit.

We may be unable to make accretive acquisitions for any of the following reasons, among others:

• because we are unable to identify attractive acquisition candidates or negotiate acceptable purchase contracts with them;

• because we are unable to raise financing for such acquisitions on economically acceptable terms; or

• because we are outbid by competitors, some of which are substantially larger than us and have greater financial resources and lower costs of capital then we do.

If we consummate future acquisitions, our capitalization and results of operations may change significantly. As we determine the application of our funds and other resources, unitholders will not have an opportunity to evaluate the economics, financial and other relevant information that we will consider.

Increased regulation of hydraulic fracturing could result in reductions or delays in drilling and completing new oil and natural gas wells, which could adversely impact our revenues by decreasing the volumes of natural gas that we gather, process and transport.

Hydraulic fracturing is a process used by oil and gas exploration and production operators in the completion of certain oil and gas wells whereby water, sand and chemicals are injected under pressure into subsurface formations to stimulate gas and, in some cases, oil production. Due to concerns that hydraulic fracturing may adversely affect drinking water supplies, the EPA recently announced a plan to conduct a comprehensive research study to investigate the potential adverse impact that hydraulic fracturing may have on water quality and public health. The initial study results are expected to be available in late 2012. Additionally, legislation was introduced in the U.S. Congress to amend the federal Safe Drinking Water Act to regulate hydraulic fracturing and to require the disclosure of chemicals used by the oil and gas industry in the hydraulic fracturing process. If enacted, such a provision could require hydraulic fracturing activities to meet permitting and financial assurance requirements, adhere to certain construction specifications, fulfill monitoring, reporting and recordkeeping requirements and meet plugging and abandonment requirements. Unrelated oil spill legislation considered by the U.S. Senate in the aftermath of the April 2010 Macondo well release in the Gulf of Mexico contained a provision that would require natural gas drillers to disclose the chemicals they pump into the ground as part of the hydraulic fracturing process. Aside from these federal initiatives, several states have moved to require disclosure of fracturing fluid components or otherwise to regulate their use more closely. Disclosure of chemicals used in the fracturing process could make it easier for third parties opposing hydraulic fracturing to initiate legal proceedings based on allegations that specific chemicals used in the fracturing process could adversely affect groundwater. Adoption of legislation or

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of any implementing regulations placing restrictions on hydraulic fracturing activities could impose operational delays, increased operating costs and additional regulatory burdens on exploration and production operators, which could reduce their production of natural gas and, in turn, adversely affect our revenues and results of operations by decreasing the volumes of natural gas and NGLs that we gather, process and transport.

Some portions of our current gathering infrastructure and other assets have been in use for many decades, which may adversely affect our business.

Some portions of our assets, including some of our gathering infrastructure, have been in use for many decades. The current age and condition of our assets could result in a material adverse impact on our business, financial condition and results of operations if the costs of maintaining our facilities exceed current expectations.

RISKS RELATED TO OUR STRUCTURE

Our General Partner is owned by ETE, which also owns the general partner of ETP. This may result in conflicts of interest.

ETE owns our General Partner and as a result controls us. ETE also owns the general partner of ETP, a publicly traded partnership with which we compete in the natural gas gathering, processing and transportation business. The directors and officers of our General Partner and its affiliates have fiduciary duties to manage our General Partner in a manner that is beneficial to ETE, its sole owner. At the same time, our General Partner has fiduciary duties to manage us in a manner that is beneficial to our unitholders. Therefore, our General Partner’s duties to us may conflict with the duties of its officers and directors to its sole owner. As a result of these conflicts of interest, our General Partner may favor its own interest or those of ETE, ETP, or their owners or affiliates over the interest of our unitholders.

Such conflicts may arise from, among others, the following:

• Decisions by our General Partner regarding the amount and timing of our cash expenditures, borrowings and issuances of additional limited partnership units or other securities can affect the amount of incentive compensation payments on our IDRs we make to the parent company of our General Partner;

• ETE and ETP and their affiliates may engage in substantial competition with us;

• Neither our partnership agreement nor any other agreement requires ETE or its affiliates, including ETP, to pursue a business strategy that favors us. The directors and officers of the general partners of ETE and ETP have a fiduciary duty to make decisions in the best interest of their members, limited partners and unitholders, which may be contrary to our best interests;

• Our General Partner is allowed to take into account the interests of other parties, such as ETE and ETP and their affiliates, which has the effect of limiting its fiduciary duties to our unitholders;

• Some of the directors and officers of ETE who provide advice to us also may devote significant time to the business of ETE and ETP and their affiliates and will be compensated by them for their 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;

• Our General Partner determines the amount and timing of asset purchases and sales and other acquisitions, operating expenditures, capital expenditures, borrowings, repayments of debt, issuances of equity and debt securities and cash reserves, each of which can affect the amount of cash available for distribution to our unitholders;

• Our General Partner determines which costs, including allocated overhead costs and costs under the services agreement we have with Service Co. and our operating agreement with ETP, incurred by it and its affiliates are reimbursable by us; and

• 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, such as the services agreement we have with an affiliate of ETE and operating agreement with ETP, with any of these entities on our behalf.

Specifically, certain conflicts may arise as a result of our pursuing acquisitions or development opportunities that may also be advantageous to ETP. If we are limited in our ability to pursue such opportunities, we may not realize any or all of the commercial value of such opportunities. In addition, if ETP is allowed access to our information concerning any such opportunity and ETP uses this information to pursue the opportunity to our detriment, we may not realize any of the commercial value of this opportunity. In either of these situations, our business, results of operations and the amount of our distributions to our unitholders may be

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adversely affected. Although we, ETE and ETP have adopted a policy to address these conflicts and to limit the commercially sensitive information that we furnish to ETE, ETP and their affiliates, we cannot assure unitholders that such conflicts will not occur.

Our reimbursement of our General Partner’s expenses will reduce our cash available for distribution to common unitholders.

Prior to making any distribution on the common units, we will reimburse our General Partner and its affiliates for all expenses they incur on our behalf. These expenses will include all costs incurred by our General Partner and its affiliates in managing and operating us, including costs for rendering corporate staff and support services to us. The reimbursement of expenses incurred by our General Partner and its affiliates could adversely affect our ability to pay cash distributions to our unitholders.

Our partnership agreement limits our General Partner’s fiduciary duties to our 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 might 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 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 voting rights with respect to the units it owns, its registration rights and its determination whether or not to consent to any merger or consolidation of the partnership;

• provides that our General Partner will not have any liability to us or our unitholders for decisions made in its capacity as a General Partner so long as it acted in good faith, meaning it believed the decision was in the best interests of our partnership;

• provides generally that affiliated transactions and resolutions of conflicts of interest not approved by the conflicts committee of our General Partner and not involving a vote of unitholders must be on terms no less favorable to us than those generally being provided to or available from unrelated third parties or be “fair and reasonable” to us, as determined by our General Partner in good faith, and that, in determining whether a transaction or resolution is “fair and reasonable,” our General Partner may consider the totality of the relationships between the parties involved, including other transactions that may be particularly advantageous or beneficial to us; 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.

Any unitholder is bound by the provisions in the partnership agreement, including those discussed above.

Unitholders have limited voting rights and are not entitled to elect our General Partner or its directors.

Unlike the holders of common stock in a corporation, unitholders have only limited voting rights on matters affecting our business and, therefore, limited ability to influence management's decisions regarding our business. Unitholders do not elect our General Partner or its Board of Directors and 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 is chosen by the members of our General Partner. Furthermore, if the unitholders are dissatisfied with the performance of our General Partner, they will have little ability to remove our General Partner. As a result of these limitations, the price at which our common units trade could be diminished because of the absence or reduction of a takeover premium in the trading price.

Even if unitholders are dissatisfied, they cannot remove our General Partner without its consent.

Our unitholders may be unable to remove the General Partner without its consent because the General Partner and its affiliates own a substantial number of common units. A vote of the holders of at least 66.67% of all outstanding units voting together as a single class is required to remove the General Partner. As of February 10, 2012, affiliates of our General Partner owned 16.7% of the total of our common units.

Our partnership agreement restricts the voting rights of those unitholders owning 20% or more of our common units or Series A Preferred Units.

Unitholders’ voting rights are further restricted by the partnership agreement provision providing that any units held by a person that owns 20% or more of any class of units then outstanding, other than our General Partner, its affiliates, their transferees, and persons who acquired such units with the prior approval of our General Partner, cannot vote on any matter. Our partnership

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agreement also contains provisions limiting the ability of unitholders to call meetings or to acquire information about our operations, as well as other provisions limiting our unitholders’ ability to influence the manner or direction of our management.

Control of our General Partner may be transferred to a third party without unitholder consent.

Our General Partner may transfer its general partner interest in us to a third party in a merger or in a sale of all or substantially all of its assets without the consent of our unitholders. Furthermore, our partnership agreement does not restrict the ability of the partners of our General Partner from transferring their ownership in our General Partner to a third party. The new partners 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 control the decisions taken by the Board of Directors and officers.

We may issue an unlimited number of additional units without unitholders’ approval, which would dilute the ownership interest of existing unitholders.

Our General Partner, without the approval of our unitholders, may cause us to issue an unlimited number of additional common units or other equity securities. The issuance by us of additional common units or other equity securities of equal or senior rank will have the following effects:

• our unitholders’ proportionate ownership interest in us will decrease;

• the amount of cash available for distribution on each unit may decrease;

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

• the market price of the common units may decline.

Our General Partner has a limited call right that may require unitholders to sell their units at an undesirable time or price.

If at any time our General Partner and its affiliates own more than 80% of the common units, our General Partner will have the right, but not the obligation (which it may assign to any of its affiliates or to us) to acquire all, but not less than all, of the common units held by unaffiliated persons at a price not less than their then-current market price. As a result, unitholders may be required to sell their common units at an undesirable time or price and may not receive any return on their investment. Unitholders may also incur a tax liability upon a sale of their units. As of February 10, 2012, affiliates of our General Partner owned 16.7% of the total number of outstanding common units.

Unitholders may not have limited liability if a court finds that unitholder actions constitute control of our business.

Under Delaware law, a unitholder could be held liable for our obligations to the same extent as a general partner if a court determined that the right of unitholders to remove our General Partner or to take other action under our partnership agreement constituted participation in the “control” of our business.

Our General Partner generally has unlimited liability for our obligations, such as our debts and environmental liabilities, except for those contractual obligations that are expressly made without recourse to our General Partner. Our partnership agreement allows the general partner to incur obligations on our behalf that are expressly non-recourse to the general partner. The general partner has entered into such limited recourse obligations in most instances involving payment liability and intends to do so in the future.

In addition, Section 17-607 of the Delaware Revised Uniform Limited Partnership Act provides that under some circumstances, a unitholder may be liable to us for the amount of a distribution for a period of three years from the date of the distribution.

We have a holding company structure in which our subsidiaries conduct our operations and own our operating assets. Additionally, we are not able to control the amounts of cash that HPC, MEP, Lone Star or Ranch JV may distribute to us.

We are a holding company, and our subsidiaries conduct all of our operations and own all of our operating assets. We have no significant assets other than the partnership interests and the equity in our subsidiaries. As a result, our ability to make required payments on our debt obligations and distributions on our common units depends on the performance of our subsidiaries and their ability to distribute funds to us. The ability of our subsidiaries to make distributions to us may be restricted by, among other things, our revolving credit facility and applicable state partnership and limited liability company laws and other laws and regulations. Pursuant to our revolving credit facility, we may be required to establish cash reserves for the future repayment of outstanding letters of credit under our revolving credit facility. If we are unable to obtain the funds necessary to pay the principal amount at maturity of our debt obligations, to repurchase our debt obligations upon the occurrence of a change of control or make distributions on our common units, we may be required to adopt one or more alternatives, such as a refinancing of our debt obligations or borrowing funds to make distributions on our common units. We cannot assure unitholders that we would be able to borrow funds to make distributions on our common units.

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Additionally, the ability of our joint ventures to make distributions to us may be restricted by, among other things, the terms of each such entity's partnership or limited liability company agreement, as applicable, and any debt instruments entered into by such entity as well as applicable state partnership or limited liability company laws, as applicable, and other laws and regulations. We do not control the amounts of cash that our joint ventures may distribute to us.

The credit and risk profile of our General Partner and its owners could adversely affect our credit ratings and profile.

The credit and business risk profiles of our General Partner, and of ETE as the indirect owner of our General Partner, may be factors in credit evaluations of us as a publicly traded limited partnership due to the significant influence of our General Partner and ETE over our business activities, including our cash distributions, 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 us to service their indebtedness.

ETE has significant indebtedness outstanding and is dependent principally on the cash distributions from its general and limited partner equity interests in us and ETP to service such indebtedness. Any distributions by us to ETE will be made only after satisfying our then current obligations to our 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 (ETE and its general partner), our credit ratings and business risk profile could be adversely affected if the ratings and risk profiles of such entities were viewed as substantially lower or riskier than ours.

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 or local entities. If the IRS treats us as a corporation or we become subject to a material amount of entity-level taxation for state or local tax purposes, it would substantially reduce the amount of cash available for payment for distributions on our common units.

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%, and would likely pay state and local income tax at varying rates. Distributions to our common unitholders would generally be taxed again as corporate distributions, and no income, gains, losses or deductions would flow through to unitholders. Because a tax would be imposed upon us as a corporation, our cash available for distribution to our common unitholders would be substantially reduced. Therefore, treatment of us as a corporation would result in a material reduction in the anticipated cash flow and after-tax return to the unitholders, likely causing a substantial reduction in the value of the units.

Current law may change so as to cause us to be treated as a corporation for federal income tax purposes or otherwise subject us to entity-level taxation. At the federal level, legislation has recently been considered that would have eliminated partnership tax treatment for certain publicly traded partnerships. Although such legislation would not have applied to us as proposed, it could be reintroduced in a manner that does apply to us. We are unable to predict whether any of these changes or other proposals will be reintroduced or will ultimately be enacted. Any such changes could negatively impact the value of an investment in our common units. At the state level, because of widespread state budget deficits and other reasons, several states are evaluating ways to subject partnerships to entity-level taxation through the imposition of state income, franchise and other forms of taxation. For example, we are required to pay a Texas margin tax. Imposition of such a tax on us by Texas, and, if applicable, by any other state, will reduce our cash available for distribution to our common unitholders.

Our partnership agreement provides that if a law is enacted or existing law is modified or interpreted in a manner that subjects us to taxation as a corporation or otherwise subjects us to entity-level taxation for federal, state or local income tax purposes, the minimum quarterly distribution amount and the target distribution amounts may be reduced to reflect the impact of that law on us.

A successful IRS contest of the federal income tax positions we take may adversely affect the market for our common units, and the cost of any IRS contest will reduce our cash available for distribution to you.

The IRS may adopt positions that differ from the positions we take. It may be necessary to resort to administrative or court proceedings to sustain some or all of the positions we take. A court may not agree with all of 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, our costs of any contest with the IRS will be borne indirectly by our unitholders and our General Partner because the costs will reduce our cash available for distribution.

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

Because our unitholders will be treated as partners to whom we will allocate taxable income that could be different in amount than the cash we distribute, they will be required to pay any federal income taxes and, in some cases, state and local income taxes on their share of our taxable income even if they receive no cash distributions from us. Our unitholders may not receive cash distributions from us equal to their share of our taxable income or even equal to the tax liability that results from that income.

Tax gain or loss on disposition of common units could be more or less than expected.

If a unitholder sells his common units, he will recognize a gain or loss equal to the difference between the amount realized and his tax basis in those common units. Prior distributions to a unitholder in excess of the total net taxable income he was allocated for a common unit, which decreased his tax basis in that common unit, will, in effect, become taxable income to him if the common unit is sold at a price greater than his tax basis in that common unit, even if the price is less than his original cost. A substantial portion of the amount realized, whether or not representing gain, may be ordinary income. In addition, because the amount realized includes a unitholder’s share of our nonrecourse liabilities, if a unitholder sells his common units, he may incur a tax liability in excess of the amount of cash he receives from the sale.

Tax-exempt entities and non-U.S. persons face unique tax issues from owning common units that may result in adverse tax consequences to them.

Investment in common units by tax-exempt entities, such as individual retirement accounts (known as IRAs), 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 a unitholder is a tax-exempt entity or a non-U.S. person, he should consult his tax advisor before investing in our common units.

We will treat each purchaser of our common units as having the same tax benefits without regard to the actual common units purchased. The IRS may challenge this treatment, which could adversely affect the value of the common units.

Because we cannot match transferors and transferees of common units and because of other reasons, we will take depreciation and amortization positions that may not conform to all aspects of existing Treasury regulations. A successful IRS challenge to those positions could adversely affect the amount of tax deductions available to a unitholder. It also could affect the timing of these tax deductions or the amount of gain from the sale of common units and could have a negative impact on the value of our common units or result in audit adjustments to a unitholder’s tax returns.

We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of our units on the first day of each month, instead of on the basis of the date a particular unit is transferred. The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and deduction among our unitholders.

We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of our units on the first day of each month, instead of on the basis of the date a particular unit is transferred. The use of this proration method may not be permitted under existing Treasury Regulations. However, recently proposed Treasury Regulations provide a safe harbor for publicly traded partnerships pursuant to which a similar monthly convention is allowed. Existing publicly traded partnerships are entitled to rely on these proposed Treasury Regulations; however they are not binding on the IRS and are subject to change until final Treasury Regulations are issued. Accordingly, if the IRS were to challenge our method of allocating income, gain, loss and deduction between transferors and transferees, or new Treasury Regulations were issued, we may be required to change the allocation of items of income, gain, loss and deduction among our unitholders.

A unitholder whose units are loaned to a “short seller” to cover a short sale of units may be considered as having disposed of those units. If so, he would no longer be treated for tax purposes as a partner with respect to those units during the period of the loan and may recognize gain or loss from the disposition.

Because a unitholder whose units are loaned to a “short seller” to cover a short sale of units may be considered as having disposed of the loaned units, he may no longer be treated for tax purposes as a partner with respect to those units during the period of the loan to the short seller and the unitholder may recognize gain or loss from such disposition. Moreover, during the period of the loan to the short seller, any of our income, gain, loss or deduction with respect to those units may not be reportable by the unitholder and any cash distributions received by the unitholder as to those units could be fully taxable as ordinary income. Unitholders desiring to assure their status as partners and avoid the risk of gain recognition from a loan to a short seller are urged to modify any applicable brokerage account agreements to prohibit their brokers from borrowing their units.

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We have adopted certain valuation and allocation methodologies that may result in a shift of income, gain, loss and deduction between the general partner and the unitholders. The IRS may challenge this treatment, which could adversely affect the value of the common units.

When we issue additional units or engage in certain other transactions, we determine the fair market value of our assets and allocate any unrealized gain or loss attributable to our assets to the capital accounts of our unitholders and our General Partner. Our methodology may be viewed as understating the value of our assets. In that case, there may be a shift of income, gain, loss and deduction between certain unitholders and the general partner, which may be unfavorable to such unitholders. Moreover, under our current valuation methods, subsequent purchasers of common units may have a greater portion of their Internal Revenue Code Section 743(b) adjustment allocated to our tangible assets and a lesser portion allocated to our intangible assets. The IRS may challenge our valuation methods, or our allocation of the Section 743(b) adjustment attributable to our tangible and intangible assets, and allocations of income, gain, loss and deduction between the general partner and certain of our unitholders.

In addition, for purposes of determining the amount of the unrealized gain or loss to be allocated to the capital accounts of our unitholders and our General Partner, we will reduce the fair market value of our property (to the extent of any unrealized income or gain in our property that has not previously been reflected in the capital accounts) to reflect the incremental share of such fair market value that would be attributable to the holders of our outstanding convertible redeemable preferred units if all of such convertible redeemable preferred units were converted into common units as of such date. Consequently, a holder of common units may be allocated less unrealized gain in connection with an adjustment of the capital accounts than such holder would have been allocated if there were no outstanding convertible redeemable preferred units. Following the conversion of our convertible redeemable preferred units into common units, items of gross income and gain (or gross loss and deduction) will be specially allocated to the holders of such common units to reflect differences between the capital accounts maintained with respect to such convertible redeemable preferred units and the capital accounts maintained with respect to common units. This method of maintaining capital accounts and allocating income, gain, loss and deduction with respect to the convertible redeemable preferred units is intended to comply with proposed Treasury Regulations. However, these proposed Treasury Regulations are not legally binding and are subject to change until final Treasury Regulations are issued. Accordingly, we may be required to change the allocation of items of income, gain, loss and deduction among our unitholders.

A successful IRS challenge to these methods or allocations could adversely affect the amount of taxable income or loss being allocated to our unitholders. It also could affect the amount of gain from our unitholders' sale of common units and could have a negative impact on the value of the common units or result in audit adjustments to our unitholders' tax returns without the benefit of additional deductions.

The sale or exchange of 50% or more of our capital and profits interests during any twelve-month period will result in the termination of our partnership for federal income tax purposes.

We will be considered to have terminated for federal income tax purposes if there is a sale or exchange of 50% or more of the total interests in our capital and profits within a twelve-month period. For purposes of determining whether the 50% threshold has been reached, multiple sales of the same unit will be counted only once. Although a termination likely will cause our unitholders to realize an increased amount of taxable income as a percentage of the cash distributed to them, we anticipate that the ratio of taxable income to distributions for future years will return to levels commensurate with our prior tax periods. However, any future termination of our partnership could have similar consequences. Additionally, in the case of a unitholder reporting on a taxable year other than a fiscal year ending December 31, the closing of our taxable year may result in more than twelve months of our taxable income or loss being includable in his taxable income for the year of termination. The position that there was a partnership termination does not affect our classification as a partnership for federal income tax purposes; however, we are treated as a new partnership for tax purposes. If treated as a new partnership, we must make new tax elections and could be subject to penalties if we are unable to prevail that a termination occurred. The IRS has recently announced a publicly traded partnership technical termination relief program whereby, if a publicly traded partnership that technically terminates requests publicly traded partnership technical termination relief and such relief is granted by the IRS, among other things, the partnership will only have to provide one Schedule K-1 to unitholders for the year notwithstanding two partnership tax years.

You may be subject to state and local taxes and tax return filing requirements.

In addition to federal income taxes, you will likely be subject to other taxes, including state and local 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, even if you do not live in any of those jurisdictions. You will likely be required to file state and local income tax returns and pay state and local income taxes in some or all of these jurisdictions. Further, you may be subject to penalties for failure to comply with those requirements. We own assets and do business in Texas, Oklahoma, Kansas, Louisiana, West Virginia, Arkansas, Colorado, Alabama, California, Mississippi, New Mexico, Utah and Pennsylvania. Each of these states, other than Texas, currently imposes a personal income tax as well as an income tax on corporations and other entities. Texas imposes a margin tax on

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corporations, limited partnerships, limited liability partnerships and limited liability companies. As we make acquisitions or expand our business, we may own assets or do business in additional states that impose a personal income tax. It is your responsibility to file all United States federal, foreign, state and local tax returns required as a result of being a unitholder.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Substantially all of our pipelines (including those of HPC, MEP and Lone Star), which are located in Texas, Louisiana, Oklahoma, Mississippi, Alabama, and Kansas, are constructed on rights-of-way granted by the apparent record owners of the property. Lands over which pipeline rights-of-way have been obtained may be subject to prior liens that have not been subordinated to the right-of-way grants. We have obtained, where necessary, easement agreements from public authorities and railroad companies to cross over or under, or to lay facilities in or along, watercourses, county roads, municipal streets, railroad properties and state highways, as applicable. In some cases, properties on which our pipelines were built were purchased in fee. These pipelines are used in our gathering and processing segment and in our corporate and others segment.

We believe that we have satisfactory title to all our assets. Record title to some of our assets may continue to be held by prior owners until we have made the appropriate filings in the jurisdictions in which such assets are located. Obligations under our credit facility are secured by substantially all of our assets and are guaranteed by the Partnership. Title to our assets may also be subject to other encumbrances. We believe that none of such encumbrances should materially detract from the value of our properties or our interest in those properties or should materially interfere with our use of them in the operation of our business.

Our executive offices occupy two entire floors in an office building at 2001 Bryan Street, Suite 3700, Dallas, Texas, 75201, under a lease that expires on October 31, 2019. We also maintain regional offices located on leased premises in Louisiana, Texas and Arkansas. While we may require additional office space as our business expands, we believe that our existing facilities are adequate to meet our needs for the immediate future, and that additional facilities will be available on commercially reasonable terms as needed.

For additional information regarding our properties, read “Item 1. Business.”

Item 3. Legal Proceedings

We are subject to a variety of risks and disputes normally incident to our business. As a result, we may, at any given time, be a defendant in various legal proceedings and litigation arising in the ordinary course of business. Neither the Partnership nor any of its subsidiaries is, however, currently a party to any material pending or, to our knowledge, threatened material legal or governmental proceedings, including proceedings under any of the various environmental protection statutes to which they are subject.

We maintain insurance policies with insurers in amounts and with coverages and deductibles that we, with the advice of our insurance advisors and brokers, believe are reasonable and prudent. We cannot, however, assure you that this insurance will be adequate to protect us from all material expenses related to potential future claims for personal and property damage or that these levels of insurance will be available in the future at economical prices.

For a description of legal proceedings, see Note 12 in the Notes to our Consolidated Financial Statements.

Item 4. Mine Safety Disclosures

Not applicable.

Part II

Item 5. Market for Registrant’s Common Units, Related Unitholder Matters and Issuer Purchases of Equity Securities

Market Price of and Distributions on the Common Units and Related Unitholder Matters

Our common units were first offered and sold to the public on February 3, 2006. On August 9, 2011, we transferred the listing of our common units from the NASDAQ to the NYSE. Our common units are currently listed on the NYSE under the symbol “RGP.” As of February 15, 2012, the number of holders of record of common units was 50, with 124,212,049 units held in street name.

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The following table sets forth, for the periods indicated, the high and low quarterly sales prices per common unit, as reported on the NYSE and on the NASDAQ prior to August 9, 2011, and the cash distributions declared per common unit, excluding the Series A Preferred Units which began receiving fixed quarterly cash distributions of $0.445 beginning with the quarter ending March 31, 2010:

	Price Ranges				Cash Distributions
Period	High		Low		(per common unit)
2011
Fourth Quarter	$	24.88	$	20.28	$	0.460
Third Quarter	26.80		20.91		0.455
Second Quarter	27.99		24.13		0.450
First Quarter	27.77		25.41		0.445
2010
Fourth Quarter	27.26		24.33		0.445
Third Quarter	26.45		23.54		0.445
Second Quarter	24.57		20.43		0.445
First Quarter	23.19		20.00		0.445

Cash Distribution Policy

We distribute to our unitholders, on a quarterly basis, all of our available cash in the manner described below. If we do not have sufficient cash to pay our distributions as well as satisfy our other operational and financial obligations, our General Partner has the ability to reduce or eliminate the distribution paid on our common units so that we may satisfy such obligations, including payments on our debt instruments.

Available cash generally means, for any quarter ending prior to liquidation of the Partnership, all cash on hand at the end of that quarter less the amount of cash reserves that are necessary or appropriate in the reasonable discretion of the General Partner to:

• provide for the proper conduct of our business;

• comply with applicable law or any partnership debt instrument or other agreement; or

• provide funds for distributions to unitholders and the General Partner in respect of any one or more of the next four quarters.

In addition to distributions on its General Partner interest, our General Partner is entitled to receive incentive distributions if the amount we distribute with respect to any quarter exceeds specified levels. The partnership agreement requires that it make distributions of Available Cash from operating surplus for any quarter after the subordination period in the following manner:

• first, to all unitholders and to the General Partner, pro rata, until each unitholder receives a total of $0.35 per unit outstanding for that quarter;

• second, to all unitholders and to the General Partner, pro rata, until each unitholder receives a total of $0.4025 per unit outstanding for that quarter;

• third, 13% to holders of the IDRs, to all unitholders and to the General Partner, pro rata, until the aggregate distributions equal $0.4375 per unit outstanding for that quarter;

• fourth, 23% to holders of the IDRs, to all unitholders and to the General Partner, pro rata, until the aggregate distributions equal $0.5250 per unit outstanding for that quarter; and

• thereafter, 48% to holders of the IDRs, to all unitholders and to the General Partner, pro rata.

Under the terms of the agreements governing our debt, we are prohibited from declaring or paying any distribution to unitholders if a default or event of default (as defined in such agreements) exists. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” for further discussion regarding the restrictions on distributions.

Recent Sales of Unregistered Securities

None.

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Issuer Purchases of Equity Securities

None.

Item 6. Selected Financial Data

The historical financial information presented below for the Partnership was derived from our audited consolidated financial statements as of and for the periods presented below. See “Item 7. Management's Discussions and Analysis of Financial Condition and Results of Operations” for a discussion of why our results may not be comparable, either from period to period or going forward. All tabular dollar amounts, except per unit data, are in thousands.

	Successor						Predecessor
	Year Ended December 31, 2011			Period from Acquisition (May 26, 2010) to December 31, 2010			Period from January 1, 2010 to May 25, 2010			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2007
Statement of Operations Data:
Total revenues	$	1,433,898		$	716,613		$	505,050		$	1,043,277		$	1,785,263		$	1,138,205
Total operating costs and expense	1,394,189			702,054			484,919			816,703			1,635,520			1,084,723
Operating income	39,709			14,559			20,131			226,574			149,743			53,482
Other income and deductions:
Income from unconsolidated affiliates	119,540			53,493			15,872			7,886			—			—
Interest expense, net	(102,474		)	(48,251		)	(34,541		)	(77,665		)	(62,940		)	(51,851		)
Loss on debt refinancing, net	—			(15,748		)	(1,780		)	—			—			(21,200		)
Other income and deductions, net	17,309			(8,229		)	(3,897		)	(15,132		)	328			1,249
Income (loss) from continuing operations before income taxes	74,084			(4,176		)	(4,215		)	141,663			87,131			(18,320		)
Income tax expense (benefit)	465			552			404			(1,095		)	(266		)	931
Income (loss) from continuing operations	$	73,619		$	(4,728	)	$	(4,619	)	$	142,758		$	87,397		$	(19,251	)
Discontinued operations
Net (loss) income from operations of east Texas assets	—			(1,244		)	(327		)	(2,269		)	13,931			5,720
Net income (loss)	73,619			(5,972		)	(4,946		)	140,489			101,328			(13,531		)
Net income attributable to noncontrolling interest	(1,177		)	(156		)	(406		)	(91		)	(312		)	(305		)
Net income (loss) attributable to Regency Energy Partners LP	$	72,442		$	(6,128	)	$	(5,352	)	$	140,398		$	101,016		$	(13,836	)
Amounts attributable to Series A Preferred Units	7,982			4,651			3,336			3,995			—			—
General partner’s interest, including IDRs	7,010			2,800			662			5,252			4,303			(366		)
Amount allocated to non-vested common units	—			—			(79		)	965			869			(103		)
Beneficial conversion feature for Class C common units	—			—			—			—			—			1,385
Beneficial conversion feature for Class D common units	—			—			—			820			7,199			—
Amount allocated to Class E common units	—			—			—			—			—			5,792
Limited partners’ interest in net income (loss)	$	57,450		$	(13,579	)	$	(9,271	)	$	129,366		$	88,645		$	(20,544	)
Basic and diluted income (loss) from continuing operations per unit:
Basic income (loss) from continuing operations per common and subordinated unit	$	0.39		$	(0.09	)	$	(0.10	)	$	1.63		$	1.14		$	(0.51	)
Diluted income (loss) from continuing operations per common and subordinated units	0.32			(0.09		)	(0.10		)	1.63			1.10			(0.51		)

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Distributions per common and subordinated unit	1.81		0.89			0.89			1.78			1.71		1.52
Basic and diluted income (loss) on discontinued operations per unit	$	—	$	(0.01	)	$	—		$	(0.03	)	$	0.21	$	0.11
Basic and diluted net income (loss) per unit:
Basic net income (loss) per common and subordinated unit	$	0.39	$	(0.10	)	$	(0.10	)	$	1.61		$	1.34	$	(0.40	)
Diluted net income (loss) per common and subordinated unit	0.32		(0.10		)	(0.10		)	1.60			1.28		(0.40		)
Income per Class C common unit due to beneficial conversion feature	$	—	$	—		$	—		$	—		$	—	$	0.48
Cash distributions declared per Class C common unit	—		—			—			—			—		—
Income per Class D common unit due to beneficial conversion feature	$	—	$	—		$	—		$	0.11		$	0.99	$	—
Cash distributions declared per Class D common unit	—		—			—			—			—		—
Income per Class E common unit due to beneficial conversion feature	$	—	$	—		$	—		$	—		$	—	$	1.23
Cash distributions declared per Class E common unit	—		—			—			—			—		2.06

	Successor				Predecessor
	December 31, 2011		December 31, 2010		December 31, 2009		December 31, 2008		December 31, 2007
Balance Sheet Data (at period end):
Property, plant and equipment, net	$	1,885,528	$	1,660,218	$	1,456,435	$	1,703,554	$	913,109
Total assets	5,567,856		4,770,204		2,533,414		2,458,639		1,278,410
Long-term debt (long-term portion only)	1,687,147		1,141,061		1,014,299		1,126,229		481,500
Series A Preferred Units	71,144		70,943		51,711		—		—
Partners’ capital	3,531,076		3,294,402		1,243,010		1,099,413		568,186

	Successor						Predecessor
	Year Ended December 31, 2011			Period from Acquisition (May 26, 2010) to December 31, 2010			Period from January 1, 2010 to May 25, 2010			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2007
Cash Flow Data:
Net cash flows provided by (used in):
Operating activities	$	253,755		$	79,786		$	89,421		$	143,960		$	181,298		$	79,529
Investing activities	(955,283		)	(296,429		)	(148,450		)	(156,165		)	(948,629		)	(157,933		)
Financing activities	693,118			203,059			72,186			21,433			734,959			99,443
Other Financial Data:
Adjusted total segment margin(1)	$	421,127		$	235,319		$	154,422		$	361,182		$	402,143		$	200,970
Adjusted EBITDA(1)	422,369			218,162			108,794			210,994			259,327			157,769
Maintenance capital expenditures	21,584			6,881			7,880			20,170			18,247			8,764

 _______________________

(1) See “—Non-GAAP Financial Measures” for a reconciliation to its most directly comparable GAAP measure.

Non-GAAP Financial Measures

We include in “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” the following non-GAAP financial measures: EBITDA, adjusted EBITDA, total segment margin, and adjusted total segment margin. We provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures as calculated and presented in accordance with GAAP.

We define EBITDA as net income (loss) plus interest expense, net, income tax expense, net, and depreciation and amortization expense. We define adjusted EBITDA as EBITDA plus (minus) the following:

38

• non-cash loss (gain) from commodity and embedded derivatives;

• non-cash unit-based compensation;

• loss (gain) on asset sales, net;

• loss on debt refinancing;

• other non-cash (income) expense, net;

• net income attributable to noncontrolling interest; and

• our interest in adjusted EBITDA from unconsolidated affiliates less income from unconsolidated affiliates.

These measures are used as supplemental measures by our management and by external users of our financial statements such as investors, banks, research analysts and others, to assess:

• financial performance of our assets without regard to financing methods, capital structure or historical cost basis;

• the ability of our assets to generate cash sufficient to pay interest costs, support our indebtedness and make cash distributions to our unitholders and General Partner;

• our operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing methods or capital structure; and

• the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.

EBITDA and adjusted EBITDA should not be considered an alternative to, or more meaningful than net income, operating income, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. Our EBITDA and adjusted EBITDA may not be comparable to a similarly titled measure of another company because other entities may not calculate EBITDA or adjusted EBITDA in the same manner.

EBITDA and adjusted EBITDA do not include interest expense, income tax expense or depreciation and amortization expense. Because we have borrowed money to finance our operations, interest expense is a necessary element of our costs and our ability to generate cash available for distribution. Because we use capital assets, depreciation and amortization are also necessary elements of our costs. Therefore, any measures that exclude these elements have material limitations. To compensate for these limitations, we believe that it is important to consider both net earnings determined under GAAP, as well as EBITDA and adjusted EBITDA, to evaluate our performance.

We define segment margin, generally, as revenues minus cost of sales. We calculate our Gathering and Processing segment margin and Corporate and Others segment margin as revenues generated from operations less the cost of natural gas and NGLs purchased and other costs of sales, including third-party transportation and processing fees. We do not record segment margin for the Joint Ventures segment because we record our ownership percentages of the net income in HPC, MEP, Lone Star and Ranch JV as income from unconsolidated affiliates in accordance with the equity method of accounting. We calculate our Contract Compression segment margin as revenues minus direct costs, primarily compressor unit repairs, associated with those revenues. We calculate our Contract Treating segment margin as revenues minus direct costs associated with those revenues. We calculate total segment margin as the sum of segment margin of our segments, excluding the Joint Ventures segment, less intersegment eliminations. We define adjusted segment margin as segment margin adjusted for non-cash (gains) losses from commodity derivatives. Our adjusted total segment margin equals the sum of our operating segments' adjusted segment margins or segment margins, as applicable, including intersegment eliminations.

Total segment margin and adjusted total segment margin are included as a supplemental disclosure because they are primary performance measures used by our management as they represent the result of product sales, service fee revenues and product purchases, a key component of our operations. We believe total segment margin and adjusted total segment margin are important measures because they are directly related to our volumes and commodity price changes. Operation and maintenance expense is a separate measure used by management to evaluate operating performance of field operations. Direct labor, insurance, property taxes, repair and maintenance, utilities and contract services comprise the most significant portion of our operation and maintenance expenses. These expenses are largely independent of the volumes we transport or process and fluctuate depending on the activities performed during a specific period. We do not deduct operation and maintenance expenses from total revenue in calculating total segment margin and adjusted total segment margin because we separately evaluate commodity volume and price changes in these margin amounts. As an indicator of our operating performance, total segment margin or adjusted total segment margin should not be considered an alternative to, or more meaningful than, net income as determined in accordance with GAAP. Our total segment margin and adjusted total segment margin may not be comparable to a similarly titled measure of another company because other entities may not calculate these measures in the same manner.

39

	Successor						Predecessor
	Year Ended December 31, 2011			Period from Acquisition (May 26, 2010) to December 31, 2010			Period from January 1, 2010 to May 25, 2010			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2007
Reconciliation of “Adjusted EBITDA” to net cash flows provided by operating activities and to net (loss) income
Net cash flows provided by operating activities	$	253,755		$	79,786		$	89,421		$	143,960		$	181,298		$	79,529
Add (deduct):
Depreciation and amortization, including debt issuance cost amortization and bond premium amortization	(174,630		)	(79,323		)	(49,363		)	(116,307		)	(105,324		)	(57,069		)
Write-off of debt issuance costs and bond premium	—			1,422			(1,780		)	—			—			(5,078		)
Amortization of excess fair value of unconsolidated affiliates	(5,847		)	(3,410		)	—			—			—			—
Income from unconsolidated affiliates	125,387			56,903			15,872			(7,886		)	—			43
Derivative valuation change	20,486			(33,189		)	(12,004		)	(5,163		)	14,700			(14,667		)
Gain (loss) on assets sales, net	2,372			(268		)	(303		)	133,284			(472		)	(1,522		)
Unit-based compensation expenses	(3,610		)	(1,827		)	(12,070		)	(6,008		)	(4,306		)	(15,534		)
Gain on insurance settlements	—			—			—			—			3,282			—
Trade accounts receivable, accrued revenues and related party receivables	8,328			401			11,272			(10,727		)	(18,648		)	28,789
Other current assets	(734		)	107			(2,516		)	(10,471		)	6,615			1,394
Trade accounts payable, accrued cost of gas and liquids, related party payables, and deferred revenues	(23,221		)	15,302			(8,649		)	3,762			40,772			(30,089		)
Other current liabilities	(9,590		)	12,853			(22,614		)	6,726			(12,749		)	149
Amount of swap termination proceeds reclassified into earnings	—			—			—			—			—			1,078
Distributions received from unconsolidated affiliates	(119,236		)	(56,903		)	(12,446		)	7,886			—			—
Other assets and liabilities	159			2,174			234			1,433			(3,840		)	(554		)
Net income (loss)	73,619			(5,972		)	(4,946		)	140,489			101,328			(13,531		)
Add (deduct):
Interest expense, net	102,474			48,292			34,679			77,996			63,243			52,016
Depreciation and amortization	168,684			76,641			46,084			109,893			102,566			55,074
Income tax expense (benefit)	465			552			404			(1,095		)	(266		)	931
EBITDA	345,242			119,513			76,221			327,283			266,871			94,490
Add (deduct):
Non-cash (gain) loss from commodity and embedded derivatives	(17,919		)	31,424			11,189			5,163			(14,708		)	11,500
Non-cash unit-based compensation	3,610			1,802			11,925			5,834			4,318			15,535
(Gain) loss on assets sales, net	(2,372		)	288			303			(133,284		)	472			1,522
Income from unconsolidated affiliates	(119,540		)	(53,493		)	(15,872		)	(7,886		)	—			—
Partnership’s ownership interest in HPC’s adjusted EBITDA (1)	72,672			45,830			21,184			11,398			—			—
Partnership’s ownership interest in MEP’s adjusted EBITDA (2)	103,059			55,682			—			—			—			—
Partnership’s ownership interest in Lone Star’s adjusted EBITDA (3)	37,841			—			—			—			—			—
Loss on debt refinancing, net	—			15,748			1,780			—			—			21,200
Other expense, net	(224		)	1,368			2,064			2,486			2,374			13,522
Adjusted EBITDA	$	422,369		$	218,162		$	108,794		$	210,994		$	259,327		$	157,769
(1) 100% of HPC's Adjusted EBITDA is calculated as follows:
Net income	$	109,186		$	71,383		$	35,354		$	19,734		$	—		$	—
Add:

40

Depreciation and amortization	34,930			20,075			11,722		8,514		—		—
Interest expense	1,245			350			176		158		—		—
Gain on insurance settlement	—			(242		)	—		—		—		—
Loss on asset sales, net	—			105			—		—		—		—
Other expense, net	16			8			6		50		—		—
HPC's Adjusted EBITDA	$	145,377		$	91,679		$	47,258	$	28,456	$	—	$	—
(2) 100% of MEP's EBITDA is calculated as follows:
Net income	$	85,339		$	42,528		$	—	$	—	$	—	$	—
Add:
Depreciation and amortization	69,538			40,103			—		—		—		—
Interest expense, net	51,515			28,959			—		—		—		—
MEP's Adjusted EBITDA	$	206,392		$	111,590		$	—	$	—	$	—	$	—
(3) 100% of Lone Star's Adjusted EBITDA is calculated as follows:
Net income	$	93,959		$	—		$	—	$	—	$	—	$	—
Add:
Depreciation and amortization	32,248			—			—		—		—		—
Other income, net	(68		)	—			—		—		—		—
Lone Star's Adjusted EBITDA	$	126,139		$	—		$	—	$	—	$	—	$	—

	Successor						Predecessor
	Year Ended December 31, 2011			Period from Acquisition (May 26, 2010) to December 31, 2010			Period from January 1, 2010 to May 25, 2010			Year Ended December 31, 2009			Year Ended December 31, 2008			Year Ended December 31, 2007
Reconciliation of net income (loss) to “Adjusted total segment margin”
Net income (loss)	$	73,619		$	(5,972	)	$	(4,946	)	$	140,489		$	101,328		$	(13,531	)
Add (deduct):
Operation and maintenance	147,643			77,808			47,842			117,080			119,715			47,385
General and administrative	67,408			43,739			37,212			57,863			51,323			39,713
(Gain) loss on assets sales, net	(2,372		)	213			303			(133,282		)	457			1,522
Management services termination fee	—			—			—			—			3,888			—
Transaction expenses	—			—			—			—			1,620			420
Depreciation and amortization	168,684			75,967			41,784			100,098			93,393			46,362
Income from unconsolidated affiliates	(119,540		)	(53,493		)	(15,872		)	(7,886		)	—			—
Interest expense, net	102,474			48,251			34,541			77,665			62,940			51,851
Loss on debt refinancing, net	—			15,748			1,780			—			—			21,200
Other income and deductions, net	(17,309		)	8,229			3,897			15,132			(328		)	(1,249		)
Income tax expense (benefit)	465			552			404			(1,095		)	(266		)	931
Discontinued operations	—			1,244			327			2,269			(13,931		)	(5,720		)
Total segment margin	421,072			212,286			147,272			368,333			420,139			188,884
Add (deduct):
Non-cash loss (gain) from commodity derivatives	55			23,033			7,150			(7,151		)	(17,996		)	9,027
Non-cash put option expiration	—			—			—			—			—			3,059
Adjusted total segment margin	$	421,127		$	235,319		$	154,422		$	361,182		$	402,143		$	200,970

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion analyzes our financial condition and results of operations. You should read the following discussion of our financial condition and results of operations in conjunction with our historical consolidated financial statements and notes included elsewhere in this document.

We are a growth-oriented publicly-traded Delaware limited partnership formed in 2005 engaged in the gathering and processing, contract compression, treating and transportation of natural gas and the transportation, fractionation and storage of NGLs. We focus on providing midstream services in some of the most prolific natural gas producing regions in the United States, including the Eagle Ford, Haynesville, Barnett, Fayetteville, Marcellus, Bone Spring and Avalon shales as well as the Permian Delaware basin and the mid-continent region. Our assets are primarily located in Texas, Louisiana, Arkansas, Pennsylvania, California, Mississippi, Alabama, West Virginia and the mid-continent region of the United States, which includes Kansas, Colorado and Oklahoma.

We divide our operations into five business segments:

• Gathering and Processing. We provide “wellhead-to-market” services to producers of natural gas, which include transporting raw natural gas from the wellhead through gathering systems, processing raw natural gas to separate NGLs and selling or delivering the pipeline-quality natural gas and NGLs to various markets and pipeline systems.

• Joint Ventures. We own investments in four joint ventures:

◦ a 49.99% general partner interest in HPC, which owns RIGS, a 450-mile intrastate pipeline that delivers natural gas from northwest Louisiana to downstream pipelines and markets;

◦ a 50% membership interest in MEP, which owns an interstate natural gas pipeline with approximately 500 miles stretching from southeast Oklahoma through northeast Texas, northern Louisiana and central Mississippi to an interconnect with the Transcontinental Gas Pipe Line system in Butler, Alabama;

◦ a 30% membership interest in Lone Star, an entity owning a diverse set of midstream energy assets including NGL pipelines, storage, fractionation and processing facilities located in the states of Texas, Mississippi and Louisiana; and

◦ a 33.33% membership interest in Ranch JV, which, upon completion of construction in 2012, will process natural gas delivered from the NGLs-rich Bone Spring and Avalon shale formations in west Texas.

• Contract Compression. We own and operate a fleet of compressors used to provide turn-key natural gas compression services for customer specific systems.

• Contract Treating. We own and operate a fleet of equipment used to provide treating services, such as carbon dioxide and hydrogen sulfide removal, natural gas cooling, dehydration and BTU management, to natural gas producers and midstream pipeline companies.

• Corporate and Others. Our Corporate and Others segment comprises a small regulated pipeline and our corporate offices.

Gathering and Processing segment. Results of operations from our Gathering and Processing segment are determined primarily by the volumes of natural gas that we gather and process, our current contract portfolio and natural gas and NGL prices. We measure the performance of this segment primarily by the adjusted segment margin it generates. We gather and process natural gas pursuant to a variety of arrangements generally categorized as “fee-based” arrangements, “percent-of-proceeds” arrangements and “keep-whole” arrangements. Under fee-based arrangements, we earn fixed cash fees for the services that we render. Under the latter two types of arrangements, we generally purchase raw natural gas and sell processed natural gas and NGLs. We regard the adjusted segment margin generated by our sales of natural gas and NGLs under percent-of-proceeds and keep-whole arrangements as comparable to the revenues generated by fixed fee arrangements to the extent that they are hedged.

Percent-of-proceeds and keep-whole arrangements involve commodity price risk to us because our adjusted segment margin is based in part on natural gas and NGL prices. We seek to minimize our exposure to fluctuations in commodity prices in several ways, including managing our contract portfolio. In managing our contract portfolio, we classify our gathering and processing contracts according to the nature of commodity risk implicit in the settlement structure of those contracts.

We also minimize our exposure to commodity price fluctuations by executing swap and put option contracts settled against ethane, propane, butane, natural gasoline, natural gas and WTI market prices. We continually monitor our hedging and contract portfolio and expect to continue to adjust our hedge position as conditions warrant.

42

In addition, we perform a producer services function whereby we purchase natural gas from producers or gas marketers at receipt points on our systems, including HPC, and transport that gas to delivery points on HPC's system at which we sell the natural gas at market price. We regard the segment margin with respect to those purchases and sales as the economic equivalent of a fee for our transportation service. These contracts are frequently settled in terms of an index price for both purchases and sales. In order to minimize commodity price risk, we attempt to match sales with purchases at the index price. We typically sell natural gas under pricing terms related to a market index. To the extent possible, we match the pricing and timing of our supply portfolio to our sales portfolio in order to lock in our margin and reduce our overall commodity price exposure. To the extent our natural gas position is not balanced, we will be exposed to the commodity price risk associated with the price of natural gas. Refer to “Item 7A. Quantitative and Qualitative Disclosure about Market Risk” for further details.

Joint Ventures segment. HPC has the capacity to transport up to 2.1 Bcf/d of natural gas. Results of HPC's operations are determined primarily by the volumes of natural gas transported and subscribed on its intrastate pipeline system and the level of fees charged to customers or the margins received from purchases and sales of natural gas. HPC generates revenues and segment margins principally under fee-based transportation contracts. Approximately 85% of the margin HPC earns is related to fixed capacity reservation charges that are not directly dependent on throughput volumes or commodity prices. If a sustained decline in commodity prices should result in a decline in volumes, HPC's revenues from these arrangements would not be significantly impacted until expiration of the current contracts.

MEP pipeline system, operated by KMP, has the capability to transport up to 1.8 Bcf/d of natural gas, and the pipeline capacity is fully subscribed with long-term binding commitments from creditworthy shippers. Results of MEP's operations are determined primarily by the volumes of natural gas transported and subscribed on its interstate pipeline system and the level of fees charged to customers. MEP generates revenues and segment margins principally under fee-based transportation contracts. The margin MEP earns is primarily related to fixed capacity reservation charges that are not directly dependent on throughput volumes or commodity prices. If a sustained decline in commodity prices should result in a decline in volumes, MEP's revenues would not be significantly impacted until expiration of the current contracts.

Lone Star owns and operates an NGLs storage, fractionation and transportation business. Lone Star's storage assets are primarily located in Mont Belvieu, Texas and its West Texas Pipeline transports NGLs through an intrastate pipeline system that originates in the Permian Basin in west Texas, passes through the Barnett shale production area in North Texas and terminates at the Mont Belvieu storage and fractionation complex. Lone Star also owns and operates fractionation and processing assets located in Louisiana. Results of Lone Star's operations are based upon fee-based revenues and commodity pricing which are determined primarily by volumes stored, processed or transported, the level of fees charged to customers and the value of the commodity in the market at the time of sale. The margin Lone Star earns is primarily related to the volume of NGLs stored, processed and transported.

We own a 33.33% interest in Ranch JV, a joint venture entity which is constructing a processing facility in Ward County, Texas, to process natural gas delivered from the NGLs-rich Bone Spring and Avalon shale formations. APM and CM own the remaining 66.67% interest in the joint venture. The project will consist of the construction of two plants, a 25 million cubic feet per day (MMcf/d) refrigeration plant and a 100 MMcf/d cryogenic processing plant. The initial start-up of the refrigeration unit is expected to be in service by the second quarter of 2012, with full facilities available by the fourth quarter of 2012.

Contract Compression segment. We own and operate a fleet of compressors used to provide turn-key natural gas compression services for customer specific systems. We own and operate more than 777,000 horsepower of compression for customers in Texas, Louisiana, Arkansas, Pennsylvania and California.

Contract Treating segment. We own and operate a fleet of equipment used to provide treating services, such as carbon dioxide and hydrogen sulfide removal, natural gas cooling, dehydration and BTU management, to natural gas producers and midstream pipeline companies.

HOW WE EVALUATE OUR OPERATIONS. Management uses a variety of financial and operational measurements to analyze our performance. We view these measures as important tools for evaluating the success of our operations and review these measurements on a monthly basis for consistency and trend analysis. These measures include volumes, segment margin, total segment margin, adjusted segment margin, adjusted total segment margin and operation and maintenance expense on a segment and company-wide basis and EBITDA and adjusted EBITDA on a company-wide basis.

Volumes. We must continually obtain new supplies of natural gas to maintain or increase throughput volumes on our gathering and processing systems. Our ability to maintain existing supplies of natural gas and obtain new supplies is affected by (i) the level of workovers or recompletions of existing connected wells and successful drilling activity in areas currently dedicated to our gathering and processing systems, (ii) our ability to compete for volumes from successful new wells in other areas and (iii) our ability to obtain natural gas that has been released from other commitments. We routinely monitor producer activity in the areas served by our gathering and processing systems to pursue new supply opportunities.

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Segment Margin and Total Segment Margin. We define segment margin, generally, as revenues minus cost of sales. We calculate our Gathering and Processing segment margin and Corporate and Others segment margin as our revenues generated from operations less the cost of natural gas and NGLs purchased and other cost of sales, including third-party transportation and processing fees.

We do not record segment margin for the Joint Ventures segment because we record our ownership percentage of the net income as income from unconsolidated affiliates in accordance with the equity method of accounting.

We calculate our Contract Compression segment margin as our revenues generated from our contract compression operations minus direct costs, primarily compressor unit repairs, associated with those revenues.

We calculate our Contract Treating segment margin as revenues generated from our contract treating operations minus direct costs associated with those revenues.

We calculate total segment margin as the total of segment margin of our five segments, less intersegment eliminations.

Adjusted Segment Margin and Adjusted Total Segment Margin. We define adjusted segment margin as segment margin adjusted for non-cash (gains) losses from commodity derivatives. Our adjusted total segment margin equals the sum of our operating segments' adjusted segment margins or segment margins, including intersegment eliminations. Adjusted segment margin and adjusted total segment margin are included as supplemental disclosures because they are primary performance measures used by management as they represent the results of product purchases and sales, a key component of our operations.

Revenue Generating Horsepower. Revenue generating horsepower is the primary driver for revenue growth in our contract compression segment, and it is also the primary measure for evaluating our operational efficiency. Revenue generating horsepower is the total horsepower that our Contract Compression segment owns and operates for external customers. It does not include horsepower under contract that is not generating revenue or idle horsepower.

Revenue Generating Gallons per Minute (GPM). Revenue generating GPM is the primary driver for revenue growth of the treating business in our contract treating segment. GPM is used as a measure of the treating capacity of an amine plant. Revenue generating GPM is our total GPM under contract less GPM that is not generating revenues.

Operation and Maintenance Expense. Operation and maintenance expense is a separate measure that we use to evaluate operating performance of field operations. Direct labor, insurance, property taxes, repair and maintenance, utilities and contract services comprise the most significant portion of our operating and maintenance expense. These expenses are largely independent of the volumes through our systems but fluctuate depending on the activities performed during a specific period. We do not deduct operation and maintenance expenses from total revenues in calculating segment margin because we separately evaluate commodity volume and price changes in segment margin.

EBITDA and Adjusted EBITDA. We define EBITDA as net income (loss) plus interest expense, provision for income taxes and depreciation and amortization expense. We define adjusted EBITDA as EBITDA plus or minus the following:

• non-cash loss (gain) from commodity and embedded derivatives;

• non-cash unit-based compensation;

• loss (gain) on asset sales, net;

• loss on debt refinancing;

• other non-cash (income) expense, net;

• net income attributable to noncontrolling interest; and

• our interest in adjusted EBITDA from unconsolidated affiliates less income from unconsolidated affiliates.

These measures are used as supplemental measures by our management and by external users of our financial statements such as investors, banks, research analysts and others, to assess:

• financial performance of our assets without regard to financing methods, capital structure or historical cost basis;

• the ability of our assets to generate cash sufficient to pay interest costs, support our indebtedness and make cash distributions to our unitholders and General Partner;

• our operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing or capital structure; and

• the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.

44

Neither EBITDA nor adjusted EBITDA should be considered as an alternative to, or more meaningful than, net income, operating income, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP. EBITDA is the starting point in determining cash available for distribution, which is an important non-GAAP financial measure for a publicly traded partnership.

GENERAL TRENDS AND OUTLOOK. We expect our business to continue to be affected by the following key trends. Our expectations are based on assumptions made by us and information currently available to us. To the extent our underlying assumptions about or interpretations of available information prove incorrect, our actual results may vary materially from our expected results.

Natural Gas Supply and Demand. Domestic crude oil production increased from 5.1 million Bbls/d in 2007 to 5.5 million Bbls/d in 2010, a 7.8% increase. This increase is attributable to recent technological advances in the development of tight oil and shale resources as well as the shift in drilling in shale plays.

Recently, however, as drilling activities have been more focused on shale plays with a high concentration of NGLs and crude oil, some producers have announced plans to reduce gas drilling activities in order to focus on oil and NGLs prospects.

Energy Outlook. In its annual energy outlook forecast, the EIA projects that domestic production of crude oil will increase from 5.5 million Bbls/d in 2010 to 6.7 million by 2020, a 21.8% increase. Although NGLs production is projected to decline beyond 2020, it is expected to remain above 6.1 million Bbls/d through 2035. By 2016, the U.S. is projected to be a net exporter of NGLs and overall net exporter of natural gas by 2021.

Natural gas production from shales is expected to increase to 13.6 trillion cubic feet by 2035 from 5 trillion cubic feet produced in 2010. Natural gas production from shales amounted to 23% of total natural gas produced in the U.S. in 2010 and projected to grow to 49% by 2035. The EIA report also expects that natural gas share of electric power generation will increase from 24% in 2010 to 27% by 2035.

The increase in natural gas consumption is expected to come primarily from electricity generation. Natural gas used in electricity generation is projected to grow from 7.4 trillion cubic feet in 2010 to 8.9 trillion cubic feet in 2035. Overall, natural gas consumption is projected to increase from 24.1 trillion cubic feet in 2010 to 26.5 trillion cubic feet in 2035.

Effect of Interest Rates and Inflation. Interest rates on existing and future credit facilities and future debt offerings could be significantly higher than current levels, causing our financing costs to increase accordingly. Although increased financing costs could limit our ability to raise funds in the capital markets, we expect to remain competitive with respect to acquisitions and capital projects since our competitors would face similar circumstances.

Inflation in the United States has been relatively low in recent years and has not had a material effect on our results of operations. It may in the future, however, increase the cost to acquire or replace property, plant and equipment and may increase the costs of labor and supplies. Our operating revenues and costs are influenced to a greater extent by price changes in natural gas and NGLs. To the extent permitted by competition, regulation and our existing agreements, we have and will continue to pass along a portion of increased costs to our customers in the form of higher fees.

RECENT DEVELOPMENTS

Investment in Lone Star. In May 2011, we contributed $592.7 million in cash to Lone Star, in exchange for our 30% membership interest. Lone Star, a newly formed joint venture that is owned 70% by ETP and 30% by us, completed its acquisition of all of the membership interest in LDH, a wholly-owned subsidiary of Louis Dreyfus Highbridge Energy LLC, for $1.98 billion in cash. To fund a portion of this capital contribution, we issued 8,500,001 common units representing limited partnership interests for net proceeds of $203.9 million. These units were issued in a private placement conducted in accordance with the exemption from the registration requirement of the Securities Act of 1933, as amended, under section 4(2) thereof. These units were subsequently registered with the SEC. The remaining portion of our capital contribution was funded by additional borrowings under our revolving credit facility.

Eagle Ford Expansion. In June 2011, we entered into agreements to provide gas and condensate gathering services for a producer in the Eagle Ford shale and to construct facilities to perform these services, including a wellhead gathering system, at an expected cost of $450 million. The expansion will be owned and operated by us and will tie into our existing gathering system. In addition, we have purchased certain existing midstream assets located in the Eagle Ford shale as part of this expansion. The expansion is ongoing with volumes increasing throughout the construction of the project. The expansion is scheduled for completion by 2014.

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Lone Star Expansion. In May 2011, Lone Star announced a construction project of a 100,000 Bbls/d fractionator and related storage services and interconnectivity infrastructure to be constructed in Mont Belvieu, Texas, which we expect to complete in early 2013. Our estimated capital expenditures for this project are $118 million.

In June 2011, Lone Star announced it would construct an approximate 570-mile NGLs pipeline that extends from Winkler County in west Texas to a processing plant in Jackson County, Texas. This pipeline will have a minimum capacity of approximately 209,000 Bbls/d. In connection with this project, Lone Star has secured capacity on ETP's recently announced NGL pipeline from Jackson County to Mont Belvieu. Our estimated capital expenditures for this project are $275 million.

In February 2012, Lone Star announced it would construct a second 100,000 Bbls/d NGL fractionation facility at Mont Belvieu, Texas. Lone Star expects this second fractionator to be completed in the first quarter of 2014 at an estimated cost of $350 million, of which our proportionate estimated capital contributions is $105 million.

Purchase of Additional MEP Interest. On September 1, 2011, the Partnership purchased an additional 0.1% membership interest in MEP from ETP for $1.2 million in cash, bringing its total membership interest in MEP to 50%. Because this transaction occurred between entities under common control, partners' capital was increased by $0.2 million, which represented a deemed contribution of the excess carrying amount of ETP's investment of $1.4 million over the purchase price.

Investment in Ranch JV. On December 2, 2011, Ranch JV was formed by us, APM and CM, each owning 33.33% of the joint venture. Ranch JV, upon completion of construction in 2012, will process natural gas delivered from the NGLs-rich Bone Spring and Avalon shale formations in west Texas. The project consists of two plants, a 25 million cubic feet per day (MMcf/d) refrigeration plant and a 100 MMcf/d cryogenic processing plant. The initial start-up of the refrigeration unit is expected to be in service by the second quarter of 2012, with full facilities available by the fourth quarter of 2012. We expect capital expenditures related to this project to total approximately $100 million, of which one-third will be owned and contributed by each joint venture partner.

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RESULTS OF OPERATIONS

Year Ended December 31, 2011 vs. Combined Year Ended December 31, 2010

(Tabular dollar amounts, except per unit data, are in thousands)

				Combined Year Ended December 31, 2010
	Successor						Predecessor
	Year Ended December 31, 2011			Period from Acquisition (May 26, 2010) to December 31, 2010			Period from January 1, 2010 to May 25, 2010			Combined Year Ended December 31, 2010			Change			Percent
Total revenues	$	1,433,898		$	716,613		$	505,050		$	1,221,663		$	212,235		17	%
Cost of sales	1,012,826			504,327			357,778			862,105			150,721			17
Total segment margin(1)	421,072			212,286			147,272			359,558			61,514			17
Operation and maintenance	147,643			77,808			47,842			125,650			21,993			18
General and administrative	67,408			43,739			37,212			80,951			(13,543		)	17
(Gain) loss on asset sales, net	(2,372		)	213			303			516			(2,888		)	560
Depreciation and amortization	168,684			75,967			41,784			117,751			50,933			43
Operating income	39,709			14,559			20,131			34,690			5,019			14
Income from unconsolidated affiliates	119,540			53,493			15,872			69,365			50,175			72
Interest expense, net	(102,474		)	(48,251		)	(34,541		)	(82,792		)	(19,682		)	24
Loss on debt refinancing, net	—			(15,748		)	(1,780		)	(17,528		)	17,528			100
Other income and deductions, net	17,309			(8,229		)	(3,897		)	(12,126		)	29,435			243
Income (loss) from continuing operations before income taxes	74,084			(4,176		)	(4,215		)	(8,391		)	82,475			983
Income tax expense	465			552			404			956			(491		)	51
Income (loss) income from continuing operations	$	73,619		$	(4,728	)	$	(4,619	)	$	(9,347	)	$	82,966		888
Discontinued operations	—			(1,244		)	(327		)	(1,571		)	1,571			100
Net income (loss)	$	73,619		$	(5,972	)	$	(4,946	)	$	(10,918	)	$	84,537		774
Net income attributable to the noncontrolling interest	(1,177		)	(156		)	(406		)	(562		)	(615		)	109
Net income (loss) attributable to Regency Energy Partners LP	$	72,442		$	(6,128	)	$	(5,352	)	$	(11,480	)	$	83,922		731	%
Gathering and processing segment margin	$	233,463		$	110,011		$	85,997		$	196,008		$	37,455		19	%
Non-cash loss from commodity derivatives	55			23,033			7,150			30,183			(30,128		)	100
Adjusted gathering and processing segment margin	$	233,518		$	133,044		$	93,147		$	226,191		$	7,327		3
Contract compression segment margin(2)	155,573			91,853			62,356			154,209			1,364			1
Contract treating segment margin(2)	29,456			11,454			—			11,454			18,002			157
Corporate and others segment margin	19,284			13,047			8,045			21,092			(1,808		)	9
Intersegment eliminations	(16,704		)	(14,079		)	(9,126		)	(23,205		)	6,501			28
Adjusted total segment margin	$	421,127		$	235,319		$	154,422		$	389,741		$	31,386		8	%

_______________________

(1) For reconciliation of segment margin to the most directly comparable financial measure calculated and presented in accordance with GAAP, read “Item 6. Selected Financial Data.”

(2) Contract Compression and Contract Treating segment margins include intersegment revenues of $16.7 million and $23.2

47

million for the years ended December 31, 2011 and 2010, respectively. These intersegment revenues were eliminated upon consolidation.

Net Income (Loss)Attributable to Regency Energy Partners LP. Net income (loss) attributable to Regency Energy Partners LP increased to a net income of $72.4 million in the year ended December 31, 2011 from a net loss of $11.5 million in the year ended December 31, 2010. The major components of this change were as follows:

• $61.5 million increase in total segment margin mainly due to increased volumes in south Texas and a full year of Contract Treating segment margin;

• $50.2 million increase in income from unconsolidated affiliates primarily from our acquisitions of a 49.9% interest in MEP in May 2010 and a 30% interest in Lone Star in May 2011;

• $29.4 million increase in other income and deductions, net due to the non-cash gain on the embedded derivatives related to the Series A Preferred Units;

• the absence of a $17.5 million redemption premium paid in 2010 and recorded as a loss on debt refinancing, net;

• $13.5 million decrease in general and administrative expenses primarily due to the absence of a $9.9 million one-time charge of unit-based compensation expense in 2010 related to the vesting of outstanding LTIP grants upon the acquisition of our General Partner by ETE; offset by

• $50.9 million increase in depreciation and amortization expense primarily related to additional assets placed in service during 2011 and a full year of depreciation related to the fair value adjustment of our long-lived assets upon the acquisition of our General Partner;

• $22 million increase in operations and maintenance expense primarily due to increased compression and pipeline maintenance as well as a full year operation of the Contract Treating segment in 2011; and

• $19.7 million increase in interest expense, net, primarily related to the interest associated with the $500 million 2021 Notes issued in May 2011 to partially fund the acquisition of our 30% interest in Lone Star as well as a full year of interest associated with the $600 million 2018 Notes issued in October 2010.

Adjusted Total Segment Margin. Adjusted total segment margin increased to $421.1 million in the year ended December 31, 2011 from $389.7 million in the year ended December 31, 2010. The major components of this increase were as follows:

• Adjusted Gathering and Processing segment margin increased to $233.5 million for the year ended December 31, 2011 from $226.2 million for the year ended December 31, 2010 primarily due to the increased volumes in the Eagle Ford shale in south Texas and Permian Delaware Basin in west Texas. Total Gathering and Processing segment throughput increased to 1,187,000 MMBtu/d during the year ended December 31, 2011 from 996,800 MMBtu/d during the year ended December 31, 2010. Total NGL gross production increased to 32,000 Bbls/d during the year ended December 31, 2011 from 26,000 Bbls/d during the year ended December 31, 2010;

• Contract Compression segment margin increased to $155.6 million in the year ended December 31, 2011 from $154.2 million in 2010. The increase was primarily attributable to the increased revenue generating horsepower provided to third parties. As of December 31, 2011, our Contract Compression segment's total revenue generating horsepower was 777,000, compared to 767,000 as of December 31, 2010;

• Contract Treating segment margin increased to $29.5 million in the year ended December 31, 2011 from $11.5 million in 2010. We acquired the Contract Treating segment in September 2010. Revenue generating GPM as of December 31, 2011 and December 31, 2010 was 3,465 and 3,431, respectively;

• Corporate and Others segment margin decreased to $19.3 million in the year ended December 31, 2011 from $21.1 million in the year ended December 31, 2010, which was primarily attributable to a decrease in margin related to Gulf States; and

• Intersegment eliminations decreased to $16.7 million in the year ended December 31, 2011 from $23.2 million in the year ended December 31, 2010. The decrease was due to decreased intersegment transactions between the Gathering and Processing and the Contract Compression segment as a result of the transfer of certain compression units from the Contract Compression segment to the Gathering and Processing segment in the second quarter of 2011.

Operation and Maintenance. Operation and maintenance expense increased to $147.6 million in the year ended December 31, 2011 from $125.7 million in the year ended December 31, 2010. The increase is primarily due to the following:

• $6.6 million increase in compressor maintenance costs primarily related to an increase in lube oil and materials costs;

48

• $6.1 million increase in pipeline maintenance expenses in our Gathering and Processing segment;

• $3.2 million increase in employee expenses primarily due to higher short-term incentive compensation accrual;

• $2.5 million increase in plant operating expenses primarily related to our Contract Treating segment, which was acquired in September 2010; and

• $2.1 million increase in consumable products.

General and Administrative. General and administrative expense decreased to $67.4 million in the year ended December 31, 2011 from $81 million in the year ended December 31, 2010. This decrease is primarily the result of the following:

• $12.5 million decrease in employee costs primarily due to the shared services integration and resulting reduction in headcount; and

• the absence of $9.9 million one-time charge in unit-based compensation primarily related to the vesting of outstanding LTIP grants upon the acquisition of our General Partner by ETE in May 2010; offset by

• $10.7 million increase in related party general and administrative expenses for the services agreements with Services Co. and ETC.

(Gain) Loss on Asset Sales, net. (Gain) loss on asset sales, net increased to a net gain of $2.4 million in the year ended December 31, 2011 from a net loss of $0.5 million in the year ended December 31, 2010 primarily due to the sale of certain assets in our Gathering and Processing and Contract Treating segments in 2011.

Depreciation and Amortization. Depreciation and amortization expense increased to $168.7 million in the year ended December 31, 2011 from $117.8 million in the year ended December 31, 2010. This increase was the result of $34.6 million of additional depreciation and amortization expense due to the completion of various organic growth projects since December 2010 and an $8.6 million increase related to our Contract Treating segment that we acquired in September 2010. Additionally, there was a $7.7 million increase in depreciation and amortization expense incurred related to the increase of property, plant and equipment amounts resulting from the fair value adjustments upon the change in control resulting from the acquisition of our General Partner in May 2010. Had the change in control occurred on January 1, 2010, our depreciation and amortization expense on a pro forma basis for the combined year ended December 31, 2010 would have been $125.4 million.

Income from Unconsolidated Affiliates. Income from unconsolidated affiliates increased to $119.5 million for the year ended December 31, 2011 from $69.4 million for the year ended December 31, 2010. The schedule summarizes the components of income from unconsolidated affiliates and our ownership interest for the years ended December 31, 2011 and 2010, respectively:

	Year Ended December 31, 2011											Year Ended December 31, 2010
	HPC			MEP		Lone Star(4)			Total			HPC			MEP(2)			Lone Star	Total
Net income	$	109,186		$	85,339	$	93,959		$	288,484		$	106,737		$	42,540		N/A	$	149,277
Average ownership interest	49.99		%	50% (1)		30		%	N/M			48.3% (3)			49.9		%	N/A	N/M
Share of unconsolidated affiliates’ net income	54,582			42,617		28,188			125,387			51,556			21,219			N/A	72,775
Less: Amortization of excess fair value of unconsolidated affiliates	(5,847		)	—		—			(5,847		)	(3,410		)	—			N/A	(3,410		)
Income from unconsolidated affiliates	$	48,735		$	42,617	$	28,188		$	119,540		$	48,146		$	21,219		N/A	$	69,365

_______________________

(1) Ownership interest in MEP increased to 50% in September 2011 due to the purchase of an additional 0.1% interest.

(2) Represents the MEP net income from May 26, 2010 (date of acquisition) to December 31, 2010.

(3) Ownership interest in HPC increased from 43% to 49.99% on April 30, 2010.

(4) Represents Lone Star net income from May 2, 2011 (date of acquisition) to December 31, 2011.

49

N/A:    We acquired a 30% membership interest in Lone Star on May 2, 2011.

N/M:    Not Meaningful

HPC's net income increased to $109.2 million for the year ended December 31, 2011 from $106.7 million for the year ended December 31, 2010, primarily due to higher throughput in 2011. Throughput increased to 1,321,000 MMBtu/d for the year ended December 31, 2011 from 1,278,000 MMBtu/d for the year ended December 31, 2010.

MEP's net income increased to $85.3 million for the year ended December 31, 2011 from $42.5 million for the period from May 26, 2010 (acquisition date) to December 31, 2010, primarily due to reporting a full year of operations.

The following table presents operational data for each of our unconsolidated affiliates for the years ended December 31, 2011 and 2010:

	Year Ended December 31,
	2011		2010
HPC
Throughput (MMBtu/d)	1,321,266		1,277,881
MEP
Throughput (MMBtu/d)	1,360,658		1,408,778	(2)
Lone Star
West Texas Pipeline – Total Volumes (Bbls/d)	130,246	(1)	N/A
Refinery Services – Geismar Throughput (Bbls/d)	15,676	(1)	N/A

_______________________

(1) All of Lone Star's operational volumes represent the period from May 2, 2011 (acquisition date) to December 31, 2011.

(2) Despite the decrease in throughput, MEP's revenues remained relatively stable throughout the period, because almost all of MEP's revenues are derived from firm transportation contracts with fixed fees.

N/A:    We acquired a 30% membership interest in Lone Star on May 2, 2011.

The following table presents capital contributions, distributions, and return of investment related to our unconsolidated affiliates:

	Year Ended December 31, 2011						Year Ended December 31, 2010
	HPC		MEP		Lone Star		HPC		MEP		Lone Star
Capital contributions	$	—	$	—	$	645,265	$	20,210	$	85,828	N/A
Distributions	65,465		82,512		22,037		65,115		43,306		N/A
Return of investment	—		—		22,698		19,995		—		N/A

_______________________

N/A:    We acquired a 30% membership interest in Lone Star on May 2, 2011.

Interest Expense, net. Interest expense, net increased to $102.5 million in the year ended December 31, 2011 from $82.8 million in the year ended December 31, 2010. The increase was primarily attributable to interest associated with the $500 million 2021 Notes issued in May 2011 and a full year of interest associated with the $600 million 2018 Notes issued in October 2010.

Other Income and Deductions, net. Other income and deductions, net increased to $17.3 milliongain in 2011 from a $12.1 millionloss in 2011 primarily due to the non-cash value change in the embedded derivatives related to the Series A Preferred Units issued in September 2009.

50

Combined Year Ended December 31, 2010 vs. Year Ended December 31, 2009

(Tabular dollar amounts, except per unit data, are in thousands)

	Combined Year Ended December 31, 2010
	Successor			Predecessor						Predecessor
	Period from Acquisition (May 26, 2010) to December 31, 2010			Period from January 1, 2010 to May 25, 2010			Combined Year Ended December 31, 2010			Year Ended December 31, 2009			Change			Percent
Total revenues	$	716,613		$	505,050		$	1,221,663		$	1,043,277		$	178,386		17	%
Cost of sales	504,327			357,778			862,105			674,944			187,161			28
Total segment margin(1)	212,286			147,272			359,558			368,333			(8,775		)	2
Operation and maintenance	77,808			47,842			125,650			117,080			8,570			7
General and administrative	43,739			37,212			80,951			57,863			23,088			40
Loss (gain) on asset sales, net	213			303			516			(133,282		)	133,798			100
Depreciation and amortization	75,967			41,784			117,751			100,098			17,653			18
Operating income	14,559			20,131			34,690			226,574			(191,884		)	85
Income from unconsolidated subsidiaries	53,493			15,872			69,365			7,886			61,479			780
Interest expense, net	(48,251		)	(34,541		)	(82,792		)	(77,665		)	(5,127		)	7
Loss on debt refinancing, net	(15,748		)	(1,780		)	(17,528		)	—			(17,528		)	100
Other income and deductions, net	(8,229		)	(3,897		)	(12,126		)	(15,132		)	3,006			20
(Loss) income from continuing operations before income taxes	(4,176		)	(4,215		)	(8,391		)	141,663			(150,054		)	106
Income tax expense (benefit)	552			404			956			(1,095		)	2,051			187
Net (loss) income from continuing operations	(4,728		)	(4,619		)	(9,347		)	142,758			(152,105		)	107
Discontinued operations	(1,244		)	(327		)	(1,571		)	(2,269		)	698			31
Net (loss) income	(5,972		)	(4,946		)	(10,918		)	140,489			(151,407		)	108
Net income attributable to the noncontrolling interest	(156		)	(406		)	(562		)	(91		)	(471		)	518
Net (loss) income attributable to Regency Energy Partners LP	$	(6,128	)	$	(5,352	)	$	(11,480	)	$	140,398		$	(151,878	)	108	%
Gathering and processing segment margin	$	110,011		$	85,997		$	196,008		$	213,920		$	(17,912	)	8	%
Non-cash loss (gain) from commodity derivatives	23,033			7,150			30,183			(7,151		)	37,334			522
Adjusted gathering and processing segment margin	$	133,044		$	93,147		$	226,191		$	206,769		$	19,422		9
Transportation segment margin(2)	—			—			—			11,714			(11,714		)	100
Contract compression segment margin(3)	91,853			62,356			154,209			141,028			13,181			9
Contract treating segment margin	11,454			—			11,454			—			11,454			100
Corporate and others segment margin	13,047			8,045			21,092			6,275			14,817			236
Intersegment eliminations(3)	(14,079		)	(9,126		)	(23,205		)	(4,604		)	(18,601		)	404
Adjusted total segment margin	$	235,319		$	154,422		$	389,741		$	361,182		$	28,559		8	%

 _______________________

(1) For reconciliation of segment margin to the most directly comparable financial measure calculated and presented in accordance with GAAP, read “Item 6. Selected Financial Data.”

(2) We contributed RIG into HPC in March 2009, and subsequently renamed Transportation segment to Joint Ventures segment in 2011. Since March 2009, we have not recorded segment margin in this segment because we recorded our ownership percentage of the net income in unconsolidated affiliates as income from unconsolidated affiliates in accordance with the equity method of accounting.

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(3) Contract Compression segment margin includes intersegment revenues of $23.2 million and $4.6 million for the years ended December 31, 2010 and 2009, respectively. These intersegment revenues were eliminated upon consolidation.

Net (Loss) Income Attributable to Regency Energy Partners LP. Net (loss) income attributable to Regency Energy Partners LP decreased to a loss of $11.5 million in the year ended December 31, 2010 from a gain of $140.4 million in the year ended December 31, 2009. The major components of this change were as follows:

• $133.8 million decrease in gain on asset sales, net primarily due to the absence of gain associated with the contribution of RIG to HPC;

• $23.1 million increase in general and administrative expenses primarily due to a $7.9 million increase in unit-based compensation primarily related to the vesting of outstanding LTIP grants upon the acquisition of our General Partner by ETE, a $5.8 million increase in service fees paid to Services Co. and a $3.5 million increase in incentive related labor costs;

• $17.7 million increase in depreciation and amortization expense primarily related to the fair value adjustment of our long-lived assets upon the acquisition of our General Partner;

• $17.5 million loss on debt refinancing, net primarily related to the redemption premium paid to redeem our senior notes due 2013; and offset by

• $61.5 million increase in income from unconsolidated subsidiaries primarily from the completion of HPC’s expansion in early 2010, our increased general partner interest in HPC from 43% as of December 31, 2009 to 49.99% as of December 31, 2010 and the acquisition of a 49.9% interest in MEP in May 2010.

Adjusted Total Segment Margin. Adjusted total segment margin increased to $389.7 million in the year ended December 31, 2010 from $361.2 million in the year ended December 31, 2009. The major components of this change were as follows:

• Adjusted Gathering and Processing segment margin increased to $226.2 million for the year ended December 31, 2010 from $206.8 million for the year ended December 31, 2009 primarily due to the increased volumes in south Texas associated with Eagle Ford shale development as well as higher realized commodity prices. Total Gathering and Processing segment throughput increased to 996,800 MMBtu/d during the year ended December 31, 2010 from 975,963 MMBtu/d during the year ended December 31, 2009. Total NGL gross production increased to 26,155 Bbls/d during the year ended December 31, 2010 from 21,104 Bbls/d during the year ended December 31, 2009;

• After our contribution of RIG to HPC on March 17, 2009, we do not record segment margin for the Transportation segment because we record our ownership percentage of the net income in HPC as income from unconsolidated affiliates. As a result, we reported no Transportation segment margin for the year ended December 31, 2010;

• Contract Compression segment margin increased to $154.2 million in the year ended December 31, 2010 from $141 million in 2009. The increase was primarily attributable to the increased revenue generating horsepower provided to third parties and additional contract compression services provided to the Gathering and Processing segment;

• We acquired the Contract Treating segment on September 1, 2010; therefore, there was no segment margin for the year ended December 31, 2009. Revenue generating GPM as of December 31, 2010 was 3,431;

• Corporate and Others segment margin increased to $21.1 million in the year ended December 31, 2010 from $6.3 million in the year ended December 31, 2009, which was primarily attributable to an increase in the reimbursement from HPC for general and administrative expenses; and

• Intersegment eliminations increased to $23.2 million in the year ended December 31, 2010 from $4.6 million in the year ended December 31, 2009. The increase was due to increased intersegment transactions between the Gathering and Processing and the Contract Compression segments.

Operation and Maintenance. Operation and maintenance expense increased to $125.7 million in the year ended December 31, 2010 from $117.1 million in the year ended December 31, 2009. The increase is primarily due to the following:

• $3.9 million increase in labor costs primarily from increased bonus accrual in 2010; and

• $3.3 million increase in consumable products primarily utilized in our Contract Compression segment.

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General and Administrative. General and administrative expense increased to $81 million in the year ended December 31, 2010 from $57.9 million in the year ended December 31, 2009. This increase is primarily due to the following:

• $7.9 million increase in unit-based compensation primarily related to the vesting of outstanding LTIP grants upon the acquisition of our General Partner by ETE;

• $5.8 million increase in related party general and administrative expenses for the services fees paid to Services Co.;

• $3.5 million increase in labor costs primarily from increased incentive compensation accrual in 2010;

• $1.9 million increase in transaction costs primarily related to the acquisition of the General Partner by ETE and our acquisitions of MEP and Zephyr;

• $1.3 million increase in severance expenses primarily related to the integration of functions across a variety of operational and general and administrative departments with Services Co.; and

• $0.8 million increase in ad valorem taxes in the Contract Compression segment.

Loss (Gain) on Asset Sales, net. Loss (gain) on asset sales, net decreased to a loss of $0.5 million in 2010 due to the absence in 2010 of $133.5 million in gain attributable to the contribution of RIG to HPC.

Depreciation and Amortization. Depreciation and amortization expense increased to $117.8 million in the year ended December 31, 2010 from $100.1 million in the year ended December 31, 2009. This increase was the result of $10.7 million of additional depreciation and amortization expense incurred related to the fair value adjustment of our long-lived assets upon the acquisition of our General Partner. In addition, $6.9 million of additional depreciation and amortization expense was the result of the completion of various organic growth projects since December 31, 2009. Had the change in control occurred on January 1, 2009, our depreciation and amortization expense on a pro forma basis for the years ended December 31, 2010 and 2009 would have been $125.4 million and $118.5 million, respectively.

Income from Unconsolidated Affiliates. Income from unconsolidated affiliates increased to $69.4 million for the year ended December 31, 2010 from $7.9 million for the year ended December 31, 2009. The schedule summarizes the components of income from unconsolidated affiliates and our ownership interest for the years ended December 31, 2010 and 2009, respectively:

	Year Ended December 31, 2010											Year Ended December 31, 2009
	HPC				MEP				Total			HPC				MEP	Total
Net income	$	106,737			$	42,540		(1)	149,277			$	26,867			N/A	$	26,867
Average ownership interest	48.3		%	(2)	49.9		%		N/M			29.35		%	(3)	N/A	N/M
Share of unconsolidated affiliates’ net income	$	51,556			$	21,219			$	72,775		$	7,886			N/A	$	7,886
Less: Amortization of excess fair value of unconsolidated affiliates	(3,410		)		—				(3,410		)	—				N/A	—
Income from unconsolidated affiliates	$	48,146			$	21,219			$	69,365		$	7,886			N/A	$	7,886

_______________________

(1) Represents the MEP net income from May 26, 2010 (date of acquisition) to December 31, 2010.

(2) Ownership interest in HPC increased from 43% to 49.99% on April 30, 2010.

(3) Ownership interest in HPC increased from 38% to 43% on September 2, 2009.

N/A:    MEP was purchased from ETE on May 26, 2010.

N/M:    Not Meaningful

HPC's net income increased to $106.7 million for the year ended December 31, 2010 from $26.9 million for the year ended December 31, 2009, primarily due to higher throughput related to HPC's expansion projects being placed in service in January 2010. Throughput increased to 1,277,881 MMBtu/d for the year ended December 31, 2010 from 738,654 MMBtu/d for the year ended December 31, 2009.

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The following table presents operational data for each of our unconsolidated affiliates for the years ended December 31, 2010 and 2009:

	Year Ended December 31,
	2010	2009
HPC
Throughput (MMBtu/d)	1,227,881	738,654
MEP
Throughput (MMBtu/d)	1,408,778	N/A

_______________________

N/A:    MEP was purchased from ETE on May 26, 2010.

The following table presents capital contributions, distributions and return of investment related to our unconsolidated affiliates:

	Year Ended December 31,
	2010				2009
	HPC		MEP		HPC		MEP
Capital contributions	$	20,210	$	85,828	$	54,159	N/A
Distributions	65,115		43,306		8,926		N/A
Return of investment	19,995		—		—		N/A

_______________________

N/A:    MEP was purchased from ETE on May 26, 2010.

Interest Expense, Net. Interest expense, net increased to $82.8 million in the year ended December 31, 2010 from $77.7 million in the year ended December 31, 2009. The increase was primarily attributable to a full year of interest expense in 2010 associated with our $250 million of 9.375% senior notes due 2016 issued May 2009 as compared to only 7 months in 2009. Also contributing to the increase was the issuance of $600 million of 6.875% senior notes due 2018 in October 2010.

Loss on Debt Refinancing, net. Loss on debt refinancing, net increased $17.5 million in 2010 compared to 2009 primarily due to the redemption premium paid to redeem our senior notes due 2013.

Other Income and Deductions, net. Other income and deductions, net decreased $3 million in 2010 compared to 2009 primarily due to the non-cash value change in the embedded derivatives related to the Series A Preferred Units issued in September 2009.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

We expect our sources of liquidity will include:

• cash generated from operations;

• borrowings under our revolving credit facility;

• distributions received from unconsolidated affiliates;

• debt offerings; and

• issuance of additional partnership units.

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We expect our 2012 capital expenditures, including capital contributions to our unconsolidated affiliates, to be as follows (in millions):

	2012
Growth Capital Expenditures
Gathering and Processing segment**	$	245
Contract Compression segment	70
Contract Treating segment	15
Joint Ventures segment: *
Lone Star**	350 - 400
Ranch JV	35
Corporate and Others segment	5
Total	$ 720 - 770
Maintenance Capital Expenditures; including our proportionate share related to our joint ventures	$	28

_______________________

* Our capital expenditures in the Joint Ventures segment represent capital contributions to those joint ventures to fund their growth projects.

** In addition to the 2012 capital expenditures disclosed above, we expect to spend $150 million in our Gathering and Processing segment beyond 2012, which represents the continuing capital expenditures on our approved growth projects; and $100 million in our Joint Venture segment beyond 2012, which represents our portion of the capital contributions to Lone Star to fund its approved growth projects.

We may revise the timing of these expenditures as necessary to adapt to economic conditions. We expect to fund our growth capital expenditures with borrowings under our revolving credit facility and a combination of debt and equity issuances.

Working Capital (Deficit) Surplus. Working capital is the amount by which current assets exceed current liabilities and is a measure of our ability to pay our obligations as they become due. When we incur growth capital expenditures, we may experience working capital deficits as we fund construction expenditures out of working capital until they are permanently financed. Our working capital is also influenced by current derivative assets and liabilities due to fair value changes in our derivative positions being reflected on our balance sheet. These derivative assets and liabilities represent our expectations for the settlement of derivative rights and obligations over the next 12 months, and should be viewed differently from trade accounts receivable and accounts payable, which settle over a shorter span of time. When our derivative positions are settled, we expect an offsetting physical transaction, and, as a result, we do not expect derivative assets and liabilities to affect our ability to pay expenditures and obligations as they come due. Our Contract Compression and Contract Treating segments record deferred revenue as a current liability. The deferred revenue represents billings in advance of services performed. As the revenues associated with the deferred revenue are earned, the liability is reduced.

Our working capital deficitincreased to $46.2 million at December 31, 2011 from a deficit of $35.1 million at December 31, 2010, an increase of $11.1 million. This increase was primarily due to an increase of $14.6 million in trade accounts payable net of trade accounts receivable, primarily due to the timing of payments and accruals for operating expenses and capital projects.

Cash Flows from Discontinued Operations. We combined the cash flows from discontinued operations with the cash flows from continuing operations. The cash flows from discontinued operations related to our operating, investing and financing activities were insignificant. We do not expect the absence of cash flows from these discontinued operations will have a significant impact on our future liquidity.

Cash Flows from Operating Activities. Net cash flows provided by operating activities increased to $253.8 million in the year ended December 31, 2011 from $169.2 million in the year ended December 31, 2010. The increase was primarily due to an increase in distributions from unconsolidated affiliates and an increase in segment margin. Net cash flows provided by operating activities increased to $169.2 million in the year ended December 31, 2010 from $144 million in the year ended December 31, 2009. The increase was primarily due to an increase in distributions from unconsolidated affiliates.

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For all periods, we used our cash flows from operating activities together with borrowings under our credit facility to fund our working capital requirements, which include operation and maintenance expenses, maintenance capital expenditures and repayment of working capital borrowings. From time to time during each period, the timing of receipts and disbursements require us to borrow under our revolving credit facility.

Cash Flows used in Investing Activities. Net cash flows used in investing activities increased to $955.3 million in the year ended December 31, 2011 from $444.9 million in the year ended December 31, 2010. The increase was primarily due to the acquisition of a 30% interest in Lone Star in May 2011 for $593.8 million, offset by an increase in return of investment from unconsolidated affiliates of $14.4 million.

Net cash flows used in investing activities increased to $444.9 million in the year ended December 31, 2010 from $156.2 million in the year ended December 31, 2009. The increase was primarily due to the acquisition of our Contract Treating assets and an increase in capital contributions to unconsolidated subsidiaries.

Growth Capital Expenditures. Growth capital expenditures are capital expenditures made to acquire additional assets to increase our business, to expand and upgrade existing systems and facilities or to construct or acquire similar systems or facilities. In the year ended December 31, 2011, we incurred $407 million of growth capital expenditures. Growth capital expenditures for the year ended December 31, 2011 consisted primarily of $250 million for organic growth projects in our Gathering and Processing segment, $94 million for the fabrication of new compressor packages for our Contract Compression segment, $53 million for growth projects for our Joint Ventures segment, $6 million for the fabrication of new treating plants for our Contract Treating segment, and $4 million in our Corporate and Others segment.

Maintenance Capital Expenditures. Maintenance capital expenditures are capital expenditures made to replace partially or fully depreciated assets or to maintain the existing operating capacity of our assets and extend their useful lives. In the year ended December 31, 2011, we incurred $22 million of maintenance capital expenditures, including our proportionate share related to our joint ventures.

Cash Flows from Financing Activities. Net cash flows provided by financing activities increased to $693.1 million in the year ended December 31, 2011 from $275.2 million in the year ended December 31, 2010. The increase was primarily due to the following:

• the absence in 2011 of $357.5 million related to the redemption of our 2013 Senior Notes;

• a net increase in our revolving credit facility borrowings of $181.6 million; partially offset by

• an increase in distributions to Partners of $69.8 million.

Net cash flows provided by financing activities increased to $275.2 million in the year ended December 31, 2010 from $21.4 million in the year ended December 31, 2009. The increase was primarily due to the following:

• a net decrease in our revolving credit facility repayments of $214.4 million;

• an increase in net proceeds from equity issuance of $179.2 million; and were partially offset by

• the absence in 2010 of $76.6 million in proceeds related to the issuance of the Series A Preferred Units;

• a net increase in partners distributions of $58.1 million; and

• an increase in debt issuance cost of $15.9 million primarily related to the amendment of our revolving credit facility and the issuance of the senior notes due 2018.

Capital Resources

Description of Our Indebtedness. As of December 31, 2011, our aggregate outstanding indebtedness totaled $1.69 billion and consisted of $332 million borrowings under our revolving credit facility and $1.36 billion of outstanding senior notes as compared to our aggregate outstanding indebtedness as of December 31, 2010, which totaled $1.14 billion and consisted of $285 million in borrowings under our revolving credit facility and $856.1 million of outstanding senior notes.

Revolving Credit Facility. We, through RGS, have a $900 million revolving credit facility, including availability for letters of credit of $200 million, that matures on June 15, 2014. We also have the option to request an additional $250 million in revolving commitments with ten business days written notice provided that no event of default has occurred or would result due to such increase, and all other additional conditions for the increase of the commitments set forth in the revolving credit facility have been met. In December 2011, we amended the facility to allow for additional investments in Lone Star of up to $550 million, allow for additional investments in ELG of up to $250 million, and allow for the investment in Ranch JV of up to $50 million. We are allowed to make additional investments in HPC up to $250 million less our ownership portion of indebtedness residing at HPC.

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In addition, the agreement allows for an additional investment in any joint venture of up to $250 million.

Borrowings under our revolving credit facility are secured by substantially all of our assets and are guaranteed by us and our subsidiaries. The revolving credit facility and the guarantees are senior to the Partnership's and the other guarantor's unsecured obligations.

The outstanding balance under our revolving credit facilities bears interest at LIBOR plus a margin or alternative base rate (equivalent to the U.S. prime lending rate) plus a margin, or a combination of both. The alternate base rate used to calculate interest on base rate loans will be calculated based on the greatest to occur of a base rate, a federal funds effective rate plus 0.50% and an adjusted one-month LIBOR rate plus 1.00%. The applicable margin ranges from 1.50% to 2.25% for base rate loans and 2.50% to 3.25% for Eurodollar loans.

We pay (i) a commitment fee ranging between 0.375% to 0.5% per annum for the unused portion of the revolving loan commitments; (ii) a participation fee for each revolving lender participating in letters of credit ranging between 2.5% to 3.25% per annum of the average daily amount of such lender's letter of credit exposure and; (iii) a fronting fee to the issuing bank of letters of credit equal to 0.125% per annum of the average daily amount of its letter of credit exposure.

The revolving credit facility contains financial covenants requiring RGS and its subsidiaries to maintain a debt to consolidated EBITDA (as defined in the credit agreement) ratio less than 5.25, a consolidated EBITDA to consolidated interest expense ratio greater than 2.75, and a secured debt to consolidated EBITDA ratio less than 3. At December 31, 2011 and 2010, RGS and its subsidiaries were in compliance with these covenants.

The revolving credit facility restricts the ability of RGS to pay dividends and distributions other than reimbursements of the Partnership for expenses and payment of dividends to the Partnership to the amount of available cash (as defined) so long as no default or event of default has occurred or is continuing. The revolving credit facility also contains various covenants that limit (subject to certain exceptions), among other things, the ability of RGS to:

• incur indebtedness;

• grant liens;

• enter into sales and leaseback transaction;

• make certain investments, loans and advances;

• dissolve or enter into a merger or consolidation;

• enter into asset sales or make acquisitions;

• enter into transactions with affiliates;

• prepay other indebtedness or amend organizational documents or transaction documents (as defined in the revolving credit facility);

• issue capital stock or create subsidiaries; or

• engage in any business other than those businesses in which it was engaged that the time of the effectiveness of the revolving credit facility or reasonable extensions thereof.

Senior Notes due 2016. In May 2009, we and Finance Corp. issued $250 million of senior notes that mature on June 1, 2016 (“2016 Notes”). The 2016 Notes bear interest at 9.375% with interest payable semi-annually in arrears on June 1 and December 1. We received net proceeds of $236.2 million upon issuance. The net proceeds were used to partially repay loans under our revolving credit facility.

At any time before June 1, 2012, up to 35% of 2016 Notes can be redeemed at a price of 109.375% plus accrued interest. Beginning June 1, 2013, we may redeem all or part of these notes at the redemption prices, expressed as percentages of the principal amount, set forth below:

June 1 of year ending:	Percentage of Redemption
2013	104.688%
2014	102.344%
2015 and thereafter	100.000%

At any time prior to June 1, 2013, we may also redeem all or part of the notes at a price equal to 100% of the principal amount of

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notes redeemed plus accrued interest and the applicable premium, which equals to the greater of (1) 1% of the principal amount of the note; or (2) the excess of the present value at such redemption date of (i) the redemption price of the note at June 1, 2013 plus (ii) all required interest payments due on the note through June 1, 2013, computed using a discount rate equal to the treasury rate (as defined) as of such redemption date plus 50 basis points, over the principal amount of the note.

Upon a change of control (as defined), each noteholder will be entitled to require us to purchase all or a portion of its notes at a purchase price of 101% plus accrued interest and liquidated damages, if any. Our ability to purchase the notes upon a change of control will be limited by the terms of our debt agreements, including our revolving credit facility.

The 2016 Notes contain various covenants that limit, among other things, our ability, and the ability of certain of our subsidiaries, to:

• incur additional indebtedness;

• pay distributions on, or repurchase or redeem equity interests;

• make certain investments;

• incur liens;

• enter into certain types of transactions with affiliates; and

• sell assets, consolidate or merge with or into other companies.

If the 2016 Notes achieve investment grade ratings by both Moody's and S&P and no default or event of default has occurred and is continuing, we will no longer be subject to many of the foregoing covenants. At December 31, 2011, we were in compliance with these covenants.

Senior Notes due 2018. In October 2010, we and Finance Corp. issued $600 million of senior notes that mature on December 1, 2018 (“2018 Notes”). The 2018 Notes bear interest at 6.875% paid semi-annually in arrears on June 1 and December 1, commencing June 1, 2011. We capitalized $12.2 million in debt issuance costs that will be amortized to interest expense, net over the term of the 2018 Notes. The proceeds were used to redeem the senior notes due 2013 and to partially repay outstanding borrowings under the revolving credit facility.

At any time before December 1, 2013, up to 35% of the 2018 Notes can be redeemed at a price of 106.875% of the principal amount plus accrued interest. Beginning December 1, 2014, we may redeem all or part of these notes at the redemption prices, expressed as percentages of the principal amount, set forth below:

December 1 of year ending:	Percentage of Redemption
2014	103.438%
2015	101.719%
2016 and thereafter	100.000%

At any time prior to December 1, 2014, we may also redeem all or part of the notes at a price equal to 100% of the principal amount of notes redeemed plus accrued interest and the applicable premium, which equals to the greater of (1) 1% of the principal amount of the note; or (2) the excess of the present value at such redemption date of (i) the redemption price of the note at December 1, 2014 plus (ii) all required interest payments due on the note through December 1, 2014, computed using a discount rate equal to the treasury rate (as defined) as of such redemption date plus 50 basis points, over the principal amount of the note.

Upon a change of control (as defined) followed by a rating decline within 90 days, each holder of the 2018 Notes will be entitled to require us to purchase all or a portion of its notes at a purchase price of 101% of the principal amount plus accrued interest and liquidated damages, if any. Our ability to purchase the notes upon a change of control will be limited by the terms of our debt agreements, including our revolving credit facility.

The 2018 Notes contain various covenants that limit, among other things, our ability, and the ability of certain of our subsidiaries, to:

• incur additional indebtedness;

• pay distributions on, or repurchase or redeem equity interests;

• make certain investments;

• incur liens;

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• enter into certain types of transactions with affiliates; and

• sell assets, consolidate or merge with or into other companies.

If the 2018 Notes achieve investment grade ratings by both Moody's and S&P and no default or event of default has occurred and is continuing, we will no longer be subject to many of the foregoing covenants. At December 31, 2011, we were in compliance with these covenants.

Senior Notes due 2021. In May 2011, we and Finance Corp. issued $500 million of senior notes that mature on July 15, 2021 (“2021 Notes”). The 2021 Notes bear interest at 6.5% paid semi-annually in arrears on January 15 and July 15, commencing on January 15, 2012. The proceeds were used to pay down the balance on our revolving credit facility.

At any time prior to July 15, 2014, we may redeem up to 35% of the 2021 Notes at a price equal to 106.5% of the principal amount plus accrued interest. Beginning on July 15 of the years indicated below, we may redeem all or part of the 2021 Notes at the redemption prices, expressed as percentages of the principal amount, set forth below:

July 15 of year ending:	Percentage of Redemption
2016	103.250	%
2017	102.167	%
2018	101.083	%
2019 and thereafter	100.000	%

At any time prior to July 15, 2016, we may also redeem all or part of the notes at a price equal to 100% of the principal amount of notes redeemed plus accrued interest and the applicable premium, which equals to the greater of (1) 1% of the principal amount of the note; or (2) the excess of the present value at such redemption date of (i) the redemption price of the note at July 15, 2016 plus (ii) all required interest payments due on the note through July 15, 2016, computed using a discount rate equal to the treasury rate (as defined) as of such redemption date plus 50 basis points, over the principal amount of the note.

Upon a change of control, as defined in the indenture, followed by a rating decline within 90 days, each holder of the 2021 Notes will be entitled to require us to purchase all or a portion of its notes at a purchase price of 101% of the principal amount plus accrued interest and liquidated damages, if any. Our ability to purchase the notes upon a change of control will be limited by the terms of our debt agreements, including our revolving credit facility.

The 2021 Notes contain various covenants that limit, among other things, our ability, and the ability of certain of its subsidiaries, to:

• incur additional indebtedness;

• pay distributions on, or repurchase or redeem equity interests;

• make certain investments;

• incur liens;

• enter into certain types of transactions with affiliates; and

• sell assets, consolidate or merge with or into other companies.

If the 2021 Notes achieve investment grade ratings by both Moody's and S&P and no default or event of default has occurred and is continuing, we will no longer be subject to many of the foregoing covenants. At December 31, 2011, we were in compliance with these covenants.

All of the 2021 Notes, 2018 Notes, and 2016 Notes are jointly and severally guaranteed by all of our consolidated subsidiaries, other than Finance Corp. and a minor subsidiary. The senior notes and the guarantees are unsecured and rank equally with all of our and the guarantors' existing and future unsecured obligations. The senior notes and the guarantees will be senior in right of payment to any of our and the guarantors' future obligations that are, by their terms, expressly subordinated in right of payment to the notes and the guarantees. The senior notes and the guarantees will be effectively subordinated to our and the guarantors' secured obligations, including our revolving credit facility, to the extent of the value of the assets securing such obligations.

Letters of Credit. At December 31, 2011, we had outstanding letters of credit totaling $19 million under our revolving credit facility. The total fees for letters of credit accrue at a current annual rate of 2.875%, which is applied to the daily amount of letters of credit exposure.

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Equity Offerings. In October 2011, we sold 11,500,000 common units in an underwritten public offering, and received $232.3 million in proceeds. In May 2011, we issued 8,500,001 common units representing limited partnership interests resulting in net proceeds of $203.9 million, to partially fund our capital contribution to Lone Star. These units were issued in a private placement conducted in accordance with the exemption from the registration requirements of the Securities Act of 1933, as amended, under section 4(2) thereof. These units were subsequently registered with the SEC.

In August 2010, we sold 17,537,500 common units in an underwritten public offering, and received $408.1 million in proceeds, inclusive of the General Partner's proportionate capital. In May 2010, we issued 26,266,791 common units, valued at $584.4 million, to ETE, to purchase a 49.9% interest in MEP. These units were issued in a private placement exempt from the registration requirements of the Securities Act of 1933, as amended, under Section 4(2) thereof. Subsequently, ETE also contributed $12.3 million as the General Partner's proportionate capital contribution.

Contractual Obligations. The following table summarizes our total contractual cash obligations as of December 31, 2011:

	Payments Due By Period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5  years
Long-term debt (including interest)(1)	$	2,438,974	$	113,217	$	548,101	$	432,656	$	1,345,000
Operating leases	10,297		2,684		2,956		2,028		2,629
Purchase obligations(2)	47,446		47,446		—		—		—
Distributions and redemption of Series A Preferred Units(3)	241,836		7,781		15,563		15,563		202,929
Related party cash obligations(4)	44,167		10,000		20,000		14,167		—
Capital contribution commitments to unconsolidated affiliate(5)	36,225		35,311		914		—		—
Total(6)	$	2,818,945	$	216,439	$	587,534	$	464,414	$	1,550,558

  _______________________

(1) Assumes a constant LIBOR interest rate of 1.128% plus applicable margin (2.50% as of December 31, 2011) for our revolving credit facility. The principal of our outstanding senior notes ($1.35 billion) bears a weighted average fixed rate of 7.2%.

(2) Excludes physical and financial purchases of natural gas, NGLs, and other commodities due to the nature of both the price and volume components of such purchases, which vary on a daily and monthly basis. Additionally, we do not have contractual commitments for fixed price and/or fixed quantities of any material amount.

(3) Assumes that the Series A Preferred Units are redeemed for cash on September 2, 2029, and an annual distribution of $7.8 million.

(4) Includes the $10 million annual service fee paid to ETE under the services agreement between us and ETE, which expires in June 2016.

(5) Includes committed capital contributions to Ranch JV.

(6) Excludes deferred tax liabilities of $5.8 million as the amount payable by period cannot be readily estimated in light of net operating loss carryforwards and future business plans for the entity that generated the deferred tax liability.

OTHER MATTERS

Legal. We are involved in various claims, lawsuits and audits by taxing authorities incidental to our business. These claims and lawsuits in the aggregate are not expected to have a material adverse effect on our business, financial condition, results of operations or cash flows.

Environmental Matters. For information regarding environmental matters, please read “Item 1. Business-Regulation-Environmental Matters.”

IRS Audits. The IRS commenced audits of our 2007 and 2008 federal income tax returns on January 27, 2010. The IRS has now completed its audit of these returns and proposed certain adjustments.  We have filed a protest with the IRS to initiate the appeals process and appeal certain of these adjustments.  Until this matter is fully resolved, we do not know whether any amounts ultimately recorded would be material, or how such adjustments would affect unitholders.  The IRS is also conducting an audit of the 2007 through 2009 tax returns of one of our wholly-owned subsidiaries and has proposed certain adjustments which we expect to appeal.

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The statute of limitations for each of these audits has been extended to December 31, 2012. We, through our tax matters partner and our tax advisers, will cooperate with the IRS examiners auditing these returns. Unitholders should consult their tax advisers if they have any questions.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and notes. Although these estimates are based on management's best available knowledge of current and expected future events, actual results could be different from those estimates.

The critical judgment areas in the application of our accounting policies that currently affect our financial condition and results of operations are as follows:

Revenue and Cost of Sales Recognition. We record revenue and cost of gas and NGLs on the gross basis for those transactions where we act as the principal and take title to gas that we purchase for resale. When our customers pay us a fee for providing a service such as gathering or transportation we record the fees separately in revenues. We estimate certain revenue and expenses since actual amounts are not confirmed until after the financial closing process due to the standard settlement dates in the gas industry. We calculate estimated revenues using actual pricing and measured volumes. In the subsequent production month, we reverse the accrual and record the actual results. Prior to the settlement date, we record actual operating data to the extent available, such as actual operating and maintenance and other expenses. We do not expect actual results to differ materially from our estimates.

Purchase Method of Accounting. We make various assumptions in developing models for determining the fair values of assets and liabilities associated with business acquisitions. These fair value models, developed with the assistance of outside consultants, apply discounted cash flow approaches to expected future operating results, considering expected growth rates, development opportunities, and future pricing assumptions, to arrive at an economic value for the business acquired. We then determine the fair value of the tangible assets based on estimates of replacement costs less obsolescence. Identifiable intangible assets acquired consist primarily of customer relations and trade names. We value customer relations as the fair value of avoided customer churn costs compared to industry norms. We value trade names using the avoided royalty payment approach. We determine the value of liabilities assumed based on their expected future cash outflows. We record goodwill as the excess of the purchase price of each business unit over the sum of amounts allocated to the tangible assets and separately recognized intangible assets acquired, less liabilities assumed by the business unit.

Goodwill. We review the carrying value of goodwill on an annual basis or on an as needed basis, for indicators of impairment at each reporting unit that has recorded goodwill. We determine our reporting units based on identifiable cash flows of a reporting unit and how reporting unit managers evaluate the results of operations of the entity. Impairment is indicated whenever the carrying value of a reporting unit exceeds the estimated fair value of a reporting unit. We adopted ASU 2011-08 in 2011, and applied it to certain of our reporting units, which allows us to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether further impairment testing is necessary. For purposes of evaluating impairment of goodwill, we estimate the fair value of a reporting unit based upon future net discounted cash flows. In calculating these estimates, historical operating results and anticipated future economic factors, such as estimated volumes and demand for services, commodity prices, and operating costs are considered as a component of the calculation of future discounted cash flows. Further, the discount rate requires estimates of the cost of equity and debt financing. The estimates of fair value of these reporting units could change if actual volumes, prices, costs or discount rates vary from these estimates.

Equity Method Investments. The equity method of accounting is used to account for our interest in investments of greater than 20% voting stock or where we exert significant influence over an investee and lack control over the investee.

Depreciation Expense, Cost Capitalization and Impairment. Our assets consist primarily of natural gas gathering pipelines, processing plants, transmission pipelines, treating equipment, and natural gas compression equipment. We capitalize all construction-related direct labor and material costs, as well as indirect construction costs. Indirect construction costs include general engineering costs and the costs of funds used in construction. Capitalized interest represents the cost of funds used to finance the construction of new facilities and is expensed over the life of the constructed asset through the recording of depreciation expense. We capitalize the costs of renewals and betterments that extend the useful life, while we expense the costs of repairs, replacements and maintenance projects as incurred.

We generally compute depreciation using the straight-line method over the estimated useful life of the assets. Certain assets such as land, NGL line pack and natural gas line pack are non-depreciable. The computation of depreciation expense requires judgments regarding the estimated useful lives and salvage value of assets. As circumstances warrant, we review depreciation estimates to determine if any changes are needed. Such changes could involve an increase or decrease in estimated useful lives or salvage values, which would impact future depreciation expense.

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We review long-lived assets for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Determining whether an impairment has occurred typically requires various estimates and assumptions, including determining which undiscounted cash flows are directly related to the potentially impaired asset, the useful life over which cash flows will occur, their amount, and the asset's residual value, if any. In turn, measurement of an impairment loss requires a determination of fair value, which is based on the best information available. We derive the required undiscounted cash flow estimates from our historical experience and our internal business plans. To determine fair value, we use our internal cash flow estimates discounted at an appropriate interest rate, quoted market prices when available and independent appraisals, as appropriate.

Equity Based Compensation. Restricted units are valued at the grant date closing price of the Partnership's common units. Phantom units are issued as either service condition awards (also defined as “time-based awards” in the LTIP plan) or market condition awards (also defined as “performance-based awards” in the LTIP plan). For service condition awards, the grant date fair value equals the grant date closing price of the Partnership's common units. For the market condition awards, we performed a Monte Carlo simulation that incorporated variables such as unit price volatility, merger and acquisition activity within the peer group, changes in credit ratings of the peer group members, and employee turnover. The grant date closing price of the Partnership's common units are also a factor in determining the grant-date fair value of the market condition awards.

Fair Value Measurements. Financial assets and liabilities, goodwill, indefinite-lived intangible assets, property, plant and equipment and asset retirement obligations are valued using a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows:

• Level 1- unadjusted quoted prices for identical assets or liabilities in active accessible markets;

• Level 2- inputs that are observable in the marketplace other than those classified as Level 1; and

• Level 3- inputs that are unobservable in the marketplace and significant to the valuation.

Entities are encouraged to maximize the use of observable inputs and minimize the use of unobservable inputs. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation.

Derivatives. Our financial assets and liabilities measured at fair value on a recurring basis are derivatives related to interest rate and commodity derivative contracts and embedded derivatives in the Series A Preferred Units. Derivatives related to interest rate , commodity swaps and ethane put options are valued using discounted cash flow techniques. These techniques incorporate Level 1 and Level 2 inputs such as future interest rates and commodity prices. These market inputs are utilized in the discounted cash flow calculation considering the instrument's term, notional amount, discount rate and credit risk and are classified as Level 2 in the hierarchy. Derivatives related to the Series A Preferred Units are valued using a binomial lattice model. The market inputs utilized in the model include credit spread, probabilities of the occurrence of certain events, common unit price, distribution yield and expected volatility, and are classified as Level 3 in the hierarchy.

RECENT ACCOUNTING PRONOUNCEMENTS

See discussion of new accounting pronouncements in Note 2 in the Notes to the Consolidated Financial Statements.

Item 7A. Quantitative and Qualitative Disclosure about Market Risk

Risk and Accounting Policies. We are exposed to market risks associated with commodity prices, counterparty credit, and interest rates. Our management and the board of directors of our General Partner have established comprehensive risk management policies and procedures to monitor and manage these market risks. Our General Partner is responsible for delegation of transaction authority levels, and the Audit and Risk Committee of our General Partner is responsible for the overall management of credit risk and commodity price risk, including monitoring exposure limits. The Audit and Risk Committee receives regular briefings on positions and exposures, credit exposures and overall risk management in the context of market activities.

Commodity Price Risk. We are a net seller of NGLs, condensate and natural gas as a result of our gathering and processing operations. The prices of these commodities are impacted by changes in supply and demand as well as market forces. Our profitability and cash flow are affected by the inherent volatility of these commodities, which could adversely affect our ability to make distributions to our unitholders. We manage this commodity price exposure through an integrated strategy that includes management of our contract portfolio, matching sales prices of commodities with purchases, optimization of our portfolio by monitoring basis and other price differentials in operating areas, and the use of derivative contracts. In some cases, we may not be able to match pricing terms or to cover our risk to price exposure with financial hedges, and we may be exposed to commodity price risk. Speculative positions are prohibited under our risk management policy.

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We have swap contracts that settle against NGLs (ethane, propane, butane, and natural gasoline), condensate and natural gas market prices. We also have put options settled against ethane. We will exercise these options only when the market prices for ethane are below the strike prices.

The following table sets forth certain information regarding our hedges outstanding at December 31, 2011. The relevant index price that we pay for NGLs is the monthly average of the daily closing price for deliveries of commodities into Mont Belvieu, Texas, as reported by the Oil Price Information Service (OPIS). The relevant index price for natural gas is NYMEX on the pricing dates as defined by the swap contracts. The relevant index for WTI is the monthly average of the daily price of WTI as reported by the NYMEX.

Period	Underlying	Notional Volume/ Amount			We Pay		We Receive Weighted Average Price		Fair Value Asset/(Liability)			Effect of Hypothetical Change in Index*
									(in thousands)
January 2012-September 2012	Ethane	279		(MBbls)	Index		0.47	($/gallon)	$	(3,350	)	$	880
July 2012-December 2012	Ethane- Put Options	110		(MBbls)	Index		0.66	($/gallon)	309			113
January 2012-March 2013	Propane	281		(MBbls)	Index		1.13	($/gallon)	(2,488		)	1,588
January 2012-March 2013	Normal Butane	166		(MBbls)	Index		1.53	($/gallon)	(1,918		)	1,264
January 2012-March 2013	Natural Gasoline	88		(MBbls)	Index		2.01	($/gallon)	(711		)	812
January 2012-March 2014	West Texas Intermediate Crude	350		(MBbls)	Index		94.85	($/Bbl)	(1,029		)	3,429
January 2012-December 2012	Natural Gas	2,198,000		(MMBtu)	Index		5.05	($/MMBtu)	3,907			717
January 2012-April 2012	Interest Rate	$	250,000,000		1.325	%	Three-month LIBOR		(470		)	625
							Total Fair Value		$	(5,750	)

 _______________________

* Price risk sensitivities were calculated assuming a theoretical 10% change in prices regardless of term or historical relationships between the contractual price of the instrument and the underlying commodity price. Interest rate sensitivity assumes a 100 basis point increase or decrease in the LIBOR yield curve. The price sensitivity results are presented in absolute terms.    

Credit Risk. Our business operations expose us to credit risk, as the margin on any sale is generally a very small percentage of the total sale price. Therefore, a credit loss can be very large relative to our overall profitability. We attempt to ensure that we issue credit only to creditworthy counterparties and that in appropriate circumstances any such extension of credit is backed by adequate collateral such as a letter of credit or a parent company guarantee.

Interest Rate Risk. We are exposed to variable interest rate risk as a result of borrowings under our revolving credit facility. As of December 31, 2011, we had $332 million of outstanding borrowings, of which $82 million were exposed to variable interest rate risk.

Item 8. Financial Statements and Supplementary Data

The financial statements set forth starting on page F-1 of this report are incorporated by reference.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. An evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer of our General Partner, of the effectiveness of the design and operation of our disclosure controls and procedures (as such are defined in Rule 13a-15(e) of the Exchange Act). Based on management’s evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in achieving that level of reasonable assurance as of December 31, 2011.

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Internal Control over Financial Reporting.

(a) Management’s Report on Internal Control over Financial Reporting. Management of our General Partner is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting for the Partnership as defined in Rules 13a-15(f) as promulgated under the Exchange Act.

Management of our General Partner assessed the effectiveness of our internal control over financial reporting as of December 31, 2011. In making this assessment, management used the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The evaluation included an evaluation of the design of our internal control over financial reporting and testing of the operating effectiveness of those controls.

Based on its assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2011.

(b) Audit Report of the Registered Public Accounting Firm. Grant Thornton LLP, the independent registered public accounting firm that audited our consolidated financial statements included in this report, has issued an audit report on the Partnership’s internal control over financial reporting, which report is included herein on page F-3.

(c) Changes in Internal Control over Financial Reporting. As required by Exchange Act Rule 13a-15(f), management of our General Partner, including the Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of our internal control over financial reporting to determine whether any change occurred during the last fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there has been no change in our internal control over financial reporting during the last fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

Part III

Item 10. Directors, Executive Officers and Corporate Governance

Management. Our General Partner manages and directs all of our operations and activities, including the appointment of up to 12 persons to serve on the Board of Directors. Our officers and directors are officers and directors of our General Partner. Our General Partner and its board members are not elected by our unitholders and are not subject to re-election on a regular basis in the future.

Investor Rights Agreement. In connection with the sale of our General Partner in May 2010, we and the owner of our General Partner entered into an Investor Rights Agreement with an affiliate of GE EFS, the former owner of our General Partner, that provides that GE or its affiliates may elect to designate two investor directors or two non-voting investor observers for as long as an affiliate of GE owns at least 15% of our common units that it held as of May 26, 2010. In addition, if the number of common units held by an affiliate of GE falls below 15%, but continues to exceed 10%, of the number held as of May 26, 2010, then an affiliate of GE has the right to designate one investor director or investor observer. During 2011, Mr. James F. Burgoyne and Mr. Paul J. Halas served as designated observers for GE's affiliate.

Corporate Governance. Our General Partner does not have a formal diversity policy or set of guidelines for selecting and appointing directors who comprise the Board of Directors. The Board of Directors has established a Nominating Committee to assist the Board and the member of our General Partner in identifying and recommending to the Board of Directors individuals qualified to become Board members. The full Board of Directors elects the directors. In considering whether to recommend any candidate for consideration by the full Board, the Nominating Committee will apply the criteria set forth in the Corporate Governance Guidelines to assess candidates. The Corporate Governance Guidelines include the following as part of that assessment: an individual's background, ability, judgment, diversity, age, skill, experience in the context of the needs of the Board and whether the individual would qualify as an independent director under the independence rules of NYSE. The Nominating Committee seeks candidates with a broad diversity of experience, professions, skills and backgrounds. The Nominating Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective candidates. Directors are expected to exemplify the highest standards of personal and professional integrity and to constructively challenge management through their active participation and questioning. In particular, the Nominating Committee seeks directors with established strong professional reputations and expertise in areas relevant to the strategy and operation of the Partnership's business. Our General Partner believes that the backgrounds and qualifications of the directors, considered as a group, should provide a significant

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composite mix of experience, knowledge and abilities that will allow the Board to fulfill its duties and responsibilities.

Our Board of Directors currently consists of five members, three of whom qualify as independent under NYSE standards for audit committee members and one person who is a member of our executive management. Mr. John D. Harkey, Jr., Mr. Rodney L. Gray and Mr. James W. Bryant are independent.

The Board of Directors has adopted Corporate Governance Guidelines to assist it in the exercise of its responsibilities to provide effective governance over our affairs for the benefit of our unitholders. In addition, we have adopted a Code of Business Conduct, which sets forth legal and ethical standards of conduct for all of our officers, directors and employees. Specific provisions are applicable to the principal executive officer, principal financial officer, principal accounting officer and controller, or those persons performing similar functions, of our General Partner. The Corporate Governance Guidelines, the Code of Business Conduct, Code of Conduct for Senior Financial Officers, and the charters of our audit and risk, compensation and nominating committees are available on our website at www.regencygasservices.com. You may also contact our investor relations department at (214) 840-5477 for printed copies of these documents free of charge. Amendments to, or waivers from, the Code of Business Conduct will also be available on our website and reported as may be required under SEC rules; however, any technical, administrative or other non-substantive amendments to the Code of Business Conduct may not be posted. Note that the preceding Internet address is for information purposes only and is not intended to be a hyperlink. Accordingly, no information found or provided at that Internet address or at our website in general is intended or deemed to be incorporated by reference herein.

Audit and Risk Committee. The Board of Directors has established an Audit and Risk Committee in accordance with Exchange Act rules. The Board of Directors appointed three directors, Rodney L. Gray, John D. Harkey, Jr. and James W. Bryant, who are independent under the NYSE's standards for audit committee members, to serve on its Audit and Risk Committee. In addition, the Board of Directors determined that at least one member, Rodney L. Gray, the chairman of the Audit and Risk Committee, has such accounting or related financial management expertise sufficient to qualify such person as the audit committee financial expert in accordance with Item 407(d)(5) of Regulation S-K.

Mr. Harkey currently serves as the Chair of the Audit and Risk Committee.  Mr. Harkey currently serves as a member or chairman of the audit committee of three other publicly traded companies, in addition to his service as a member of the Audit and Risk Committee.  As required by Rule 303A.07 of the NYSE Listed Company Manual, the Board of Directors has determined that such simultaneous service does not impair Mr. Harkey's ability to effectively serve on our Audit and Risk Committee.

The Audit and Risk Committee meets on a regularly-scheduled basis with our independent accountants at least four times each year and is available to meet at their request. The Audit and Risk Committee has the authority and responsibility to review our external financial reporting, to review our procedures for internal auditing and the adequacy of our internal accounting controls, to consider the qualifications and independence of our independent accountants, to engage and resolve disputes with our independent accountants, including the letter of engagement and statement of fees relating to the scope of the annual audit work and special audit work that may be recommended or required by the independent accountants, and to engage the services of any other advisors and accountants as the Audit and Risk Committee deems advisable. The Audit and Risk Committee reviews and discusses the audited financial statements with management, discusses with our independent auditors matters required to be discussed by SAS 114 (Communications with Audit and Risk Committees), and makes recommendations to the Board of Directors for inclusion in our audited financial statements on this Form 10-K.

The Audit and Risk Committee is authorized to recommend to the Board of Directors any changes or modifications to its charter that the Audit and Risk Committee believes may be required.

The Board’s Role in Risk Oversight. The Board of Directors performs oversight functions to protect our unitholders' and other stakeholders' interest in the long-term health and the overall success of the Partnership and its financial strength. The full Board of Directors is actively involved in overseeing risk management for the Partnership. It does so in part through discussion and review of our business, financial and corporate governance practices and procedures.

The Board's Audit and Risk Committee identifies and reviews the risks confronted by the Partnership with respect to its operations and financial condition, establishes limits of risk tolerance with respect to the Partnership's hedging activities and exposure to customers' credit risk and ensures adequate property and liability insurance coverage.

In addition, each of our other Board committees considers the risks within its areas of responsibilities. For example, the Audit and Risk Committee reviews risks related to financial reporting. The Audit and Risk Committee discusses policies with respect to risk assessment and risk management, reviews contingent liabilities and risks that may be material to the Partnership and assesses major legislative and regulatory developments that could materially impact the Partnership's contingent liabilities and risks. The Audit and Risk Committee is required to discuss any material violations of our policies brought to its attention on an ad hoc basis. Additionally, the outcome of the audit risk assessment is presented to the Audit and Risk Committee annually; this assessment identifies internal control risks and drives the internal audit plan for the coming year. Material violations of our Code of Business

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Conduct and related corporate policies are reported to the Audit and Risk Committee and, as required, are reported to the full Board. The Compensation Committee reviews our overall compensation program and its effectiveness at both linking executive pay to performance and aligning the interests of our executives and our unitholders.

Meetings of Non-Management Directors and Communication with Directors. Our non-management directors are required by NYSE rules to meet regularly in executive session. In practice, they meet in executive session at most meetings of the Board. The presiding director at these executive sessions is rotated among the independent directors, John D. Harkey, Jr., Rodney L. Gray and James W. Bryant.

Unitholders and interested parties may communicate with the independent directors directly and anonymously by writing to the Chairman of the Audit and Risk Committee, Regency GP LLC, 2001 Bryan Street, Suite 3700, Dallas, Texas 75201.

Directors and Executive Officers of the General Partner. The following table sets forth certain information with respect to the executive officers and members of the Board of Directors of our General Partner as of February 22, 2012. Executive officers and directors are elected for indefinite terms.

Name	Age	Position with Regency GP LLC
Michael J. Bradley	57	Director, President and Chief Executive Officer
Thomas E. Long	55	Executive Vice President and Chief Financial Officer
Paul M. Jolas(1)	47	Executive Vice President, Chief Legal Officer and Secretary
Jim Holotik	58	Executive Vice President, Chief Commercial Officer
A. Troy Sturrock	41	Vice President, Controller and Principal Accounting Officer
John D. Harkey, Jr.	51	Chairman of the Board of Directors
John W. McReynolds	61	Director
Rodney L. Gray	60	Director
James W. Bryant	78	Director

_______________________

(1) In January 2012, the Partnership and Mr. Jolas entered into a Separation Agreement and Full Release of Claims pursuant to which Mr. Jolas will resign, effective May 16, 2012, from his position.

Michael J. Bradley was elected to the Board of Directors of Regency GP LLC in January 2008. In November 2010, he was also elected president and CEO of Regency. Prior to joining Regency, he served as President, Chief Executive Officer and a director of Matrix Service Company since November 2006. Prior to joining Matrix Service Company, Mr. Bradley served as President and CEO of DCP Midstream Partners and was a member of the board of its general partner. Mr. Bradley was named Group Vice President of Gathering and Processing for Duke Energy Field Services (DEFS) in 2004 and served as Executive Vice President (DEFS) from 2002 to 2004. From 1994 to 2002, he served as Senior Vice President (DEFS) and was responsible for business development and commercial activities. Mr. Bradley graduated from the University of Kansas with a bachelor's degree in civil engineering. He also completed the Duke University Executive Management Program. Mr. Bradley is a member of the American Society of Civil Engineers. He also serves on the advisory board for the University of Kansas, School of Engineering.

Thomas E. Long was elected executive vice president and chief financial officer of Regency GP LLC in November 2010. From May 2008 to November 2010, Mr. Long served as vice president and chief financial officer of Matrix Service Company. Prior to joining Matrix, he served as vice president and chief financial officer of DCP Midstream Partners, LP, a publicly traded natural gas and natural gas liquids midstream business company located in Denver, CO. In that position, he was responsible for all financial aspects of the company since its formation in December 2005. From 1998 to 2005, Mr. Long served in several executive positions with subsidiaries of Duke Energy Corp., one of the nation's largest electric power companies. During his tenure at Duke Energy, Mr. Long served as vice president and chief financial officer of its publicly owned power company in Ecuador; vice president and treasurer of Duke Energy Field Services, Denver; and executive vice president of National Methanol Company, a Duke Energy Corp. chemical joint-venture in Saudi Arabia. Starting in 1991, Mr. Long held financial management positions at PanEnergy Corp., Houston. He began his career in 1979 at Texas Eastern Corp., Houston. As a Certified Public Accountant, Mr. Long has a Bachelor of Arts in Accounting from Lamar University, Beaumont, TX.

Paul M. Jolas was elected executive vice president, chief legal officer and secretary of Regency GP LLC on September 8, 2009. Mr. Jolas has more than 20 years of legal experience, including extensive experience with corporate, securities, governance, finance and transitional matters. Prior to joining Regency, he served in various legal roles at Dallas-based Trinity Industries, Inc. (NYSE: TRN) from June 2006 through September 2009, most recently as vice president, deputy general counsel and corporate secretary. Previous to his work at Trinity, he served as senior regional counsel for the Texas division of KB Home from 2004 to 2006; from 1996 to 2003, he served as general counsel, executive vice president and corporate secretary for Radiologix, Inc.; and from 1989

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to 1996, as a member of the corporate securities group for Haynes and Boone, LLP. Mr. Jolas received a Bachelor of Arts degree in Economics from Northwestern University and a Juris Doctor degree from Duke University School of Law. On January 27, 2012, Mr. Jolas entered into a separation agreement with RGP GP LLC, pursuant to which, Mr. Jolas will resign, effective May 16, 2012, from his position as the Executive Vice President, Chief Legal Officer and Secretary.

Jim Holotik was elected executive vice president and chief commercial officer of Regency GP LLC in October 2010. From 2004 to October 2010, Mr. Holotik served in various positions at ETP, most recently serving as president of Transwestern Pipeline Company, LLC and leading the mergers and acquisition efforts for Energy Transfer. Mr. Holotik began his career in 1976 in exploration and moved to the natural gas industry in 1986 when he joined Endevco Oil and Gas. He later held positions as executive vice president of Cornerstone Natural Gas and was director of the East and West regions for El Paso Field Services. He joined Energy Transfer in 2004 as commercial vice president of project development, and later became president of Transwestern following its acquisition by Energy Transfer. Mr. Holotik has a bachelor's degree in business administration from Stephen F. Austin University.

A. Troy Sturrock was elected vice president and controller of Regency GP LLC in February 2008, and in November 2010 was appointed as the principal accounting officer. From June 2006 to February 2008, Mr. Sturrock served as the assistant controller and director of financial reporting and tax for Regency GP LLC. From January 2004 to June 2006, Mr. Sturrock was associated with the Public Company Accounting Oversight Board, where he was an inspection specialist in the division of registration and inspections. Mr. Sturrock served in various roles at PricewaterhouseCoopers LLP from 1995 to 2004, most recently as a senior manager in the audit practice specializing in the transportation and energy industries. Mr. Sturrock is a Certified Public Accountant.

John D. Harkey, Jr. was elected Chairman of the Board of Directors of Regency GP LLC in May 2010. Mr. Harkey has served as Chief Executive Officer and Chairman of Consolidated Restaurant Companies, Inc., since 1998. Mr. Harkey currently serves on the Board of Directors of Leap Wireless International, Inc., Loral Space & Communications, Inc., Emisphere Technologies, Inc., and the Board of Directors for the Baylor Health Care System Foundation. He currently serves on the Audit Committees of Loral and Emisphere. He also serves on the President’s Development Council of Howard Payne University and on the Executive Board of Circle Ten Council of the Boy Scouts of America. In May 2006, Mr. Harkey was elected as a director of ETE's General Partner and member of their Audit Committee. He currently serves as the Chairman of the Audit Committee of ETE's General Partner. Among the reasons for Mr. Harkey's appointment as a director are his background in corporate finance as well as his experience as a director on the boards and audit committees of several other public companies.

John W. McReynolds was elected to the Board of Directors of Regency GP LLC in May 2010. Mr. McReynolds is a Director and the President and Chief Financial Officer of Energy Transfer Equity. Mr. McReynolds has served as the President of ETE since March 2005 and as a Director and the Chief Financial Officer of ETE since August 2005. He has previously served as a director of Energy Transfer Partners from August 2001 through May 2010. Prior to becoming President of ETE, Mr. McReynolds was a partner with the international law firm of Hunton & Williams LLP for over 20 years. As a lawyer, he specialized in energy related finance, securities, partnerships, mergers and acquisitions, syndication and litigation matters, and served as an expert in numerous arbitration, litigation, and governmental proceedings, including as an expert in special projects for Boards of Directors of public companies. Mr. McReynolds has served as a Director of ETE's General Partner since August 2004. Among the reasons for Mr. McReynolds' appointment as a director are his legal background and his extensive experience in energy-related corporate finance. Mr. McReynolds has relationships with executives and senior management at several companies in the energy sector, as well as with investment bankers who cover the industry.

Rodney L. Gray was elected to the Board of Directors of Regency GP LLC on February 22, 2008. From June 2009 to June 2010, Mr. Gray served as Chief Financial Officer and Executive Vice President of Cobalt International Energy, Inc. From 2003 to April 2009, Mr. Gray served as chief financial officer of Colonial Pipeline, an interstate carrier of petroleum products. Mr. Gray currently serves on the Board of Directors of Rose Rock Midstream GP, LLC, the general partner of Rose Rock Midstream, L.P. Mr. Gray received a Bachelor of Science degree in Accounting from the University of Wyoming and a Bachelor of Science degree in Mathematics and Economics from Rock Mountain College in Billings, Montana. Among the reasons for Mr. Gray's appointment as a director are his more than 30 years of experience in the energy industry, his past experiences as an executive with financial leadership responsibility at energy companies, and his current position as a member of the board of directors of another master limited partnership.

James W. Bryant was elected to the Board of Directors of Regency GP LLC in July 2010. Mr. Bryant is a chemical engineer and has more than 40 years of experience in all phases of the natural gas business, specifically in the engineering and management of midstream facilities. Mr. Bryant currently serves as a partner and member of the Board of Directors for Cardinal Midstream, LLC. Prior to that, he was a co-founder of Cardinal Gas Solutions LP, a contract gas treating company that was later sold to Crosstex Energy Services, L.P. In 2003, Mr. Bryant co-founded Regency Gas Services, LLC, the predecessor to Regency, and served as president of Regency Gas Services, LLC, until December 2004, when it was sold to Hicks, Muse, Tate & Furst Inc. He has been instrumental in the formation, development and growth of numerous other companies in the midstream sector, including those specializing in natural gas treating. Mr. Bryant has previously served on the Board of Directors for Gulf Energy & Development,

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Endevco, Inc., Oachita Energy Company, and Regency Gas Services, LLC. Mr. Bryant received a bachelor's degree in chemical engineering from Louisiana Tech University. Among the reasons for Mr. Bryant's appointment as a director are his more than 40 years of experience in the midstream natural gas business as well as his experience as a director on the boards of several other public companies.

Reimbursement of Expenses of Our General Partner. We will reimburse our General Partner and its affiliates for all expenses they incur on our behalf. These expenses will include all costs incurred by our General Partner and its affiliates in managing and operating us, including costs for rendering corporate staff and support services to us. In addition, we are a party to a services agreement with Services Co., an affiliate of ETE, pursuant to which Services Co. provides certain general and administrative services to us and our partner. The reimbursement of expenses of our General Partner and its affiliates and our payments under the services agreement with Services Co. will reduce our cash available for debt service.

Section 16(a) Beneficial Ownership Reporting Compliance. Section 16(a) of the Exchange Act requires executive officers, directors and persons who beneficially own more than 10% of a security registered under Section 12 of the Exchange Act to file initial reports of ownership and reports of changes of ownership of such security with the SEC. Copies of such reports are required to be furnished to the issuer. The common units of the Partnership were first registered under Section 12 of the Exchange Act on January 30, 2006. Based solely on a review of reports furnished to our General Partner, or written representations from reporting persons that all reportable transactions were reported, we believe that, during the fiscal year ended December 31, 2011, our General Partner's executive officers, directors and greater than 10% common unitholders filed all reports they were required to file under Section 16(a).

Item 11. Executive Compensation

Compensation Discussion and Analysis

Named Executive Officers

We do not have officers or directors. Instead, as a limited partnership, we are managed by the board of directors of our General Partner, and the executive officers of our General Partner perform all of our management functions. As a result, the executive officers of our General Partner are essentially our executive officers, and their compensation is administered by our General Partner. This Compensation Discussion and Analysis is, therefore, focused on the total compensation of the executive officers of our General Partner as set forth below. The executive officers we refer to in this discussion as our “named executive officers” are the following officers of our General Partner:

• Michael J. Bradley, President and Chief Executive Officer;

• Thomas E. Long, Executive Vice President and Chief Financial Officer;

• A. Troy Sturrock, Vice President, Controller and Principal Accounting Officer;

• Paul M. Jolas⁽¹⁾, Executive Vice President, Chief Legal Officer and Secretary; and

• Jim Holotik, Executive Vice President and Chief Commercial Officer.

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(1) In January 2012, the Partnership and Mr. Jolas entered into a Separation Agreement and Full Release of Claims pursuant to which Mr. Jolas will resign, effective May 16, 2012, from his position.

Our General Partner's Philosophy for Compensation of Executives

In general, our General Partner's philosophy for executive compensation is based on the premise that a significant portion of each executive's compensation should be incentive-based and that executives' base salary levels should be competitive in the marketplace for executive talent and abilities. Our General Partner also believes the incentives should be competitive in the marketplace and balanced between short and long-term performance. Our General Partner believes this balance is achieved by (i) the payment of annual discretionary cash bonuses that consider the achievement of the Partnership's financial performance objectives for a fiscal year set at the beginning of such fiscal year and the individual contributions of our named executive officers to the success of the Partnership and (ii) the annual grant of phantom units under our equity incentive plans, which are intended to provide a longer term incentive to our key employees to focus their efforts on increasing the market price of our publicly traded units and to increase the cash distribution we pay to our unitholders. Since ETE's acquisition of our General Partner, our equity awards have primarily been in the form of phantom units that vest over a specified time period, with substantially all of these awards vesting over a five-year period at 20% per year based on continued employment through each specified vesting date. We refer to these awards as “phantom units,” consistent with the use of such term in our long-term incentive plans. Our General Partner believes that these equity-based incentive arrangements are important in attracting and retaining our executive officers and key employees as well

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as motivating these individuals to achieve our business objectives. The equity-based compensation also reflects the importance we place on aligning the interests of our named executive officers with those of our unitholders.

While we are responsible for the direct payment of the compensation of our named executive officers as employees of the Partnership, the Partnership does not participate or have any input in any decisions as to the compensation policies of our General Partner or the compensation levels of the executive officers of our General Partner. The compensation committee of the board of directors of our General Partner (the “Compensation Committee”) is responsible for the approval of the compensation policies and the compensation levels of these executive officers. We directly pay these executive officers in lieu of receiving an allocation of overhead related to executive compensation from our General Partner. For the year ended December 31, 2011, we paid 100% of the compensation of the executive officers of our General Partner as we represent the only business currently managed by our General Partner.

Our General Partner is ultimately controlled by the general partner of ETE. We pay quarterly distributions to our General Partner in accordance with our partnership agreement with respect to its ownership of a general partner interest and the incentive distribution rights specified in our partnership agreement. The amount of each quarterly distribution that we must pay to our General Partner is based solely on the provisions of our partnership agreement. Accordingly, the cash distributions we make to our General Partner bear no relationship to the level or components of compensation of our General Partner's executive officers. Our General Partner's incentive distribution rights are described in detail in “Item 5. Market for Registrant's Common Equity, Related Unitholder Matters and Issuer Purchases of Equity Securities.” Our named executive officers also own directly and indirectly certain of our limited partner interests and, accordingly, receive quarterly distributions. Such per unit distributions equal the per unit distributions made to all our limited partners and bear no relationship to the level of compensation of the named executive officers.

For a more detailed description of the compensation of our named executive officers, please see “—Compensation Tables” below.

Compensation Committee

We are a limited partnership and our units are listed on the NYSE. Although the rules of the NYSE do not require publicly traded limited partnerships to have a compensation committee, the board of directors of our General Partner has established a Compensation Committee that is composed of two directors of our General Partner (Messrs. Harkey and Gray) who our General Partner has determined to be “independent” (as that term is defined in the applicable NYSE corporate governance standards) and one director (Mr. McReynolds) who is not “independent” under the NYSE standards.

The Compensation Committee is directly responsible for establishing annual and long-term performance goals and objectives for our elected officers. The responsibilities of the Compensation Committee are:

• to set the compensation of the Chief Executive Officer and the other elected officers based upon the evaluation of the performance of the Chief Executive Officer and other elected officers;

• to evaluate the performance of the Chief Executive Officer and other elected officers in light of the approved performance goals and objectives;

• to make awards under existing cash-based and equity-based compensation plans and to make recommendations to the Board with respect to new cash-based incentive compensation plans and equity-based compensation plans; and

• to prepare an annual performance self-evaluation of the Compensation Committee.

In addition, the Compensation Committee:

• administers the Partnership's incentive plans;

• determines and certifies the shares awarded under corporate performance-based plans; and

• advises on the setting of compensation for senior executives whose compensation is not otherwise set by the Compensation Committee.

Compensation Philosophy

Our compensation program is structured to provide the following benefits:

• attract, retain and reward talented executive officers and key management employees by providing total compensation competitive with that of other executive officers and key management employees employed by publicly traded limited partnerships of similar size and in similar lines of business;

• motivate executive officers and key employees to achieve strong financial and operational performance;

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• emphasize performance-based compensation; and

• reward individual performance. 

Components of Executive Compensation

For the year ended December 31, 2011, the compensation paid to our named executive officers consisted of the following components:

• annual base salary;

• non-equity incentive plan compensation consisting solely of discretionary cash bonuses;

• equity-based awards granted under our long-term incentive plans; and

• qualified retirement plan benefits. 

Methodology

The Compensation Committee considers relevant data available to it to assess the competitive position with respect to base salary, annual short-term incentives and long-term incentive compensation for our executive officers. The Compensation Committee also considers individual performance, levels of responsibility, skills and experience.

Periodically, the Compensation Committee engages a third-party consultant to provide market information for compensation levels at peer companies in order to assist the Compensation Committee in its determination of compensation levels for our executive officers. Most recently, the Compensation Committee engaged BDO Seidman, LLP (“BDO”) during the year ended December 31, 2010 to assist in the determination of compensation levels for our senior management. The results of this study were utilized to determine long-term incentive awards and bonuses during 2010 and 2011. The consultant provided an analysis of compensation for senior executives at the following 20 companies in the energy industry, comprised primarily of midstream and exploration and production companies:

• Atlas Pipeline Partners, L.P.             Ÿ Holly Energy Partners, L.P.

• Boardwalk Pipeline Partners, LP             Ÿ Magellan Midstream Partners, L.P.

• Buckeye Partners, L.P.                 Ÿ MarkWest Energy Partners, L.P.

• Copano Energy, L.L.C.                 Ÿ Martin Midstream Partners L.P.

• Crosstex Energy L.P.                 Ÿ Nustar Energy L.P.

• DCP Midstream Partners, LP             Ÿ Plains All American Pipeline, L.P.

• Eagle Rock Energy Partners, L.P.             Ÿ Quicksilver Gas Services LP

• Energy Transfer Partners, L.P.             Ÿ Sunoco Logistics Partners L.P.

• Enterprise Products Partners L.P.             Ÿ Targa Resources Partners LP

• Hiland Partners, LP                 Ÿ Teppco Partners, L.P.

The compensation analysis provided by BDO covered annual salary, annual cash bonus and long-term incentive arrangements for the senior executives of these companies. The Compensation Committee utilized the information provided by BDO to compare the levels of base salary, annual bonus and long-term equity incentives at these other companies with those of our named executive officers to ensure that compensation of our named executive officers is competitive with the compensation for executive officers of these other companies. The Compensation Committee did not attempt to benchmark the base salary, annual bonus or long-term equity incentives to any percentage of, or numerical average of, the compensation levels at these other companies. BDO did not provide any services during 2011 and also did not provide any non-executive compensation services for the Partnership during 2010.

In addition to the periodic engagement of a third-party consultant, the Compensation Committee also utilizes information obtained from other sources, such as third-party surveys, for comparison purposes in its determination of compensation levels for our executive officers.

Annual Base Salary. The base salaries of our named executive officers are determined by the Compensation Committee after taking into account the recommendations of our CEO. For 2011, the Compensation Committee did not approve increasesfor our named executive officers, primarily due to increases that had been granted in 2010 and the commencement of employment in late 2010 or early 2011 by three named executive officers. In 2010, the Compensation Committee approved increases in the annual

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base salaries of Messrs. Sturrock and Jolas of 7% and 20%, respectively. Mr. Sturrock's 2010 increase was the result of his promotion to a new position, and Mr. Jolas' 2010 increase was in recognition of his performance and his contributions in connection with the acquisition of our General Partner by ETE. Each of the remaining named executive officers began employment in 2010 and therefore did not receive an increase in that period.

Annual Cash Bonus. In addition to base salary, the Compensation Committee makes a determination whether to award our named executive officers', discretionary annual cash bonuses following the end of the year. These discretionary bonuses, if awarded, are intended to reward our named executive officers for the achievement of financial performance objectives during the year for which the bonuses are awarded in light of the contribution of each individual to our profitability and success during such year. In this regard, the Compensation Committee takes into account whether the Partnership achieved or exceeded its internal EBITDA budget for the year. The Compensation Committee also considers the recommendation of our CEO in determining the specific annual cash bonus amounts for each of the other named executive officers. Beginning in 2011, the Compensation Committee did not establish its own financial performance objectives in advance for purposes of determining whether to approve any annual bonuses, and the Compensation Committee does not utilize any formulaic approach to determine annual bonuses. Prior to 2011, as discussed further below, annual bonus payments were based on certain performance measures, and the Compensation Committee had a designated level of discretion with respect to such bonus payments. The goal of the Compensation Committee in changing the annual bonus methodology in 2011 was to conform to the bonus programs of ETE.

The Partnership's internal financial budgets are generally developed for each business segment, and then aggregated with appropriate corporate level adjustments, to reflect an overall performance objective that is reasonable in light of market conditions and opportunities based on a high level of effort and dedication across all segments of the Partnership's business. The evaluation of the Partnership's performance versus its internal financial budget is based on the Partnership's EBITDA for a calendar year. In general, the Compensation Committee believes that Partnership performance at or above the internal EBITDA budget would support bonuses to our named executive officers ranging from 80% to 120% of their annual salary. The individual bonus amounts for each named executive officer also reflect the Compensation Committee's view of the impact of such individual's efforts and contributions towards (i) achievement of the Partnership's success in exceeding its internal financial budget, (ii) the development of new projects that are expected to result in increased cash flows from operations in future years and (iii) the overall management of the Partnership's business.

In February 2012, the Compensation Committee approved cash bonuses relating to the 2011 calendar year to Messrs. Bradley, Long, Sturrock, Jolas and Holotik of $603,750, $315,000, $138,700, $342,000 and $270,750, respectively. In approving the cash bonuses for Messrs. Bradley, Long, Sturrock, Jolas and Holotik, the Compensation Committee took into account the achievement by the Partnership of approximately 95% of its internal EBITDA budget of $433 million for 2011. Accordingly, the approved amounts represent 95% of the bonus targets for Messrs. Sturrock, Jolas and Holotik. With respect to Messrs. Bradley and Long, the approved amounts represent 105% of the bonus target. In addition to the performance of the Partnership in relation to its internal EBITDA budget during 2011, the Compensation Committee also took into account Mr. Bradley's role in managing the Partnership during and after a period of significant executive turnover that occurred following the change in control of the General Partner and Mr. Long's role in orchestrating financing for the Partnership's growth projects. As a result of their combined efforts, the Partnership is well-positioned for future growth.

In connection with the negotiation of employment terms with Messrs. Bradley and Long, we agreed to pay them guaranteed minimum bonuses for fiscal year 2011. We believe it was important to provide this one-time element of compensation in light of the highly competitive employment environment and in order to recruit these individuals. The amounts of the guaranteed bonuses are substantially the same as the amounts that each of Messrs. Bradley and Long would otherwise be entitled to receive under our annual incentive bonus program if target performance is achieved. However, these guaranteed amounts will be paid regardless of whether the company or the executive meet their respective 2011 performance goals. Mr. Bradley's minimum bonus will be $500,000. Mr. Long's minimum bonus will be $250,000.

Prior to 2011, named executive officers were eligible to receive an annual bonus opportunity ranging from 40% to 100% of base salary. Initially, the Compensation Committee would determine the amount of funding for the Partnership's bonus pool based on the following corporate performance measures:

• Adjusted EBITDA;

• the amount of distributions paid with respect to all of our outstanding common units;

• our ability to control and manage general and administrative expenses and operations and maintenance expenses;

• the total reportable incident rate, which is a measure of the number of injury accidents involving employees over the calendar year; and

• the number of preventable vehicle accidents.

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Under our previous bonus methodology, each of these performance metrics was weighted and was subject to a “threshold,” “target” and “stretch” performance goal. In assessing the Partnership's performance with respect to its corporate performance goals in 2010, the Compensation Committee considered the impact of the change of control that occurred when ETE acquired the General Partner, as well as the sale of our east Texas assets in 2010. While the Compensation Committee had the discretion, under the previous bonus methodology, to make subjective adjustments based on a range of individual performance factors for each named executive officer, the Compensation Committee did not exercise this discretion in 2010. Consequently, the bonuses awarded to Messrs. Sturrock and Jolas for 2010 were $95,765 and $316,261, respectively.

Equity-Based Awards. Each of our long-term incentive plans authorizes the Compensation Committee, in its discretion, to grant awards of options to purchase our common units; awards of our restricted units, phantom units and common units; awards of distribution equivalent rights (“DERs”); awards of common unit appreciation rights; and other unit-based awards to employees, directors and consultants of the Partnership and its affiliates and subsidiaries. The Compensation Committee approved the terms of the unit grants awarded to our named executive officers, including the number of Common Units subject to the unit award and the vesting structure of those unit awards.

Subsequent to ETE's acquisition of our General Partner in 2010, all of the new awards granted have provided for vesting over a specified time period, with vesting based on continued employment as of each applicable vesting date, rather than vesting based on the satisfaction of any performance objectives which is more generally prevalent with companies in the energy industry. In December 2011, the Compensation Committee approved grants of phantom unit awards to Messrs. Bradley, Long, Sturrock, and Holotik of 50,000 units, 22,500 units, 8,000 units and 22,500 units, respectively. All of these phantom unit awards provide for vesting over a five-year period at 20% per year, subject to continued employment through each specified vesting date. These phantom unit awards entitle the recipients of the unit awards to receive, with respect to each Regency Common Unit subject to such award that has not either vested or been forfeited, a cash payment equal to each cash distribution per Common Unit made by us on our Common Units promptly following each such distribution by us to our Unitholders. In approving the grant of such unit awards, the Compensation Committee took into account the same factors as discussed above under the caption "Annual Cash Bonus," the long-term objective of retaining such individuals as key drivers of the Partnership's future success, the existing level of equity ownership of such individuals and the previous awards to such individuals of equity awards subject to vesting.

The issuance of Common Units pursuant to our equity incentive plans is intended to serve as a means of incentive compensation; therefore, no consideration will be payable by the plan participants upon vesting and issuance of the Common Units.

The unit awards under our equity incentive plans generally require the continued employment of the recipient during the vesting period. The Compensation Committee may, but is not required to, accelerate the vesting of unvested unit awards in the event of the termination or retirement of an executive officer. The Compensation Committee did not accelerate the vesting of unit awards in 2011.

Prior to ETE's acquisition of our General Partner, we issued awards with different features than those that we currently issue. In May 2010, prior to the change of control, we granted phantom units for which 40% were subject to time-based vesting restrictions and 60% were subject to performance-based vesting restrictions. Time-based restrictions for those awards lapse as to one-third of any unit on each of the first three anniversaries of the date of grant. The units subject to performance-based vesting restrictions vest at the end of a three-year period based on our total unitholder return. The Compensation Committee elected to grant these phantom units to incentivize continued performance. Accordingly, the vesting provisions of these phantom unit awards did not accelerate when the change of control of our General Partner occurred shortly after the May 7, 2010 grant.

Qualified Retirement Plan Benefits. Effective January 1, 2011, our 401(k) plan, which covers substantially all of our employees, including our named executive officers, merged with and into that of ETP. The plan is subject to the provisions of ERISA. Employees who have completed one hour of service and have attained age 18 years of age (age 21 for certain union workers) are eligible to participate. Employees may elect to defer up to 100% of their eligible compensation after applicable taxes, as limited under the IRC. We are required to make a matching contribution that is not less than the aggregate amount of matching contributions that would be credited to a participant's account based on a rate of match equal to 100% of each participant's elective deferrals up to 5% of covered compensation. The entire amount credited to the participant's account is fully vested and non-forfeitable at all times. We provide this benefit as a means to incentivize employees and provide them with an opportunity to save for their retirement. In 2010, prior to the merger of the plan with ETP's, our 401(k) plan matched dollar for dollar up to 6% of eligible compensation, and participants vested in matching contributions ratably over three years.

Health and Welfare Benefits. All full-time employees, including our named executive officers, may participate in our health and welfare benefit programs including medical, dental, vision, flexible spending, life insurance and disability insurance.

Termination Benefits. Our named executive officers do not have any employment agreements that call for payments of termination or severance benefits or that provide for any payments in the event of a change in control of our General Partner. Our long-term

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incentive plans provide for immediate vesting of all unvested awards in the event of a change in control, as defined in our long-term incentive plans. No such accelerated vesting occurred in 2011.

Deferred Compensation Plan. Effective January 1, 2011, employees earning more than $125,000 per year have the option to participate in a deferred compensation plan (“DC Plan”). The DC Plan permits eligible highly compensated employees to defer a portion of their salary and/or bonus until retirement or termination of employment or other designated distribution.

Under the DC Plan, each year eligible employees are permitted to make an irrevocable election to defer up to 50% of their annual base salary, 50% of their quarterly non-vested unit distribution income, and/or 50% of their discretionary performance bonus compensation to be earned for services performed during the following year. Pursuant to the DC Plan, we may make annual discretionary matching contributions to participants' accounts; however, we have not made any discretionary contributions to participants' accounts and currently have no plans to make any discretionary contributions to participants' accounts. All amounts credited under the DC Plan (other than discretionary credits) are immediately 100% vested. Participant accounts are credited with deemed earnings (or losses) based on hypothetical investment fund choices made by the participants among available funds.

Participants may also elect to have their accounts distributed in one lump sum payment or in annual installments over a period of 3 or 5 years upon retirement, and in a lump sum upon other termination. Upon a change in control (as defined in the DC Plan), all DC Plan accounts are immediately vested in full. However, distributions are not accelerated and, instead, are made in accordance with the DC Plan's normal distribution provisions unless a participant has elected to receive a change of control distribution pursuant to his deferral agreement.

Risk Assessment Related to our Compensation Structure. We believe our compensation plans and programs for our named executive officers, as well as our other employees, are appropriately structured and are not reasonably likely to result in material risk to the Partnership. We believe our compensation plans and programs are structured in a manner that does not promote excessive risk-taking that could harm our value or reward poor judgment. We also believe we have allocated our compensation among base salary and short and long-term compensation in such a way as to not encourage excessive risk-taking. In particular, we generally do not adjust base annual salaries for the executive officers and other employees significantly from year to year, and therefore the annual base salary of our employees is not generally impacted by our overall financial performance or the financial performance of an operating segment. We generally determine whether, and to what extent, our named executive officers receive a cash bonus based on our achievement of specified financial performance objectives as well as the individual contributions of our named executive officers to the Partnership's success. We use phantom units rather than unit options for equity awards because phantom units retain value even in a depressed market so that employees are less likely to take unreasonable risks to get, or keep, options “in-the-money.” Finally, the time-based vesting over five years for our long-term incentive awards ensures that our employees' interests align with those of our Unitholders for the long-term performance of the Partnership.

Recoupment Policy

We currently do not have a recovery policy applicable to annual incentive bonuses or equity awards. The Compensation Committee will continue to evaluate the need to adopt such a policy.

Tax and Accounting Implications of Equity-Based Compensation Arrangements

Deductibility of Executive Compensation

We are a limited partnership and not a corporation for U.S. federal income tax purposes. Therefore, we believe that the compensation paid to the named executive officers is not subject to the deduction limitations under section 162(m) of the IRC and therefore is generally fully deductible for federal income tax purposes.

Accounting for Unit-Based Compensation

For our unit-based compensation arrangements, including equity-based awards issued to certain of our named executive officers by an affiliate (as discussed above), we record compensation expense over the vesting period of the awards, as discussed further in Note 17 in the Notes to our Consolidated Financial Statements.

Compensation Committee Interlocks and Insider Participation

Messrs. Harkey, McReynolds and Gray served on the Compensation Committee during 2011. During 2011, none of the members of the committee was an officer or employee of us or any of our subsidiaries or served as an officer of any company with respect to which any of our executive officers served on such company's board of directors. In addition, none of the members of the Compensation Committee are former employees of ours or any of our subsidiaries.

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Report of Compensation Committee

The Compensation Committee of the board of directors of our General Partner has reviewed and discussed the section entitled “Compensation Discussion and Analysis” with the management of Regency Energy Partners LP. Based on this review and discussion, we have recommended to the board of directors of our General Partner that the Compensation Discussion and Analysis be included in this annual report on Form 10-K.

Compensation Committee

John D. Harkey, Jr., Chairman

John W. McReynolds

Rodney L. Gray

The foregoing report shall not be deemed to be incorporated by reference by any general statement or reference to this annual report on Form 10-K into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under those Acts.

COMPENSATION TABLES AND NARRATIVES

Summary Compensation Table for 2011

Name and Principal Position	Year (#)(1)	Salary ($)		Bonus ($)(2)		Equity Awards ($)(3)		All Other Compensation ($)(4)		Total ($)(5)
Michael J. Bradley	2011	$	575,000	$	603,750	$	1,216,000	$	51,392	$	2,446,142
President and Chief Executive Officer	2010	44,231		—		2,447,500		10,701		2,502,432
Thomas E. Long	2011	300,000		315,000		547,200		210,226		1,372,426
Executive Vice President and Chief Financial Officer	2010	15,000		—		965,750		11,630		992,380
A. Troy Sturrock	2011	182,500		138,700		194,560		26,869		542,629
Vice President, Controller and Principal Accounting Officer	2010	176,038		95,765		315,511		25,734		613,048
Paul M. Jolas(6)	2011	360,000		342,000		—		42,554		744,554
Executive Vice President, Chief Legal Officer and Secretary	2010	310,060		316,261		918,232		48,506		1,593,059
Jim Holotik	2011	285,000		270,750		547,200		13,441		1,116,391
Executive Vice President and Chief Commercial Officer

_______________________

(1) The information provided in the Summary Compensation Table reflects full-year information for each individual for the years in which such individuals are considered Named Executive Officers. Mr. Holotik became a Named Executive Officer beginning in 2011; Messrs. Bradley, Long, Sturrock and Jolas became Named Executive Officers beginning in 2010.

(2) The bonus amounts reflect discretionary cash bonuses for our named executive officers for 2011 approved by the Compensation Committee in February 2012, which are expected to be paid in March 2012.

(3) Equity award amounts reflect the aggregate grant date fair value of unit awards granted for the periods presented, computed in accordance with FASB ASC Topic 718. See Note 17 in the Notes to the Consolidated Financial Statements for additional assumptions underlying the value of the equity awards.

(4) The amounts reflected in "All Other Compensation" for 2011 include (i) reimbursement of moving expenses in the amount of $159,409 to Mr. Long, (ii) housing allowances for Messrs. Bradley and Long in the amounts of $37,911 and $37,535, respectively, (iii) payments to Messrs. Sturrock and Jolas in the amounts of $14,307 and $29,494, respectively, in connection with the termination of the Partnership's previous employee leave policy, (iv) contributions to the 401(k) plan on behalf of each named executive officer in the amount of $12,250 each, and (v) the dollar value of life insurance premiums paid for the benefit of the named executive officers. Vesting in 401(k) contributions occurs immediately.

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(5) Amounts presented do not include the value of unvested phantom unit awards under long-term incentive plans that would fully vest upon a change of control as defined in our plans, which amounts are reflected in the "Outstanding Equity Awards at Year-End Table".

(6) In January 2012, the Partnership and Mr. Jolas entered into a Separation Agreement and Full Release of Claims pursuant to which Mr. Jolas will resign, effective May 16, 2012, from his positions.

Grant of Plan-Based Awards for the Year Ended December 31, 2011

		Estimated Future Payouts Under Equity Incentive Plan Awards			All Other Unit Awards: Number of Units (#)	All Other Option Awards: Number of Securities Underlying Options (#)	Exercise or Base Price of Option Awards ($/Sh)	Grant Date Fair Value of Unit Awards(1)
Name	Grant Date	Threshold (#)	Target (#)	Maximum (#)
Michael J. Bradley	12/21/2011	—	—	—	50,000	—	—	$	1,216,000
Thomas E. Long	12/21/2011	—	—	—	22,500	—	—	547,200
A. Troy Sturrock	12/21/2011	—	—	—	8,000	—	—	194,560
Paul M. Jolas(2)	—	—	—	—	—	—	—	—
Jim Holotik	12/21/2011	—	—	—	22,500	—	—	547,200

  _______________________

(1) We have computed the grant date fair value of these phantom unit awards in accordance with FASB ASC Topic 718, as further described below and in Note 17 in the Notes to our Consolidated Financial Statements.

(2) In January 2012, the Partnership and Mr. Jolas entered into a Separation Agreement and Full Release of Claims pursuant to which Mr. Jolas will resign, effective May 16, 2012, from his positions.

Narrative Disclosure to Summary Compensation Table and Grants of the Plan-Based Awards Table

A description of material factors necessary to understand the information disclosed in the tables above with respect to salaries, bonuses, equity awards, nonqualified deferred compensation earnings, and 401(k) plan contributions can be found in the compensation discussion and analysis that precedes these tables.

Outstanding Equity Awards at December 31, 2011

	Unit Awards
Name	Grant Date	Number of Units that have not Vested (1) (#)	Market Value of Units That Have Not Vested (2) ($)		Equity Incentive Plan Awards: Number of Units That Have Not Vested (3) (#)	Equity Incentive Plan Awards: Market or Payout Value of Units That Have Not Vested (2) ($)
Michael J. Bradley	12/21/2011	50,000	$	1,243,000	—	$	—
	12/17/2010	40,000	994,400		—	—
	11/21/2010	40,000	994,400		—	—
Thomas E. Long	12/21/2011	22,500	559,350		—	—
	12/17/2010	18,800	467,368		—	—
	12/1/2010	12,000	298,320
A. Troy Sturrock	12/21/2011	8,000	198,880		—	—
	12/17/2010	8,000	198,880		—	—
	5/7/2010	934	23,219		2,100	52,206
Paul M. Jolas(4)	12/17/2010	18,800	467,368		—	—
	5/7/2010	4,534	112,715		10,200	253,572
Jim Holotik	12/21/2011	22,500	559,350		—	—
	12/17/2010	18,800	467,368		—	—

  _______________________

(1) Phantom unit awards outstanding as of December 31, 2011 reflected in the table above vest ratably on each anniversary of

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the grant date through 2016 for awards granted in 2011 and through 2015 for awards granted in 2010.

(2) Market value was computed as the number of unvested awards as of December 31, 2011 multiplied by the closing price of our common units on December 31, 2011.

(3) The forfeiture restrictions on these market-based phantom unit awards lapse on March 15, 2013 based upon the Partnership's achievement of certain levels of total unitholder return. The units subject to performance-based vesting restrictions vest at the end of a three-year period based on our total unitholder return.

(4) In January 2012, the Partnership and Mr. Jolas entered into a Separation Agreement and Full Release of Claims pursuant to which Mr. Jolas will resign, effective May 16, 2012, from his positions.

Option Exercises and Stock Vested for the Year Ended December 31, 2011

	Unit Awards
Name	Number of Units Acquired on Vesting (1) (#)	Value Realized on Vesting (1) ($)
Michael J. Bradley	20,000	$	464,200
Thomas E. Long	7,700	182,886
A. Troy Sturrock	2,466	59,001
Paul M. Jolas(2)	6,966	168,405
Jim Holotik	4,700	110,826

 _______________________

(1) Amounts presented represent the number of phantom units vested during 2011 and the value realized upon vesting of these awards, which is calculated as the number of units vested multiplied by the closing price of our common units upon the vesting date.

(2) In January 2012, the Partnership and Mr. Jolas entered into a Separation Agreement and Full Release of Claims pursuant to which Mr. Jolas will resign, effective May 16, 2012, from his position.

Potential Payments upon a Termination or Change of Control

As discussed in "Termination Benefits" within the compensation discussion and analysis above, equity incentive plan awards would vest upon a change of control. Such awards are reflected in the Summary Compensation Table and Grants of Plan-Based Awards Table above at 100% of the fair value of the award upon the grant date. To the extent such awards were not already vested as of December 31, 2011, the fair value of the unvested awards at the date are reflected in the Outstanding Equity Awards at Year-End Table above.

Equity Compensation Awards Granted under the 2006 Plan. With respect to the phantom units granted to Messrs. Sturrock and Jolas on May 7, 2010, a termination without cause or resignation for good reason upon or within a 12-month period following any change of control in the future and prior to the end of the performance period would cause the awards to automatically become vested at the “maximum” vested percentage of 150% of target. Assuming such an event had occurred on December 31, 2011, the value of the common units that would have been received by Messrs. Sturrock and Jolas would have been $101,528 and $493,073, respectively.

The time-based outstanding phantom unit awards held by each named executive officer that were granted in November and December of 2010 under the Regency GP LLC Long-Term Incentive Plan (dated February 3, 2006, the “2006 Plan”) would also receive automatic vesting acceleration upon our change of control, or a termination of employment due to the executive's death or disability. In the event that (i) a change of control had occurred on December 31, 2011, whether or not the executives also incurred a termination of employment, or (ii) the executive's termination of employment with us had terminated due to his death or disability, the value of the accelerated vesting for outstanding phantom unit awards would have been as follows: Mr. Bradley, $1,888,800; Mr. Long, $765,688 ; Mr. Sturrock, $198,880; Mr. Jolas, $112,715; and Mr. Holotik, $467,368. These amounts were calculated by multiplying the number of phantom unit awards granted under the 2006 Plan and still held by each named executive officer as of December 31, 2011, and multiplying that number by the closing price of our common stock on that date, $24.86.

Under the 2006 Plan phantom award agreements and our 2006 Plan document, the vesting event terms generally are defined as follows. A termination for “cause” is defined as (i) a failure to render material duties to the Partnership to the reasonable satisfaction of the Partnership (other than as a result of physical or mental impairment or other disability); (ii) failure to follow a reasonable, lawful directive of the Partnership, and non-remedy of such failure within 10 days after receipt of written notice from the Partnership of such failure; (iii) material violation of the policies or procedures of the Partnership; (iv) engagement in misconduct in connection

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with the performance of duties for the Partnership, including but not limited to a material act of fraud, embezzlement, misappropriation, willful misconduct or breach of fiduciary duty against the Partnership; (v) plea of guilty to or conviction of any felony; or (vi) unlawful use or possession of illegal drugs on Partnership premises or while performing duties and responsibilities for the Partnership. A “good reason” termination, if applicable, means a material reduction in the executive's base salary or target bonus following a change of control. While any individual award agreement may contain a modified definition of a “change of control,” the term is generally defined pursuant to our 2006 Plan as the occurrence of one or more of the following events: (1) any person or group becomes the beneficial owner of 50 percent or more of our voting power or voting securities, unless such person or group is the initial entity controlling the General Partner or an affiliate, (2) the complete liquidation of either the general partner of our General Partner, our General Partner, or us; or (3) the sale of all or substantially all of our General Partner's, or our assets to anyone other than an entity that is wholly owned by one or more of the General Partner, or us. An executive's “disability” will have occurred at the point that the executive would be entitled to receive benefits under our long-term disability plan.

Equity Compensation Awards Granted under the 2011 Plan. The phantom unit agreements granted to certain of our named executive officers on December 21, 2011 were granted under the Regency Energy Partners LP 2011 Long-Term Incentive Plan (the “2011 Incentive Plan”). The phantom unit awards under the 2011 Plan will receive accelerated vesting upon a holder's termination of employment for death or a disability, or upon a change of control. The value of the accelerated vesting for outstanding phantom unit awards under the 2011 Plan in the event of a termination of employment for death or disability, or upon a change of control, as of December 31, 2011, would have been as follows: Mr. Bradley, $1,243,000; Mr. Long, $559,350; Mr. Sturrock, $198,880; and Mr. Holotik, $559,350. These amounts were calculated by multiplying the number of phantom unit awards granted under the 2011 Plan and still held by each named executive officer as of December 31, 2011, by the closing price of our common stock on that date, $24.86.

Under our 2011 Plan phantom unit award agreements and the 2011 Plan document, the vesting event terms are generally defined as follows. A “change of control” generally will occur if (i) any person or group, other than an affiliate of the general partner of our General Partner (the “Company”), shall become the beneficial owner, by way of merger, consolidation, recapitalization, reorganization or otherwise, of 50% or more of the combined voting power of the equity interests in the Company; (ii) the members of the Company approve, in one or a series of transactions, a plan of complete liquidation of the Company; (iii) the sale or other disposition by the Company of all or substantially all of its assets in one or more transactions to any person other than the Company or an affiliate of the Company; or (iv) a person other than the Company, our General Partner or an affiliate of the Company or our General Partner becomes the general partner of the Partnership; however, if a phantom unit award is designed to be subject to Section 409A of the Code, the term “change of control” shall mean a “change of control event” as defined in the regulations under Section 409A of the Code. A “disability” is an illness or injury that lasts at least six continuous months, is expected to be permanent and renders the individual unable to carry out his or her duties to the Board, the general partner of our General Partner, our General Partner, the Partnership or an affiliate of any of the applicable entities.

Severance Agreement with Mr. Jolas. In January 2012, the Partnership and Mr. Jolas entered into a Separation Agreement and Full Release of Claims (“Separation Agreement”) in which Mr. Jolas will resign, effective May 16, 2012, from his position. Pursuant to the Separation Agreement, Mr. Jolas will receive a cash payment on or before May 16, 2012 of $390,000, which represents 13 months' base salary. Additionally, in connection with Mr. Jolas' agreement to continue his employment through May 16, 2012, all of the 14,734 phantom units that remain outstanding from the May 7, 2010 grant will vest at the 100% target level. These phantom units, along with the fair value of the units (at 100% target level) would have been valued at $366,287 as of December 31, 2011, but the actual value that Mr. Jolas may receive from these awards can not be determined with certainty as of this filing. In addition, Mr. Jolas will be entitled to receive his 2011 annual cash bonus to be paid in March 2012, which bonus amount of $342,000 is reflected in the Summary Compensation Table for 2011 above.

As discussed in "Deferred Compensation Plan" within the compensation discussion and analysis above, all amounts under the DC Plan (other than discretionary credits) are immediately 100% vested. Upon a change of control, distributions from the DC Plan would be made in accordance with the DC Plan's normal distribution provisions.

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Non-Employee, Independent Director Compensation Table for the Year Ended December 31, 2011

Our Board of Directors annually determines the amounts payable to the members of our Board of Directors. In 2011, the directors of the General Partner who were not employees of the General Partner received an annual retainer of $40,000, a flat fee of $1,500 for each meeting of the board attended in person, $1,000 for each committee meeting attended in person, a flat fee of $500 for each such meeting attended by telephone and fees at specified rates for consulting services. In addition, the Chairman of our Audit and Risk Committee receives an annual fee of $10,000.

Name	Fees Paid in Cash ($) (1)		Unit Awards ($) (2)		Total ($)
Michael J. Bradley (3)	$	3,500	$	—	$	3,500
James W. Bryant	52,500		50,000		102,500
Rodney L. Gray	65,500		187,200		252,700
John D. Harkey, Jr.	49,000		414,400		463,400

_______________________

(1) Fees paid in cash are based on amounts paid during the period.

(2) Unit award amounts reflect the aggregate grant date fair value of awards granted based on the market price of Common Units as of the grant date, reduced by the present value of the expected distributions during the vesting period.

(3) Mr. Bradley's fees were earned for 2010 (prior to becoming an employee) and were paid in 2011.

As of December 31, 2011, Messrs. Bryant, Gray and Harkey had 1,822, 6,822, and 15,101 unit awards outstanding, respectively.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Unitholder Matters

The following table sets forth, as of February 15, 2012, the beneficial ownership of our units by:

• each person who then owned beneficially 5% or more of our common units;

• each member of the Board of Directors of Regency GP LLC;

• each named executive officer of Regency GP LLC; and

• all directors and executive officers of Regency GP LLC, as a group.

The amounts and percentage of units beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities with respect to which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed a beneficial owner of the same securities and a person may be deemed a beneficial owner of securities as to which he has no economic interest.

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Name of Beneficial Owners	Business Address	Common Units	Percentage of Outstanding Common Units
Energy Transfer Equity, L.P., LE GP, LLC, Kelcy L. Warren (1)	3738 Oak Lawn Avenue, Dallas, Texas, 75219	26,266,791	16.7%
Tortoise Capital Advisors, L.L.C. (2)	11550 Ash Street, Suite 300 Leawood, KS 66211	14,052,710	8.9%
Regency LP Acquirer, L.P., General Electric Capital Corporation, General Electric Company (3)	800 Long Ridge Rd Stamford, CT 06927	13,168,735	8.4%
Kayne Anderson Capital Advisors, L.P. (4)	1800 Avenue of the Stars Second Floor Los Angeles, CA 90067	10,531,962	6.7%
Neuberger Berman Group LLC (5)	605 Third Avenue New York, NY 10158	9,507,298	6.0%
Michael J. Bradley	2001 Bryan Street, Suite 3700 Dallas, TX 75219	19,710	*
Thomas E. Long	2001 Bryan Street, Suite 3700 Dallas, TX 75219	5,662	*
A. Troy Sturrock	2001 Bryan Street, Suite 3700 Dallas, TX 75219	15,280	*
Paul M. Jolas(6)	2001 Bryan Street, Suite 3700 Dallas, TX 75219	25,408	*
Jim Holotik	2001 Bryan Street, Suite 3700 Dallas, TX 75219	4,206	*
James W. Bryant	2001 Bryan Street, Suite 3700 Dallas, TX 75219	—	*
Rodney L. Gray	2001 Bryan Street, Suite 3700 Dallas, TX 75219	5,000	*
John D. Harkey, Jr.	2001 Bryan Street, Suite 3700 Dallas, TX 75219	—	*
John W. McReynolds	2001 Bryan Street, Suite 3700 Dallas, TX 75219	—	*
All directors and executive officers as a group (9 persons)		75,266	*
Total number of units as of February 15, 2012		157,437,608

  _______________________

(1) Based solely on the Schedule 13D/A filed with the SEC on December 13, 2010, ETE, LE GP, LLC (“LE GP”) and Kelcy L. Warren are the beneficial owners of 26,266,791 common units. ETE, LE GP and Mr. Warren have the sole power to vote and dispose of 26,266,791 common units. Ray C. Davis, through his ownership interest in LE GP, may be deemed to also beneficially own the common units that are beneficially owned by ETE, LE GP and Mr. Warren to the extent of his interest in LE GP.

(2) Based solely on the Schedule 13G/A filed with the SEC on February 10, 2012, Tortoise Capital Advisors, L.L.C. (“TCA”) acts as an investment adviser to certain investment companies registered under the Investment Company Act of 1940. TCA, by virtue of investment advisory agreements with these investment companies, has all investment and voting power over securities owned of record by these investment companies. However, despite their delegation of investment and voting power to TCA, these investment companies may be deemed to be the beneficial owners under Rule 13d-3 of the Exchange Act of the securities they own of record because they have the right to acquire investment and voting power through termination of their investment advisory agreement with TCA. Thus, TCA has reported that it shares voting power and dispositive power over the securities owned of record by these investment companies. TCA also acts as an investment advisor to certain managed accounts. Under contractual agreements with individual account holders, TCA, with respect to the securities held in the managed accounts, shares investment and voting power with certain account holders, and has no voting power but shares investment power with certain other account holders. TCA may be deemed the beneficial owner of the securities under Rule 13d-3 of the Exchange Act. Of the 14,052,710 common units reported as beneficially owned by TCA, TCA has reported that it has shared voting power with respect to 13,307,422 of these common units and shared dispositive power with respect to all of these common units. None of these securities are owned of record by TCA, and TCA disclaims any beneficial interest in such securities. The source of the foregoing information is the Schedule 13G.

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(3) Based solely on the Schedule 13D/A filed with the SEC on June 30, 2011, GE, GECC and Regency LP Acquirer, L.P. (“LP Holdings”) are the beneficial owners of 13,168,735 common units. LP Holdings is the sole record owner of, and has the sole power to vote and dispose of, 13,168,735 common units. Neither GECC nor GE directly own any common units. GE and GECC may be deemed beneficial owners of, and may each be deemed to possess sole voting and dispositive powers with respect to, 13,168,735 common units due to their indirect ownership interests in LP Holdings.

(4) Based solely on the Schedule 13G/A filed with the SEC on February 7, 2012.

(5) Based solely of the Schedule 13G/A filed with the SEC on February 14, 2012.

(6) In January 2012, the Partnership and Mr. Jolas entered into a Separation Agreement and Full Release of Claims pursuant to which Mr. Jolas will resign, effective May 16, 2012, from his positions.

* Less than 1.0%

Our General Partner's Board of Directors, or its Compensation Committee, in its discretion may terminate, suspend or discontinue the LTIP at any time with respect to any award that has not yet been granted. Our General Partner's Board of Directors, or its Compensation Committee, also has the right to alter or amend the LTIP or any part of the plan from time to time, including increasing the number of units that may be granted subject to unitholder approval as required by the exchange upon which the common units are listed at that time. However, no change in any outstanding grant may be made that would materially impair the rights of the participant without the consent of the participant.

The following table summarizes the number of securities remaining available for future issuance under our LTIP plans as of December 31, 2011:

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights		Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Plans (Excluding Securities Reflected in Column(a))
	(a)		(b)		(c)
Equity compensation plans approved by security holders 2011 Long-Term Incentive Plan	515,575		$	—	2,484,425
Equity compensation plans not approved by security holders 2006 Long-Term Incentive Plan (1)	727,668	*			67,770
Total	1,243,243		$	—	2,552,195

 _______________________

* Assumes performance-based phantom unit grants vest at 100%.

(1) The long-term incentive plan currently permits the grant of awards covering an aggregate of 2,865,584 units, which grant did not require approval by our limited partners.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The Board of Directors appoints independent directors as members of the Board to serve on the Conflicts Committee with the authority to review specific matters for which the Board of Directors believes there may be a conflict of interest in order to determine if the resolution of such conflict proposed by the General Partner is fair and reasonable to us and our common unitholders. As a policy matter, the Conflicts Committee generally reviews any proposed related-party transaction that may be material to us to determine whether the transaction is fair and reasonable to us. Our partnership agreement provides that any matter approved by the Conflicts Committee will be deemed approved by all partners of us and not a breach by the General Partner or its affiliates of the partnership agreement or of any duty they may owe us or our unitholders. The Conflicts Committee is composed only of independent directors.

ETE owns all of the limited partnership interest in the General Partner, all of the membership interest in the general partner of the General Partner and 100% of the IDRs. Two of the five current directors of the General Partner are also directors of LE GP, LLC, which is the general partner of ETE. As of December 31, 2011, ETE owned approximately 17% of our outstanding common units. In conjunction with our distributions to the limited and general partner interests, ETE received cash distributions, including IDRs, of $57.4 million in 2011.

We have a services agreement with ETE and Services Co., in which Services Co. performs certain general and administrative services for us. We also have an operating and service agreement with ETC, in which ETC provides certain operations, maintenance and related services for us. We incurred $16.6 million of total service fees in 2011.

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Our Gathering and Processing segment, in the normal course of business, sells natural gas and NGLs to, and purchases natural gas and NGLs from, subsidiaries of ETE. In 2011, our Gathering and Processing segment recorded revenues from subsidiaries of ETE of $6.8 million, and cost of sales to subsidiaries of ETE of $1.7 million.

Our Contract Compression segment provides contract compression services to ETE and recorded $1.1 million in revenues in 2011 in gathering, transportation and other fees on the statement of operations. In addition, during 2011, our Contract Compression segment purchased property, plant and equipment of $33.1 million from a subsidiary of ETE, and sold property, plant and equipment of $7.9 million to a subsidiary of ETE.

In September 2011, we purchased 0.1% interest in MEP from ETP for $1.2 million in cash.

Item 14. Principal Accountant Fees and Services

Appointment of Independent Registered Public Accountant. The Audit and Risk Committee appointed Grant Thornton LLP as our principal accountant to conduct the audit of our financial statements for the years ended December 31, 2011 on March 30, 2010. KPMG LLP served as our independent registered public accountant for the year ended December 31, 2010.

Audit Fees. The following table sets forth fees billed by Grant Thornton LLP and KPMG LLP for the professional services rendered for the audits of our annual financial statements and other services rendered for the years ended December 31, 2011 and 2010.

	Grant Thornton LLP		KPMG LLP
	December 31, 2011		December 31, 2010
Audit fees(1)	$	946	$	2,101
Audit related fees(2)	—		10
Total	$	946	$	2,111

  _______________________

(1) Includes fees for audits of annual financial statements, including the audit of internal control over financial reporting, reviews of related quarterly financial statements, and services that are normally provided by independent accountants in connection with statutory and regulatory filings or engagements, including reviews of documents filed with the SEC.

(2) Includes fees related to consultation concerning financial accounting and reporting standards.

Procedures for Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accountant. Pursuant to the charter of the Audit and Risk Committee, the Audit and Risk Committee is responsible for the oversight of our accounting, reporting and financial practices. The Audit and Risk Committee has the responsibility to select, appoint, engage, oversee, retain, evaluate and terminate our external auditors; pre-approve all audit and non-audit services to be provided, consistent with all applicable laws, to us by our external auditors; and to establish the fees and other compensation to be paid to our external auditors. The Audit and Risk Committee also oversees and directs our internal auditing program and reviews our internal controls.

The Audit and Risk Committee has adopted a policy for the pre-approval of audit and permitted non-audit services provided by our principal independent accountant. The policy requires that all services provided by Grant Thornton LLP or KPMG LLP, including audit services, audit-related services, tax services and other services, must be pre-approved by the Audit and Risk Committee.

The Audit and Risk Committee reviews the external auditors' proposed scope and approach as well as the performance of the external auditors. It also has direct responsibility for and sole authority to resolve any disagreements between our management and our external auditors regarding financial reporting, regularly reviews with the external auditors any problems or difficulties the auditors encountered in the course of their audit work, and, at least annually, uses its reasonable efforts to obtain and review a report from the external auditors addressing the following (among other items):

• the auditors’ internal quality-control procedures;

• any material issues raised by the most recent internal quality-control review, or peer review, of the external auditors;

• the independence of the external auditors;

• the aggregate fees billed by our external auditors for each of the previous two fiscal years; and

• the rotation of the lead partner.

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Part IV

Item 15. Exhibits and Financial Statement Schedules

(a)1. Financial Statements. See “Index to Financial Statements” set forth on page F-1.

(a)2. Financial Statement Schedules. Other schedules are omitted because they are not required or applicable, or the required information is included in the Consolidated Financial Statements or related notes.

(a)3. Exhibits. See “Index to Exhibits.”

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Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

REGENCY ENERGY PARTNERS LP
By:	REGENCY GP LP, its general partner
By:	REGENCY GP LLC, its general partner
By:	/s/    MICHAEL J. BRADLEY
	Michael J. Bradley
	President and Chief Executive Officer and officer duly authorized to sign on behalf of the registrant

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated:

Signature	Title	Date
/s/    MICHAEL J. BRADLEY	President, Chief Executive Officer (Principal Executive Officer) and Director	February 22, 2012
Michael J. Bradley
/s/    THOMAS E. LONG	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	February 22, 2012
Thomas E. Long
/s/    A. TROY STURROCK	Vice President, Controller (Principal Accounting Officer)	February 22, 2012
A. Troy Sturrock
/s/    JAMES W. BRYANT	Director	February 22, 2012
James W. Bryant
/s/    RODNEY L. GRAY	Director	February 22, 2012
Rodney L. Gray
/s/    JOHN D. HARKEY, JR.	Chairman of the Board of Directors	February 22, 2012
John D. Harkey, Jr.
/s/  JOHN W. MCREYNOLDS	Director	February 22, 2012
John W. McReynolds

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Index to Exhibits

Exhibit Number	Description	Incorporated by Reference from Form	Date Filed or File No.
2.1	Purchase Agreement, dated as of March 22, 2011, by and among ETP-Regency Midstream Holdings, LLC, LDH Energy Asset Holdings LLC, Louis Dreyfus Highbridge Energy LLC and, for the limited purposes set forth therein, Energy Transfer Partners, L.P. and Regency Energy Partners LP.	8-K/A	March 25, 2011
3.1	Certificate of Limited Partnership of Regency Energy Partners LP	S-1	333-128332
3.2	Form of Amended and Restated Limited Partnership Agreement of Regency Energy Partners LP (included as Appendix A to the Prospectus and including specimen unit certificate for the common units)	S-1	333-128332
3.2.1	Amendment No. 1 to Amended and Restated Agreement of Limited Partnership of Regency Energy Partners LP	8-K	August 14, 2006
3.2.2	Amendment No. 2 to Amended and Restated Agreement of Limited Partnership of Regency Energy Partners LP	8-K	September 21, 2006
3.2.3	Amendment No. 3 to Amended and Restated Agreement of Limited Partnership of Regency Energy Partners LP	8-K	January 8, 2008
3.2.4	Amendment No. 4 to Amended and Restated Agreement of Limited Partnership of Regency Energy Partners LP	8-K	January 16, 2008
3.2.5	Amendment No. 5 to Amended and Restated Agreement of Limited Partnership of Regency Energy Partners LP	8-K	August 28, 2008
3.2.6	Amendment No. 6 to Amended and Restated Agreement of Limited Partnership of Regency Energy Partners LP	8-K	February 27, 2009
3.2.7	Amendment No. 7 to Amended and Restated Agreement of Limited Partnership of Regency Energy Partners LP	8-K	September 4, 2009
3.3	Certificate of Formation of Regency GP LLC	S-1	333-128332
3.4	Form of Amended and Restated Limited Liability Company Agreement of Regency GP LLC	S-1	333-128332
3.4.1	First Amendment to Amended and Restated Limited Liability Company Agreement of Regency GP LLC	10-K	March 1, 2010
3.4.2	Second Amendment to Amended and Restated Limited Liability Company Agreement of Regency GP LLC	8-K	August 10, 2010
3.4.3	Third Amendment to Amended and Restated Limited Liability Company Agreement of Regency GP LLC	8-K	January 6, 2011
3.5	Certificate of Limited Partnership of Regency GP LP	S-1	333-128332
3.6	Form of Amended and Restated Limited Partnership Agreement of Regency GP LP	S-1	333-128332
3.7	Second Amended and Restated General Partnership Agreement of RIGS Haynesville Partnership Co. dated as of December 18, 2009	10-K	March 1, 2010
3.7.1	First Amendment to Second Amended and Restated General Partnership Agreement of RIGS Haynesville Partnership Co. dated as of March 9, 2010	10-Q	May 7, 2010
4.1	Form of Common Unit Certificate	S-1	333-128332
4.2	Indenture for 9.375% Senior Notes due 2016, together with the global notes	10-Q	August 10, 2009
4.3	Registration Rights Agreement for 9.375% Senior Notes due 2016	10-Q	August 10, 2009

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Exhibit Number	Description	Incorporated by Reference from Form	Date Filed or File No.
4.4	Registration Rights Agreement dated May 26, 2010 by and between Energy Transfer Equity, L.P. and Regency Energy Partners LP	8-K	May 28, 2010
4.5	Registration Rights Agreement dated May 26, 2010 by and between Regency GP Acquirer, L.P. and Regency Energy Partners LP	8-K	May 28, 2010
4.6	Investor Rights Agreement dated as of May 26, 2010 by and among Regency LP Acquirer LP, Regency GP LP and Regency GP LLC	8-K	May 28, 2010
4.7	First Supplemental Indenture dated October 26, 2010 among the Guaranteeing Subsidiaries, Regency Energy Partners LP, Regency Energy Finance Corp. and Wells Fargo Bank, National Association, as trustee	10-K	February 18, 2011
4.8	Indenture dated October 27, 2010 among Regency Energy Partners LP, Regency Energy Finance Corp., the guarantors party thereto and U.S. Bank National Association, as trustee	8-K	October 27, 2010
4.9	First Supplemental Indenture dated October 27, 2010 among Regency Energy Partners LP, Regency Energy Finance Corp., the guarantors party thereto and U.S. Bank National Association, as trustee	8-K	October 27, 2010
4.10	Registration Rights Agreement, dated May 2, 2011.	8-K	May 2, 2011
4.11	Registration Rights Agreement dated May 2, 2011 by and between Regency Energy Partners LP and the purchasers set forth on Schedule I thereto.	8-K	May 2, 2011
4.12	Second Supplemental Indenture dated May 24, 2011 among the Guaranteeing Subsidiaries, Regency Energy Partners LP, Regency Energy Finance Corp. and Wells Fargo Bank, National Association, as trustee.	8-K	May 26, 2011
4.13	Second Supplemental Indenture dated May 24, 2011 among Regency Energy Partners LP, Regency Energy Finance Corp., the guarantors party thereto and U.S. Bank National Association, as trustee.	8-K	May 26, 2011
4.14	Third Supplemental Indenture dated May 26, 2011 among Regency Energy Partners LP, Regency Energy Finance Corp., the guarantors party thereto and U.S. Bank National Association, as trustee.	8-K	May 26, 2011
4.15	Regency Energy Partners LP 2011 Long-Term Incentive Plan	8-K	December 20, 2011
4.16	Form of Grant of Phantom Units with DERs.	8-K	December 20, 2011
10.1	Regency GP LLC Long-Term Incentive Plan	S-1	333-128332
10.2	Form of Grant Agreement for the Regency GP LLC Long-Term Incentive Plan—Unit Option Grant	S-1	333-128332
10.3	Form of Indemnification Agreement between Regency GP LLC and Indemnities	S-1	333-128332
10.4	Amended and Restated Master Services Agreement, dated as of December 18, 2009, by and between RIGS Haynesville Partnership Co., a Delaware general partnership, and Regency Employees Management LLC, a Delaware limited liability company	10-K	March 1, 2010
10.5	Area of Mutual Interest Agreement, dated as of March 17, 2009, by and among Regency Energy Partners LP, a Delaware limited partnership, RIGS Haynesville Partnership Co., a Delaware general partnership, Regency Haynesville Intrastate Gas LLC, a Delaware limited liability company, Alinda Gas Pipeline I, L.P., a Delaware limited partnership, and Alinda Gas Pipeline II, L.P., a Delaware limited partnership	8-K	March 18, 2009
10.6	Series A Cumulative Convertible Preferred Unit Purchase Agreement, dated September 2, 2009, by and among Regency Energy Partners LP and the purchasers named therein	8-K	September 4, 2009

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Exhibit Number	Description	Incorporated by Reference from Form	Date Filed or File No.
10.7	Fifth Amended and Restated Credit Agreement, dated March 4, 2010	8-K	March 4, 2010
10.8	Amendment Agreement to the Fifth Amended and Restated Credit Agreement, dated March 4, 2010	8-K	March 4, 2010
10.9	Assignment and Assumption Agreement, dated April 30, 2010, by and between EFS Haynesville, LLC and Regency Haynesville Intrastate Gas LLC	8-K	April 30, 2010
10.10	Voting Agreement, dated April 30, 2010, by and between EFS Haynesville, LLC and Regency Haynesville Intrastate Gas LLC	8-K	April 30, 2010
10.11	Contribution Agreement, dated May 10, 2010, by and among Energy Transfer Equity, L.P., Regency Energy Partners LP and Regency Midcontinent Express LLC.	8-K	May 11, 2010
10.12	Form of Grant of Phantom Units—Service Vesting	8-K	May 11, 2010
10.13	Form of Grant of Phantom Units—Performance Vesting	8-K	May 11, 2010
10.14	Amendment Agreement No. 1 to Fifth Amended and Restated Credit Agreement.	8-K	May 28, 2010
10.15	Services Agreement dated May 26, 2010 by and among ETE Services Company, LLC, Energy Transfer Equity, L.P. and Regency Energy Partners LP.	8-K	May 28, 2010
10.16	Purchase and Sale Agreement by and among Regency Field Services LLC, Tristream East Texas, LLC and Tristream Energy, LLC dated July 15, 2010.	10-Q	August 9, 2010
10.17	Merger Agreement by and among Zephyr Gas Management, LLC, Zephyr Gas Services, LP, Regency Gas Services LP, and Regency Zephyr LLC, dated August 6, 2010.	10-Q	August 9, 2010
10.18	Form of Grant Agreement for the Regency GP LLC Long-Term Incentive Plan—Phantom Unit Grant (With DERs).	10-K	February 18, 2011
10.19	Assumption, Contribution and Indemnification Agreement, dated as of March 22, 2011, between Energy Transfer Partners, L.P. and Regency Energy Partners LP.	8-K/A	March 25, 2011
10.20	Common Unit Purchase Agreement, dated March 23, 2011, by and among Regency Energy Partners LP and the purchasers named therein.	8-K	March 28, 2011
10.21	Amendment Agreement No. 2 to the Fifth Amended and Restated Credit Agreement, dated May 2, 2011.	8-K	May 2, 2011
10.22	Amended and Restated Limited Liability Company Agreement of ETP-Regency Midstream Holdings, LLC, dated May 2, 2011.	8-K	May 2, 2011
10.23	Operation and Service Agreement by and between La Grange Acquisition, L.P., Regency GP LP, Regency Energy Partners LP and Regency Gas Services LP, dated May 19, 2011.	8-K	May 19, 2011
10.24	Amendment No. 3 to the Fifth Amended and Restated Credit Agreement, dated December 15, 2011	8-K	December 16, 2011
10.25	Separation Agreement and Full Release of Claims dated January 27, 2012, by and between Regency GP LLC and Paul M. Jolas.	8-K	January 31, 2012
12.1	Computation of Ratio of Earnings to Fixed Charges.	*
16.1	Letter from KPMG LLP to the Securities and Exchange Commission, dated April 4, 2011.	8-K	April 4, 2011
21.1	List of Subsidiaries of Regency Energy Partners LP.	*
23.1	Consent of Grant Thornton LLP.	*

86

Exhibit Number	Description	Incorporated by Reference from Form	Date Filed or File No.
23.2	Consent of Grant Thornton LLP.	*
23.3	Consent of Grant Thornton LLP.	*
23.4	Consent of KPMG LLP.	*
23.5	Consent of KPMG LLP.	*
23.6	Consent of PricewaterhouseCoopers LLP.	*
23.7	Consent of Ernst & Young LLP.	*
31.1	Certifications pursuant to Rule 13a-14(a).	*
31.2	Certifications pursuant to Rule 13a-14(a).	*
32.1	Certifications pursuant to Section 1350.	**
32.2	Certifications pursuant to Section 1350.	**
99.1	Statement of Policies Relating to Potential Conflicts among Energy Transfer Partners, L.P., Energy Transfer Equity, L.P., and Regency Energy Partners LP dated as of April 26, 2011.	10-Q	August 8, 2011
99.2	Audited Financial Statements of RIGS Haynesville Partnership Co. as of and for the year ended December 31, 2011.	*
99.3	Audited Financial Statements of RIGS Haynesville Partnership Co. as of and for the year ended December 31, 2010 and for the period from March 18, 2009 to December 31, 2009.	*
99.4	Audited Financial Statements of Midcontinent Express Pipeline LLC as of December 31, 2011 and 2010 and for the year ended December 31, 2011 and the seven month period ended December 31, 2010.	*
99.5	Audited Financial Statements of Lone Star NGL LLC as of December 31, 2011 and for the period from March 21, 2011 to December 31, 2011.	*
99.6	Audited Financial Statements of LDH Energy Asset Holdings LLC as of December 31, 2010 and 2009, and for the three-year period ended December 31, 2010.	*
99.7	Regency Energy Partner LP Notice of Beginning of Administrative Proceedings for Tax Year December 31, 2008.	10-K	March 1, 2010
99.8	Regency Energy Partner LP Notice of Beginning of Administrative Proceedings for Tax Year December 31, 2007.	10-K	March 1, 2010
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schemat
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

_______________________

* Filed herewith

** Furnished herewith

87

Index to Consolidated Financial Statements

	Page
Report of Independent Registered Public Accounting Firm	F-2
Report of Independent Registered Public Accounting Firm	F-3
Report of Independent Registered Public Accounting Firm	F-4
Consolidated Balance Sheets as of December 31, 2011 and 2010	F-5
Consolidated Statements of Operations for the year ended December 31, 2011, the period from Acquisition (May 26, 2010) to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009	F-6
Consolidated Statements of Comprehensive Income (Loss) for the year ended December 31, 2011, the period from Acquisition (May 26, 2010) to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009	F-8
Consolidated Statements of Cash Flows for the year ended December 31, 2011, the period from Acquisition (May 26, 2010) to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009	F-9
Consolidated Statements of Partners’ Capital and Noncontrolling Interest for the year ended December 31, 2011, the period from Acquisition (May 26, 2010) to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009	F-11
Notes to Consolidated Financial Statements	F-13

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Partners

Regency Energy Partners LP

We have audited the accompanying consolidated balance sheet of Regency Energy Partners LP (a Delaware limited partnership) and subsidiaries (the “Partnership”) as of December 31, 2011, and the related consolidated statements of operations, comprehensive income (loss), cash flows, and partners' capital and noncontrolling interest for the year ended December 31, 2011. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of Midcontinent Express Pipeline LLC, a 50 percent owned investee company, the Partnership's investment in which is accounted for by the equity method of accounting. The Partnership's investment in Midcontinent Express Pipeline LLC as of December 31, 2011 was $613.9 million and its equity in the earnings of Midcontinent Express Pipeline LLC was $42.6 million for the year ended December 31, 2011. The financial statements of Midcontinent Express Pipeline LLC were audited by other auditors, whose report thereon has been furnished to us, and our opinion, insofar as it relates to the amounts included for Midcontinent Express Pipeline LLC, is based solely on the report of the other auditors.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Regency Energy Partners LP and subsidiaries as of December 31, 2011, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Partnership's internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated February 22, 2012 expressed an unqualified opinion thereon.

/s/ GRANT THORNTON LLP

Dallas, Texas

February 22, 2012

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Partners

Regency Energy Partners LP

We have audited Regency Energy Partners LP's (a Delaware limited partnership) internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Regency Energy Partners LP's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on Regency Energy Partners LP's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Regency Energy Partners LP maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control-Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Regency Energy Partners LP and subsidiaries as of December 31, 2011, and the related consolidated statements of operations, comprehensive income (loss), cash flows, and partners' capital and noncontrolling interest for the year ended December 31, 2011 and our report dated February 22, 2012 expressed an unqualified opinion thereon.

/s/ GRANT THORNTON LLP

Dallas, Texas

February 22, 2012

F-3

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Partners

Regency Energy Partners LP:

We have audited the accompanying consolidated balance sheet of Regency Energy Partners LP and subsidiaries as of December 31, 2010, and the related consolidated statements of operations, comprehensive income (loss), cash flows, and partners' capital and noncontrolling interest for the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009. These consolidated financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit the financial statements of Midcontinent Express Pipeline LLC, (a 49.9% owned investee company which was acquired by the Partnership on May 26, 2010). The Partnership's investment in Midcontinent Express Pipeline LLC at December 31, 2010 was $652,482,000 and its equity in the earnings of Midcontinent Express Pipeline LLC was $21,219,000 for the period from May 26, 2010 to December 31, 2010. The financial statements of Midcontinent Express Pipeline LLC were audited by other auditors whose report has been furnished to us and included herein, and our opinion, insofar as it relates to the amounts included for Midcontinent Express Pipeline LLC, is based solely on the report of the other auditors.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, based on our audits and the report of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Regency Energy Partners LP and subsidiaries as of December 31, 2010, and the results of their operations and their cash flows for the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Dallas, Texas

February 18, 2011

F-4

Regency Energy Partners LP

Consolidated Balance Sheets

(in thousands except unit data)

	December 31, 2011			December 31, 2010
ASSETS
Current Assets:
Cash and cash equivalents	$	990		$	9,400
Trade accounts receivable, net of allowance of $1,190 and $297	43,917			35,212
Accrued revenues	68,011			74,017
Related party receivables	45,204			32,342
Derivative assets	4,374			2,650
Other current assets	24,628			7,384
Total current assets	187,124			161,005
Property, Plant and Equipment:
Gathering and transmission systems	698,906			543,286
Compression equipment	846,914			812,428
Gas plants and buildings	195,231			185,741
Other property, plant and equipment	147,967			81,295
Construction-in-progress	191,914			97,439
Total property, plant and equipment	2,080,932			1,720,189
Less accumulated depreciation	(195,404		)	(59,971		)
Property, plant and equipment, net	1,885,528			1,660,218
Other Assets:
Investment in unconsolidated affiliates	1,924,705			1,351,256
Long-term derivative assets	474			23
Other, net of accumulated amortization of debt issuance costs of $10,186 and $3,326	39,353			37,758
Total other assets	1,964,532			1,389,037
Intangible Assets and Goodwill:
Intangible assets, net of accumulated amortization of $44,856 and $15,584	740,883			770,155
Goodwill	789,789			789,789
Total intangible assets and goodwill	1,530,672			1,559,944
TOTAL ASSETS	$	5,567,856		$	4,770,204
LIABILITIES & PARTNERS’ CAPITAL AND NONCONTROLLING INTEREST
Current Liabilities:
Drafts payable	$	2,507		$	—
Trade accounts payable	73,462			50,208
Accrued cost of gas and liquids	84,943			80,756
Related party payables	12,625			3,338
Deferred revenues, including related party amounts of $41 and $8,765	16,225			25,257
Derivative liabilities	10,535			13,172
Other current liabilities	33,009			23,419
Total current liabilities	233,306			196,150
Long-term derivative liabilities	39,112			61,127
Other long-term liabilities	6,071			6,521
Long-term debt, net	1,687,147			1,141,061
Commitments and contingencies
Series A Preferred Units, redemption amount of $84,773 and $83,891	71,144			70,943
Partners’ Capital and Noncontrolling Interest:
Common units (161,233,046 and 138,255,919 units authorized; 157,437,608 and 137,281,336 units issued and outstanding at December 31, 2011 and December 31, 2010)	3,173,090			2,940,732
General partner interest	329,876			333,077
Accumulated other comprehensive loss	(4,759		)	(11,099		)
Total partners’ capital	3,498,207			3,262,710
Noncontrolling interest	32,869			31,692
Total partners’ capital and noncontrolling interest	3,531,076			3,294,402
TOTAL LIABILITIES AND PARTNERS’ CAPITAL AND NONCONTROLLING INTEREST	$	5,567,856		$	4,770,204

See accompanying notes to consolidated financial statements

F-5

Regency Energy Partners LP

Consolidated Statements of Operations

(in thousands except unit data and per unit data)

	Successor						Predecessor
	Year Ended December 31, 2011			Period from  Acquisition (May 26, 2010) to December 31, 2010			Period from January 1, 2010 to May 25, 2010			Year Ended December 31, 2009
REVENUES
Gas sales, including related party amounts of $22,715, $3,298, $0, and $0	$	455,746		$	291,247		$	228,097		$	476,077
NGL sales, including related party amounts of $364,906, $136,960, $0, and $0	603,219			238,076			152,803			239,255
Gathering, transportation and other fees, including related party amounts of $23,716, $14,004, $12,200, and $11,162	350,745			178,769			114,526			270,071
Net realized and unrealized (loss) gain from derivatives	(19,214		)	(7,866		)	(716		)	37,712
Other, including related party amounts of $9,799, $2,725, $0, and $0	43,402			16,387			10,340			20,162
Total revenues	1,433,898			716,613			505,050			1,043,277
OPERATING COSTS AND EXPENSES
Cost of sales, including related party amounts of $21,957, $12,998, $6,564, and $10,913	1,012,826			504,327			357,778			674,944
Operation and maintenance	147,643			77,808			47,842			117,080
General and administrative, including related party amounts of $16,579, $5,833, $0, and $0	67,408			43,739			37,212			57,863
(Gain) loss on asset sales, net	(2,372		)	213			303			(133,282		)
Depreciation and amortization	168,684			75,967			41,784			100,098
Total operating costs and expenses	1,394,189			702,054			484,919			816,703
OPERATING INCOME	39,709			14,559			20,131			226,574
Income from unconsolidated affiliates	119,540			53,493			15,872			7,886
Interest expense, net	(102,474		)	(48,251		)	(34,541		)	(77,665		)
Loss on debt refinancing, net	—			(15,748		)	(1,780		)	—
Other income and deductions, net	17,309			(8,229		)	(3,897		)	(15,132		)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	74,084			(4,176		)	(4,215		)	141,663
Income tax expense (benefit)	465			552			404			(1,095		)
INCOME (LOSS) FROM CONTINUING OPERATIONS	$	73,619		$	(4,728	)	$	(4,619	)	$	142,758
DISCONTINUED OPERATIONS
Net loss from operations of east Texas assets, including loss on disposal of $55 in 2010	—			(1,244		)	(327		)	(2,269		)
NET INCOME (LOSS)	$	73,619		$	(5,972	)	$	(4,946	)	$	140,489
Net income attributable to noncontrolling interest	(1,177		)	(156		)	(406		)	(91		)
NET INCOME (LOSS) ATTRIBUTABLE TO REGENCY ENERGY PARTNERS LP	$	72,442		$	(6,128	)	$	(5,352	)	$	140,398
Amounts attributable to Series A Preferred Units	7,982			4,651			3,336			3,995
General partner’s interest, including IDRs	7,010			2,800			662			5,252
Amount allocated to non-vested common units	—			—			(79		)	965
Beneficial conversion feature for Class D common units	—			—			—			820
Limited partners’ interest in net income (loss)	$	57,450		$	(13,579	)	$	(9,271	)	$	129,366
Basic and diluted income (loss) from continuing operations per unit:
Amount allocated to common units	$	57,450		$	(12,359	)	$	(8,966	)	$	131,752
Weighted average number of common units outstanding	145,490,869			130,619,554			92,788,319			80,582,705
Basic income (loss) from continuing operations per common unit	$	0.39		$	(0.09	)	$	(0.10	)	$	1.63
Diluted income (loss) from continuing operations per common unit	$	0.32		$	(0.09	)	$	(0.10	)	$	1.63
Distributions per unit	$	1.81		$	0.89		$	0.89		$	1.78
Basic and diluted loss on discontinued operations per unit	$	—		$	(0.01	)	$	—		$	(0.03	)

F-6

Basic and diluted net income (loss) per unit:
Amount allocated to common units	$	57,450	$	(13,579	)	$	(9,271	)	$	129,366
Basic net income (loss) per common unit	$	0.39	$	(0.10	)	$	(0.10	)	$	1.61
Diluted net income (loss) per common unit	$	0.32	$	(0.10	)	$	(0.10	)	$	1.60
Amount allocated to Class D common units	$	—	$	—		$	—		$	820
Total number of Class D common units outstanding	—		—			—			7,276,506
Income per Class D common unit due to beneficial conversion feature	$	—	$	—		$	—		$	0.11
Distributions per unit	$	—	$	—		$	—		$	—

See accompanying notes to consolidated financial statements

F-7

Regency Energy Partners LP

Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

	Successor						Predecessor
	Year Ended December 31, 2011			Period from  Acquisition (May 26, 2010) to December 31, 2010			Period from January 1, 2010 to May 25, 2010			Year Ended December 31, 2009
Net income (loss)	$	73,619		$	(5,972	)	$	(4,946	)	$	140,489
Net cash flow hedge amounts reclassified to earnings	19,018			—			2,145			(47,394		)
Net change in fair value of cash flow hedges	(12,678		)	(11,099		)	18,486			(22,040		)
Comprehensive income (loss)	$	79,959		$	(17,071	)	$	15,685		$	71,055
Comprehensive income attributable to noncontrolling interest	1,177			156			406			91
Comprehensive income (loss) attributable to Regency Energy Partners LP	$	78,782		$	(17,227	)	$	15,279		$	70,964

See accompanying notes to consolidated financial statements

F-8

Regency Energy Partners LP

Consolidated Statements of Cash Flows

(in thousands)

	Successor						Predecessor
	Year Ended December 31, 2011			Period from  Acquisition (May 26, 2010) to December 31, 2010			Period from January 1, 2010 to May 25, 2010			Year Ended December 31, 2009
OPERATING ACTIVITIES
Net income (loss)	$	73,619		$	(5,972	)	$	(4,946	)	$	140,489
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
Depreciation and amortization, including debt issuance cost amortization and bond premium amortization	174,630			79,323			49,363			116,307
Write-off of debt issuance costs and bond premium	—			(1,422		)	1,780			—
Amortization of excess fair value of unconsolidated affiliates	5,847			3,410			—			—
Income from unconsolidated affiliates	(125,387		)	(56,903		)	(15,872		)	(7,886		)
Derivative valuation changes	(20,486		)	33,189			12,004			5,163
(Gain) loss on asset sales, net	(2,372		)	268			303			(133,284		)
Unit-based compensation expenses	3,610			1,827			12,070			6,008
Cash flow changes in current assets and liabilities:
Trade accounts receivable, accrued revenues and related party receivables	(8,328		)	(401		)	(11,272		)	10,727
Other current assets	734			(107		)	2,516			10,471
Trade accounts payable, accrued cost of gas and liquids, related party payables and deferred revenues	23,221			(15,302		)	8,649			(3,762		)
Other current liabilities	9,590			(12,853		)	22,614			(6,726		)
Distributions received from unconsolidated affiliates	119,236			56,903			12,446			7,886
Cash flow changes in other assets and liabilities	(159		)	(2,174		)	(234		)	(1,433		)
Net cash flows provided by operating activities	253,755			79,786			89,421			143,960
INVESTING ACTIVITIES
Capital expenditures	(406,339		)	(159,223		)	(63,787		)	(193,083		)
Capital contributions to unconsolidated affiliates	(52,601		)	(85,828		)	(20,210		)	—
Distributions in excess of earnings of unconsolidated affiliates	73,476			59,066			—			1,039
Acquisition of investment in unconsolidated affiliates, net of cash received	(593,843		)	4,632			(75,114		)	—
Acquisitions, net of cash of $0, $1,983, $0, and $0	—			(191,313		)	—			(52,803		)
Proceeds from asset sales	24,024			76,237			10,661			88,682
Net cash flows used in investing activities	(955,283		)	(296,429		)	(148,450		)	(156,165		)
FINANCING ACTIVITIES
Net borrowings (repayments) under revolving credit facility	47,000			(333,650		)	199,008			(349,087		)
Proceeds from issuance of senior notes	500,000			600,000			—			236,240
Redemption of senior notes	—			(357,500		)	—			—
Debt issuance costs	(9,768		)	(12,389		)	(15,728		)	(12,224		)
Partner contributions	—			27,999			—			6,344
Partner distributions	(274,488		)	(118,630		)	(86,078		)	(146,585		)
Acquisition of assets between entities under common control in excess of historical cost	72			—			(16,973		)	(10,197		)
Contributions from noncontrolling interest	—			86			—			—
Distributions to noncontrolling interest	—			—			(1,135		)	—
Drafts payable	2,507			—			—			—
(Payments) proceeds associated with issuance of common units under LTIP, net of tax withholding	(109		)	1,452			(4,874		)	—
Proceeds from common unit issuances, net of issuance costs	435,685			399,582			(89		)	220,318
Proceeds from Series A Preferred Units issuance, net of issuance costs	—			—			—			76,624
Distributions to Series A Preferred Units	(7,781		)	(3,891		)	(1,945		)	—
Net cash flows provided by financing activities	693,118			203,059			72,186			21,433
Net change in cash and cash equivalents	(8,410		)	(13,584		)	13,157			9,228
Cash and cash equivalents at beginning of period	9,400			22,984			9,827			599
Cash and cash equivalents at end of period	$	990		$	9,400		$	22,984		$	9,827

F-9

Supplemental cash flow information:
Non-cash capital expenditures	$	24,111	$	19,635	$	18,051	$	9,688
Issuance of common units for investment in unconsolidated affiliate	—		584,436		—		—
Deemed contribution from acquisition of assets between entities under common control	177		8,937		—		—
Release of escrow payable from restricted cash	—		1,011		500		8,501
Interest paid, net of amounts capitalized	82,602		58,335		5,410		69,401
Income taxes paid	1,778		937		378		6
Contribution of RIG to HPC	—		—		—		263,921
Non-cash proceeds from contribution of RIG to HPC	—		—		—		403,568
Distributions accrued but not paid to Series A Preferred Units	—		—		—		3,891

See accompanying notes to consolidated financial statements

F-10

Regency Energy Partners LP

Consolidated Statements of Partners’ Capital and Noncontrolling Interest

(in thousands except unit data)

	Units
	Common		Class D and Subordinated		Common Unitholders			Class D and Subordinated Unitholders			General Partner Interest			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest			Total
Predecessor
Balance— December 31, 2008	54,796,701		26,380,402		$	764,161		$	225,368		$	29,283		$	67,440		$	13,161		$	1,099,413
Revision of partner interest	—		—		6,073			—			(6,073		)	—			—			—
Issuance of restricted common units, net of forfeitures	(63,750	)	—		—			—			—			—			—			—
Public common units offerings	12,075,000		—		220,318			—			—			—			—			220,318
Conversion of subordinated units	19,103,896		(19,103,896	)	(1,391		)	1,391			—			—			—			—
Unit based compensation expenses	—		—		6,008			—			—			—			—			6,008
Accrued distributions to phantom units	—		—		(249		)	—			—			—			—			(249		)
Acquisition of assets between entities under common control in excess of historical costs	—		—		—			—			(10,197		)	—			—			(10,197		)
Partner distributions	—		—		(141,225		)	—			(5,360		)	—			—			(146,585		)
Partner contributions	—		—		—			—			6,344			—			—			6,344
Net income	—		—		134,326			820			5,252			—			91			140,489
Conversion of Class D common units	7,276,506		(7,276,506	)	227,579			(227,579		)	—			—			—			—
Contributions from noncontrolling interest	—		—		—			—			—			—			898			898
Accrued distributions to Series A Preferred Units	—		—		(3,891		)	—			—			—			—			(3,891		)
Accretion of Series A Preferred Units	—		—		(104		)	—			—			—			—			(104		)
Net cash flow hedge amounts reclassified to earnings	—		—		—			—			—			(47,394		)	—			(47,394		)
Net change in fair value of cash flow hedges	—		—		—			—			—			(22,040		)	—			(22,040		)
Balance—December 31, 2009	93,188,353		—		1,211,605			—			19,249			(1,994		)	14,150			1,243,010
Issuance of common units under LTIP, net of forfeitures and tax withholding	152,075		—		(4,994		)	—			—			—			—			(4,994		)
Issuance of common units, net of costs	—		—		(89		)	—			—			—			—			(89		)
Proceeds from exercise of common unit options	—		—		120			—			—			—			—			120
Unit-based compensation expenses	—		—		12,070			—			—			—			—			12,070
Accrued distributions to phantom units	—		—		(473		)	—			—			—			—			(473		)
Acquisition of assets between entities under common control in excess of historical costs	—		—		—						(16,973		)	—			—			(16,973		)
Partner distributions	—		—		(82,930		)	—			(3,148		)	—			—			(86,078		)
Distributions to noncontrolling interest	—		—		—			—			—			—			(1,135		)	(1,135		)
Net (loss) income	—		—		(6,014		)	—			662			—			406			(4,946		)
Distributions to Series A Preferred Units	—		—		(1,906		)	—			(39		)	—			—			(1,945		)
Accretion of Series A Preferred Units	—		—		(55		)	—			—			—			—			(55		)
Net cash flow hedge amounts reclassified to earnings	—		—		—			—			—			2,145			—			2,145
Net change in fair value of cash flow hedges	—		—		—			—			—			18,486			—			18,486
Balance—May 25, 2010	93,340,428		—		$	1,127,334		$	—		$	(249	)	$	18,637		$	13,421		$	1,159,143

See accompanying notes to consolidated financial statements

F-11

Regency Energy Partners LP

Consolidated Statements of Partners’ Capital and Noncontrolling Interest—(Continued)

(in thousands except unit data)

	Units
	Common	Common Unitholders			General Partner Interest			Accumulated Other Comprehensive Income (Loss)			Noncontrolling Interest		Total
Successor
Balance—May 26, 2010	93,340,428	$	2,073,532		$	304,950		$	—		$	31,450	$	2,409,932
Private common unit offerings, net of costs	26,266,791	584,436			—			—			—		584,436
Public common unit offerings, net of costs	17,537,500	399,582			—			—			—		399,582
Issuance of common units under LTIP, net of forfeitures and tax withholding	42,417	(485		)	—			—			—		(485		)
Proceeds from exercise of common unit options	94,200	1,937			—			—			—		1,937
Unit-based compensation expenses	—	1,827			—			—			—		1,827
Acquisition of assets between entities under common control below historical costs	—	—			8,937			—			—		8,937
Partner contributions	—	7,193			20,806			—			—		27,999
Partner distributions	—	(114,292		)	(4,338		)	—			—		(118,630		)
Contributions from noncontrolling interest	—	—			—			—			86		86
Accrued distributions to phantom units	—	(107		)	—			—			—		(107		)
Net (loss) income	—	(8,928		)	2,800			—			156		(5,972		)
Distributions to Series A Preferred Units	—	(3,813		)	(78		)	—			—		(3,891		)
Accretion of Series A Preferred Units	—	(150		)	—			—			—		(150		)
Net change in fair value of cash flow hedges	—	—			—			(11,099		)	—		(11,099		)
Balance—December 31, 2010	137,281,336	2,940,732			333,077			(11,099		)	31,692		3,294,402
Common unit offerings, net of costs	20,000,001	435,685			—			—			—		435,685
Issuance of common units under LTIP, net of forfeitures and tax withholding	156,271	(109		)	—			—			—		(109		)
Unit-based compensation expenses	—	3,610			—			—			—		3,610
Transfer of assets between entities under common control in excess of historical costs	—	—			249			—			—		249
Partner distributions	—	(264,174		)	(10,314		)	—			—		(274,488		)
Accrued distributions to phantom units	—	(250		)	—			—			—		(250		)
Net income	—	65,432			7,010			—			1,177		73,619
Distributions to Series A Preferred Units	—	(7,635		)	(146		)	—			—		(7,781		)
Accretion of Series A Preferred Units	—	(201		)	—			—			—		(201		)
Net cash flow hedge amounts reclassified to earnings	—	—			—			19,018			—		19,018
Net change in fair value of cash flow hedges	—	—			—			(12,678		)	—		(12,678		)
Balance—December 31, 2011	157,437,608	$	3,173,090		$	329,876		$	(4,759	)	$	32,869	$	3,531,076

See accompanying notes to consolidated financial statements

F-12

Regency Energy Partners LP

Notes to Consolidated Financial Statements

For the Year Ended December 31, 2011

(Tabular dollar amounts, except per unit data, are in thousands)

1. Organization and Basis of Presentation

Organization. The consolidated financial statements presented herein contain the results of Regency Energy Partners LP and its subsidiaries (“Partnership”), a Delaware limited partnership. The Partnership was formed on September 8, 2005, and completed its IPO on February 3, 2006. The Partnership and its subsidiaries are engaged in the business of gathering and processing, contract compression, treating, transportation, fractionation and storage of natural gas and NGLs. Regency GP LP is the Partnership’s general partner and Regency GP LLC (collectively the “General Partner”) is the managing general partner of the Partnership and the general partner of Regency GP LP.

In March 2009, the Partnership contributed RIG to HPC in exchange for a noncontrolling general partner interest in that joint venture. Accordingly, the Partnership no longer consolidates RIG in its financial statements, and accounts for its investment in HPC under the equity method. Transactions between the Partnership and HPC involve the transportation of natural gas, contract compression services, and the provision of administrative support. Because these transactions are immediately realized, the Partnership does not eliminate these transactions with its equity method investee.

In May 2010, GP Seller completed the sale of all of the outstanding membership interests of the General Partner pursuant to a Purchase Agreement (the “Purchase Agreement”) among itself, ETE and ETE GP (the “ETE Acquisition”). Prior to the closing of the Purchase Agreement, GP Seller, an affiliate of GE EFS, owned all of the outstanding limited partner interests in the General Partner and all of the member interests in the general partner of the General Partner and, as a result of that position, controlled the Partnership. As a result of this transaction, the outstanding voting interests of the General Partner and control of the Partnership were transferred from GE EFS to ETE.

In connection with this change in control, the Partnership’s assets and liabilities were adjusted to fair value on the closing date (May 26, 2010) by application of “push-down” accounting (the “Push-down Adjustments”).

The Partnership applied the guidance in FASB ASC 820, Fair Value Measurements and Disclosures (“FASB ASC 820”), in determining the fair value of partners’ capital, which is comprised of the following items:

	May 26, 2010
Fair value of limited partners interest, based on the number of outstanding Partnership common units and the trading price on May 26, 2010	$	2,073,532
Fair value of consideration paid for general partner interest	304,950
Noncontrolling interest	31,450
	$	2,409,932

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The Partnership then developed the fair value of its assets and liabilities, with the assistance of third-party valuation experts, using the guidance in FASB ASC 820.

	May 26, 2010
Working capital	$	(3,286	)
Gathering and transmission systems	471,169
Compression equipment	745,838
Gas plants and buildings	116,967
Other property, plant and equipment	100,264
Construction-in-progress	114,146
Other long-term assets	37,694
Investment in unconsolidated affiliate	739,164
Intangible assets	666,360
Goodwill	789,789
	$	3,778,105
Less:
Series A Preferred Units	70,793
Fair value of long-term debt	1,239,863
Other long-term liabilities	57,517
Total fair value of partners’ capital	$	2,409,932

Due to the Push-down Adjustments, the Partnership’s consolidated financial statements and certain footnote disclosures are presented in two distinct periods to indicate the application of two different bases of accounting between the periods presented: (1) the period prior to the acquisition date (May 26, 2010), identified as “Predecessor” and (2) the period from May 26, 2010 forward, identified as “Successor”.

Basis of presentation. The consolidated financial statements of the Partnership have been prepared in accordance with GAAP and include the accounts of all controlled subsidiaries after the elimination of all intercompany accounts and transactions. Certain prior year numbers have been conformed to the current year presentation.

2. Summary of Significant Accounting Policies

Use of Estimates. These consolidated financial statements have been prepared in conformity with GAAP, which includes the use of estimates and assumptions by management that affect the reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and liabilities that exist at the date of the financial statements. Although these estimates are based on management’s available knowledge of current and expected future events, actual results could be different from those estimates.

Cash and Cash Equivalents. Cash and cash equivalents include temporary cash investments with original maturities of three months or less.

Equity Method Investments. The equity method of accounting is used to account for the Partnership’s interest in investments of greater than 20% voting interest or exerts significant influence over an investee and where the Partnership lacks control over the investee.

Other Current Assets and Other Current Liabilities. As of December 31, 2011 and 2010, other current assets included inventories of $21.2 million and $4.4 million, respectively, and other current liabilities included accrued interest of $26.8 million and $11.8 million, respectively.

Property, Plant and Equipment. Property, plant and equipment is recorded at historical cost of construction or, upon acquisition, the fair value of the assets acquired. Gains or losses on sales or retirements of assets are included in operating income unless the disposition is treated as discontinued operations. Natural gas and NGLs used to maintain pipeline minimum pressures is capitalized and classified as property, plant and equipment. Financing costs associated with the construction of larger assets requiring ongoing efforts over a period of time are capitalized. For the year ended December 31, 2011, the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009, the Partnership capitalized interest of $1.2 million, $1.4 million, $0.9 million and $1.7 million, respectively. The costs of maintenance and repairs, which are not significant improvements, are expensed when incurred. Expenditures to extend the useful lives of the assets are capitalized.

F-14

The Partnership accounts for its asset retirement obligations by recognizing on its balance sheet the net present value of any legally-binding obligation to remove or remediate the physical assets that it retires from service, as well as any similar obligations for which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the Partnership. While the Partnership is obligated under contractual agreements to remove certain facilities upon their retirement, management is unable to reasonably determine the fair value of such asset retirement obligations because the settlement dates, or ranges thereof, were indeterminable and could range up to 95 years, or the undiscounted amounts are immaterial. An asset retirement obligation will be recorded in the periods wherein management can reasonably determine the settlement dates.

Depreciation expense related to property, plant and equipment was $138.4 million, $60.1 million, $37.1 million and $89.7 million for the year ended December 31, 2011, the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009, respectively. Depreciation of property, plant and equipment is recorded on a straight-line basis over the following estimated useful lives:

Functional Class of Property	Useful Lives (Years)
Gathering and Transmission Systems	10 - 20
Compression Equipment	3 - 30
Gas Plants and Buildings	10 - 35
Other property, plant and equipment	3 - 15

Intangible Assets. As of December 31, 2011, intangible assets consisted of trade names and customer relations, and are amortized on a straight line basis over their estimated useful lives, which is the period over which the assets are expected to contribute directly or indirectly to the Partnership’s future cash flows. The estimated useful lives range from 20 to 30 years. Prior to the ETE Acquisition, the Partnership’s intangible assets consisted of (i) permits and licenses, (ii) customer contracts, (iii) trade names, and (iv) customer relations. The intangibles were amortized on a straight line basis over their estimated useful lives which ranged from 3 to 30 years.

The Partnership assesses long-lived assets, including property, plant and equipment and intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is assessed by comparing the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amounts exceed the fair value of the assets. The Partnership did not record any impairment in 2011, 2010 or 2009.

Goodwill. Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill is not amortized, but is tested for impairment annually based on the carrying values as of December 31, or more frequently if impairment indicators arise that suggest the carrying value of goodwill may not be recovered. Impairment is indicated when the carrying amount of a reporting unit exceeds its fair value. To estimate the fair value of the reporting units, the Partnership makes estimates and judgments about future cash flows, as well as revenues, cost of sales, operating expenses, capital expenditures and net working capital based on assumptions that are consistent with the Partnership’s most recent forecast. At the time it is determined that an impairment has occurred, the carrying value of the goodwill is written down to its fair value. The Partnership did not record any impairment in 2011, 2010 or 2009.

Other Assets, net. Other assets, net primarily consists of debt issuance costs, which are capitalized and amortized to interest expense, net over the life of the related debt.

Gas Imbalances. Quantities of natural gas or NGLs over-delivered or under-delivered related to imbalance agreements are recorded monthly as other current assets or other current liabilities using then current market prices or the weighted average prices of natural gas or NGLs at the plant or system pursuant to imbalance agreements for which settlement prices are not contractually established. Within certain volumetric limits determined at the sole discretion of the creditor, these imbalances are generally settled by deliveries of natural gas. Imbalance receivables and payables as of December 31, 2011 and 2010 were immaterial.

Revenue Recognition. The Partnership earns revenue from (i) domestic sales of natural gas, NGLs and condensate, (ii) natural gas gathering, processing and transportation, (iii) contract compression services, and (iv) contract treating services. Revenue associated with sales of natural gas, NGLs and condensate are recognized when title passes to the customer, which is when the risk of ownership passes to the purchaser and physical delivery occurs. Revenue associated with transportation and processing fees are recognized when the service is provided. For contract compression and contract treating services, revenue is recognized when the service is performed. For gathering and processing services, the Partnership receives either fees or commodities from natural gas producers depending on the type of contract. Commodities received are in turn sold and recognized as revenue in accordance with the criteria outlined above. Under the percentage-of-proceeds contract type, the Partnership is paid for its services by keeping a percentage of the NGLs produced and a percentage of the residue gas resulting from processing the natural gas. Under the

F-15

percentage-of-index contract type, the Partnership earns revenue by purchasing wellhead natural gas at a percentage of the index price and selling processed natural gas and NGLs at a price approximating the index price to third parties. The Partnership generally reports revenue gross in the consolidated statements of operations when it acts as the principal, takes title to the product, and incurs the risks and rewards of ownership. Revenue for fee-based arrangements is presented net, because the Partnership takes the role of an agent for the producers. Allowance for doubtful accounts is determined based on historical write-off experience and specific identification.

Derivative Instruments. The Partnership’s net income and cash flows are subject to volatility stemming from changes in market prices such as natural gas prices, NGLs prices, processing margins and interest rates. The Partnership uses natural gas, ethane, propane, butane, natural gasoline, and condensate swaps as well as ethane put options to create offsetting positions to specific commodity price exposures, and uses interest rate swap contracts to create offsetting positions to specific interest rate exposures. Derivative financial instruments are recorded on the balance sheet at their fair value based on their settlement date. The Partnership employs derivative financial instruments in connection with an underlying asset, liability and/or anticipated transaction and not for speculative purposes. Derivative financial instruments qualifying for hedge accounting treatment have been designated by the Partnership as cash flow hedges. The Partnership enters into cash flow hedges to hedge the variability in cash flows related to a forecasted transaction. At inception, the Partnership formally documents the relationship between the hedging instrument and the hedged item, the risk management objectives, and the methods used for assessing and testing correlation and hedge effectiveness. The Partnership also assesses, both at the inception of the hedge and on an on-going basis, whether the derivatives are highly effective in offsetting changes in cash flows of the hedged item. Furthermore, the Partnership regularly assesses the creditworthiness of counterparties to manage the risk of default. If the Partnership determines that a derivative is no longer highly effective as a hedge, it discontinues hedge accounting prospectively by including changes in the fair value of the derivative in current earnings. For cash flow hedges, changes in the derivative fair values, to the extent that the hedges are effective, are recorded as a component of accumulated other comprehensive income (loss) until the hedged transactions occur and are recognized in earnings. Any ineffective portion of a cash flow hedge’s change in value is recognized immediately in earnings. In the statement of cash flows, the effects of settlements of derivative instruments are classified consistent with the related hedged transactions. For the Partnership’s derivative financial instruments that were not designated for hedge accounting, the change in market value is recorded as a component of net realized and unrealized (loss) gain from derivatives in the consolidated statements of operations.

Benefits. The Partnership previously provided medical, dental, and other healthcare benefits to employees, including providing a matching contribution for employee contributions to their 401(k) accounts, which vested ratably over 3 years. Effective January 1, 2011, the Partnership's 401(k) plan merged with and into that of ETP. As a result of the merger, the Partnership’s matching contributions that had not yet fully vested became fully vested, effective immediately. All future matching contributions from the Partnership to the employee 401(k) accounts will vest immediately. The amount of matching contributions for the year ended December 31, 2011, the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009, were $2.7 million, $2 million, $0.5 million and $1.3 million, respectively, and were recorded in general and administrative expenses. The Partnership has no pension obligations or other post employment benefits.

Income Taxes. The Partnership is generally not subject to income taxes, except as discussed below, because its income is taxed directly to its partners. The Partnership is subject to the gross margins tax enacted by the state of Texas. The Partnership has a wholly-owned subsidiary that is subject to income tax and provides for deferred income taxes using the asset and liability method. Accordingly, deferred taxes are recorded for differences between the tax and book basis that will reverse in future periods. The Partnership’s deferred tax liabilities of $5.8 million and $6.2 million as of December 31, 2011 and 2010, respectively, relate to the difference between the book and tax basis of property, plant and equipment and intangible assets and is included in other long-term liabilities in the accompanying consolidated balance sheets. The Partnership follows the guidance for uncertainties in income taxes where a liability for an unrecognized tax benefit is recorded for a tax position that does not meet the “more likely than not” criteria. The Partnership has not recorded any uncertain tax positions meeting the more likely than not criteria as of December 31, 2011 and 2010. The Partnership recognized current federal income tax expense (benefit) of $0.0 million, $0.6 million, $(0.2) million and $(0.4) million and deferred income tax expense (benefit) of $(0.4) million, $(0.1) million, $0.3 million and $(1.2) million using a 35% effective rate for the year ended December 31, 2011, the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010 and the year ended December 31, 2009, respectively.

On December 31, 2010, Gulf States Transmission Corporation converted to a limited liability company, resulting in a $0.2 million net tax expense.

The IRS commenced audits of our 2007 and 2008 federal income tax returns on January 27, 2010. The IRS has now completed its audit of these returns and proposed certain adjustments.  We have filed a protest with the IRS to initiate the appeals process and appeal certain of these adjustments.  Until this matter is fully resolved, it is not known whether any amounts ultimately recorded would be material, or how such adjustments would affect unitholders.  The IRS is also conducting an audit of the 2007 through 2009 tax returns of one of our wholly-owned subsidiaries and has proposed certain adjustments which we expect to appeal. The

F-16

statute of limitations for each of these audits has been extended to December 31, 2012. We, through our tax matters partner and our tax advisers, will cooperate with the IRS examiners auditing these returns.

Equity-Based Compensation. The Partnership accounts for equity-based compensation by recognizing the grant-date fair value of awards into expense as they are earned, using an estimated forfeiture rate. The forfeiture rate assumption is reviewed annually to determine whether any adjustments to expense are required.

Earnings per Unit. Basic net income per common unit is computed through the use of the two-class method, which allocates earnings to each class of equity security based on their participation in distributions and deemed distributions. Accretion of the Series A Preferred Units and the beneficial conversion feature related to the Class D common units are considered deemed distributions. Distributions and deemed distributions to the Series A Preferred Units as well as the beneficial conversion feature of the Class D common units reduce the amount of net income available to the general partner and limited partner interests. The general partners’ interest in net income or loss consists of its respective percentage interest, make- whole allocations for any losses allocated in a prior tax year and IDRs. After deducting the General Partner’s interest, the limited partners’ interest in the remaining net income or loss is allocated to each class of equity units based on distributions and beneficial conversion feature amounts, if applicable, then divided by the weighted average number of common and subordinated units outstanding in each class of security. Diluted net income per common unit is computed by dividing limited partners’ interest in net income, after deducting the General Partner’s interest, by the weighted average number of units outstanding and the effect of non-vested restricted units, phantom units, Series A Preferred Units and unit options. Common and subordinated units were considered to be a single class for the year ended December 31, 2009. For special classes of common units issued with a beneficial conversion feature, the amount of the benefit associated with the period is added back to net income and the unconverted class is added to the denominator.

Revision to Partners’ Capital Accounts. In 2009, the Partnership revised the allocation of net income between the General Partner and common unitholders to reflect the income allocation provisions of the Partnership agreement. The effect of this revision was not material to the prior financial statements.

Recently Issued Accounting Standards. In September 2011, the FASB issued Accounting Standards Update No. 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment ("ASU 2011-08"), which gives entities the option, under certain circumstances, to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether further impairment testing is necessary. The Partnership adopted and applied this standard to its annual impairment tests performed for certain of our reporting units during the year ended December 31, 2011. There was no material impact to the Partnership's financial position or results of operations as a result of the adoption of this standard.

3. Partners’ Capital and Distributions

Public Common Unit Offerings. In October 2011, the Partnership issued 11,500,000 common units representing limited partnership interests in a public offering at a price of $20.92 per common unit, resulting in net proceeds of $231.8 million which were used to repay outstanding borrowings under the revolving credit facility. In August 2010, the Partnership sold 17,537,500 common units and received $408.1 million in proceeds, inclusive of the General Partner’s proportionate capital contribution. In December 2009, the Partnership sold 12,075,000 common units and received $225 million in proceeds, inclusive of the General Partner’s proportionate capital contribution.

Private Common Unit Offerings. In May 2011, the Partnership sold 8,500,001 common units representing limited partnership interests resulting in net proceeds of $203.9 million, to partially fund its capital contribution to Lone Star. These units were issued in a private placement conducted in accordance with the exemption from the registration requirements of the Securities Act of 1933, as amended, under section 4(2) thereof. These units were subsequently registered with the SEC.

In May 2010, the Partnership issued 26,266,791 common units, valued at $584.4 million, to ETE, to purchase a 49.9% interest in MEP. These units were issued in a private placement conducted in accordance with the exemption from the registration requirements of the Securities Act of 1933, as amended, under Section 4(2) thereof. Subsequently, ETE contributed $12.3 million as the General Partner’s proportionate capital.

Subordinated Units. The subordinated units converted into common units on a one-for-one basis on February 17, 2009.

Class D Common Units. On January 15, 2008, the Partnership issued 7,276,506 of Class D common units to CDM as partial consideration for the CDM acquisition. The Class D common units had the same terms and conditions as the Partnership’s common units, except that the Class D common units were not entitled to participate in earnings or distributions by the Partnership. The Class D common units were issued in a private placement conducted in accordance with the exemption from the registration requirements of the Securities Act of 1933, as amended, under Section 4(2) thereof. The Class D common units converted into common units without the payment of further consideration on a one-for-one basis on February 9, 2009.

F-17

Noncontrolling Interest. The Partnership operates a gas gathering joint venture in south Texas in which other third party companies own a 40% interest, which is reflected on the balance sheet as noncontrolling interest.

Distributions. The partnership agreement requires the distribution of all of the Partnership’s Available Cash (defined below) within 45 days after the end of each quarter to unitholders of record on the applicable record date, as determined by the General Partner.

Available Cash. Available Cash, for any quarter, generally consists of all cash and cash equivalents on hand at the end of that quarter less the amount of cash reserves established by the general partner to: (i) provide for the proper conduct of the Partnership’s business; (ii) comply with applicable law, any debt instruments or other agreements; or (iii) provide funds for distributions to the unitholders and to the General Partner for any one or more of the next four quarters and plus, all cash on hand on that date of determination of available cash for the quarter resulting from working capital borrowings made after the end of the quarter for which the determination is being made.

General Partner Interest and Incentive Distribution Rights. The General Partner is entitled to its proportionate share of all quarterly distributions that the Partnership makes prior to its liquidation. The General Partner has the right, but not the obligation, to contribute a proportionate amount of capital to the Partnership to maintain its current general partner interest. The General Partner’s initial 2% interest in these distributions has been reduced since the Partnership has issued additional units and the General Partner has not contributed a proportionate amount of capital to the Partnership to maintain its General Partner interest. The General Partnership ownership interest as of December 31, 2011 was 1.8%. This General Partner interest is represented by 2,804,592 equivalent units as of December 31, 2011.

The IDRs held by the General Partner entitle it to receive an increasing share of Available Cash when pre-defined distribution targets are achieved. The General Partner’s IDRs are not reduced if the Partnership issues additional units in the future and the general partner does not contribute a proportionate amount of capital to the Partnership to maintain its general partner interest.

Distributions of Available Cash. The partnership agreement requires that it make distributions of Available Cash from operating surplus for any quarter after the subordination period as set forth in the partnership agreement.

Distributions. The Partnership made the following cash distributions per unit during the years ended December 31, 2011 and 2010:

Distribution Date	Cash Distribution (per common unit)
November 14, 2011	$	0.455
August 12, 2011	0.450
May 13, 2011	0.445
February 14, 2011	0.445
November 12, 2010	0.445
August 13, 2010	0.445
May 14, 2010	0.445
February 14, 2010	0.445

The Partnership paid a cash distribution of $0.46 per common unit on February 13, 2012 .

F-18

4. Income (Loss) per Limited Partner Unit

The following table provides a reconciliation of the numerator and denominator of the basic and diluted earnings per unit computations for the years ended December 31, 2011 and 2009. For the periods from May 26, 2010 to December 31, 2010 and from January 1, 2010 to May 25, 2010, diluted earnings per unit equals basic because all instruments were antidilutive.

	Successor						Predecessor
	For the Year Ended December 31, 2011						For the Year Ended December 31, 2009
	Income (Numerator)			Units (Denominator)	Per-Unit Amount		Income (Numerator)		Units (Denominator)	Per-Unit Amount
Amounts allocated to common units	$	57,450		145,490,869	$	0.39	$	131,752	80,582,705	$	1.63
Effect of Dilutive Securities
Common unit options	—			19,192			—		—
Phantom units	—			148,388			—		100,764
Series A Preferred Units	(9,991		)	4,632,389			—		—
Class D common units	$	—		—			$	820	797,425
Diluted Earnings per Unit	$	47,459		150,290,838	$	0.32	$	132,572	81,480,894	$	1.63

In connection with the CDM acquisition, the Partnership issued 7,276,506 Class D common units. At the commitment date, the sales price of $30.18 per unit represented a $1.10 discount from the fair value of the Partnership’s common units. This discount represented a beneficial conversion feature that is treated as a non-cash distribution for purposes of calculating earnings per unit. The beneficial conversion feature is reflected in income per unit using the effective yield method over the period the Class D common units were outstanding, as indicated on the statements of operations in the line item entitled “beneficial conversion feature for Class D common units.” The Class D common units converted into common units without the payment of further consideration on a one-for-one basis on February 9, 2009 and no additional Class D common units have been issued.

The following data show securities that could potentially dilute earnings per unit in the future that were not included in the computation of diluted earnings per unit because to do so would have been antidilutive for the periods presented:

	Successor		Predecessor
	Year Ended December 31, 2011	Period from Acquisition (May 26, 2010) to  December 31, 2010	Period from January 1, 2010 to (May 25, 2010)	Year Ended December 31, 2009
Restricted (non-vested) common units	—	—	396,918	566,493
Common unit options	—	259,650	298,400	357,489
Phantom units*	—	366,489	369,346	—
Series A Preferred Units	—	4,584,192	4,584,192	1,449,211

 _______________________

* Amount assumes maximum conversion rate for market condition awards.

The partnership agreement requires that the General Partner shall receive a 100% allocation of income until its capital account is made whole for all of the net losses allocated to it in prior years.

5. Acquisitions and Dispositions

2011

Lone Star. On May 2, 2011, the Partnership contributed $592.7 million in cash to Lone Star, in exchange for its 30% interest. Lone Star, a newly formed joint venture that is owned 70% by ETP and 30% by the Partnership, completed its acquisition of all of the membership interest in LDH, a wholly-owned subsidiary of Louis Dreyfus Highbridge Energy LLC, for $1.98 billion in cash. To fund a portion of this capital contribution, the Partnership issued 8,500,001 common units representing limited partnership interests with net proceeds of $203.9 million. The remaining portion of the Partnership’s capital contribution was funded by additional borrowings under its revolving credit facility.

F-19

Lone Star owns and operates an NGL storage, fractionation and transportation business. Lone Star’s storage assets are primarily located in Mont Belvieu, Texas and its West Texas Pipeline transports NGLs through an intrastate pipeline system that originates in the Permian Basin in west Texas, passes through the Barnett shale production area in north Texas and terminates at the Mont Belvieu storage and fractionation complex. Lone Star also owns and operates fractionation and processing assets located in Louisiana. Lone Star is managed by a two-person board of directors, with the Partnership and ETP each having the right to appoint one director, and is operated by ETP.

MEP. On September 1, 2011, the Partnership purchased an additional 0.1% interest in MEP from ETP for $1.2 million in cash, bringing its total interest in MEP to 50%. Because this transaction occurred between entities under common control, partners' capital was increased by $0.2 million, which represented a deemed contribution of the excess carrying amount of ETP's investment of $1.4 million over the purchase price.

Ranch JV. On December 2, 2011, Ranch JV was formed by the Partnership, APM and CM, each owning a 33.33% interest in the joint venture. Ranch JV, upon completion of construction in 2012, will process natural gas delivered from the NGLs-rich Bone Spring and Avalon shale formations in west Texas.

2010

HPC. On April 30, 2010, the Partnership purchased an additional 6.99% general partner interest in HPC from EFS Haynesville, bringing its total general partner interest in HPC to 49.99%. The purchase price of $92.1 million was funded by borrowings under the Partnership’s revolving credit facility. Because this transaction occurred between two entities under common control, partners’ capital was decreased by $17 million, which represented a deemed distribution of the excess purchase price over EFS Haynesville’s carrying amount of $75.1 million.

MEP. On May 26, 2010, the Partnership purchased a 49.9% interest in MEP from ETE. The Partnership issued 26,266,791 common units to ETE, valued at $584.4 million, and received a working capital adjustment of $4.6 million from ETE that was recorded as an adjustment to investment in unconsolidated affiliates. Because this transaction occurred between two entities under common control, partners’ capital was increased by $8.9 million, which represented a deemed contribution of the excess carrying amount of ETE’s investment of $588.7 million over the purchase price. MEP owns approximately 500 miles of natural gas pipelines that extend from the southeast corner of Oklahoma, across northeast Texas, northern Louisiana, central Mississippi and into Alabama.

Disposition of East Texas Assets. In July 2010, the Partnership sold its gathering and processing assets located in east Texas for $70.2 million in cash. The financial results of these assets have been reclassified to discontinued operations in accordance with applicable accounting standards. Revenues for these assets for the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009 were $9.5 million, $24.2 million and $46.2 million, respectively.

Zephyr. On September 1, 2010, the Partnership completed the Zephyr acquisition for $193.3 million in cash that was funded by borrowings under the Partnership’s revolving credit facility. Zephyr owns and operates a fleet of equipment used in gas treating. The primary treatment services include carbon dioxide and hydrogen sulfide removal, dehydration, natural gas cooling and BTU management. The acquisition of Zephyr further increased the Partnership’s fee-based revenues. From September 1, 2010 through December 31, 2010, revenues and net income attributable to Zephyr’s operations of $13.7 million and $5.9 million, respectively are included in the Partnership’s results of operations. The total purchase price was allocated as follows:

	September 1, 2010
Cash and cash equivalents	$	1,983
Trade accounts receivable	6,580
Other current assets	128
Gas plants and buildings	80,859
Other property, plant and equipment	303
Intangible assets	119,379
Total assets acquired	$	209,232
Trade accounts payable	(8,364		)
Deferred revenues	(6,408		)
Other current liabilities	(1,164		)
Net assets acquired	$	193,296

F-20

2009

HPC. In March 2009, the Partnership completed a joint venture arrangement among Regency HIG, EFS Haynesville, and the Alinda Investors. The Partnership contributed RIG, which owns RIGS, with a fair value of $401.4 million, to HPC, in exchange for a 38% general partner interest in HPC. EFS Haynesville and Alinda Investors contributed $126.9 million and $528.3 million in cash, respectively, to HPC in return for a 12% general partner and a 50% general partner interest, respectively. The disposition and deconsolidation resulted in the recording of a $133.5 million gain (of which $52.8 million represents the remeasurement of the Partnership’s retained 38% general partner interest to its fair value), net of transaction costs of $5.5 million.

In September 2009, the Partnership purchased a 5% general partner interest in HPC from EFS Haynesville for $63 million, increasing the Partnership’s general partner ownership percentage from 38% to 43%. Because the transaction occurred between two entities under common control, the Partnership’s general partner interest was reduced by $10.2 million, which represented a deemed distribution of the excess purchase price over EFS Haynesville’s carrying amount.

6. Investment in Unconsolidated Affiliates

Investment in HPC. HPC was established in March 2009 and as of December 31, 2011, the Partnership owned a 49.99% general partner interest in HPC. As of December 31, 2011 and December 31, 2010, the carrying value of the Partnership’s general partner interest in HPC was $682.1 million and $698.8 million, respectively. The following table summarizes the changes in the Partnership's investment in HPC:

	Successor				Predecessor
HPC	Year Ended December 31, 2011		Period from  Acquisition (May 26, 2010) to December 31, 2010		Period from January 1, 2010 to Disposition (May 25, 2010)		Period from Inception (March 18, 2009) to December 31, 2009
Contributions to HPC	$	—	$	—	$	20,210	$	401,356
Purchase of additional HPC general partner interest	—		—		75,114		52,803
Distributions received from HPC	65,465		52,668		12,446		8,926
Return of investment received from HPC	—		19,995		—		—
Partnership’s share of HPC’s net income	54,582		35,684		15,872		7,886
Amortization of excess fair value of investment in HPC	5,847		3,410		—		—

As discussed in Note 1, the Partnership’s investment in HPC was adjusted to its fair value on May 26, 2010 and the excess fair value over net book value was comprised of two components: (1) $154.9 million was attributed to HPC’s long-lived assets and is being amortized as a reduction of income from unconsolidated affiliates over the useful lives of the respective assets, which vary from 15 to 30 years, and (2) $32.4 million could not be attributed to a specific asset and therefore will not be amortized in future periods.

Investment in MEP. The Partnership purchased a 49.9% interest in MEP from ETE on May 26, 2010. On September 1, 2011, the Partnership purchased an additional 0.1% interest in MEP from ETP for $1.2 million in cash, bringing the total membership interest to 50%. As of December 31, 2011 and December 31, 2010, the carrying value of the Partnership’s interest in MEP was $613.9 million and $652.5 million, respectively. The following table summarizes the changes in the Partnership's investment in MEP:

MEP	Year Ended December 31, 2011		Period from Acquisition (May 26, 2010) to December 31, 2010
Contributions to MEP	$	—	$	85,828
Purchase of additional MEP interest	1,355		—
Distributions received from MEP	82,512		43,306
Partnership’s share of MEP’s net income	42,617		21,219

Investment in Lone Star. On May 2, 2011, the Partnership contributed $592.7 million to Lone Star, in exchange for its 30% interest. To fund a portion of this capital contribution, the Partnership issued 8,500,001 common units representing limited partnership interests with net proceeds of $203.9 million. The remaining portion of the Partnership’s capital contribution was funded by additional borrowings under its revolving credit facility.

F-21

As of December 31, 2011, the carrying value of the Partnership’s interest in Lone Star was $628.7 million. Amounts recorded with respect to Lone Star for the period ended December 31, 2011 are summarized in the table below:

Lone Star	Period from Initial Contribution (May 2, 2011) to December 31, 2011
Contributions to Lone Star	$	645,265
Return of investments from Lone Star	22,698
Distributions received from Lone Star	22,037
Partnership’s share of Lone Star’s net income	28,188

Investment in Ranch JV. Ranch JV was created by the Partnership, APM and CM in December 2011, each owns an equal 33.33% interest of the joint venture. As of December 31, 2011, the Partnership has not made any capital contributions into Ranch JV; and Ranch JV has not commenced its business operations.

7. Derivative Instruments

Policies. The Partnership established comprehensive risk management policies and procedures to monitor and manage the market risks associated with commodity prices, counterparty credit, and interest rates. The General Partner is responsible for delegation of transaction authority levels, and the Audit and Risk Committee of the General Partner is responsible for the overall management of these risks, including monitoring exposure limits. The Audit and Risk Committee receives regular briefings on exposures and overall risk management in the context of market activities.

Commodity Price Risk. The Partnership is a net seller of NGLs, condensate and natural gas as a result of its gathering and processing operations. The prices of these commodities are impacted by changes in the supply and demand as well as market focus. Both the Partnership's profitability and cash flow are affected by the inherent volatility of these commodities which could adversely affect its ability to make distributions to its unitholders. The Partnership manages this commodity price exposure through an integrated strategy that includes management of its contract portfolio, matching sales prices of commodities with purchases, optimization of its portfolio by monitoring basis and other price differentials in operating areas, and the use of derivative contracts. In some cases, the Partnership may not be able to match pricing terms or to cover its risk to price exposure with financial hedges, and it may be exposed to commodity price risk. Speculative positions with derivative contracts are prohibited under the Partnership's policies.

The Partnership has swap contracts settled against NGLs (ethane, propane, butane, and natural gasoline), condensate and natural gas market prices. The Partnership also has put options settled against ethane. The Partnership will exercise these options only when the market prices for ethane is below the price that the Partnership has locked on these options.

As of December 31, 2011 all of the Partnership's commodity swap contracts were accounted for as cash flow hedges, and the Partnership's put options were accounted for on mark-to-market basis. On January 1, 2012, the Partnership, for accounting purposes, de-designated its swap contracts and will account for these contracts using the mark-to-market method of accounting. Upon the de-designation of these trades, the Partnership has $4.8 million in net hedging losses in accumulated other comprehensive loss which will be amortized to earnings over the next 2.25 years, of which $5.2 million of net hedging losses will be amortized to revenues in the next 12 months.

Interest Rate Risk. The Partnership is exposed to variable interest rate risk as a result of borrowings under its credit facility. As of December 31, 2011 and December 31, 2010, the Partnership had $332 million and $285 million, respectively, of outstanding borrowings exposed to variable interest rate risk. The Partnership’s $300 million interest rate swaps expired in March 2010. In April 2010, the Partnership entered into two-year interest rate swaps related to $250 million of borrowings under its revolving credit facility, effectively locking the base rate for these borrowings at 1.325% through April 2012. As of December 31, 2011 the interest rate swaps were accounted for using the mark-to-market method of accounting.

Credit Risk. The Partnership's resale of NGLs, condensate, and natural gas exposes it to credit risk, as the margin on any sale is generally a very small percentage of the total sales price. Therefore, a credit loss can be very large relative to overall profitability on these transactions. The Partnership attempts to ensure that it issues credit only to creditworthy counterparties and that in appropriate circumstances any such extension of credit is backed by adequate collateral, such as a letter of credit or parental guarantee from a parent company with potentially better credit.

The Partnership is exposed to credit risk from its derivative counterparties. The Partnership does not require collateral from these counterparties. The Partnership deals primarily with financial institutions when entering into financial derivatives, and utilizes

F-22

master netting agreements that allow for netting of swap contract receivables and payables in the event of default by either party. If the Partnership's counterparties failed to perform under existing swap contracts, the Partnership's maximum loss as of December 31, 2011 was $4.8 million, which would be reduced by $4.6 million due to the netting feature. The Partnership has elected to present assets and liabilities under master netting agreements gross on the condensed consolidated balance sheets.

Embedded Derivatives. The Series A Preferred Units contain embedded derivatives which are required to be bifurcated and accounted for separately, such as the holders' conversion option and the Partnership's call option. These embedded derivatives are accounted for using mark-to-market accounting. The Partnership does not expect the embedded derivatives to affect its cash flows.

The Partnership’s derivative assets and liabilities, including credit risk adjustments, for the years ended December 31, 2011 and 2010 are detailed below:

	Assets				Liabilities
	December 31, 2011		December 31, 2010		December 31, 2011		December 31, 2010
Derivatives designated as cash flow hedges
Current amounts
Commodity contracts	$	4,065	$	2,650	$	10,065	$	11,421
Long-term amounts
Commodity contracts	474		23		63		3,271
Total cash flow hedging instruments	4,539		2,673		10,128		14,692
Derivatives not designated as cash flow hedges
Current amounts
Ethane put options	309		—		—		—
Interest rate contracts	—		—		470		1,751
Long-term amounts
Interest rate contracts	—		—		—		833
Embedded derivatives in Series A Preferred Units	—		—		39,049		57,023
Total derivatives not designated as cash flow hedges	309		—		39,519		59,607
Total derivatives	$	4,848	$	2,673	$	49,647	$	74,299

F-23

The Partnership's statement of operation for the year ended December 31, 2011 and 2010 were impacted by derivative instruments activities as detailed below:

		Successor						Predecessor
		Year Ended December 31, 2011			Period from May 26, 2010 to December 31, 2010			Period from January 1, 2010 to May 25, 2010			Year Ended December 31, 2009
		Change in Value Recognized in AOCI on Derivatives (Effective Portion)
Derivatives in cash flow hedging relationships:
Commodity derivatives		$	(12,678	)	$	(11,099	)	$	14,371		$	(19,958	)
Interest rate swap derivatives		—			—			—			(2,082		)
		$	(12,678	)	$	(11,099	)	$	14,371		$	(22,040	)
	Location of Gain/(Loss) Recognized in Income	Amount of Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)
Derivatives in cash flow hedging relationships:
Commodity derivatives	Revenue	$	(19,018	)	$	—		$	(5,200	)	$	54,260
Interest rate swap derivatives	Interest expense	—			—			(1,060		)	(6,255		)
		$	(19,018	)	$	—		$	(6,260	)	$	48,005
	Location of Gain/(Loss) Recognized in Income	Amount of Gain/(Loss) Recognized in Income on Ineffective Portion
Derivatives in cash flow hedging relationships:
Commodity derivatives	Revenue	$	3		$	(88	)	$	(799	)	$	108

	Location of Gain/(Loss) Recognized in  Income	Amount of Gain/(Loss) from De-designation Amortized from AOCI into Income
Derivatives not designated in a hedging relationship:
Commodity derivatives	Revenue	$	—		$	—		$	4,115		$	(611	)
	Location of  Gain/(Loss) Recognized in  Income	Amount of Gain/(Loss) Recognized in Income on Derivatives
Derivatives not designated in a hedging relationship:
Commodity derivatives	Revenue	$	(58	)	$	(7,778	)	$	1,168		$	(13,669	)
Interest rate swap derivatives	Interest expense	(395		)	(3,588		)	(824		)	—
Embedded derivatives	Other  income & deductions	17,974			(8,390		)	(4,039		)	(15,686		)
		$	17,521		$	(19,756	)	$	(3,695	)	$	(29,355	)

F-24

8. Long-term Debt

Obligations in the form of senior notes and borrowings under the credit facilities are as follows:

	December 31, 2011			December 31, 2010
Senior notes	$	1,355,147		$	856,061
Revolving loans	332,000			285,000
Total	1,687,147			1,141,061
Less: current portion	—			—
Long-term debt	$	1,687,147		$	1,141,061
Availability under revolving credit facility:
Total credit facility limit	$	900,000		$	900,000
Revolving loans	(332,000		)	(285,000		)
Letters of credit	(19,000		)	(16,015		)
Total available	$	549,000		$	598,985

Long-term debt maturities as of December 31, 2011 for each of the next five years are as follows:

Year Ended December 31,	Amount
2012	$	—
2013	—
2014	332,000
2015	—
2016	250,000
Thereafter	1,100,000
Total	$	1,682,000	*

_______________________

* Excludes an unamortized premium of $5.1 million as of December 31, 2011.

In the year ended December 31, 2011, the Partnership borrowed $940 million under its revolving credit facility; these borrowings were primarily to fund capital expenditures and acquisitions. During the same period, the Partnership repaid $893 million with proceeds from an equity offering and an issuance of senior notes. In the years ended December 31, 2010 and 2009, the Partnership borrowed $603 million and $191.7 million, respectively; these funds were used primarily to finance capital expenditures and acquisitions. During the same periods, the Partnership repaid $737.6 million, and $540.8 million, respectively, of these borrowings with proceeds from equity offerings.

Revolving Credit Facility. The Partnership, through RGS, has a $900 million revolving credit facility, including the availability for letters of credit of $200 million, that expires on June 15, 2014. RGS also has the option to request an additional $250 million in revolving commitments with ten business days written notice provided that no event of default has occurred or would result due to such increase, and all other additional conditions for the increase of the commitments set forth in the revolving credit facility have been met.

In March 2010, RGS entered into the Fifth Amended and Restated Credit Agreement that extended the maturity date of this facility to June 15, 2014 from August 15, 2011. The Partnership treated the March 2010 amendment of the revolving credit facility as a modification of an existing revolving credit agreement and, therefore, wrote off debt issuance costs of $1.8 million to interest expense, net in the period from January 1, 2010 to May 25, 2010. In addition, the Partnership paid and capitalized $15.9 million of loan fees which will be amortized over the remaining term. In May 2010, the Fifth Amended and Restated Credit Agreement amended certain definitions to include MEP, to allow for the pledge of the equity interest in MEP as indirect collateral, to permit certain investments in MEP by the Partnership and its affiliates and to require that the Partnership and its subsidiaries maintain a senior consolidated secured leverage ratio not to exceed three to one.

In May 2011, RGS amended its Fifth Amended and Restated Credit Agreement to permit the acquisition of equity interests in Lone Star and to allow for additional investments in Lone Star of up to $150 million. In December 2011, certain definitions were amended to include ELG and Ranch JV, allow for additional investments in Lone Star and ELG and allow for investments in Ranch JV. As of December 31, 2011, RGS is allowed additional investments in Lone Star of up to $550 million; additional

F-25

investment in ELG of up to $250 million; investment in Ranch JV of up to $50 million; and additional investment in HPC of up to $250 million less the Partnership's ownership portion of HPC's indebtedness. In addition, RGS is allowed an additional investment in any joint venture of up to $250 million.

The revolving credit facility and the guarantees are senior to the Partnership’s and the guarantors’ unsecured obligations, to the extent of the value of the assets securing such obligations.

The outstanding balance under the of revolving credit facility bears interest at LIBOR plus a margin or alternative base rate (equivalent to the U.S. prime lending rate) plus a margin, or a combination of both. The alternate base rate used to calculate interest on base rate loans will be calculated based on the greatest to occur of a base rate, a federal funds effective rate plus 0.50% and an adjusted one-month LIBOR rate plus 1.00%. The applicable margin shall range from 1.50% to 2.25% for base rate loans, 2.50% to 3.25% for Eurodollar loans. The weighted average interest rates on the total amounts outstanding under the Partnership's revolving credit facility was 3.18%, 2.96%, 3.30% and 3.24% as of December 31, 2011, December 31, 2010, May 25, 2010 and December 31, 2009, respectively.

RGS must pay (i) a commitment fee ranging from 0.375% to 0.50% per annum of the unused portion of the revolving loan commitments, (ii) a participation fee for each revolving lender participating in letters of credit ranging from 2.50% to 3.25% per annum of the average daily amount of such lender’s letter of credit exposure and (iii) a fronting fee to the issuing bank of letters of credit equal to 0.125% per annum of the average daily amount of the letter of credit exposure. These fees are included in interest expense, net in the consolidated statement of operations.

The revolving credit facility contains financial covenants requiring RGS and its subsidiaries to maintain debt to consolidated EBITDA (as defined in the credit agreement) ratio less than 5.25, consolidated EBITDA to consolidated interest expense ratio greater than 2.75 and a secured debt to consolidated EBITDA ratio less than 3. At December 31, 2011 and 2010, RGS and its subsidiaries were in compliance with these covenants.

The revolving credit facility restricts the ability of RGS to pay dividends and distributions other than reimbursements of the Partnership for expenses and payment of dividends to the Partnership to the amount of available cash (as defined) so long as no default or event of default has occurred or is continuing. The revolving credit facility also contains various covenants that limit (subject to certain exceptions), among other things, the ability of RGS to:

• incur indebtedness;

• grant liens;

• enter into sale and leaseback transactions;

• make certain investments, loans and advances;

• dissolve or enter into a merger or consolidation;

• enter into asset sales or make acquisitions;

• enter into transactions with affiliates;

• prepay other indebtedness or amend organizational documents or transaction documents (as defined in the revolving credit facility);

• issue capital stock or create subsidiaries; or

• engage in any business other than those businesses in which it was engaged at the time of the effectiveness of the revolving credit facility or reasonable extensions thereof.

Senior Notes due 2013. During the fourth quarter of 2010, in connection with the issuance of $600 million of senior notes due 2018 as further described below, the Partnership redeemed all of its $357.5 million senior notes due 2013. Accordingly, a redemption premium of $17.2 million was charged to loss on debt refinancing, net in the consolidated statement of operations. In addition, the Partnership wrote off the unamortized loan fee of $5 million and unamortized bond premium of $6.4 million to a loss on debt refinancing, net in the consolidated statement of operations.

Senior Notes due 2016. In May 2009, the Partnership and Finance Corp. issued $250 million of senior notes in a private placement that mature on June 1, 2016 ("2016 Notes"). The 2016 Notes bear interest at 9.375% with interest payable semi-annually in arrears on June 1 and December 1. The Partnership received net proceeds of $236.2 million upon issuance. The net proceeds were used to partially repay revolving loans under the Partnership’s revolving credit facility.

F-26

At any time before June 1, 2012, up to 35% of the 2016 Notes can be redeemed at a price of 109.375% plus accrued interest. Beginning June 1, 2013, the Partnership may redeem all or part of these notes at the redemption prices, expressed as percentages of the principal amount, set forth below:

June 1 of year ending:	Percentage of Redemption
2013	104.688%
2014	102.344%
2015 and thereafter	100.000%

At any time prior to June 1, 2013, the Partnership may also redeem all or part of the notes at a price equal to 100% of the principal amount of notes redeemed plus accrued interest and the applicable premium, which equals to the greater of (1) 1% of the principal amount of the note; or (2) the excess of the present value at such redemption date of (i) the redemption price of the note at June 1, 2013 plus (ii) all required interest payments due on the note through June 1, 2013, computed using a discount rate equal to the treasury rate (as defined) as of such redemption date plus 50 basis points, over the principal amount of the note.

Upon a change of control (as defined), each noteholder will be entitled to require the Partnership to purchase all or a portion of its notes at a purchase price of 101% plus accrued interest and liquidated damages, if any. The Partnership’s ability to purchase the notes upon a change of control will be limited by the terms of our debt agreements, including the Partnership’s revolving credit facility. Subsequent to the ETE Acquisition, no noteholder exercised this option.

The 2016 Notes contain various covenants that limit, among other things, the Partnership’s ability, and the ability of certain of its subsidiaries, to:

• incur additional indebtedness;

• pay distributions on, or repurchase or redeem equity interests;

• make certain investments;

• incur liens;

• enter into certain types of transactions with affiliates; and

• sell assets, consolidate or merge with or into other companies.

If the 2016 Notes achieve investment grade ratings by both Moody’s and S&P and no default or event of default has occurred and is continuing, the Partnership will no longer be subject to many of the foregoing covenants. At December 31, 2011, the Partnership was in compliance with these covenants.

Senior Notes due 2018. In October, 2010, the Partnership and Finance Corp. issued $600 million of senior notes that mature on December 1, 2018 ("2018 Notes"). The 2018 Notes bear interest at 6.875% paid semi-annually in arrears on June 1 and December 1, commencing June 1, 2011. The Partnership capitalized $12.2 million in debt issuance costs that will be amortized to interest expense, net over the term of the senior notes. The proceeds were used to redeem the senior notes due 2013 and to partially repay outstanding borrowings under the Partnership’s revolving credit facility.

At any time before December 1, 2013, up to 35% of the 2018 Notes can be redeemed at a price of 106.875% plus accrued interest. Beginning December 1, 2014, the Partnership may redeem all or part of these notes at the redemption prices, expressed as percentages of the principal amount, set forth below:

December 1 of year ending:	Percentage of Redemption
2014	103.438%
2015	101.719%
2016 and thereafter	100.000%

At any time prior to December 1, 2014, the Partnership may also redeem all or part of the notes at a price equal to 100% of the principal amount redeemed plus accrued interest and the applicable premium, which equals the greater of (1) 1% of the principal amount of the note; or (2) the excess of the present value at such redemption date of (i) the redemption price of the note at December 1, 2014 plus (ii) all required interest payments due on the note through December 1, 2014, computed using a discount rate equal to the treasury rate (as defined) as of such redemption date plus 50 basis points, over the principal amount of the note.

Upon a change of control (as defined) followed by a rating decline within 90 days, each holder of the 2018 Notes will be entitled to require the Partnership to purchase all or a portion of its notes at a purchase price of 101% plus accrued interest and liquidated

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damages, if any. The Partnership's ability to purchase the notes upon a change of control will be limited by the terms of its debt agreements, including the Partnership’s revolving credit facility.

The 2018 Notes contain various covenants that limit, among other things, our ability, and the ability of certain of our subsidiaries, to:

• incur additional indebtedness;

• pay distributions on, or repurchase or redeem equity interests;

• make certain investments;

• incur liens;

• enter into certain types of transactions with affiliates; and

• sell assets, consolidate or merge with or into other companies.

If the 2018 Notes achieve investment grade ratings by both Moody’s and S&P and no default or event of default has occurred and is continuing, the Partnership will no longer be subject to many of the foregoing covenants. At December 31, 2011, the Partnership was in compliance with these covenants.

Senior Notes due 2021. In May 2011, the Partnership and Finance Corp. issued $500 million in senior notes that mature on July 15, 2021 ("2021 Notes"). The 2021 Notes bear interest at 6.5% payable semi-annually in arrears on January 15 and July 15, commencing January 15, 2012. The Partnership capitalized $9.8 million in debt issuance costs that will be amortized to interest expense, net over the term of the 2021 Notes. The proceeds were used to repay borrowings outstanding under the Partnership’s revolving credit facility.

At any time prior to July 15, 2014, the Partnership may redeem up to 35% of the 2021 Notes at a price equal to 106.5% plus accrued interest. Beginning on July 15 of the years indicated below, the Partnership may redeem all or part of the 2021 Notes at the redemption prices, expressed as percentages of the principal amount, set forth below:

July 15 of year ending:	Percentage of Redemption
2016	103.250	%
2017	102.167	%
2018	101.083	%
2019 and thereafter at 100%	100.000	%

At any time prior to July 15, 2016, the Partnership may also redeem all or part of the notes at a price equal to 100% of the principal amount redeemed plus accrued interest and the applicable premium, which equals the greater of (1) 1% of the principal amount of the note; or (2) the excess of the present value at such redemption date of (i) the redemption price of the note at July 15, 2016 plus (ii) all required interest payments due on the note through July 15, 2016, computed using a discount rate equal to the treasury rate (as defined) as of such redemption date plus 50 basis points, over the principal amount of the note.

Upon a change of control, as defined in the indenture, followed by a rating decline within 90 days, each holder of the 2021 Notes will be entitled to require the Partnership to purchase all or a portion of its notes at a purchase price of 101% plus accrued interest and liquidated damages, if any. The Partnership’s ability to purchase the notes upon a change of control will be limited by the terms of our debt agreements, including the Partnership’s revolving credit facility.

The 2021 Notes contain various covenants that limit, among other things, the Partnership’s ability, and the ability of certain of its subsidiaries, to:

• incur additional indebtedness;

• pay distributions on, or repurchase or redeem equity interests;

• make certain investments;

• incur liens;

• enter into certain types of transactions with affiliates; and

• sales assets, consolidate or merge with or into other companies.

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If the 2021 Notes achieve investment grade ratings by both Moody’s and S&P and no default or event of default has occurred and is continuing, the Partnership will no longer be subject to many of the foregoing covenants. At December 31, 2011, the Partnership was in compliance with these covenants.

The 2016 Notes, 2018 Notes, and 2021 Notes are jointly and severally guaranteed by all of the Partnership’s current consolidated subsidiaries, other than Finance Corp. and a minor subsidiary, and by certain of its future subsidiaries. The senior notes and the guarantees are unsecured and rank equally with all of the Partnership’s and the guarantors’ existing and future unsecured obligations. The senior notes and the guarantees will be senior in right of payment to any of the Partnership’s and the guarantors’ future obligations that are, by their terms, expressly subordinated in right of payment to the notes and the guarantees. The senior notes and the guarantees will be effectively subordinated to the Partnership’s and the guarantors’ secured obligations, including the Partnership’s revolving credit facility, to the extent of the value of the assets securing such obligations.

Finance Corp. has no operations and will not have revenues other than as may be incidental as co-issuer of the senior notes. Since the Partnership has no independent operations, the guarantees are fully unconditional and joint and several of its subsidiaries, except for a minor subsidiary, the Partnership has not included condensed consolidated financial information of guarantors of the senior notes.

9. Intangible Assets

Activity related to intangible assets, net consisted of the following:

	Contracts			Customer Relations			Trade Names			Permits and Licenses			Total
Predecessor
Balance at January 1, 2010	$	126,332		$	35,362		$	30,508		$	5,092		$	197,294
Amortization	(3,322		)	(817		)	(975		)	(214		)	(5,328		)
Balance at May 25, 2010	$	123,010		$	34,545		$	29,533		$	4,878		$	191,966
	Customer Relations			Trade Names			Total
Successor
Balance at May 26, 2010	$	600,860		$	65,500		$	666,360
Additions	119,379			—			119,379
Amortization	(13,673		)	(1,911		)	(15,584		)
Balance at December 31, 2010	706,566			63,589			770,155
Amortization	(25,998		)	(3,274		)	(29,272		)
Balance at December 31, 2011	$	680,568		$	60,315		$	740,883

The average remaining amortization periods for customer relations and trade names are 26 and 18 years, respectively. The expected amortization of the intangible assets for each of the five succeeding years is $29.3 million.

10. Fair Value Measures

The fair value measurement provisions establish a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows:

• Level 1—unadjusted quoted prices for identical assets or liabilities in active accessible markets;

• Level 2—inputs that are observable in the marketplace other than those classified as Level 1; and

• Level 3—inputs that are unobservable in the marketplace and significant to the valuation.

Entities are encouraged to maximize the use of observable inputs and minimize the use of unobservable inputs. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation.

The Partnership's financial assets and liabilities measured at fair value on a recurring basis are derivatives related to interest rate swaps, commodity swaps, ethane put options and embedded derivatives in the Series A Preferred Units. Derivatives related to interest rate, commodity swaps and ethane put options are valued using discounted cash flow techniques. These techniques incorporate Level 1 and Level 2 inputs such as future interest rates and commodity prices. These market inputs are utilized in the

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discounted cash flow calculation considering the instrument's term, notional amount, discount rate and credit risk and are classified as Level 2 in the hierarchy. Embedded derivatives related to Series A Preferred Units are valued using a binomial lattice model. The market inputs utilized in the model include credit spread, probabilities of the occurrence of certain events, common unit price, dividend yield, and expected volatility, and are classified as Level 3 in the hierarchy.

The following table presents the Partnership’s derivative assets and liabilities measured at fair value on a recurring basis:

	Fair Value Measurement at December 31, 2011						Fair Value Measurement at December 31, 2010
	Fair Value Total		Level 2		Level 3		Fair Value Total		Level 2		Level 3
Assets
Commodity Derivatives:
Natural Gas	$	3,907	$	3,907	$	—	$	2,481	$	2,481	$	—
Natural Gas Liquids	94		94		—		192		192		—
Condensate	538		538		—		—		—		—
Ethane - Put Options	309		309		—		—		—		—
Total Assets	$	4,848	$	4,848	$	—	$	2,673	$	2,673	$	—
Liabilities
Interest Rate Derivatives	$	470	$	470	$	—	$	2,584	$	2,584	$	—
Commodity Derivatives:
Natural Gas	—		—		—		427		427		—
Natural Gas Liquids	8,561		8,561		—		10,684		10,684		—
Condensate	1,567		1,567		—		3,581		3,581		—
Embedded Derivatives in Series A Preferred Units	39,049		—		39,049		57,023		—		57,023
Total Liabilities	$	49,647	$	10,598	$	39,049	$	74,299	$	17,276	$	57,023

The following table presents the changes in Level 3 derivatives measured on a recurring basis for the years ended December 31, 2011 and 2010. There were no transfers between Level 2 and Level 3 derivatives for the years ended December 31, 2011 and 2010.

	Embedded Derivatives in Series A Preferred Units
Balance at January 1, 2010	$	44,594
Change in fair value	4,039
Balance at May 25, 2010	48,633
Change in fair value	8,390
Balance at December 31, 2010	57,023
Additions	—
Change in fair value	(17,974		)
Balance at December 31, 2011	$	39,049

The carrying amount of cash and cash equivalents, accounts receivable and accounts payable approximates fair value due to their short-term maturities. Long-term debt, other than the senior notes, is comprised of borrowings under which interest accrues under a floating interest rate structure. Accordingly, the carrying value approximates fair value.

The following table presents the estimated fair value of senior notes, based on third party market value quotations, as of December 31, 2011 and 2010:

Outstanding Senior Notes	December 31, 2011		December 31, 2010
2016 Notes	$	276,250	$	274,375
2018 Notes	643,500		607,500
2021 Notes	516,250		N/A

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_______________________

N/A:    The 2021 Notes were issued in May 2011.

11. Leases

The following table is a schedule of future minimum lease payments for office space and certain equipment leased by the Partnership, that had initial or remaining noncancelable lease terms in excess of one year as of December 31, 2011:

For the year ending December 31,	Operating
2012	$	2,684
2013	1,793
2014	1,163
2015	1,072
2016	956
Thereafter	2,629
Total minimum lease payments	$	10,297

On January 14, 2011, CDM exercised an early buyout option on a Master Lease Agreement between CDM and Caterpillar Financial Services Corporation to purchase the leased compression equipment for $9 million and terminated the agreement. The related annual rent expense of $1.2 million has been removed from the above table.

Total rent expense for operating leases, including those leases with terms of less than one year, was $3.2 million, $2.7 million, $2.4 million and $5.5 million, during the year ended December 31, 2011, the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010 and for the year ended December 31, 2009, respectively.

12. Commitments and Contingencies

Legal. The Partnership is involved in various claims, lawsuits and audits by taxing authorities incidental to its business. These claims and lawsuits in the aggregate are not expected to have a material adverse effect on the Partnership’s business, financial condition, results of operations or cash flows.

Keyes Litigation. In August 2008, Keyes Helium Company, LLC (“Keyes”) filed suit against RGS, the Partnership, the General Partner and various other subsidiaries. Keyes entered into an output contract with the Partnership’s predecessor-in-interest in 1996 under which it purchased all of the helium produced at the Lakin, Kansas processing plant. In September 2004, the Partnership decided to shut down its Lakin plant and contract with a third party for the processing of volumes processed at Lakin; as a result, the Partnership no longer delivered any helium to Keyes. In its suit, Keyes alleges it is entitled to damages for the costs of covering its purchases of helium. On May 7, 2010, the jury rendered a verdict in favor of the Partnership. No damages were awarded to the Plaintiffs. Plaintiffs have appealed the verdict. The hearing on appeal is expected to take place in the first half of 2012.

13. Series A Preferred Units

On September 2, 2009, the Partnership issued 4,371,586 Series A Preferred Units at a price of $18.30 per unit, less a 4% discount of $3.2 million and issuance costs of $0.2 million for net proceeds of $76.6 million, exclusive of the General Partner’s contribution of $1.6 million. The Series A Preferred Units are convertible to common units under terms described below, and if outstanding, are mandatorily redeemable on September 2, 2029 for $80 million plus all accrued but unpaid distributions thereon (the “Series A Liquidation Value”). The Series A Preferred Units receive fixed quarterly cash distributions of $0.445 per unit which began with the quarter ending March 31, 2010.

Distributions on the Series A Preferred Units were accrued for the first two quarters (and not paid in cash) and will result in an increase in the number of common units issuable upon conversion. If on any distribution payment date beginning March 31, 2010, the Partnership (1) fails to pay distributions on the Series A Preferred Units, (2) reduces the distributions on the common units to zero and (3) is prohibited by its material financing agreements from paying cash distributions, such distributions shall automatically accrue and accumulate until paid in cash. If the Partnership has failed to pay cash distributions in full for two quarters (whether or not consecutive) from and including the quarter ended on March 31, 2010, then if the Partnership fails to pay cash distributions on the Series A Preferred Units, all future distributions on the Series A Preferred Units that are accrued rather than being paid in cash by the Partnership will consist of the following: (1) $0.35375 per Series A Preferred Unit per quarter, (2) $0.09125 per Series A Preferred Unit per quarter (the “Common Unit Distribution Amount”), payable solely in common units, and (3) $0.09125 per Series A Preferred Unit per quarter (the “PIK Distribution Additional Amount”), payable solely in common units. The total number

F-31

of common units payable in connection with the Common Unit Distribution Amount or the PIK Distribution Additional Amount cannot exceed $1.6 million in any period of 20 consecutive fiscal quarters.

Upon the Partnership’s breach of certain covenants (a “Covenant Default”), the holders of the Series A Preferred Units will be entitled to an increase of $0.1825 per quarterly distribution, payable solely in common units (the “Covenant Default Additional Amount”). All accumulated and unpaid distributions will accrue interest (i) at a rate of 2.432% per quarter, or (ii) if the Partnership has failed to pay all PIK Distribution Additional Amounts or Covenant Default Additional Amounts or any Covenant Default has occurred and is continuing, at a rate of 3.429% per quarter while such failure to pay or such Covenant Default continues.

The Series A Preferred Units are convertible, at the holder’s option, into common units, provided that the holder must request conversion of at least 375,000 Series A Preferred Units. The conversion price will initially be $18.30, subject to adjustment for customary events (such as unit splits) and until December 31, 2011, based on a weighted average formula in the event the Partnership issues any common units (or securities convertible or exercisable into common units) at a per common unit price below $16.47 per common unit (subject to typical exceptions). The number of common units issuable is equal to the issue price of the Series A Preferred Units (i.e. $18.30) being converted plus all accrued but unpaid distributions and accrued but unpaid interest thereon (the “Redeemable Face Amount”), divided by the applicable conversion price.

Commencing on September 2, 2014, if at any time the volume-weighted average trading price of the common units over the trailing 20-trading day period (the “VWAP Price”) is less than the then-applicable conversion price, the conversion ratio will be increased to: the quotient of (1) the Redeemable Face Amount on the date that the holder’s conversion notice is delivered, divided by (2) the product of (x) the VWAP Price set forth in the applicable conversion notice and (y) 91%, but will not be less than $10.

Also commencing on September 2, 2014, the Partnership will have the right at any time to convert all or part of the Series A Preferred Units into common units, if (1) the daily volume-weighted average trading price of the common units is greater than 150% of the then-applicable conversion price for 20 out of the trailing 30 trading days, and (2) certain minimum public float and trading volume requirements are satisfied.

In the event of a change of control, the Partnership will be required to make an offer to the holders of the Series A Preferred Units to purchase their Series A Preferred Units for an amount equal to 101% of their Series A Liquidation Value. In addition, in the event of certain business combinations or other transactions involving the Partnership in which the holders of common units receive cash consideration exclusively in exchange for their common units (a “Cash Event”), the Partnership must use commercially reasonable efforts to ensure that the holders of the Series A Preferred Units will be entitled to receive a security issued by the surviving entity in the Cash Event with comparable powers, preferences and rights to the Series A Preferred Units. If the Partnership is unable to ensure that the holders of the Series A Preferred Units will be entitled to receive such a security, then the Partnership will be required to make an offer to the holders of the Series A Preferred Units to purchase their Series A Preferred Units for an amount equal to 120% of their Series A Liquidation Value. If the Partnership enters into any recapitalization, reorganization, consolidation, merger, spin-off that is not a Cash Event, the Partnership will make appropriate provisions to ensure that the holders of the Series A Preferred Units receive a security with comparable powers, preferences and rights to the Series A Preferred Units upon consummation of such transaction. Subsequent to the ETE Acquisition, no unitholder exercised this option.

Holders may elect to convert Series A Preferred Units to common units beginning on March 2, 2010. As of December 31, 2011, the Series A Preferred Units were convertible to 4,632,389 common units.

Net proceeds from the issuance of Series A Preferred Units on September 2, 2009 was $76.6 million, of which $28.9 million was allocated to the initial fair value of the embedded derivatives and recorded into long-term derivative liabilities on the balance sheet. The remaining $47.7 million represented the initial value of the Series A Preferred Units and will be accreted to $80 million by deducting the accretion amounts from partners’ capital over 20 years. As disclosed in Note 1, the Series A Preferred Units were adjusted to fair value of $70.8 million on May 26, 2010.

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The following table provides a reconciliation of the beginning and ending balances of the Series A Preferred Units for all income statement periods presented:

	Units	Amount
Balance at January 1, 2010	4,371,586	$	51,711
Accretion to redemption value	—	55
Balance at May 25, 2010	4,371,586	51,766
Fair value adjustment	—	19,027
Balance at May 26, 2010	4,371,586	70,793
Accretion to redemption value	—	150
Balance at December 31, 2010	4,371,586	70,943
Accretion to redemption value	—	201
Balance at December 31, 2011	4,371,586	$	71,144	*

 _______________________

* The amount will be accreted to $80 million plus any accrued and unpaid distributions by deducting amounts from partners’ capital over the remaining periods until the mandatory redemption date of September 2, 2029.    

14. Related Party Transactions

As of December 31, 2011 and 2010, details of the Partnership’s related party receivables and related party payables were as follows:

	December 31, 2011		December 31, 2010
Related party receivables
EPD	$	41,781	$	25,539
HPC	1,360		5,823
ETE	554		970
Other	1,509		10
Total related party receivables	$	45,204	$	32,342
Related party payables
EPD	$	1,469	$	1,323
HPC	475		760
ETE	10,605		1,245
Other	76		10
Total related party payables	$	12,625	$	3,338

Transactions with ETE and its subsidiaries.Under a May 26, 2010 service agreement with Services Co., Services Co. performs certain services for the Partnership. The Partnership pays Services Co.’s direct expenses for these services, plus an annual fee of $10 million, and receives the benefit of any cost savings recognized for these services. The services agreement has a five year term from May 26, 2010 to May 26, 2015, subject to earlier termination rights in the event of a change in control, the failure to achieve certain cost savings for the Partnership or upon an event of default. Also, the Partnership, together with the General Partner and RGS entered into an operation and service agreement (the “Operations Agreement”) with ETC. Under the Operations Agreement, ETC will perform certain operations, maintenance and related services reasonably required to operate and maintain certain facilities owned by the Partnership. Pursuant to the Operations Agreement, the Partnership will reimburse ETC for actual costs and expenses incurred in connection with the provision of these services based on an annual budget agreed-upon by both parties. The Operations Agreement has an initial term of one year and automatically renews on a year-to-year basis upon expiration of the initial term. The Partnership incurred total service fees of $16.6 million and $5.8 million for the year ended December 31, 2011 and during the period from May 26, 2010 to December 31, 2010, respectively.

In conjunction with distributions made by the Partnership to the limited and general partner interests, ETE received cash distributions of $57.4 million and $27.7 million for the year ended December 31, 2011 and for the period from May 26, 2010 to December 31, 2010. During the period from May 26, 2010 to December 31, 2010, the Partnership received cash of $7.2 million from ETE, which represents the portion of the amount of the Partnership’s common unit distribution to be paid to ETE for the period of time that those units were not outstanding (April 1, 2010 to May 25, 2010).

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ETE made capital contributions aggregating to $20.8 million, to maintain the General Partner’s 2% interest in the Partnership for the period from May 26, 2010 to December 31, 2010. The General Partner has the right, but not the obligation, to contribute a proportionate amount of capital to the Partnership to maintain its general partner interest.

Prior to December 31, 2010, the employees operating the assets of the Partnership and its subsidiaries and all those providing staff or support services were employees of the General Partner. Pursuant to the Partnership agreement, the General Partner receives a monthly reimbursement for all direct and indirect expenses incurred on behalf of the Partnership. Reimbursements of $58 million, $44.2 million, $31.1 million and $33.8 million were recorded in the Partnership’s financial statements for the year ended December 31, 2011, for the period from May 26, 2010 to December 31, 2010, for the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009, respectively, as operation and maintenance expenses or general and administrative expenses, as appropriate. Effective January 1, 2011, certain employees of the General Partner became employees of ETP, and the Partnership reimburses ETP for all direct and indirect expenses incurred on behalf of the Partnership related to those employees. For the year ended December 31, 2011, a reimbursement of $21.6 million was recorded to ETP in the Partnership’s financial statements as operating expenses or general and administrative expenses.

In September 2011, the Partnership purchased a 0.1% interest in MEP from ETP for $1.2 million in cash.

The Partnership's Gathering and Processing segment, in the ordinary course of business, sells natural gas and NGLs to subsidiaries of ETE and records the revenue in gas sales and NGL sales. The Partnership’s Contract Compression segment provides contract compression services to ETP and records revenue in gathering, transportation and other fees on the statement of operations. The Partnership’s Contract Compression segment sold compression equipment to a subsidiary of ETP for $7.9 million for the year ended December 31, 2011. As these transactions are between entities under common control, partners’ capital was increased, which represented a deemed contribution of the excess sales price over the carrying amounts. The Partnership’s Contract Compression segment purchased compression equipment from a subsidiary of ETP for $33.1 million during the year ended December 31, 2011.

Transactions with HPC. Under a Master Services Agreement with HPC, the Partnership operates and provides all employees and services for the operation and management of HPC. For the year ended December 31, 2011, during the periods from May 26, 2010 to December 31, 2010, from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009, the related party general and administrative expenses reimbursed to the Partnership were $16.8 million, $9.8 million, $6.9 million and $4.7 million respectively, which is recorded in gathering, transportation and other fees on the statements of operations.

Upon the formation of HPC in March 2009, the Partnership was reimbursed by HPC for construction-in-progress incurred prior to formation of HPC at the cost of $80.6 million.

The Partnership’s Contract Compression segment provides contract compression services to HPC and records revenue in gathering, transportation and other fees on the statement of operations. The Partnership also receives transportation services from HPC and records the cost as cost of sales.

Transactions with EPD and its subsidiaries. EPD owns a portion of ETE’s outstanding common units and therefore is considered a related party along with any of its subsidiaries. The Partnership, in the ordinary course of business, sells natural gas and NGLs to subsidiaries of EPD and records the revenue in gas sales and NGL sales. The Partnership also incurs NGL processing fees and transportation fees with subsidiaries of EPD and records these fees as cost of sales. On January 18, 2012, EPD sold a significant portion of its ownership in ETE's common units. Subsequent to that transaction, EPD owns less than 5% of ETE's outstanding common units.

The Partnership’s Contract Compression segment provided contract compression services to CDM MAX LLC (“CDM MAX”), which was partially owned by an officer of CDM. In 2009, CDM MAX was purchased by a third party and, as a result, CDM MAX is no longer a related party. The Partnership’s related party revenue associated with CDM MAX was $1.1 million during the year ended December 31, 2009.

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15. Concentration Risk

The following table provides information about the extent of reliance on major customers and gas suppliers. Total revenues and cost of sales from transactions with an external customer or supplier amounting to 10% or more of revenue or cost of gas and liquids are disclosed below, together with the identity of the reporting segment.

		Successor				Predecessor
	Reportable Segment	Year Ended December 31, 2011		Period from  May 26, 2010 to December 31, 2010		Period from January 1, 2010 to May 25, 2010		Year Ended December 31, 2009
Customer
Customer A	Gathering and  Processing	$	366,259	$	131,724	$	88,003	$	123,524
Customer B	Gathering and Processing	—		*		52,372		*
Supplier
Supplier A	Joint Ventures	$	—	$	—	$	—	$	14,053
Supplier A	Gathering and Processing	*		*		*		143,435
Supplier B	Gathering and Processing	132,679		—		—		—

_______________________

* Amounts are less than 10% of the total revenue or cost of sales.

The Partnership is a party to various commercial netting agreements that allow it and contractual counterparties to net receivable and payable obligations. These agreements are customary and the terms follow standard industry practice. In the opinion of management, these agreements reduce the overall counterparty risk exposure.

16. Segment Information

During 2011, the Partnership changed the name of the Transportation segment to Joint Ventures segment, which represents the Partnership’s equity method investments in its four unconsolidated affiliates: HPC, MEP, Lone Star and Ranch JV.

Gathering and Processing. The Partnership provides “wellhead-to-market” services to producers of natural gas, which include transporting raw natural gas from the wellhead through gathering systems, processing raw natural gas to separate NGLs from the raw natural gas and selling or delivering pipeline-quality natural gas and NGLs to various markets and pipeline systems.

Joint Ventures. The Partnership owns investments in four joint ventures:

• a 49.99% general partner interest in HPC, which owns RIGS, a 450-mile intrastate pipeline that delivers natural gas from northwest Louisiana to downstream pipelines and markets;

• a 50% membership interest in MEP, which owns an interstate natural gas pipeline with approximately 500  miles stretching from southeast Oklahoma through northeast Texas, northern Louisiana and central Mississippi to an interconnect with the Transcontinental Gas Pipe Line system in Butler, Alabama;

• a 30% membership interest in Lone Star, an entity owning a diverse set of midstream energy assets including pipelines, storage, fractionation and processing facilities located in the states of Texas, Mississippi and Louisiana; and

• a 33.33% membership interest in Ranch JV, which, upon completion of construction in 2012, will process natural gas delivered from the NGLs-rich Bone Spring and Avalon shale formations in west Texas.

Contract Compression. The Partnership owns and operates a fleet of compressors used to provide turn-key natural gas compression services for customer specific systems.

Contract Treating. The Partnership owns and operates a fleet of equipment used to provide treating services, such as carbon dioxide and hydrogen sulfide removal, natural gas cooling, dehydration and BTU management, to natural gas producers and midstream pipeline companies.

Corporate and Others. The Corporate and Others segment comprises a small regulated pipeline and the Partnership’s corporate offices.

F-35

The Partnership accounts for intersegment revenues as if the revenues were to third parties, exclusive of certain cost of capital charges.

Management evaluates the performance of each segment and makes capital allocation decisions through the separate consideration of segment margin and operation and maintenance expenses. Segment margin, for the Gathering and Processing and the Corporate and Others segments is defined as total revenues, including service fees, less cost of sales. In the Contract Compression segment and Contract Treating segment, segment margin is defined as revenues less direct costs.

Management believes segment margin is an important measure because it directly relates to volume, commodity price changes, revenue generating horsepower and revenue generating gallons per minute. Operation and maintenance expenses are a separate measure used by management to evaluate performance of field operations. Direct labor, insurance, property taxes, repair and maintenance, utilities and contract services comprise the most significant portion of operation and maintenance expenses. These expenses fluctuate depending on the activities performed during a specific period. The Partnership does not deduct operation and maintenance expenses from total revenues in calculating segment margin because management separately evaluates commodity volume and price changes in segment margin. The Partnership does not record segment margin for the Joint Ventures segment because it records its ownership percentages of the net income in HPC, MEP, Lone Star and Ranch JV as income from unconsolidated affiliates in accordance with the equity method of accounting.

Results for each period, together with amounts related to balance sheets for each segment are shown below:

	Successor						Predecessor
	Year Ended December 31, 2011			Period from Acquisition (May 26, 2010) to December 31, 2010				Period from January 1, 2010 to May 25, 2010			Year Ended December 31, 2009
External Revenue
Gathering and Processing	$	1,226,260		$	606,944			$	438,804		$	879,439
Joint Ventures	—			—				—			9,078
Contract Compression	150,496			86,099				58,971			148,846
Contract Treating	39,604			13,662				—			—
Corporate and Others	17,538			9,908				7,275			5,914
Eliminations	—			—				—			—
Total	$	1,433,898		$	716,613			$	505,050		$	1,043,277
Intersegment Revenue
Gathering and Processing	$	—		$	—			$	—		$	(8,755	)
Joint Ventures	—			—				—			4,933
Contract Compression	16,346			14,079				9,126			4,604
Contract Treating	397			—				—			—
Corporate and Others	296			185				91			296
Eliminations	(17,039		)	(14,264		)		(9,217		)	(1,078		)
Total	$	—		$	—			$	—		$	—
Cost of Sales
Gathering and Processing	$	992,797		$	496,933			$	352,807		$	656,764
Joint Ventures	—			—				—			2,297
Contract Compression	11,269			8,325				5,741			12,422
Contract Treating	10,545			2,208				—			—
Corporate and Others	(1,450		)	(2,954		)		(679		)	(65		)
Eliminations	(335		)	(185		)		(91		)	3,526
Total	$	1,012,826		$	504,327			$	357,778		$	674,944
Segment Margin
Gathering and Processing	$	233,463		$	110,011			$	85,997		$	213,920
Joint Ventures	—			—				—			11,714
Contract Compression	155,573			91,853				62,356			141,028
Contract Treating	29,456			11,454				—			—
Corporate and Others	19,284			13,047				8,045			6,275
Eliminations	(16,704		)	(14,079		)		(9,126		)	(4,604		)
Total	$	421,072		$	212,286			$	147,272		$	368,333

F-36

Operation and Maintenance
Gathering and Processing	$	97,566		$	53,421		$	33,430		$	74,962
Joint Ventures	—			—			—			2,112
Contract Compression	63,442			37,067			23,476			45,744
Contract Treating	2,974			1,227			—			—
Corporate and Others	365			172			59			238
Eliminations	(16,704		)	(14,079		)	(9,123		)	(5,976		)
Total	$	147,643		$	77,808		$	47,842		$	117,080
Depreciation and Amortization
Gathering and Processing	$	87,377		$	45,547		$	25,422		$	59,654
Joint Ventures	—			—			—			2,448
Contract Compression	65,201			25,771			15,560			36,548
Contract Treating	12,325			3,684			—			—
Corporate and Others	3,781			965			802			1,448
Eliminations	—			—			—			—
Total	$	168,684		$	75,967		$	41,784		$	100,098
Income from Unconsolidated Affiliates
Gathering and Processing	$	—		$	—		$	—		$	—
Joint Ventures	119,540			53,493			15,872			7,886
Contract Compression	—			—			—			—
Contract Treating	—			—			—			—
Corporate and Others	—			—			—			—
Eliminations	—			—			—			—
Total	$	119,540		$	53,493		$	15,872		$	7,886
Expenditures for Long-Lived Assets
Gathering and Processing	$	280,199		$	93,398		$	43,666		$	84,097
Joint Ventures	—			—			—			22,367
Contract Compression	112,338			44,316			18,418			83,707
Contract Treating	7,445			18,106			—			—
Corporate and Others	6,357			3,403			1,703			2,912
Eliminations	—			—			—			—
Total	$	406,339		$	159,223		$	63,787		$	193,083
							December 31, 2011			December 31, 2010
Assets
Gathering and Processing							$	1,959,697		$	1,724,682
Joint Ventures							1,924,705			1,351,256
Contract Compression							1,405,600			1,411,325
Contract Treating							215,172			220,584
Corporate and Others							62,682			62,357
Eliminations							—			—
Total							$	5,567,856		$	4,770,204
Investment in Unconsolidated Affiliates
Gathering and Processing							$	—		$	—
Joint Ventures							1,924,705			1,351,256
Contract Compression							—			—
Contract Treating							—			—
Corporate and Others							—			—
Eliminations							—			—
Total							$	1,924,705		$	1,351,256
Goodwill
Gathering and Processing							$	313,361		$	313,361
Joint Ventures							—			—

F-37

Contract Compression	476,428		476,428
Contract Treating	—		—
Corporate and Others	—		—
Eliminations	—		—
Total	$	789,789	$	789,789

The table below provides a reconciliation of total segment margin to net income (loss) from continuing operations before income taxes:

	Successor						Predecessor
	Year Ended December 31, 2011			Period from  Acquisition (May 26, 2010) to December 31, 2010			Period from  January 1, 2010 to (May 25, 2010)			Year Ended December 31, 2009
Net income (loss) from continuing operations before income taxes	$	74,084		$	(4,176	)	$	(4,215	)	$	141,663
Add (deduct):
Operation and maintenance	147,643			77,808			47,842			117,080
General and administrative	67,408			43,739			37,212			57,863
(Gain) loss on assets sales, net	(2,372		)	213			303			(133,282		)
Depreciation and amortization	168,684			75,967			41,784			100,098
Income from unconsolidated affiliates	(119,540		)	(53,493		)	(15,872		)	(7,886		)
Interest expense, net	102,474			48,251			34,541			77,665
Loss on debt refinancing, net	—			15,748			1,780			—
Other income and deductions, net	(17,309		)	8,229			3,897			15,132
Total segment margin	$	421,072		$	212,286		$	147,272		$	368,333

17. Equity-Based Compensation

In December 2011, the Partnership's unitholders approved the Regency Energy Partners LP 2011 Long-Term Incentive Plan (the “2011 Incentive Plan”), which provides for awards of options to purchase the Partnership's common units; awards of the Partnership's restricted units, phantom units and common units; awards of distribution equivalent rights; awards of common unit appreciation rights; and other unit-based awards to employees, directors and consultants of the Partnership and its affiliates and subsidiaries. The 2011 Incentive Plan will be administered by the Compensation Committee of the board of directors, which may, in its sole discretion, delegate its powers and duties under the 2011 Incentive Plan to the Chief Executive Officer. Up to 3,000,000 of the Partnership’s common units may be granted as awards under the 2011 Incentive Plan, with such amount subject to adjustment as provided for under the terms of the 2011 Incentive Plan.

The 2011 Incentive Plan may be amended or terminated at any time by the board of directors or the Compensation Committee without the consent of any participant or unitholder, including an amendment to increase the number of common units available for awards under the plan; however, any material amendment, such as a change in the types of awards available under the plan, would require the approval of the unitholders of the Partnership. The Compensation Committee is also authorized to make adjustments in the terms and conditions of, and the criteria included in awards under the 2011 Incentive Plan in specified circumstances. The 2011 Incentive Plan is effective until December 19, 2021 or, if earlier, the time at which all available units under the 2011 Incentive Plan have been issued to participants or the time of termination of the plan by the board of directors.

In 2010, upon the change of control from GE EFS to ETE, all then non-vested restricted and phantom units, exclusive of the May 7, 2010 phantom unit grants described below, vested during the predecessor period and the Partnership recorded a one-time general and administrative charge of $9.9 million as a result of such unit vesting. LTIP compensation expense of $3.6 million, $1.8 million, $12.1 million and $6 million is recorded in general and administrative expense in the statement of operations for the year ended December 31, 2011, for the periods from May 26, 2010 to December 31, 2010 and from January 1, 2010 to May 25, 2010 and for the year ended December 31, 2009, respectively.

F-38

Common Unit Options. The fair value of each option award is estimated on the date of grant using the Black-Scholes Option Pricing Model. Upon the exercise of the common unit options, the Partnership intends to settle these obligations with new issues of common units on a net basis. The common unit options activity for the years ended December 31, 2011, 2010, and 2009 is as follows:

2011
Common Unit Options	Units		Weighted Average Exercise Price		Weighted Average Contractual Term (Years)	Aggregate Intrinsic Value* (in thousands)
Outstanding at the beginning of period	201,950		$	21.93
Granted	—		—
Exercised	(38,300	)	20.84			$	224
Forfeited or expired	(6,800	)	26.72
Outstanding at end of period	156,850		21.99		4.3	498
Exercisable at the end of the period	156,850					498
2010
Common Unit Options	Units		Weighted Average Exercise Price		Weighted Average Contractual Term (Years)	Aggregate Intrinsic Value* (in thousands)
Outstanding at the beginning of period	306,651		$	21.50
Granted	—		—
Exercised	(100,200	)	20.60			$	444
Forfeited or expired	(4,501	)	23.73
Outstanding at end of period	201,950		21.93		5.3	1,087
Exercisable at the end of the period	201,950					1,087
2009
Common Unit Options	Units		Weighted Average Exercise Price		Weighted Average Contractual Term (Years)	Aggregate Intrinsic Value* (in thousands)
Outstanding at the beginning of period	431,918		$	21.31
Granted	—		—
Exercised	—		—			$	—
Forfeited or expired	(125,267	)	20.87
Outstanding at end of period	306,651		21.50		6.3	184
Exercisable at the end of the period	306,651					184

 _______________________

* Intrinsic value equals the closing market price of a unit less the option strike price, multiplied by the number of unit options outstanding as of the end of the period presented. Unit options with an exercise price greater than the end of the period closing market price are excluded.

F-39

Restricted (Non-Vested) Units. The fair value of each restricted (non-vested) unit is determined using the grant date closing price of the Partnership’s common units. All outstanding restricted units vested on May 25, 2010, and the Partnership did not issue any additional restricted units during the remainder of 2010 or 2011. Restricted (non-vested) common unit activity for the years ended December 31, 2010, and 2009 is as follows:

2010
Restricted (Non-Vested) Common Units	Units		Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period	464,009		$	28.36
Granted	—		—
Vested	(444,759	)	28.19
Forfeited or expired	(19,250	)	32.35
Outstanding at the end of period	—		—
2009
Restricted (Non-Vested) Common Units	Units		Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period	704,050		$	29.26
Granted	24,500		11.13
Vested	(176,291	)	29.78
Forfeited or expired	(88,250	)	27.96
Outstanding at the end of period	464,009		28.36

Phantom Units. All phantom units granted prior to November 2010 were in substance two grants composed of (1) service condition grants with graded vesting over three years; and (2) market condition grants with cliff vesting based upon the Partnership’s relative ranking in total unitholder return among 20 peer companies. Upon the change in control from GE EFS to ETE, all then-outstanding phantom units, exclusive of the May 7, 2010 grant described below, vested. The service condition grants vested at a rate of 100% and the market condition grants vested at a rate of 150% pursuant to the terms of the awards. Subsequent to November 2010, all phantom units granted are service condition grants that vest at a rate of 100%.

On May 7, 2010, the Partnership awarded 247,500 phantom units to senior management and certain key employees. These phantom units include a provision that will accelerate vesting (1) upon a change in control and (2) within 12 months of a change in control, if the grantee’s employment is terminated by the Partnership without “Cause” (as defined in the Form of Grant of Phantom Units) or the grantee resigns for “Good Reason” (as defined in the Form of Grant of Phantom Units). Distributions related to these unvested phantom units will be accrued and paid upon vesting.

On November 21, 2010, Mr. Byron R. Kelley, the Partnership’s former President and Chief Executive Officer, retired. The Partnership entered into a consulting agreement with Mr. Kelley, pursuant to which Mr. Kelley will provide consulting services to the Partnership for a term of three years and received a grant of 33,000 service condition (time-based) phantom units. Distributions on the phantom units (including non-vested units) will be paid concurrent with the Partnership’s distribution for common units.

In November and December 2010, the Partnership awarded 574,700 phantom units to senior management and certain key employees. These awards are service condition (time-based) grants that generally vest ratably over the next five years. Distributions on the phantom units (including non-vested units) will be paid concurrent with the Partnership’s distribution for common units.

During 2011, the Partnership awarded 596,320 phantom units to senior management and certain key employees. These awards are service condition (time-based) grants that generally vest ratably over the next five years. Distributions on the phantom units (including non-vested units) will be paid concurrent with the Partnership’s distribution for common units.

F-40

The following table presents phantom unit activity for the years ended December 31, 2011, 2010 and 2009:

2011
Phantom Units	Units		Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period	742,517		$	23.61
Service condition grants	596,320		24.55
Market condition grants	—		—
Vested service condition	(142,520	)	24.73
Vested market condition	(8,550	)	19.52
Forfeited service condition	(88,474	)	24.99
Forfeited market condition	(12,900	)	19.52
Total outstanding at end of period	1,086,393		24.51
2010
Phantom Units	Units		Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period	301,700		$	8.63
Service condition grants	716,200		24.72
Market condition grants	148,500		11.89
Vested service condition	(166,173	)	11.63
Vested market condition	(200,610	)	5.85
Forfeited service condition	(18,787	)	20.18
Forfeited market condition	(38,313	)	11.43
Total outstanding at end of period	742,517		23.61
2009
Phantom Units	Units		Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period	—		$	—
Service condition grants	133,480		13.43
Market condition grants	174,720		4.64
Vested service condition	—		—
Vested market condition	—		—
Forfeited service condition	(2,600	)	12.46
Forfeited market condition	(3,900	)	4.49
Total outstanding at end of period	301,700		8.63

The Partnership expects to recognize $20.7 million of compensation expense related to non-vested phantom units over a period of 4.2 years.

F-41

18. Quarterly Financial Data (Unaudited)

	Successor
2011	Quarter Ended December 31		Quarter Ended September 30		Quarter Ended June 30		Quarter Ended March 31
Operating revenues	$	369,881	$	390,267	$	356,498	$	317,252
Operating income	13,215		13,616		4,820		8,058
Net income attributable to Regency Energy Partners LP	13,524		30,300		14,544		14,074
Earnings per common units:
Basic net income per common unit	0.06		0.18		0.08		0.08
Diluted net income per common unit	0.06		0.09		0.07		0.07

	Successor									Predecessor
2010	Quarter Ended December 31			Quarter Ended September 30			Period from May 26 to June 30			Period from  April 1 to May 25			Quarter Ended March 31
Operating revenues	$	322,745		$	296,888		$	96,980		$	200,265		$	304,785
Operating income (loss)	16,742			(927		)	(1,256		)	1,726			18,405
(Loss) income from continuing operations	(7,269		)	7,522			(4,981		)	(5,081		)	462
(Loss) income from discontinued operations	(1,654		)	324			86			585			(912		)
Net (loss) income attributable to Regency Energy Partners LP	(8,992		)	7,788			(4,924		)	(4,740		)	(612		)
Earnings per common units:
Basic and diluted (loss) income from continuing operations per common unit	(0.07		)	0.03			(0.05		)	(0.07		)	(0.02		)
Basic and diluted (loss) income from discontinued operations per common unit	(0.01		)	0.00			0.00			0.01			(0.01		)
Basic and diluted net (loss) income per common unit	(0.09		)	0.04			(0.05		)	(0.07		)	(0.03		)

F-42

EX-12.1

Exhibit 12.1

Regency Energy Partners LP

Computation of Ratio of Earnings to Fixed Charges

(in thousands, except for ratio amounts)

(Unaudited)

	Successor					Predecessor
	Year Ended December 31, 2011		Period from Acquisition (May 26, 2010) to December 31, 2010			Period from January 1, 2010 to May 25, 2010			Year Ended December 31, 2009		Year Ended December 31, 2008		Year Ended December 31, 2007
Fixed Charges:
Interest expense, net	$	102,474	$	48,251		$	34,541		$	77,665	$	62,940	$	51,851
Capitalized interest	1,199		1,425			881			1,722		2,409		1,754
Interest charges included in rental expense(c)	1,843		724			487			1,201		375		280
Distribution to the Series A Preferred Units	7,781		3,891			1,945			3,891		—		—
Accretion of the Series A Preferred Units	201		150			55			104		—		—
Total fixed charges (a)	$	113,498	$	54,441		$	37,909		$	84,583	$	65,724	$	53,885
Earnings:
Income (loss) from continuing operations before income taxes	$	74,084	$	(4,176	)	$	(4,215	)	$	141,663	$	87,131	$	(18,320	)
Less:
Income from unconsolidated affiliates	119,540		53,493			15,872			7,886		—		—
Capitalized interest	1,199		1,425			881			1,722		2,409		1,754
Noncontrolling interests	1,177		156			406			91		312		305
Add:
Distributed income from unconsolidated affiliates	119,236		56,903			12,446			7,886		—		—
Fixed charges	113,498		54,441			37,909			84,583		65,724		53,885
Amortization of capitalized interest	595		383			113			411		279		186
Total earnings available for fixed charges (b)	$	185,497	$	52,477		$	29,094		$	224,844	$	150,413	$	33,692
Ratio of earnings to fixed charges (b)/(a) (1)	1.63		—			—			2.66		2.29		—
(1) Earnings were insufficient to cover fixed charges by:	$	—	$	1,964		$	8,815		$	—	$	—	$	20,193

_______________________

(c)    Amount approximates reasonable interest expense included within operating lease payments.

EX-21.1

Exhibit 21.1

LIST OF SUBSIDIARIES OF REGENCY ENERGY PARTNERS LP

All subsidiaries are wholly or partially owned, directly or indirectly by Regency Energy Partners LP as of February 22, 2012.

Name of Subsidiary	Jurisdiction of Organization
Regency OLP GP LLC	Delaware
Regency Energy Finance Corp.	Delaware
Regency Gas Services LP	Delaware
Regency Field Services LLC	Delaware
Palafox Joint Venture	Texas
Edwards Lime Gathering, LLC	Texas
Regency Liquids Pipeline LLC	Delaware
Gulf States Transmission LLC	Louisiana
Regency Gas Utility LLC	Delaware
Pueblo Holdings, Inc.	Delaware
Pueblo Midstream Gas Corporation	Texas
CDM Resource Management LLC	Delaware
FrontStreet Hugoton LLC	Delaware
WGP-KHC, LLC	Delaware
Regency Haynesville Intrastate Gas LLC	Delaware
RIGS Haynesville Partnership Co.	Delaware
RIGS GP LLC	Delaware
Regency Intrastate Gas LP	Delaware
Regency Midcontinent Express LLC	Delaware
Midcontinent Express Pipeline LLC	Delaware
Zephyr Gas Services LLC	Delaware
Regency Texas Pipeline LLC	Delaware
Regency Midstream LLC	Delaware
Lone Star NGL LLC	Delaware
Ranch Westex JV LLC	Delaware
ELG Oil LLC	Delaware
ELG Utility LLC	Delaware

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have issued our reports dated February 22, 2012, with respect to the consolidated financial statements and internal control over financial reporting included in the Annual Report of Regency Energy Partners LP on Form 10-K for the year ended December 31, 2011.  We hereby consent to the incorporation by reference of said reports in the Registration Statements of Regency Energy Partners LP on Forms S-3 (File No. 333-163424, File No. 333-163834, File No. 333-169307, File No. 333-169901, and File No. 333-174578) and on Forms S-8 (File No. 333-140088, File No. 333-167082, and File No. 333-178573).

/s/ GRANT THORNTON LLP

Dallas, Texas

February 22, 2012

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have issued our report dated February 22, 2012, with respect to the consolidated financial statements of RIGS Haynesville Partnership Co. and subsidiaries as of December 31, 2011 and for the year then ended, which report is included in the Annual Report of Regency Energy Partners LP on Form 10-K for the year ended December 31, 2011.  We hereby consent to the incorporation by reference of said report in the Registration Statements of Regency Energy Partners LP on Forms S-3 (File No. 333-163424, File No. 333-163834, File No. 333-169307, File No. 333-169901, and File No. 333-174578) and on Forms S-8 (File No. 333-140088, File No. 333-167082, and File No. 333-178573).

/s/ GRANT THORNTON LLP

Dallas, Texas

February 22, 2012

EX-23.3

Exhibit 23.3

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We have issued our report dated February 22, 2012, with respect to the consolidated financial statements of Lone Star NGL LLC and subsidiaries as of December 31, 2011 and for the period from inception (March 21, 2011) to December 31, 2011, which report is included in the Annual Report of Regency Energy Partners LP on Form 10-K for the year ended December 31, 2011.  We hereby consent to the incorporation by reference of said report in the Registration Statements of Regency Energy Partners LP on Forms S-3 (File No. 333-163424, File No. 333-163834, File No. 333-169307, File No. 333-169901, and File No. 333-174578) and on Forms S-8 (File No. 333-140088, File No. 333-167082, and File No. 333-178573).

/s/ GRANT THORNTON LLP

Dallas, Texas

February 22, 2012

EX-23.4

Exhibit 23.4

Consent of Independent Registered Public Accounting Firm

The Partners

Regency Energy Partners LP:

We consent to the incorporation by reference in the registration statements No. 333-140088, No. 333-167082, and No. 333-178573 on Form S-8 and registration statements No. 333-163424, No. 333-163834, No. 333-169307, No. 333-169901, and No. 333-174578 Form S-3 of Regency Energy Partners LP of our reports dated February 18, 2011, with respect to the consolidated balance sheets of Regency Energy Partners LP as of December 31, 2010 and 2009, and the related consolidated statements of operations, comprehensive income (loss), cash flows, and partners' capital and noncontrolling interest for the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the years ended December 31, 2009 and 2008.

/s/ KPMG LLP

Dallas, Texas

February 22, 2012

EX-23.5

Exhibit 23.5

Consent of Independent Registered Public Accounting Firm

The Partners
Regency Energy Partners LP:

We consent to the incorporation by reference in the registration statements No. 333-140088, No. 333-167082, and No. 333-178573 on Form S-8 and registration statements No. 333-163424, No. 333-163834, No. 333-169307, No. 333-169901, and No. 333-174578 Form S-3 of Regency Energy Partners LP of our report dated February 18, 2011, with respect to the consolidated balance sheets of RIGS Haynesville Partnership Co. as of December 31, 2010 and 2009 and the related consolidated statements of income, cash flows, and partners' capital for the year ended December 31, 2010 and for the period from March 18, 2009 to December 31, 2009, and the related statements of income, cash flows and member's interests of Regency Intrastate Gas LLC for the period from January 1, 2009 to March 17, 2009.

/s/ KPMG LLP

Dallas, Texas February 22, 2012

EX-23.6

Exhibit 23.6

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-174578, 333-169901, 333-169307, 333-163834 and 333-163424) and on Form S-8 (Nos. 333-178573, 333-167082 and 333-140088) of Regency Energy Partners LP of our report dated February 17, 2012 relating to the financial statements of Midcontinent Express Pipeline LLC, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Houston, Texas

February 17, 2012

EX-23.7

Exhibit 23.7

Consent of Independent Auditors

We consent to the incorporation by reference in the following Registration Statements:

(1) Registration Statement (Form S-8 No. 333-178573) pertaining to the Regency Energy Partners LP 2011 Long-Term Incentive Plan,

(2) Registration Statement (Form S-3 No. 333-174578) of Regency Energy Partners LP,

(3) Registration Statement (Form S-3 No. 333-169901) of Regency Energy Partners LP,

(4) Registration Statement (Form S-3 No. 333-169307) of Regency Energy Partners LP,

(5) Registration Statement (Form S-8 No. 333-167082) pertaining to the Regency GP LLC Long-Term Incentive Plan,

(6) Registration Statement (Form S-3 No. 333-163834) of Regency Energy Partners LP,

(7) Registration Statement (Form S-3 No. 333-163424) of Regency Energy Partners LP, and

(8) Registration Statement (Form S-8 No. 333-140088) pertaining to the Regency GP LLC Long-Term Incentive Plan;

of our report dated February 28, 2011, with respect to the consolidated financial statements of LDH Energy Asset Holdings LLC included in Exhibit 99.6 of this Annual Report (Form 10-K) of Regency Energy Partners LP for the year ended December 31, 2011.

/s/ Ernst & Young LLP

Hartford, Connecticut

February 22, 2012

EX-31.1

Exhibit 31.1

I, Michael J. Bradley, certify that:

1. I have reviewed this annual report on Form 10-K of Regency Energy Partners LP;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Securities and Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	February 22, 2012	/s/ MICHAEL J. BRADLEY
		Michael J. Bradley
		President and Chief Executive Officer of Regency GP LLC, general partner of Regency GP LP, general partner of Regency Energy Partners LP

EX-31.2

Exhibit 31.2

I, Thomas E. Long, certify that:

1. I have reviewed this annual report on Form 10-K of Regency Energy Partners LP;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Securities and Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	February 22, 2012	/s/ THOMAS E. LONG
		Thomas E. Long
		Executive Vice President and Chief Financial Officer of Regency GP LLC, general partner of Regency GP LP, general partner of Regency Energy Partners LP

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

OF REGENCY ENERGY PARTNERS LP

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying annual report on Form 10-K for the year ended December 31, 2011 and filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael J. Bradley, President and Chief Executive Officer of Regency GP LLC, the general partner of Regency GP LP, the general partner of Regency Energy Partners LP (the “Partnership”), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

Date:	February 22, 2012	/s/ MICHAEL J. BRADLEY
		Michael J. Bradley
		President and Chief Executive Officer of Regency GP LLC, general partner of Regency GP LP, general partner of Regency Energy Partners LP

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

OF REGENCY ENERGY PARTNERS LP

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying annual report on Form 10-K for the year ended December 31, 2011 and filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas E. Long, Executive Vice President and Chief Financial Officer of Regency GP LLC, the general partner of Regency GP LP, the general partner of Regency Energy Partners LP (the “Partnership”), hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.

Date:	February 22, 2012	/s/ THOMAS E. LONG
		Thomas E. Long
		Executive Vice President and Chief Financial Officer of Regency GP LLC, general partner of Regency GP LP, general partner of Regency Energy Partners LP

EX-99.2

Exhibit 99.2

RIGS Haynesville Partnership Co.

Consolidated Financial Statements

December 31, 2011

With Independent Auditors' Report Thereon

RIGS Haynesville Partnership Co.

Table of Contents

	Page
Report of Independent Auditors	2
Consolidated Balance Sheet as of December 31, 2011	3
Consolidated Income Statement for the year ended December 31, 2011	4
Consolidated Cash Flow Statement for the year ended December 31, 2011	5
Consolidated Statement of Partners' Capital for the year ended December 31, 2011	6
Notes to Consolidated Financial Statements	7-10

Report of Independent Certified Public Accountants

Partners

RIGS Haynesville Partnership Co.

We have audited the accompanying consolidated balance sheet of RIGS Haynesville Partnership Co. (a Delaware general partnership) and subsidiaries (the “Partnership”) as of December 31, 2011, and the relatedconsolidated statements of income, cash flows, and partners' capital for the year then ended.These financial statements are the responsibility of the Partnership's management.Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America established by the American Institute of Certified Public Accountants.Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership's internal control over financial reporting.Accordingly, we express no such opinion.An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.We believe that our audit provides a reasonable basis for our opinion.

In our opinion, theconsolidatedfinancial statements referred to above present fairly, in all material respects, the financial position of RIGS Haynesville Partnership Co. and subsidiaries as of December 31, 2011, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Dallas, Texas

February 22, 2012

2

RIGS Haynesville Partnership Co.
Consolidated Balance Sheet
As of December 31, 2011
(Amounts in United States Dollars)
ASSETS
Current Assets
Cash and cash equivalents	$	12,012,490
Trade accounts receivable, net of allowance of $86,052	2,656,772
Accrued revenues	13,764,304
Related party receivables	1,355,213
Other current assets	1,873,847
Total current assets	31,662,626
Property, Plant and Equipment:
Transmission systems	728,446,921
Compression equipment	102,121,581
Right of way	71,196,242
Other property, plant and equipment	25,851,917
Construction-in-process	35,286,136
Total property, plant and equipment	962,902,797
Less accumulated depreciation	(70,757,094		)
Property, plant and equipment, net	892,145,703
Other Assets:
Other assets, net of accumulated amortization of $439,448	453,479
Intangible assets, net of accumulated amortization of $4,323,000	27,117,000
Goodwill	119,161,140
Total other assets	146,731,619
TOTAL ASSETS	$	1,070,539,948
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Trade accounts payable	$	2,826,172
Related party payables	1,119,277
Other current liabilities	861,812
Total current liabilities	4,807,261
Long-term Debt	79,000,000
Commitments and Contingencies
Partners' Capital	986,732,687
TOTAL LIABILITIES AND PARTNERS' CAPITAL	$	1,070,539,948

See accompanying notes to consolidated financial statements

3

RIGS Haynesville Partnership Co.
Consolidated Income Statement
For the Year Ended December 31, 2011
(Amounts in United States Dollars)
REVENUES
Transportation and other fees	$	166,681,853
Gas sales	3,622,302
Related party revenues	14,652,398
Total revenues	184,956,553
OPERATING COSTS AND EXPENSES
Cost of sales, including related party amounts of $1,320,967	1,647,222
Operation and maintenance, including related party amounts of $6,205,216	20,803,286
General and administrative, including related party amounts of $16,800,000	17,160,996
Depreciation	33,417,638
Amortization	1,512,839
Total operating costs and expenses	74,541,981
OPERATING INCOME	110,414,572
Interest expense	(1,244,577		)
Other income, net	16,251
NET INCOME	$	109,186,246

See accompanying notes to consolidated financial statements

4

RIGS Haynesville Partnership Co.
Consolidated Cash Flow Statement
For the Year December 31, 2011
(Amounts in United States Dollars)
OPERATING ACTIVITIES
Net income	$	109,186,246
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization, including debt issuance cost amortization	35,110,029
Loss on aid-in-construction	35,131
Cash flow changes in current assets and liabilities:
Trade accounts receivable, accrued revenues and related party receivables	11,244,341
Other current assets	(937,993		)
Trade accounts payable and related party payables	(2,488,301		)
Other current liabilities	256,723
Net cash flows provided by operating activities	152,406,176
INVESTING ACTIVITIES
Capital expenditures	(45,223,714		)
Proceeds from assets sales	44,545
Net cash flows used in investing activities	(45,179,169		)
FINANCING ACTIVITIES
Net borrowings under revolving credit facility	46,000,000
Debt issuance costs	(262,220		)
Partner distributions	(141,771,312		)
Net cash flows used in financing activities	(96,033,532		)
Net change in cash and cash equivalents	11,193,475
Cash and cash equivalents at beginning of period	819,015
Cash and cash equivalents at end of period	$	12,012,490
Supplemental cash flow information:
Non-cash capital expenditures	$	2,525,355
Interest paid	871,450

See accompanying notes to consolidated financial statements

5

RIGS Haynesville Partnership Co.
Consolidated Statement of Partners' Capital
For the Year Ended December 31, 2011
(Amounts in United States Dollars)
Balance at January 1, 2011	$	1,019,317,753
Partner distributions	(141,771,312		)
Net income	109,186,246
Balance at December 31, 2011	$	986,732,687

See accompanying notes to consolidated financial statements

6

RIGS Haynesville Partnership Co.

Notes to Consolidated Financial Statements

(All amounts in United States Dollars, unless otherwise indicated)

1. Organization and Basis of Presentation

Organization. The consolidated financial statements presented herein reflect the results of RIGS Haynesville Partnership Co. (“Partnership”), a Delaware general partnership. The Partnership was formed on March 17, 2009, as a joint venture by and among Alinda Gas Pipeline I, L.P. and Alinda Gas Pipeline II, L.P. (“Alinda Investors”), Regency Haynesville Intrastate Gas LLC (“Regency HIG”), an indirect wholly-owned subsidiary of Regency Energy Partners LP (“Regency”), and EFS Haynesville, LLC. As of December 31, 2011, the Partnership was 50 percent owned by Alinda Investors, 49.99 percent owned by Regency HIG and 0.01 percent owned by EFS Haynesville, LLC.

The Partnership, through its wholly-owned subsidiary, Regency Intrastate Gas LP (“RIG”), an entity that owns a 450-mile intrastate natural gas pipeline, delivers natural gas from northwest Louisiana to downstream pipelines and markets.

Basis of presentation. The consolidated financial statements of the Partnership and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of all controlled subsidiaries after the elimination of all intercompany accounts and transactions.

2. Summary of Significant Accounting Policies

Use of Estimates. These consolidated financial statements have been prepared in conformity with GAAP which necessarily includes the use of estimates and assumptions by management that affect the reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and liabilities that exist at the date of the financial statements. Although these estimates are based on management's available knowledge of current and expected future events, actual results could be different from those estimates.

Cash and cash equivalents. Cash and cash equivalents include temporary cash investments with original maturities of three months or less.

Accounts Receivable, Accrued Revenue and Allowance for Doubtful Accounts. Accounts receivable consist principally of trade receivables from customers and are generally unsecured. Accrued revenue represents the revenues earned in the current month but billed in the following month. The Partnership periodically assesses accounts receivable for estimated losses resulting from the inability of customers to make required payments. Estimates are based on historical collection experience, aging of the accounts receivable balances, current economic conditions, historical write-off experience, and each specific customer's ability to meet its financial obligations to the Partnership.

Property, Plant and Equipment. Property, plant and equipment is recorded at historical cost of construction, or, upon acquisition, the fair value of the assets acquired. Gains or losses on sales or retirements of assets are included in operating income unless the disposition is treated as discontinued operations. Gas to maintain pipeline minimum pressures is capitalized, not subject to depreciation, and classified as property, plant and equipment. The costs of maintenance and repairs, which are not significant improvements, are expensed when incurred. Expenditures to extend the useful lives of the assets are capitalized.

The Partnership accounts for its asset retirement obligations in accordance with the Asset Retirement Obligation Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). The guidance requires the Partnership to recognize on its balance sheet the net present value of any legally binding obligation to remove or remediate the physical assets that it retires from service, as well as any similar obligations for which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the Partnership. While the Partnership is obligated under contractual agreements to remove certain facilities upon their retirement, management is unable to reasonably determine the fair value of such asset retirement obligations because the settlement dates, or ranges thereof, were indeterminable and could range up to 95 years. An asset retirement obligation will be recorded in the periods wherein management can reasonably determine the settlement dates.

7

RIGS Haynesville Partnership Co.

Notes to Consolidated Financial Statements

(All amounts in United States Dollars, unless otherwise indicated)

Depreciation of property, plant and equipment is recorded on a straight-line basis over the following estimated useful lives:

Functional Class of Property	Useful Lives (Years)
Transmission systems	30
Compression equipment	5-20
Right of way	30
Other property, plant and equipment	3-35

Other assets. Other assets consist of costs related to establishing and modifying the revolving credit facility, which are capitalized and amortized to interest expense, net over the term of the related revolving credit facility.

Intangible Assets. Intangible assets consist of customer contracts and are amortized on a straight line basis over their estimated useful lives of 20 years, which is the period over which these contracts are expected to contribute directly or indirectly to the Partnership's future cash flows. The remaining amortization period for customer contracts is 18 years. The expected amortization of the intangible assets is $1,572,000 for each of the five succeeding years.

The Partnership assesses long-lived assets, including property, plant and equipment and intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability is assessed by comparing the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by the asset. If the asset is considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amounts exceed the fair value of the asset. The Partnership did not record any impairment for the year ended December 31, 2011.

Goodwill. Goodwill represents the excess of purchase price over the fair value of the net assets. Goodwill is not amortized, but is tested for impairment annually based on the carrying values as of October 1, or more frequently if impairment indicators arise that suggest the carrying value of goodwill may not be recovered. Impairment occurs when the carrying amount of a reporting unit exceeds its fair value. At the time it is determined that an impairment has occurred, the carrying value of the goodwill is written down to its fair value. To estimate the fair value, the Partnership makes estimates and judgments about future cash flows, as well as to revenues, cost of sales, operating expenses, capital expenditures and net working capital based on assumptions that are consistent with the Partnership's most recent forecast. No impairment was indicated for the year ended December 31, 2011.

Gas Imbalances. Quantities of over or under deliveries related to imbalance agreements are recorded monthly as other current assets or other current liabilities using the current market prices or the weighted average prices. Within certain volumetric limits determined at the sole discretion of the creditor, these imbalances are generally settled by deliveries of natural gas. Net imbalance settlement gains with third party customers are recorded as gas sales in the consolidated income statements. Imbalance receivables included in other current assets and imbalance payables included in other current liabilities as of December 31, 2011 were $1,701,399 and $51,863, respectively.

8

RIGS Haynesville Partnership Co.

Notes to Consolidated Financial Statements

(All amounts in United States Dollars, unless otherwise indicated)

Fair Value Measures. The Partnership follows the Fair Value Measurement Topic of the FASB ASC for financial assets and liabilities and applied the fair value measurement provisions to non-financial assets and liabilities, such as goodwill, indefinite-lived intangible assets, property, plant and equipment and asset retirement obligations. These provisions establish a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows:

Level 1- unadjusted quoted prices for identical assets or liabilities in active markets accessible by the Partnership;

Level 2- inputs that are observable in the marketplace other than those classified as Level 1; and

Level 3- inputs that are unobservable in the marketplace and significant to the valuation.

Entities are encouraged to maximize the use of observable inputs and minimize the use of unobservable inputs. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation.

As of December 31, 2011, the Partnership did not have financial instruments whose fair value were determined using available market information and valuation methodologies. The carrying amount of cash and cash equivalents, accounts receivable and accounts payable approximates fair value due to their short-term maturities. Long-term debt is comprised of borrowings under which interest accrues under a floating interest rate structure. Accordingly, the carrying value approximates fair value.

Revenue Recognition. The Partnership earns revenues from (i) natural gas transportation and (ii) domestic sales of natural gas. Revenues associated with transportation fees are recognized when the service is provided. Sales of natural gas are recognized as revenue when title passes to the customer, which is when the risk of ownership passes to the purchaser and physical delivery occurs.

Income Taxes. The Partnership is a tax pass through entity, and, therefore, is generally not subject to income taxes. The Partnership follows the guidance for uncertainties in income taxes and did not identify or record any uncertain tax positions not meeting the more likely than not standard as of December 31, 2011.

Comprehensive Income. For the year ended December 31, 2011, comprehensive income equaled net income.

3. Debt

As of December 31, 2011, RIG had a $100,000,000 working capital facility that expires in July 27, 2014. The outstanding balance under the revolving credit facility bears interest at the London Interbank Offered Rate plus a margin or the Prime Referenced Rate as defined in the revolving credit facility agreement plus a margin. The weighted average interest rate on the total amount outstanding under the Partnership's revolving credit facility as of December 31, 2011 was 2.32 percent. The revolving credit facility is secured by substantially all of RIG's assets.

9

RIGS Haynesville Partnership Co.

Notes to Consolidated Financial Statements

(All amounts in United States Dollars, unless otherwise indicated)

4. Related Party Transactions

The Partnership provides transportation services, purchases and sells natural gas and settles gas imbalances with certain Regency affiliates. For the year ended December 31, 2011, related party revenues and related party cost of sales were primarily the results of these transactions.

Under a Master Services Agreement between Regency and the Partnership, Regency operates and provides all employees and services for the operation and management of the Partnership. For the year ended December 31, 2011, related party general and administrative expenses charged by Regency were $16,800,000.

The Partnership has gas compression service agreements with CDM Resource Management LLC, a wholly-owned subsidiary of Regency. For the year ended December 31, 2011, related party operating and maintenance expenses were primarily results of these agreements.

5. Major Customers

During the year ended December 31, 2011, three non-affiliated shippers accounted for 28%, 17% and 15%, respectively, of the Partnership's total revenues.

6. Subsequent Events

Subsequent events have been evaluated through the date the financial statements were issued.

10

EX-99.3

Exhibit 99.3

RIGS Haynesville Partnership Co.

Consolidated Financial Statements

December 31, 2010 and 2009

With Independent Auditors' Report Thereon

RIGS Haynesville Partnership Co.

Table of Contents

	Page
Report of Independent Auditors	2
Consolidated Balance Sheet as of December 31, 2010 and 2009	3
Consolidated Income Statement for the year ended December 31, 2010 and the periods from March 18, 2009 to December 31, 2009, and from January 1, 2009 to March 17, 2009	4
Consolidated Cash Flow Statement for the year ended December 31, 2010 and the periods from March 18, 2009 to December 31, 2009, and from January 1, 2009 to March 17, 2009	5
Consolidated Statements of Partners' Capital for the year ended December 31, 2010 and for the period from March 18, 2009 to December 31, 2009, and Statement of Member's Interest for the period from January 1, 2009 to March 17, 2009	6
Notes to Consolidated Financial Statements	7-11

Report of Independent Registered Public Accounting Firm

The Partners

RIGS Haynesville Partnership Co.:

We have audited the accompanying consolidated balance sheets of RIGS Haynesville Partnership Co. (the Partnership or Successor) as of December 31, 2010 and 2009, and the related consolidated statements of income, cash flows, and partners’ capital for the year ended December 31, 2010 and for the period from March 18, 2009 to December 31, 2009. Further, we have audited the statements of income, cash flows, and member’s interest of Regency Intrastate Gas LLC (the Predecessor) for the period from January 1, 2009 to March 17, 2009. These consolidated financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of RIGS Haynesville Partnership Co. as of December 31, 2010 and 2009, and the results of its operations and its cash flows for the year ended December 31, 2010 and for the period from March 18, 2009 to December 31, 2009, and the results of Regency Intrastate Gas LLC’s operations and cash flows for the period from January 1, 2009 to March 17, 2009, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Dallas, Texas

February 18, 2011

2

RIGS Haynesville Partnership Co.
Consolidated Balance Sheets
(Amounts in United States Dollars)
	December 31, 2010			December 31, 2009
ASSETS
Current Assets
Cash and cash equivalents	$	819,015		$	1,516,010
Restricted cash, current	—			23,254,642
Trade accounts receivable, net of allowance of $35,382 and $3,669	12,749,294			3,958,092
Accrued revenues	14,756,202			3,587,580
Related party receivables	813,917			2,300,921
Other current assets	935,854			4,622,125
Total current assets	30,074,282			39,239,370
Restricted Cash, non-current	—			33,595,346
Property, Plant and Equipment:
Transmission systems	724,112,495			175,104,698
Compression equipment	60,294,220			25,604,819
Right of way	71,035,785			27,651,219
Other property, plant and equipment	23,850,595			8,054,855
Construction-in-process	46,937,997			632,344,065
Total property, plant and equipment	926,231,092			868,759,656
Less accumulated depreciation	(37,339,456		)	(7,190,143		)
Property, plant and equipment, net	888,891,636			861,569,513
Other Assets:
Other assets, net of accumulated amortization of $259,896 and $65,469	370,812			391,402
Intangible assets, net of accumulated amortization of $2,810,161 and $1,238,161	28,629,839			30,201,839
Goodwill	119,161,140			119,161,140
Total other assets	148,161,791			149,754,381
TOTAL ASSETS	$	1,067,127,709		$	1,084,158,610
LIABILITIES AND PARTNERS' CAPITAL
Current Liabilities:
Trade accounts payable	$	8,667,587		$	20,438,975
Related party payables	5,537,278			6,085,869
Other current liabilities	605,091			4,442,128
Total current liabilities	14,809,956			30,966,972
Long-term Debt	33,000,000			—
Commitments and Contingencies
Partners' Capital	1,019,317,753			1,053,191,638
TOTAL LIABILITIES AND PARTNERS' CAPITAL	$	1,067,127,709		$	1,084,158,610

See accompanying notes to consolidated financial statements

3

RIGS Haynesville Partnership Co.
Consolidated Income Statements
(Amounts in United States Dollars)	RIGS Haynesville Partnership Co.						Regency Intrastate Gas LLC
	Year Ended December 31, 2010			Period from March 18, 2009 to December 31, 2009			Period from January 1, 2009 to March 17, 2009
REVENUES
Transportation and other fees	$	156,553,183		$	26,659,371		$	7,224,854
Gas sales	5,865,090			3,442,931			2,405,453
Related party revenues	14,178,841			13,380,326			7,146,425
Total revenues	176,597,114			43,482,628			16,776,732
OPERATING COSTS AND EXPENSES
Cost of sales, including related party amounts of $2,061,828, $3,136,027 and $5,314,637	2,250,369			3,146,527			5,314,637
Operation and maintenance, including related party amounts of $5,000,453, $2,486,102 and $579,268	17,760,341			6,910,100			1,724,908
Gain on asset sales, net	(652		)	—			—
General and administrative, including related party amounts of $16,733,333, $4,725,806 and $0	17,758,634			5,680,413			20,347
Depreciation	30,224,970			7,275,524			3,057,912
Amortization	1,572,000			1,238,161			57,913
Total operating costs and expenses	69,565,662			24,250,725			10,175,717
(Gain) loss on insurance settlement	(135,851		)	675,000			—
OPERATING INCOME	107,167,303			18,556,903			6,601,015
Interest expense	(525,517		)	(158,012		)	—
Other income, net	95,018			1,334,825			—
NET INCOME	$	106,736,804		$	19,733,716		$	6,601,015

See accompanying notes to consolidated financial statements

4

RIGS Haynesville Partnership Co.
Consolidated Cash Flow Statements
(Amounts in United States Dollars)	RIGS Haynesville Partnership Co.						Regency Intrastate Gas LLC
	Year Ended December 31, 2010			Period from March 18, 2009 to December 31, 2009			Period from January 1, 2009 to March 17, 2009
OPERATING ACTIVITIES
Net income	$	106,736,804		$	19,733,716		$	6,601,015
Adjustments to reconcile net income to net cash flows provided by operating activities:
Depreciation and amortization, including debt issuance cost amortization	31,991,397			8,579,154			3,115,825
(Gain) loss on insurance settlement	(135,851		)	675,000			—
Gain on aid-in-construction	(49,301		)	—			—
Gain on asset sales, net	(652		)	—			—
Cash flow changes in current assets and liabilities:
Trade accounts receivable and related party receivables	(8,925,598		)	(802,393		)	(5,130,437		)
Accrued revenues	(11,168,622		)	(3,056,803		)	1,934,728
Other current assets	(424,259		)	307,363			98,657
Trade accounts payable and related party payables	2,822,039			1,086,356			(635,481		)
Other current liabilities	(3,837,038		)	2,050,233			(2,616,439		)
Net cash flows provided by operating activities	117,008,919			28,572,626			3,367,868
INVESTING ACTIVITIES
Net proceeds from insurance settlement on property, plant and equipment	4,047,791			3,500,000			—
Changes in restricted cash	56,849,988			(56,849,988		)	—
Capital expenditures	(70,964,388		)	(603,139,683		)	(3,367,868		)
Proceeds from assets sales	145,220			—			—
Net cash flows used in investing activities	(9,921,389		)	(656,489,671		)	(3,367,868		)
FINANCING ACTIVITIES
Net borrowings under revolving credit facility	33,000,000			—			—
Debt issuance costs	(173,836		)	(456,871		)	—
Partner contributions	47,000,000			653,000,000			—
Partner distributions	(187,610,689		)	(23,110,074		)	—
Net cash flows used in financing activities	(107,784,525		)	629,433,055			—
Net change in cash and cash equivalents	(696,995		)	1,516,010			—
Cash and cash equivalents at beginning of period	1,516,010			—			—
Cash and cash equivalents at end of period	$	819,015		$	1,516,010		$	—
Supplemental cash flow information:
Non-cash capital expenditures	$	10,296,470		$	25,438,488		$	80,607,803
Interest paid	318,941			92,196			—
Contribution of equity interests	—			403,567,996			—

See accompanying notes to consolidated financial statements

5

RIGS Haynesville Partnership Co.
Statement of Member's Interest and Consolidated Statements of Partners' Capital
(Amounts in United States Dollars)
	Member's Interest			Partners' Capital			Total
Regency Intrastate Gas LLC
Balance at January 1, 2009	$	310,008,267		$	—		$	310,008,267
Net income from January 1, 2009 to March 17, 2009	6,601,015			—			6,601,015
Net decrease in member's interest	(52,688,404		)	—			(52,688,404		)
Balance at March 17, 2009	263,920,878			—			263,920,878
Conversion of member's interest	(263,920,878		)	—			(263,920,878		)
	—			—			—
RIGS Haynesville Partnership Co.
Partner contributions on March 18, 2009	—			1,056,567,996			1,056,567,996
Partner distributions	—			(23,110,074		)	(23,110,074		)
Net income from March 18, 2009 to December 31, 2009	—			19,733,716			19,733,716
Balance at December 31, 2009	—			1,053,191,638			1,053,191,638
Partner distributions	—			(187,610,689		)	(187,610,689		)
Partner contributions	—			47,000,000			47,000,000
Net income	—			106,736,804			106,736,804
Balance at December 31, 2010	$	—		$	1,019,317,753		$	1,019,317,753

See accompanying notes to consolidated financial statements

6

RIGS Haynesville Partnership Co.

Notes to Consolidated Financial Statements

(All amounts in United States Dollars, unless otherwise indicated)

1. Organization and Basis of Presentation

Organization. The consolidated financial statements presented herein reflect the results of RIGS Haynesville Partnership Co. (“Partnership”), a Delaware general partnership, and its predecessor, Regency Intrastate Gas LLC (“Predecessor”). The Partnership was formed on March 17, 2009, as a joint venture by and among Alinda Gas Pipeline I, L.P. and Alinda Gas Pipeline II, L.P. (“Alinda Investors”), Regency Haynesville Intrastate Gas LLC (“Regency HIG”), an indirect 100 percent owned subsidiary of Regency Energy Partners LP (“Regency”), and EFS Haynesville, LLC. Regency, through Regency HIG, contributed its equity interests in the Predecessor, valued at $401,355,838, to the Partnership in exchange for a 38 percent general partner interest. EFS Haynesville, LLC and the Alinda Investors contributed $126,928,160 and $528,283,998 in cash, respectively, to the Partnership in return for a 12 percent and a 50 percent general partner interest, respectively. Immediately prior to the contribution, the Predecessor was converted from a limited liability company to a limited partnership named Regency Intrastate Gas LP (“RIG”). Upon the completion of the Partnership contribution, RIG became a 100 percent owned subsidiary of the Partnership.

The total purchase price of $1,056,567,996 was allocated as follows:

	At March 18, 2009
Restricted cash	$	653,000,000
Current assets	8,439,418
Gathering and transmission systems	175,261,520
Compression equipment	33,229,085
Right of way	27,744,270
Other property, plant and equipment	8,163,985
Construction-in-progress	82,453,276
Customer contracts	31,440,000
Goodwill*	119,161,140
Accrued payables**	(80,607,803		)
Other current liability	(1,716,895		)
Net assets acquired	$	1,056,567,996

* Goodwill recognized was primarily attributed to the anticipated growth potential in the Haynesville Shale region, where the Partnership's intrastate pipeline system is located.

** Accrued payables represented the construction-in-progress that the Partnership purchased from Regency upon formation.

On September 2, 2009, Regency increased its ownership percentage in the Partnership to 43 percent by purchasing five percent of EFS Haynesville, LLC's partnership interest for $63,000,000. On April 28, 2010, Regency further increased its ownership percentage in the Partnership to 49.99 percent by purchasing 6.99 percent of EFS Haynesville, LLC's partnership interest for $92,086,857.

The Partnership was formed to finance the construction and development of the expansion of the Predecessor's intrastate natural gas pipeline system (the “Haynesville Expansion Project”). After the Partnership was formed, it announced an additional extension of the system known as the Red River Lateral. Both the Haynesville Expansion Project and the Red River Lateral were completed in January 2010.

The Partnership and its subsidiaries are primarily engaged in the business of transporting natural gas.

Basis of presentation. The consolidated financial statements of the Partnership and its subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of all controlled subsidiaries after the elimination of all intercompany accounts and transactions.

7

RIGS Haynesville Partnership Co.

Notes to Consolidated Financial Statements

(All amounts in United States Dollars, unless otherwise indicated)

2. Summary of Significant Accounting Policies

Use of Estimates. These consolidated financial statements have been prepared in conformity with GAAP which necessarily includes the use of estimates and assumptions by management that affect the reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and liabilities that exist at the dates of the financial statements. Although these estimates are based on management's available knowledge of current and expected future events, actual results could be different from those estimates.

Cash and cash equivalents. Cash and cash equivalents include temporary cash investments with original maturities of three months or less.

Restricted cash. Cash contributed by the partners can only be used in the capital expenditures related to the Haynesville Expansion Project and the Red River Lateral, thus is classified as restricted cash. Restricted cash is excluded from current assets on the consolidated balance sheet, except for the portion that relates to liabilities accrued for as of December 31, 2009, which was included in current assets. Subsequent to the completion of the Haynesville Expansion Project and the Red River Lateral, the Partnership distributed the remaining restricted cash amount of $40,000,000 to the partners.

Accounts Receivable, Accrued Revenue and Allowance for Doubtful Accounts. Accounts receivable consist principally of trade receivables from customers and are generally unsecured. Accrued revenue represents the revenues earned in the current month but billed in the following month. The Partnership periodically assesses accounts receivable for estimated losses resulting from the inability of customers to make required payments. Estimates are based on historical collection experience, aging of the accounts receivable balances, current economic conditions, historical write-off experience, and each specific customer's ability to meet its financial obligations to the Partnership.

Property, Plant and Equipment. Property, plant and equipment is recorded at historical cost of construction, or, upon acquisition, the fair value of the assets acquired. Gains or losses on sales or retirements of assets are included in operating income unless the disposition is treated as discontinued operations. Gas to maintain pipeline minimum pressures is capitalized, not subject to depreciation, and classified as property, plant and equipment. The costs of maintenance and repairs, which are not significant improvements, are expensed when incurred. Expenditures to extend the useful lives of the assets are capitalized.

The Partnership accounts for its asset retirement obligations in accordance with the Asset Retirement Obligation Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). The guidance requires the Partnership to recognize on its balance sheet the net present value of any legally binding obligation to remove or remediate the physical assets that it retires from service, as well as any similar obligations for which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the Partnership. While the Partnership is obligated under contractual agreements to remove certain facilities upon their retirement, management is unable to reasonably determine the fair value of such asset retirement obligations because the settlement dates, or ranges thereof, were indeterminable and could range up to 95 years. An asset retirement obligation will be recorded in the periods wherein management can reasonably determine the settlement dates.

Depreciation of property, plant and equipment is recorded on a straight-line basis over the following estimated useful lives:

Functional Class of Property	Useful Lives (Years)
Transmission systems	30
Compression equipment	15
Right of way	30
Other property, plant and equipment	15-35

Other assets. Other assets consist of costs related to establishing and modifying the revolving credit facility, which are capitalized and amortized to interest expense, net over the term of the related revolving credit facility.

8

RIGS Haynesville Partnership Co.

Notes to Consolidated Financial Statements

(All amounts in United States Dollars, unless otherwise indicated)

Intangible Assets. Intangible assets are customer contracts and are amortized on a straight line basis over their estimated useful lives of 20 years, which is the period over which these contracts are expected to contribute directly or indirectly to the Partnership's future cash flows. The remaining amortization period for customer contracts is 18 years. The expected amortization of the intangible assets is $1,572,000 for each of the five succeeding years.

The Partnership assesses long-lived assets, including property, plant and equipment and intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability is assessed by comparing the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by the asset. If the asset is considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amounts exceed the fair value of the asset. The Partnership did not record any impairment for the year ended December 31, 2010, or for the periods from January 1, 2009 to March 17, 2009 or from March 18, 2009 to December 31, 2009.

Goodwill. Goodwill represents the excess of purchase price over the fair value of the net assets. Goodwill is not amortized, but is tested for impairment annually based on the carrying values as of October 1, or more frequently if impairment indicators arise that suggest the carrying value of goodwill may not be recovered. Impairment occurs when the carrying amount of a reporting unit exceeds its fair value. At the time it is determined that an impairment has occurred, the carrying value of the goodwill is written down to its fair value. To estimate the fair value, the Partnership makes estimates and judgments about future cash flows, as well as to revenues, cost of sales, operating expenses, capital expenditures and net working capital based on assumptions that are consistent with the Partnership's most recent forecast. No impairment was indicated for the year ended December 31, 2010, or for the periods from January 1, 2009 to March 17, 2009 or from March 18, 2009 to December 31, 2009.

Gas Imbalances. Quantities of over or under deliveries related to imbalance agreements are recorded monthly as other current assets or other current liabilities using the current market prices or the weighted average prices. Within certain volumetric limits determined at the sole discretion of the creditor, these imbalances are generally settled by deliveries of natural gas. Net imbalance settlement gains with third party customers are recorded as gas sales in the consolidated income statements. Imbalance receivables included in other current assets as of December 31, 2010 and 2009, were $480,162 and $67,448, respectively. Imbalance payables included in other current liabilities as of December 31, 2010 and 2009, were $346,411 and $1,105,567, respectively.

Fair Value Measures. On January 1, 2008, the Predecessor adopted the Fair Value Measurement Topic of the FASB ASC for financial assets and liabilities and on January 1, 2009, the Predecessor applied the fair value measurement provisions to non-financial assets and liabilities, such as goodwill, indefinite-lived intangible assets, property, plant and equipment and asset retirement obligations. These provisions define fair value, thereby eliminating inconsistencies in guidance found in various prior accounting pronouncements, and increases disclosures surrounding fair value calculations. These provisions establish a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows:

Level 1- unadjusted quoted prices for identical assets or liabilities in active markets accessible by the Partnership;

Level 2- inputs that are observable in the marketplace other than those classified as Level 1; and

Level 3- inputs that are unobservable in the marketplace and significant to the valuation.

Entities are encouraged to maximize the use of observable inputs and minimize the use of unobservable inputs. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation.

As of December 31, 2010 and 2009, the Partnership did not have financial instruments whose fair value were determined using available market information and valuation methodologies. The Partnership's financial instruments, which consist of trade accounts receivable and trade accounts payable are short-term in nature. Accordingly, the carrying amount of these financial instruments approximates fair value.

9

RIGS Haynesville Partnership Co.

Notes to Consolidated Financial Statements

(All amounts in United States Dollars, unless otherwise indicated)

Revenue Recognition. The Partnership earns revenues from (i) natural gas transportation and (ii) domestic sales of natural gas. Revenues associated with transportation fees are recognized when the service is provided. Sales of natural gas are recognized as revenue when title passes to the customer, which is when the risk of ownership passes to the purchaser and physical delivery occurs.

Income Taxes. The Partnership is a tax pass through entity, and, therefore, is generally not subject to income taxes. The Partnership follows the guidance for uncertainties in income taxes and did not identify or record any uncertain tax positions not meeting the more likely than not standard as of December 31, 2010 and 2009.

Comprehensive Income. For the year ended December 31, 2010 and the periods from January 1, 2009 to March 17, 2009, and from March 18, 2009 to December 31, 2009, comprehensive income equaled net income.

3. Debt

On July 27, 2009, RIG entered into a $25,000,000 revolving credit facility that expires on July 27, 2012, to primarily fund the Partnership's working capital needs. On June 28, 2010, RIG amended the credit facility agreement to:

• extend the maturity date to July 27, 2013 from July 27, 2012;

• increase the revolving credit maximum amount to $50,000,000 from $25,000,000; and

• modify the applicable margin defined in the credit facility agreement.

The outstanding balance under the revolving credit facility bears interest at the London Interbank Offered Rate plus a margin or the Prime Referenced Rate as defined in the revolving credit facility agreement plus a margin. The average interest rate for the year ended December 31, 2010 and for the period from March 18, 2009 to December 31, 2009 were 2.09 and 2.11 percent, respectively. The revolving credit facility is secured by substantially all of RIG's assets.

4. Related Party Transactions

The Partnership provides transportation services, purchases and sells natural gas and settles gas imbalances with certain Regency affiliates. For the year ended December 31, 2010 and for the periods from January 1, 2009 to March 17, 2009, and from March 18, 2009 to December 31, 2009, related party revenues and related party cost of sales were primarily the results of these transactions.

Upon the Partnership formation in March 2009, the Partnership purchased construction-in-progress related to the Haynesville Expansion Project from Regency, at the cost of $80,607,803.

Under a Master Services Agreement between Regency and the Partnership, Regency operates and provides all employees and services for the operation and management of the Partnership. Under this agreement, the Partnership paid Regency $500,000 monthly as a reimbursement of its general and administrative costs. On December 18, 2009, the reimbursement amount was amended to $1,400,000 per month effective on the first calendar day in the month subsequent to mechanical completion of the Haynesville Expansion Project (February 1, 2010), subject to an annual adjustment beginning March 1, 2011. For the year ended December 31, 2010 and for the period from March 18, 2009 to December 31, 2009, related party general and administrative expenses charged by Regency were $16,733,333 and $4,725,806, respectively.

The Partnership has several gas compression service agreements with CDM Resource Management LLC (“CDM”), a wholly owned subsidiary of Regency. For the year ended December 31, 2010 and for the periods from January 1, 2009 to March 17, 2009, and from March 18, 2009 to December 30, 2009, related party operating and maintenance expenses were primarily results of this charge.

The Partnership purchased $10,201,303 and $11,523,801 of property, plant and equipment from CDM during the year ended December 31, 2010 and the period from March 18, 2009 to December 31, 2009, respectively.

10

RIGS Haynesville Partnership Co.

Notes to Consolidated Financial Statements

(All amounts in United States Dollars, unless otherwise indicated)

5. Eastside Compressor Fire

In May 2009, a compressor fire occurred at the Eastside compressor station. The total loss related to the fire was $8,086,940, of which the Partnership received $7,547,791 from insurance reimbursement, and recorded a loss of $539,149. The Partnership estimated a loss of $675,000 in 2009 and recorded a reduction of previously recognized loss of $135,851 in 2010 as a result of the final insurance settlement.

6. Subsequent Events

On February 7, 2011, the Partnership increased its revolving credit facility from $50,000,000 to $100,000,000, and extended the maturity date from July 27, 2013 to July 27, 2014.

11

EX-99.4

Exhibit 99.4

FINANCIAL STATEMENTS

MIDCONTINENT EXPRESS

PIPELINE LLC

Year Ended December 31, 2011 and

Seven Months Ended December 31, 2010

Report of Independent Registered Public Accounting Firm

Tothe Board of Directors and Members of Midcontinent Express Pipeline LLC:

In our opinion, the accompanying balance sheets and the related statements of income, of comprehensive income, of members' equity and of cash flows present fairly, in all material respects, the financial position of Midcontinent Express Pipeline LLC (the "Company") at December 31, 2011 and 2010, and the results of its operations and its cash flows for the year ended December 31, 2011 and for the seven-month period ended December 31, 2010, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Houston, Texas

February 17, 2012

MIDCONTINENT EXPRESS PIPELINE LLC

STATEMENTS OF INCOME

(in thousands)

	Year Ended December 31, 2011			Seven Months Ended December 31, 2010
Revenues:
Transportation services	$	262,360		$	137,996
Operating Costs and Expenses:
Cost of sales and transportation services	15,603			3,907
Operations and maintenance	10,243			5,714
Depreciation and amortization	69,538			40,093
General and administrative	3,612			2,009
Taxes, other than income taxes	26,509			14,779
Total Operating Costs and Expenses	125,505			66,502
Operating Income	136,855			71,494
Other Income (Expense):
Allowance for funds used during construction-
Equity	(43		)	810
Debt	6			294
Interest expense, net	(51,474		)	(30,058		)
Other income	(5		)	—
Total Other Income (Expense)	(51,516		)	(28,954		)
Net Income to Members	$	85,339		$	42,540

The accompanying notes are an integral part of these financial statements.

MIDCONTINENT EXPRESS PIPELINE LLC

STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

	Year Ended December 31, 2011		Seven Months Ended December 31, 2010
Net Income to Members	$	85,339	$	42,540
Other Comprehensive Income:
Reclassification of change in fair value of derivatives to net income	166		97
Total Other Comprehensive Income	166		97
Comprehensive Income	$	85,505	$	42,637

The accompanying notes are an integral part of these financial statements.

MIDCONTINENT EXPRESS PIPELINE LLC

BALANCE SHEETS

(in thousands)

	December 31,
	2011			2010
ASSETS
Current Assets
Cash and cash equivalents	$	1		$	12,958
Restricted deposits	—			201
Accounts receivable	22,199			21,662
Gas imbalance	6,390			4,421
Other current assets	327			504
Total Current Assets	28,917			39,746
Property, Plant and Equipment, Net	2,150,766			2,221,193
Unamortized Debt Expense	4,542			5,154
Deferred Charges and Other Assets	744			70
Total Assets	$	2,184,969		$	2,266,163
LIABILITIES AND MEMBER'S EQUITY
Current Liabilities
Notes payable	$	1,000		$	—
Cash book overdrafts	7,657			6,401
Accounts payable	16,925			11,334
Accrual for construction	6,328			11,809
Gas imbalances	1,273			740
Accrued interest	13,792			13,791
Accrued taxes	—			5,784
Accrued other current liabilities	5,659			4,406
Total Current Liabilities	52,634			54,265
Long-term Debt	799,200			799,018
Commitments and Contingencies (Notes 5, 7 and 10)
Members' Equity
Members' capital	1,334,070			1,413,981
Accumulated other comprehensive loss	(935		)	(1,101		)
Total Members' Equity	1,333,135			1,412,880
Total Liabilities and Members' Equity	$	2,184,969		$	2,266,163

The accompanying notes are an integral part of these financial statements.

MIDCONTINENT EXPRESS PIPELINE LLC

STATEMENT OF MEMBERS' EQUITY

(in thousands)

	Total			Kinder Morgan Operating Limited Partnership "A"			ETC Midcontinent Express II L.L.C.			Regency Midcontinent Express II L.L.C.			Regency Midcontinent Express LLC
Members' Equity
Balance at June 1, 2010	$	1,285,028		$	642,514		$	1,285		$	641,229		$	—
Net income to Members	42,540			21,270			43			21,227			—
Contributions by Members	172,000			86,000			172			85,828			—
Distributions to Members	(86,785		)	(43,392		)	(87		)	(43,306		)	—
Other Comprehensive Income	97			48			—			49			—
Balance at December 31, 2010	1,412,880			706,440			1,413			705,027			—
Net income to Members	85,339			42,669			70			35,166			7,434
Distributions to Members	(165,250		)	(82,625		)	(140		)	(69,833		)	(12,652		)
Other Comprehensive Income	166			83			—			69			14
Transfer of Members' interest-October 31, 2011 (Note 1)	—			—			(1,343		)	(670,429		)	671,772
Balance at December 31, 2011	$	1,333,135		$	666,567		$	—		$	—		$	666,568

The accompanying notes are an integral part of these financial statements.

MIDCONTINENT EXPRESS PIPELINE LLC

STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended December 31, 2011			Seven Months Ended December 31, 2010
Cash Flows from Operating Activities
Net income to Members	$	85,339		$	42,540
Adjustments to reconcile net income to net cash flows from operating activities
Depreciation and amortization	69,538			40,093
Amortization of debt expense, debt discount, interest rate swap loss and treasury lock	1,424			712
Loss (income) from the allowance for equity funds used during construction	43			(810		)
Changes in components of working capital
Accounts receivable	(537		)	(2,643		)
Other current assets	(5		)	456
Accounts payable	5,591			8,827
Cashbook overdrafts	1,256			6,216
Accrued interest	1			3,878
Accrued taxes	(5,784		)	(6,266		)
Other current liabilities	(1		)	(69		)
Other, net	(674		)	51
Net Cash Flows Provided by Operating Activities	156,191			92,985
Cash Flows from Investing Activities
Capital expenditures	(11,448		)	(52,279		)
Proceeds received from vending settlement	6,813			—
Proceeds received from restricted deposit	201			—
Acquisition of plant	—			(21		)
Net Cash Flows Used in Investing Activities	(4,434		)	(52,300		)
Cash Flows from Financing Activities
Issuance of debt	131,100			215,700
Payment of debt	(130,100		)	(328,586		)
Contributions from Members	—			172,000
Distributions to Members	(165,250		)	(86,785		)
Debt issue costs	(464		)	(111		)
Net Cash Flows used in by Financing Activities	(164,714		)	(27,782		)
Net (Decrease) Increase in Cash and Cash Equivalents	(12,957		)	12,903
Cash and Cash Equivalents at beginning of period	12,958			55
Cash and Cash Equivalents at end of period	$	1		$	12,958
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest (net of capitalized interest)	$	49,583		$	24,868

The accompanying notes are an integral part of these financial statements.

MIDCONTINENT EXPRESS PIPELINE LLC

NOTES TO FINANCIAL STATEMENTS

1. General

Midcontinent Express Pipeline LLC ("Midcontinent Express") owns a long-haul, firm natural gas transportation pipeline with takeaway capacity, either directly or indirectly, from natural gas producing regions located in Texas, Oklahoma and Arkansas. The pipeline provides the capability to transport natural gas supplies to major pipeline interconnects along its route, which originates near Bennington, Oklahoma and traverses east through Texas, Louisiana and Mississippi to its terminus at Transcontinental Gas Pipe Line Corporation's Station 85 near Butler, Alabama. In June 2010, Midcontinent Express completed two natural gas compression projects that increased Zone 1 capacity from 1.5 to 1.8 billion cubic feet per day, and Zone 2 capacity from 1.0 to 1.2 billion cubic feet per day. The incremental capacity is fully subscribed with ten-year binding shipper agreements. During 2011, Midcontinent Express had natural gas transportation throughput volume of approximately 496.6 million dekatherms (“Dth”).

From its inception on March 1, 2007 to April 11, 2010, Midcontinent Express was owned 50% by Kinder Morgan Operating Limited Partnership “A” (“KMOLPA”), a subsidiary of Kinder Morgan Energy Partners, L.P. (“KMP”), and 50% by ETC Midcontinent Express Pipeline, L.L.C. (“ETC Midcontinent Express”), a wholly owned subsidiary of Energy Transfer Partners, L.P. (“ETP”). Kinder Morgan, Inc. (“KMI”) owns the general partnership interest in KMP. On April 12, 2010, ETC Midcontinent Express transferred its 50.0% Membership interest in Midcontinent Express to ETC Midcontinent Express II LLC (“ETC Midcontinent II”) and ETC Midcontinent II transferred 49.9% of the interest in Midcontinent Express to ETC Midcontinent Express III (“ETC Midcontinent III”). At the time of these transfers, all three entities were subsidiaries of ETP. On May 26, 2010, Energy Transfer Equity L.P. (“ETE”), the owner of the general partner of ETP and the owner of the general partner of Regency Energy Partners LP (“Regency”), transferred 100% of member interests in ETC Midcontinent III and an option to acquire 100% of member interests in ETC Midcontinent II one year thereafter to Regency. On June 3, 2010, ETC Midcontinent III changed its name to Regency Midcontinent Express Pipeline I LLC (“Regency Midcontinent I”).

On September 1, 2011, Regency exercised its option to acquire a 100% interest in ETC Midcontinent Express II, a 0.1% owner of Midcontinent Express, from ETP.

On October 31, 2011, Midcontinent Express II and Regency Midcontinent I, a 49.9% owner of Midcontinent Express, were merged into Regency Midcontinent Express LLC (“RME”), a wholly owned subsidiary of Regency, with RME as the sole surviving entity.

As a result of these transactions, the member interests and voting rights in Midcontinent Express are as follows:

• 50% - KMOLPA; and

• 50% - RME

The prior period financial statements are being presented for the seven months ended December 31, 2010 in order to satisfy the reporting requirements of Regency, representing the period for which Regency was a Member.

2. Summary of Significant Accounting Policies

Basis of Presentation

The preparation of financial statementsin conformity with accounting principles generally accepted in the United States of America (“GAAP”)requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses. Actual results could differ from these estimates. Certain prior year amounts have been reclassified to conform to the current presentation. Subsequent events have been evaluated, which are events or transactions that occurred after December 31, 2011 through the issuance of the accompanying financial statements on February 17, 2012.

Cash Equivalents

Midcontinent Express considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Restricted Deposits

Restricted deposits consist of restricted funds on deposit with escrow agents in support of Midcontinent Express' operations.

Accounting for Regulatory Activities

Midcontinent Express' regulated activities are accounted for in accordance with the “Regulated Operations” Topic of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“Codification”). This Topic prescribes the circumstances in which the application of GAAP is affected by the economic effects of regulation. Regulatory assets and liabilities represent probable future revenues or expenses to Midcontinent Express associated with certain charges and credits that will be recovered from or refunded to customers through the ratemaking process.

As of December 31, 2011 and 2010, Midcontinent Express' regulatory assets totaled $0.7 million and $0.3 million, respectively. The December 31, 2011 regulatory assets amount is included within “Deferred Charges and Other Assets” in the accompanying Balance Sheet, and is primarily attributable to unamortized Federal Energy Regulatory Commission's (“FERC”) annual charge adjustments. The December 31, 2010 regulatory assets amount consists of (i) $0.2 million of Midcontinent Express' fuel tracker (discussed below) which is included within “Other current assets” in the accompanying Balance Sheet and (ii) $0.1 million of unamortized employee benefit costs which is included within “Deferred Charges and Other Assets” in the accompanying Balance Sheet.

As of December 31, 2011 and 2010, Midcontinent Express' regulatory liabilities totaled $5.1 million and $3.9 million, respectively. Both amounts are included within “Accrued other current liabilities” in the accompanying Balance Sheet and are attributable to Midcontinent Express' fuel tracker.

Fuel Recovery Mechanism

Midcontinent Express obtains natural gas quantities from its shippers, in accordance with its tariff and applicable contract terms, as reimbursement for fuel consumed at compressor stations and other locations on its system as well as for natural gas quantities lost and otherwise unaccounted for. Midcontinent Express tracks the volume and associates the value of over- or under-collections of (i) fuel and (ii) lost and unaccounted for quantities through tracking mechanisms that are recorded as an addition or reduction to a regulatory asset or liability balance representing the amounts to be recovered or refunded, respectively, to customers through future rates.

Gas Imbalances

Gas imbalances receivable and payable reflect gas volumes owed to Midcontinent Express from its customers or by Midcontinent Express to its customers. Gas imbalances represent the difference between customer nominated versus actual gas receipts from and gas deliveries to interconnecting pipelines under various Operational Balancing Agreements. Gas imbalances are settled in cash or made up in-kind subject to the terms of the various agreements and are valued at the December 2011 and 2010 average monthly index prices of $3.09 and $4.09 per MMbtu, respectively.

Property, Plant and Equipment

Property, plant and equipment is stated at historical cost, which for constructed plant includes indirect costs such as allowance for funds used during construction, payroll taxes, fringe benefits, administrative and general costs. Expenditures that increase capacities, improve efficiencies or extend useful lives are capitalized. Routine maintenance, repairs and renewal costs are expensed as incurred. The cost of normal retirements of depreciable utility property, plant and equipment, plus the cost of removal less salvage, is recorded in accumulated depreciation with no effect on current period earnings. Gains or losses are recognized upon retirement of utility property, plant and equipment constituting an operating unit or system, and land, when sold or abandoned.

Midcontinent Express maintains natural gas in its pipeline which serves the function of maintaining the necessary pressure to allow efficient transmission of natural gas. This component of natural gas in the pipeline is generally known as “line pack.” Line pack is capitalized within Property, Plant and Equipment, Net and depreciated over the estimated useful life of the pipeline.

Midcontinent Express reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss results when the estimated undiscounted future net cash flows expected to result from the asset's use and its eventual disposition are less than its carrying amount.

Depreciation and Amortization

Depreciation is computed based on the straight-line method over the estimated useful lives of property, plant and equipment. The annual composite rate of depreciation for the years ended December 31, 2011 and 2010 was 3.0%.

Allowance For Funds Used During Construction

Included in the cost of Property, Plant and Equipment, Net is an allowance for funds used during construction (“AFUDC”). AFUDC represents the estimated cost of debt, from borrowed funds, or the estimated cost of capital, from equity funds, during the construction period.

Revenue Recognition

Midcontinent Express recognizes revenues as services are rendered or goods are delivered and, if applicable, title has passed. Midcontinent Express provides various types of natural gas transportation services to its customers in which the natural gas remains the property of these customers at all times. In many cases (generally described as "firm service"), the customer pays a two-part rate that includes (i) a fixed-fee reserving the right to transport natural gas in Midcontinent Express' facilities and (ii) a per-unit rate for volumes actually transported. The fixed-fee component of the overall rate is recognized as revenue in the period the service is provided. The per-unit charge is recognized as revenue when the volumes are delivered to the customers' agreed upon delivery point. In other cases (generally described as "interruptible service"), there is no fixed-fee associated with the services because the customer accepts the possibility that service may be interrupted at Midcontinent Express' discretion in order to serve customers who have purchased firm service. In the case of interruptible service, revenue is recognized in the same manner utilized for the per-unit rate for volumes actually transported under firm service agreements. In addition to the “firm” and “interruptible” transportation services, Midcontinent Express also provides natural gas park and loan services to assist customers in managing short-term gas surpluses or deficits. Revenues are recognized as services are provided, in accordance with the terms negotiated under these contracts.

Debt Issuance Costs

Generally, debt issuance costs are amortized utilizing the straight-line-method, which approximates the effective interest rate method, over the life of the debt or the life of the facility. Debt issuance costs associated with the $175.4 million revolving credit facility, which was subsequently reduced to a $75.0 million credit facility (see Note 5), were amortized over the construction period.

Environmental Matters

Midcontinent Express expenses or capitalizes, as appropriate, environmental expenditures that relate to current operations. Midcontinent Express expenses amounts that relate to an existing condition caused by past operations that do not contribute to current or future revenue generation. Midcontinent Express does not discount environmental liabilities to a net present value, and records environmental liabilities when environmental assessments and/or remedial efforts are probable and costs can be reasonably estimated. Generally, recording of these accruals coincides with the completion of a feasibility study or a commitment to a formal plan of action.

Income Taxes

Midcontinent Express is a limited liability company that has elected to be treated as a partnership for income tax purposes. Accordingly, no provision for federal or state income taxes has been recorded in the financial statements of Midcontinent Express and the tax effects of Midcontinent Express' activities accrue to its Members.

3. Property, Plant and Equipment

Midcontinent Express' Property, Plant and Equipment, Net consisted of the following (in millions):

	At December 31,
	2011			2010
Natural gas pipelines	$	2,318.2		$	2,315.8
General and other	1.3			1.2
Accumulated depreciation and amortization	(169.3		)	(100.3		)
	2,150.2			2,216.7
Construction work in progress	0.6			4.5
Total Property, Plant and Equipment, Net	$	2,150.8		$	2,221.2

4. Members' Equity

During the year ended December 31, 2011 and the seven months ended December 31, 2010, Midcontinent Express made distributions to its Members of approximately $165.3 million and $86.8 million, respectively. During the seven months ended December 31, 2010, Midcontinent Express received Member contributions of $172.0 million, that were used to finance construction.

Subsequent Event

In January 2012, Midcontinent Express paid distributions of $13.5 million to its Members.

5. Financing

Notes Payable

On February 25, 2011, Midcontinent Express replaced its then existing $175.4 million, unsecured revolving credit facility with a $75.0 million, three-year, unsecured revolving credit facility due February 25, 2014. As a result, debt issuance cost of $0.5 million was recorded in “Unamortized Debt Issuance Costs” in the accompanying Balance Sheet. As of February 28, 2011, each of Midcontinent Express' member owners were released from their respective debt obligations under the previous guaranty agreements for the $175.4 million unsecured revolving credit facility. The $75.0 million credit facility is with a syndicate of financial institutions with The Royal Bank of Scotland as the administrative agent. Borrowings under the Midcontinent Express credit facility are generally comprised of underlying notes issued with terms not to exceed 90 days. Interest on borrowings against Midcontinent Express' $75.0 million credit facility accrues at its option at a floating rate equal to either (i) the Prime Rate (but not less than the Federal Funds Rate, plus 0.5%); or (ii) LIBOR, plus a margin, which varies depending upon its credit rating. The credit agreement provides for customary commitment fees and letter of credit fees under the revolving credit facility. As of December 31, 2011, Midcontinent Express had outstanding $1.0 million at a weighted-average interest rate of 4.25% under its $75.0 million revolving credit facility. As of December 31, 2010, Midcontinent Express had no amounts outstanding under its $175.4 million revolving credit facility. During the year ended December 31, 2011 and the seven months ended December 31, 2010, Midcontinent Express had average borrowings outstanding of $12.9 million and $63.6 million, respectively with a weighted-average interest rate of 2.85% and 1.09%, respectively.

The $75.0 million credit facility includes the following restrictive covenants:

• Certain limitations on indebtedness, including capital lease obligations in excess of $20 million;

• Certain limitations on entering into mergers, consolidations, sales of assets and investments;

• Limitations on granting liens; and

• Total debt divided by earnings before interest, income taxes, depreciation and amortization for the preceding four quarters may not exceed 5.0.

The following constitute events of default under the credit facility, subject to certain cure periods:

• Nonpayment of interest, principal or fees;

• Failure to make required payments under other agreements or adverse judgments that exceed $25 million; and

• Voluntary or involuntary bankruptcy or liquidation.

Additionally, the revolving credit facility can be used for the issuance of letters of credit to support the construction and operations of the Midcontinent Express pipeline, and as of December 31, 2011 and 2010, a letter of credit having a face amount of $33.3 million was issued under the credit facility.

Long-term Debt

Midcontinent Express' outstanding long-term debt as of December 31, 2011 and 2010 consisted of the following (in millions):

	December 31,
	2011			2010
5.45% senior notes due September 15, 2014	$	350.0		$	350.0
6.70% senior notes due September 15, 2019	450.0			450.0
Unamortized debt discount	(0.8		)	(1.0		)
Total Long-term debt	$	799.2		$	799.0

Maturities of Debt

The scheduled maturities of Midcontinent Express' outstanding debt balances, excluding unamortized debt discount, as of December 31, 2011 are summarized as follows (in millions):

Year	Commitment
2012	$	—
2013	—
2014	350.0
2015	—
2016	—
Thereafter	450.0
Total	$	800.0

Fair Value

Fair value as used in the disclosure of financial instruments represents the amount at which an instrument could be exchanged in a current transaction between willing parties. As of each reporting date, the estimated fair value of Midcontinent Express' outstanding private placement debt is based upon quoted market prices. In addition, Midcontinent Express adjusts (discounts) the fair value measurement of its long-term debt for the effect of credit risk. The estimated fair value of Midcontinent Express' outstanding debt balance as of December 31, 2011 and 2010 was $867.3 million and $852.9 million, respectively.

6. Related Party Transactions

Midcontinent Express has an operating agreement with Kinder Morgan NatGas Operator LLC, a subsidiary of KMP under which Kinder Morgan NatGas Operator LLC provides and bills Midcontinent Express for various services including employee costs, information technology services, employee health and life benefits, and insurance for property and casualty risks, at cost.

Midcontinent Express' policy is to settle receivable and payable balances that exist with affiliates in the following month.

Totals of significant transactions with affiliated companies are as follows (in millions):

	Year Ended December 31, 2011		Seven Months Ended December 31, 2010
Charges from Kinder Morgan, Inc.(a)
Directly charged wages and salaries	$	3.2	$	2.4
Other compensation and benefits	$	1.2	$	0.9
General and administrative charges from affiliate	$	0.9	$	0.6
Charges from Kinder Morgan NatGas Operator LLC
Overhead fee	$	—	$	0.7

(a) Includes charges of $0.1 million and $1.0 million for the year ended December 31, 2011 and the seven months ended December 31, 2010, respectively, that were capitalized in Property, Plant and Equipment, Net.

Balances with affiliated companies are included in the accompanying Balance Sheets as follows (in millions):

	At December 31,
	2011		2010
Current Liabilities: Accounts payable	$	0.5	$	0.5
Current Liabilities: Gas imbalances	$	0.9	$	0.6

7. Commitments and Contingent Liabilities

Leases

Total lease and rental expenses under operating leases were $15.6 million and $3.9 million for the year ended December 31, 2011 and the seven months ended December 31, 2010, respectively. Future minimum commitments under major operating leases as of December 31, 2011 are as follows (in millions):

Year	Total
2012	$	15.5
2013	15.4
2014	15.5
2015	15.5
2016	15.4
Thereafter	34.8
Total	$	112.1

The amounts of future minimum rental commitments as of December 31, 2011 are principally attributable to a 10-year capacity lease agreement entered into on December 11, 2006 (commenced on April 1, 2009) with Enogex Inc. (“Enogex”). The capacity lease provides the right to transport on a firm basis, 272,000 Dth of natural gas per day through Enogex's system from an existing point of interconnection with the interstate natural gas pipeline system of Natural Gas Pipeline Company of America LLC (“Natural”), at the Washita receipt point, West Pool, and East Pool to a point of interconnection with the Midcontinent Express system in the vicinity of Bennington, Oklahoma.

Capital Expenditures Budget

Approximately $2.0 million had been committed for future purchases of property, plant and equipment at December 31, 2011. These expenditures will be funded by cash generated from operations.

8. Major Customers

During the year ended December 31, 2011, three non-affiliated shippers accounted for $109.2 million (42%), $53.8 million (21%) and $26.0 million (10%), respectively, of Midcontinent Express' total revenues. During the seven months ended December 31, 2010, three non-affiliated shippers accounted for $54.3 million (39%), $31.3 million (23%) and $14.6 million (11%), respectively, of Midcontinent Express' total revenues.

9. Regulatory Matters

There are currently no proceedings challenging the rates Midcontinent Express charges. Regulators, as well as shippers on Midcontinent Express, do have rights, under circumstances prescribed by applicable regulations, to challenge the rates Midcontinent Express charges. Midcontinent Express can provide no assurance that it will not face challenges to the rates it charges in the future. Any successful challenge could adversely affect in a material way Midcontinent Express' future earnings and cash flows.

Semi-Annual FERC Fuel Tracking Filing - Docket No. RP12-87-000

On October 31, 2011, Midcontinent Express made its semi-annual filing under Docket No. RP12-87-000 to revise its Fuel and Unaccounted for Gas (“UAF”) Reimbursement Percentages for its Zone 1, Zone 2, Booster Compression Fuel, and system wide UAF Reimbursement Percentages applicable to its shippers for the period of six months starting December 1, 2011. In this filing, Midcontinent Express proposed a Fuel Reimbursement Percentage of 0.349% for Zone 1 and a Fuel Reimbursement Percentage of 0.276% for Zone 2, which represents a decrease of 0.125% in Zone 1 and a decrease of 0.010% in Zone 2. Also, Midcontinent Express proposed a system wide UAF Reimbursement Percentage of 0.000% and a Booster Compression Fuel Reimbursement Percentage of 0.230%, which represents a decrease of 0.272% for the Booster Compression Fuel Reimbursement Percentage. In this proceeding, Midcontinent Express also requested a continuance of its current waiver regarding the UAF Reimbursement Percentage which would allow Midcontinent Express to hold the UAF percentage at zero rather than allowing the percentage to be negative. On November 28, 2011, the FERC approved the aforementioned tariff fuel rates and granted waiver of the UAF Reimbursement Percentage.

10. Legal and Environmental Matters

Legal

Midcontinent Express Construction Incident

On July 15, 2009, a Midcontinent Express contractor and subcontractor were conducting a nitrogen pressure test on facilities at a Midcontinent Express delivery meter station that was under construction in Smith County, Mississippi. An unexpected release occurred during testing, resulting in one fatality and injuries to four other employees of the contractor or subcontractor. The United States Occupational Safety and Health Administration (“OSHA”) completed their investigation. Midcontinent Express was not cited for any violations by OSHA.

In July 2010, Kinder Morgan, Inc. and Midcontinent Express were named in two lawsuits arising out of the accident. One case was filed by one of the injured workers and the other case was filed by the deceased worker's descendants. Both cases are pending in Louisiana State District Court, Vermilion Parish. Plaintiffs allege that Kinder Morgan, Inc. and Midcontinent Express were negligent and grossly negligent in failing to maintain a safe worksite. Kinder Morgan, Inc. and Midcontinent Express have tendered the cases to the responsible insurance carriers, and they have agreed to accept the defense and indemnity. Discovery is proceeding in the cases.

In addition, Midcontinent Express is a defendant in various lawsuits arising from the day-to-day operations of its business. Although no assurance can be given, Midcontinent Express believes, based on its experience to date, that the ultimate resolution of such matters, including the matter discussed preceding, will not have a material adverse impact on its business, cash flows, financial position or results of operations.

Environmental

Midcontinent Express is subject to a variety of federal, state and local laws that regulate permitted activities relating to air and water quality, waste disposal, and other environmental matters. Midcontinent Express believes that compliance with these laws will not have a material adverse impact on its business, cash flows, financial position or results of operations. However, there can be no assurances that future events, such as changes in existing laws, the promulgation of new laws, or the development of new facts or conditions will not cause Midcontinent Express to incur significant costs.

11. Recent Accounting Pronouncements

ASU No. 2011-04

On May 12, 2011, the FASB issued Accounting Standards Update (“ASU”) No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This ASU amends GAAP and results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between GAAP and international financial reporting standards (“IFRS”). The amendments in this ASU change the wording used to describe many of the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements; however, the amendment's requirements do not extend the use of fair value accounting, and for many of the requirements, the FASB does not intend for the amendments to result in a change in the application of the requirements in the “Fair Value Measurement” Topic of the Codification. Additionally, ASU No. 2011-04 includes some enhanced disclosure requirements, including an expansion of the information required for Level 3 fair value measurements. For Midcontinent Express, ASU No. 2011-04 was effective January 1, 2012, and the adoption of this ASU did not have a material impact on its financial statements.

ASU Nos. 2011-05 and 2011-12

On June 16, 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220): Presentation of Comprehensive Income.” This ASU eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. An entity can elect to present items of net income and other comprehensive income in one continuous statement or in two separate, but consecutive, statements.

ASU No. 2011-05 also requires reclassifications of items out of accumulated other comprehensive income to net income to be measured and presented by income statement line item in both the statement where net income is presented and the statement where other comprehensive income is presented. However, on December 23, 2011, the FASB issued ASU No. 2011-12, “Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” to defer this new requirement. For Midcontinent Express, both ASU No. 2011-05 and ASU No. 2011-12 were effective January 1, 2012. Since these ASUs pertain to presentation and disclosure requirements only, the adoption of these ASUs did not have a material impact on Midcontinent Express' financial statements.

EX-99.5

Exhibit 99.5

Consolidated Financial Statements and Report of Independent Certified Public Accountants

Lone Star NGL LLC

Period from March 21, 2011 (Inception) to December 31, 2011

Lone Star NGL LLC

Consolidated Financial Statements

Period from March 21, 2011 (Inception) to December 31, 2011

Contents

Report of Independent Certified Public Accountants	1
Audited Financial Statements:
Consolidated Balance Sheet	2
Consolidated Statement of Operations	3
Consolidated Statement of Members’ Equity	4
Consolidated Statement of Cash Flows	5
Notes to Consolidated Financial Statements	6

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Members

Lone Star NGL LLC

We have audited the accompanying consolidated balance sheet of Lone Star NGL LLC (a Delaware limited liability company) and subsidiaries (the “Company”) as of December 31, 2011, and the related consolidated statements of operations, changes in members’ equity, and cash flows for the period from inception (March 21, 2011) to December 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Lone Star NGL LLC and subsidiaries as of December 31, 2011, and the results of their operations and their cash flows for the period from inception (March 21, 2011) to December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

/s/ GRANT THORNTON LLP

Dallas, Texas

February 22, 2012

Lone Star NGL LLC

Consolidated Balance Sheet

(In thousands)

Assets	December 31, 2011
Current assets
Cash and cash equivalents	$	35,704
Accounts receivable, net of allowance of $503	41,711
Accounts receivable from related parties	374
Materials and supplies	5,187
Inventories	10,639
Other current assets	2,093
Total current assets	95,708
Property, plant & equipment, net	1,577,575
Goodwill	432,026
Intangible assets, net	76,705
Other assets	24,613
Total assets	$	2,206,627
Liabilities and Members’ Equity
Current liabilities
Accounts payable	$	37,686
Accounts payable to related parties	4,026
Accrued expenses and other current liabilities	67,386
Exchanges payable	534
Income taxes payable	926
Deferred income tax liabilities	4
Total current liabilities	110,562
Non-current liabilities	341
Commitments and contingencies (Note 8)
Members’ equity	2,095,724
Total liabilities and members’ equity	$	2,206,627

See accompanying notes.

Lone Star NGL LLC

Consolidated Statement of Operations

(In thousands)

	Period from March 21, 2011 (Inception) to December 31, 2011
Revenues	$	397,001
Costs and expenses
Costs of sales	218,282
Operating expenses	39,254
General and administrative expenses	13,326
Depreciation and amortization	32,248
Total operating expenses	303,110
Operating Income	93,891
Interest income	20
Other income, net	880
Income before income tax expense	94,791
Income tax expense	833
Net income	$	93,958

See accompanying notes.

Lone Star NGL LLC

Consolidated Statement of Members’ Equity

(In thousands)

	Total			La Grange Acquisition, L.P.			Regency Midstream LLC
Balance at March 21, 2011 (Inception)	$ -			$ -			$ -
Net income	93,958			65,771			28,187
Initial contributions from members	1,975,549			1,382,884			592,665
Contributions from members	175,336			122,735			52,601
Distributions to members	(149,119		)	(104,383		)	(44,736		)
Balance at December 31, 2011	$	2,095,724		$	1,467,007		$	628,717

See accompanying notes.

Lone Star NGL LLC

Consolidated Statement of Cash Flows

(In thousands)

	Period from March 21, 2011 (Inception) to December 31, 2011
Cash flows from operating activities:
Net income	$	93,958
Adjustments to reconcile net income to net cash provided by operating    activities:
Depreciation and amortization	32,248
Provision for losses on accounts receivable	503
Deferred income tax	(93		)
Changes in operating assets and liabilities
Accounts receivable	32,701
Accounts receivable from related parties	(374		)
Materials and supplies	710
Inventories	(4,683		)
Other current assets	(1,915		)
Other assets	(24,457		)
Accounts payable	(22,664		)
Accounts payable to related parties	4,026
Accrued expenses and other current liabilities	(4,664		)
Exchanges payable	534
Income taxes payable	926
Net cash provided by operating activities	106,756
Cash flows from investing activities:
LDH Energy Asset Holdings LLC acquisition, net of cash received	(1,944,318		)
Additions to property, plant and equipment	(128,500		)
Net cash used in investing activities	(2,072,818		)
Cash flows from financing activities:
Contributions from Members	2,150,885
Distributions to Members	(149,119		)
Net cash provided by financing activities	2,001,766
Net increase in cash and cash equivalents	35,704
Beginning cash and cash equivalents	-
Ending cash and cash equivalents	$	35,704

See accompanying notes.

Lone Star NGL LLC

Notes to Consolidated Financial Statements

1. Business and Organization

Business

ETP-Regency Midstream Holdings, LLC (“ETP-Regency LLC”), a Delaware limited liability company, was formed on March 21, 2011 as a joint venture owned 70% by La Grange Acquisition, L.P., an indirect wholly owned subsidiary of Energy Transfer Partners, L.P. (“ETP”), and 30% by Regency Midstream LLC, an indirect wholly owned subsidiary of Regency Energy Partners LP (“Regency”). ETP and Regency are referred to herein collectively as the “Members”.

ETP-Regency LLC began operations on May 2, 2011 when it acquired all of the membership interest in LDH Energy Asset Holdings LLC (“LDH”), from Louis Dreyfus Highbridge Energy LLC (“Louis Dreyfus”) for approximately $1.98 billion in cash (the “LDH Acquisition”), including working capital adjustments (see Note 3). Subsequent to the closing of the LDH Acquisition, ETP-Regency LLC was renamed Lone Star NGL LLC (“Lone Star” or the “Company”).

Lone Star provides services in the midstream sector of the energy industry, which is the link between upstream exploration and production activities and downstream end-users. The Company is engaged in the business of storing and transporting natural gas liquids (“NGLs”) and fractionation of NGLs and petrochemicals. Lone Star conducts its activities through its wholly owned operating subsidiaries, which are as follows:

• Lone Star NGL Mont Belvieu LP owns and operates natural gas liquid (“NGL”), refined petroleum product and petrochemical storage capacity in underground salt dome caverns located in Mont Belvieu, Texas, as well as NGL pipelines located in Brazoria, Chambers and Harris Counties, Texas. Its pipeline system and associated interconnects tie the Mont Belvieu facility to refineries and petrochemical facilities along the upper Texas Gulf Coast. The Mont Belvieu facility also provides truck and rail car loading capacity. In addition, through interconnections with third party pipelines, natural gas liquids and refined petroleum products stored by the Mont Belvieu facility may be transported to the Midwest, Southeast and Northeast.

• Lone Star NGL Fractionators LLC began construction on a fractionator at the Mont Belvieu facility in 2011 that will process Y-grade NGLs into purity products. ETP will utilize a substantial amount of this fractionation capacity to handle NGL barrels it will deliver from its Jackson county, Texas processing plant. The project will also include interconnectivity infrastructure to provide NGL suppliers and NGL markets with significant access to storage, other fractionators, pipelines and multiple markets along the Texas and Louisiana gulf coast. Lone Star expects to have the Mont Belvieu fractionation facilities in service by the first quarter of 2013.

Lone Star NGL LLC

Notes to Consolidated Financial Statements (continued)

1. Business and Organization (continued)

• Lone Star NGL Hattiesburg LLC owns and operates an underground NGL storage facility located in Petal, Mississippi. This storage facility also contains truck and rail loading racks, and drying equipment. The storage facility is principally used for the storage of propane and butane.

• Lone Star NGL Pipeline LP owns and operates the West Texas Pipeline, an intrastate, NGLs pipeline system in Texas. Originating in west Texas, the pipeline gathers Y-grade NGL streams from various third party gas processing plants in the Permian Basin and Barnett Shale and transports such liquids to locations in East Texas, including Hull, Texas and the Mont Belvieu, Texas area. Through third party interconnections, this pipeline system also transports Y-grade NGL streams produced in the Rocky Mountain region. The West Texas Pipeline includes an underground liquid facility used for system balancing. In 2011 Lone Star began construction of a pipeline from Winkler county in west Texas to ETP’s processing plant in Jackson county Texas. The pipeline is expected to be in service by first quarter 2013.

• Lone Star NGL Refinery Services LLC owns and operates two cryogenic refinery off-gas processing facilities, a fractionator and a pipeline connecting such facilities located along the Mississippi River corridor in South Louisiana. These plants process refinery off-gas from third party refineries and fractionate the resulting natural gas liquids and petrochemicals stream into its separate components.

• Lone Star NGL Sea Robin LLC owns a 20% interest in a cryogenic gas processing facility that straddles the Sea Robin natural gas pipeline at Erath, Louisiana. Sea Robin is located directly adjacent to the Henry Hub and provides access to nine interstate and four intrastate natural gas pipelines.

Organization

Lone Star is operated under the terms of its limited liability company agreement. Under the terms of this agreement, Lone Star is managed by a board consisting of one board member appointed by each Member and who have equal voting rights. Pursuant to the limited liability operating agreement, the Members have agreed to contribute to the Company, in proportion to their ownership interests, any capital contributions approved by the Company Board by unanimous consent.

Lone Star NGL LLC

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements presented herein include the accounts of the Company and its wholly owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany transactions between the Company and its subsidiaries have been eliminated.

Lone Star owns an undivided interest in a cryogenic gas processing plant. Ownership of this facility has been structured as an ownership of undivided interest in assets, not as an ownership interest in a partnership, limited liability company, joint venture or other forms of entities. Each owner controls marketing and invoices separately, and each owner is responsible for any loss, damage or injury that may occur to their own customers. As a result, the Company applies proportionate consolidation for its interest in this facility.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the accrual for and disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses.

The NGL industry conducts its business by processing actual transactions at the end of the month following the month of delivery. Consequently, the most current month’s financial results for the storage, transportation and processing operations are estimated using volume estimates and contractual and market prices. Any differences between estimated results and actual results are recognized in the following month’s financial statements. Management believes that the estimated operating results represent the actual results in all material respects.

Some of the other significant estimates made by management include, but are not limited to, useful lives from depreciation and amortization, purchase accounting allocations and subsequent realizability of intangible assets, fair value measurements used in goodwill impairment tests, and contingency reserves. Actual results could differ from those estimates.

Revenue Recognition

Storage and Pipeline Transportation revenues are recognized when services are performed or products are delivered, respectively. Fractionation and Processing revenues are recognized when product is either loaded into a truck or injected into a third party pipeline, which is when title and risk of loss pass to the customer.

Lone Star NGL LLC

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Cash and Cash Equivalents

Cash and cash equivalents include all cash on hand, demand deposits, and investments with original maturities of three months or less. Lone Star considers each cash equivalent to include short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.

Lone Star places its cash deposits and temporary cash investments with high credit quality financial institutions. At times, its cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance Corporation insurance limit.

Non-cash supplemental cash flow information is as follows (in thousands):

	Period from March 21, 2011 to December 31, 2011
Accrued capital expenditures	$	57,755

Accounts Receivable

Lone Star regularly reviews its trade accounts receivable balances for collectability in the event facts and circumstances indicate that the carrying amount may not be collectible and provides for any unrealizable amounts. Bad debt expense related to these receivables is recognized at the time an account is deemed uncollectible. As of December 31, 2011, an allowance for doubtful accounts of $0.5 million was recorded.

Inventories

Inventories consist primarily of refined petroleum products held in storage valued at the lower of cost or market utilizing the weighted-average cost method.

Exchanges

Exchanges consist of NGL delivery imbalances (over and under deliveries) with others. These amounts, which are valued at market prices or weighted average market prices pursuant to contractual imbalance agreements, turn over monthly and are recorded as exchanges receivable and exchanges payable on Lone Star’s consolidated balance sheets. These imbalances are generally settled by deliveries of NGLs, but may be settled in cash, depending on contractual terms.

Lone Star NGL LLC

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Fair Value

The carrying amounts of cash and cash equivalents, accounts receivable and account payables approximate their fair value.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Expenditures for maintenance and repairs that do not add capacity or extend the useful life are expensed as incurred. Expenditures to refurbish assets that extend the useful lives of the asset are capitalized and depreciated over the remaining useful life of the asset. Upon disposition or retirement of pipeline components or natural gas plant components, any gain or loss is recorded to accumulated depreciation. When entire pipeline systems, gas plants or other property and equipment are retired or sold, any gain or loss is included in Lone Star’s consolidated statements of operations.

Lone Star reviews property, plant and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If such review should indicate that the carrying amount of long lived assets is not recoverable, the Company reduces the carrying amount of such assets to fair value. No impairment of long-lived assets was required during the period presented.

Goodwill

In September 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updated No. 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment (“ASU 2011-08”), which simplified how entities test goodwill for impairment. ASU 2011-08 gives entities the option, under certain circumstances, to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether further impairment testing is necessary. ASU 2011-08 was effective for fiscal years beginning after December 15, 2011, and early adoption was permitted. Lone Star adopted and applied this standard to its annual impairment tests performed during the year ended December 31, 2011. There was no material impact to the Company’s financial position or results of operations as a result of the adoption of this standard.

Goodwill is tested for impairment annually or more frequently if circumstances indicate that goodwill might be impaired. Lone Star’s annual impairment test is performed as of December 31. No goodwill impairment was recorded for the period presented in these consolidated financial statements.

Lone Star NGL LLC

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Intangibles and Other Assets

Intangibles and other assets are stated at cost, net of amortization computed on the straight-line method. Lone Star eliminates from its balance sheet the gross carrying amount and the related accumulated amortization for any fully amortized intangible in the year they are fully amortized.

The Company reviews amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If such review should indicate that the carrying amount of amortizable intangible assets is not recoverable, Lone Star reduces the carrying amount of such assets to fair value. No impairment of intangible assets was required during the period presented in these consolidated financial statements.

Asset Retirement Obligation

Lone Star has determined that it is obligated by contractual or regulatory requirements to remove facilities or perform other remediation upon retirement of certain assets. Determination of the amounts to be recognized is based upon numerous estimates and assumptions, including expected settlement dates, future retirement costs, future inflation rates and the credit-adjusted risk-free interest rates. However, management was not able to reasonably measure the fair value of the asset retirement obligations as of December 31, 2011 because the settlement dates are indeterminable. Lone Star will record an asset retirement obligation in the periods in which management can reasonably determine the settlement dates.

Costs and Expenses

Costs of products sold include actual cost of NGLs sold. Operating expenses include all costs incurred to provide products to customers, including compensation for operations personnel, insurance costs, vehicle maintenance, advertising costs, purchasing costs and plant operations. Selling, general and administrative expenses include all company related expenses and compensation for executive, company and administrative personnel including the allocation from ETP discussed in Note 9.

Lone Star records the collection of taxes to be remitted to government authorities on a net basis.

Lone Star NGL LLC

Notes to Consolidated Financial Statements (continued)

2. Summary of Significant Accounting Policies (continued)

Income Taxes

Lone Star is a limited liability company that has elected to be treated as a partnership for income tax purposes. Accordingly, no provision for federal or state income taxes has been recorded in the consolidated financial statements of Lone Star and the tax effects of Lone Star’s activities generally accrue to the Members. The income tax expense reflected on the statement of operations is for the Texas margins tax.

3. Acquisitions

On May 2, 2011, Lone Star acquired all of the membership interest in LDH, from Louis Dreyfus for approximately $1.98 billion in cash, including working capital adjustments. Lone Star accounted for the LDH Acquisition using the acquisition method of accounting. The following table summarizes the assets acquired and liabilities assumed recognized as of the acquisition date (in thousands):

Total current assets	$	118,177
Property, plant and equipment (1)	1,419,591
Goodwill	432,026
Intangible assets	81,000
Other assets	157
	2,050,951
Total current liabilities	74,964
Non-current liabilities	438
	75,402
Total consideration	1,975,549
Cash received	31,231
	$	1,944,318

Lone Star NGL LLC

Notes to Consolidated Financial Statements (continued)

3. Acquisitions (continued)

(1) Property, plant and equipment (and estimated useful lives) consists of the following (in thousands):

Land improvements	$	30,759
Buildings and improvements (10 to 40 years)	3,123
Pipelines and equipment (20 to 65 years)	662,881
Natural gas liquids storage (40 years)	682,419
Linepack	704
Vehicles (3 to 20 years)	242
Furniture and fixtures (3 to 10 years)	49
Other (5 to 10 years)	8,526
Construction work-in-progress	30,888
Total property, plant and equipment	$	1,419,591

4. Inventories

Inventories as of December 31, 2011 consisted of the following (in thousands):

	December 31, 2011
Ethane	$	2,389
Propane	81
Natural gasoline	336
Ultra-low-sulfur diesel	637
Conventional gasoline	7,196
Total inventories	$	10,639

Lone Star NGL LLC

Notes to Consolidated Financial Statements (continued)

5. Property, Plant and Equipment, Net

Property, plant and equipment as of December 31, 2011 consisted of the following (in thousands):

	December 31, 2011
Land improvements	$	30,759
Buildings and improvements (10 to 40 years)	4,915
Pipelines and equipment (20 to 65 years)	688,217
Right of way	389
Natural gas liquids storage (40 years)	686,953
Linepack	704
Vehicles (3 to 20 years)	1,037
Furniture and fixtures (3 to 10 years)	49
Other (5 to 10 years)	8,549
Construction work-in-progress	183,955
	1,605,527
Less - Accumulated depreciation	27,952
Property, plant and equipment, net	$	1,577,575

Lone Star recognized $28 million of depreciation expense for the period from March 21, 2011 to December 31, 2011.

6. Intangible Assets

Intangible assets as of December 31, 2011 were as follows (in thousands):

	December 31, 2011
Customer relationships (3 to 15 years)	$	81,000
Less - Accumulated amortization	(4,295		)
Intangibles, net	$	76,705

Lone Star NGL LLC

Notes to Consolidated Financial Statements (continued)

6. Intangible Assets (continued)

Amortization expense related to intangible assets for the next five years is expected to be the following (in thousands):

Years Ending December 31:
2012	$	6,443
2013	6,443
2014	5,318
2015	5,318
2016	5,318

7. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities as of December 31, 2011 consisted of the following (in thousands):

	December 31, 2011
Customer advances and deposits	$	695
Accrued capital expenditures	57,019
Accrued wages and benefits	2,525
Taxes other than income taxes	2,360
Other	4,787
Total accrued and other current liabilities	$	67,386

8. Commitments and Contingencies

Commitments

Lone Star leases office space, automobiles, office equipment and other equipment under non-cancellable operating leases that have expiration dates extending through July 2015. Aggregate rent expense for the period from March 21, 2011 (inception) to December 31, 2011 was $0.8 million.

Lone Star NGL LLC

Notes to Consolidated Financial Statements (continued)

8. Commitments and Contingencies (continued)

Future minimum lease payments under such leases with lease terms in excess of one year as of December 31, 2011, are as follows (in thousands):

2012	$	65
2013	19
2014	19
2015	5
	$	108

NGL Pipeline Regulation

Lone Star has interests in NGL pipelines located in Texas. The company believes that these pipelines do not provide interstate service and that they are thus not subject to the jurisdiction of the FERC under the Interstate Commerce Act (“ICA”) and the Energy Policy Act of 1992. Under the ICA, tariffs must be just and reasonable and not unduly discriminatory or confer any undue preference. Lone Star cannot guarantee that the jurisdictional status of its NGL facilities will remain unchanged; however, should they be found jurisdictional, the FERC’s rate-making methodologies may limit its ability to set rates based on its actual costs, may delay or limit the use of rates that reflect increased costs and may subject the Company to potentially burdensome and expensive operational, reporting and other requirements. Any of the foregoing could adversely affect Lone Star’s business, revenues and cash flow.

Litigation and Contingencies

Lone Star may, from time to time, be involved in litigation and claims arising out of its operations in the normal course of business. Serious personal injury and significant property damage can arise in connection with the transportation, storage or use of NGLs. In the ordinary course of business, Lone Star is sometimes threatened with or named as a defendant in various lawsuits seeking actual and punitive damages for product liability, personal injury and property damage. The Company maintains liability insurance with insurers in amounts and with coverage and deductibles management believes are reasonable and prudent, and which are generally accepted in the industry. However, there can be no assurance that the levels of insurance protection currently in effect will continue to be available at reasonable prices or that such levels will remain adequate to protect Lone Star from material expenses related to product liability, personal injury or property damage in the future.

Lone Star NGL LLC

Notes to Consolidated Financial Statements (continued)

8. Commitments and Contingencies (continued)

Lone Star is a party to various legal proceedings and regulatory proceedings incidental to its businesses. For each of these matters, Lone Star evaluates the merits of the case, the exposure to the matter, possible legal or settlement strategies, the likelihood of an unfavorable outcome and the availability of insurance coverage. If it is determined that an unfavorable outcome of a particular matter is probable and can be estimated, Lone Star accrues the contingent obligation, as well as any expected insurance recoverable amounts related to the contingency. As of December 31, 2011, accruals of approximately $3.3 million were reflected on the balance sheet related to these contingent obligations.

The outcome of these matters cannot be predicted with certainty and there can be no assurance that the outcome of a particular matter will not result in the payment of amounts that have not been accrued for the matter. Furthermore, Lone Star may revise accrual amounts prior to resolution of a particular contingency based on changes in facts and circumstances or changes in the expected outcome.

No amounts have been recorded in the December 31, 2011 consolidated balance sheet for contingencies and current litigation, other than amounts disclosed herein.

9. Related Party Transactions

ETP is the operator of Lone Star; therefore, the employees of ETP perform services for its operations. Lone Star reimburses ETP for all costs related to these employees. For the period from March 21, 2011 to December 31, 2011, Lone Star paid $11.6 million for these services.

ETP has an agreement to provide Lone Star with various general and administrative services. For the period from March 21, 2011 to December 31, 2011, Lone Star paid $7.1 million in management fees related to these services.

Lone Star provides subsidiaries of ETP and Regency with certain NGL, storage and transportation services. For the period from March 21, 2011 to December 31, 2011, Lone Star recorded revenue of $33.7 million and $0.2 million related to transactions with ETP and Regency, respectively.

Lone Star NGL LLC

Notes to Consolidated Financial Statements (continued)

9. Related Party Transactions (continued)

The following table summarizes the related party balances on Lone Star’s consolidated balance sheet (in thousands):

	December 31, 2011
Accounts receivable from related parties:
ETP	$	35
Regency	281
Other	58
Total accounts receivable from related parties	$	374
Accounts payable to related parties:
ETP	$	3,864
Other	162
Total accounts payable to related parties	$	4,026
Net imbalance - Other	$	475

10. Major Customers

During the period from March 21, 2011 to December 31, 2011, Lone Star had revenues from three non-affiliated customers of approximately $310 million. Revenues from each of these three customers were over 10% of Lone Star’s total revenues for the period.

11. Subsequent Events

Subsequent events have been evaluated through February 22, 2012, the date the financial statements were available to be issued.

EX-99.6

Exhibit 99.6

LDH Energy Asset Holdings LLC

Consolidated Financial Statements

Years Ended December 31, 2010, 2009 and 2008

Contents

Report of Independent Auditors	2
Consolidated Balance Sheets	3
Consolidated Statements of Income	4
Consolidated Statements of Member’s Equity	5
Consolidated Statements of Cash Flows	6
Notes to Consolidated Financial Statements	7

1

Report of Independent Auditors

To the Member

LDH Energy Asset Holdings LLC

We have audited the accompanying consolidated balance sheets of LDH Energy Asset Holdings LLC as of December 31, 2010 and 2009, and the related consolidated statements of income, member’s equity and cash flows for each of the three years in the period ended December 31, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of LDH Energy Asset Holdings LLC at December 31, 2010 and 2009, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2010, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Hartford, Connecticut

February 28, 2011

2

LDH Energy Asset Holdings LLC

Consolidated Balance Sheets

	December 31
	2010		2009
	(In Thousands)
Assets
Current assets:
Cash	$	21,377	$	24,812
Trade accounts receivable, net allowance of $2,202 and $0, respectively	40,816		40,406
Trade receivables from related parties	47,987		53,428
Inventories	3,759		332
Prepaid expenses and other current assets	664		994
Total current assets	114,603		119,972
Property, plant and equipment, net	611,061		567,141
Intangibles, net	15,459		16,843
Goodwill	24,438		24,438
Other assets	19,478		22,290
Total assets	$	785,039	$	750,684
Liabilities and member’s equity
Current liabilities:
Accounts payable and accrued expenses	$	103,118	$	94,804
Accounts payable to related parties	4,513		7,072
Total current liabilities	107,631		101,876
Long-term debt	250,000		250,000
Other liabilities	438		2,649
Other liabilities to related parties	1,250		—
Commitments and contingencies (Note 9)	—		—
Member’s equity	425,720		396,159
Total liabilities and member’s equity	$	785,039	$	750,684

See accompanying notes.

3

LDH Energy Asset Holdings LLC

Consolidated Statements of Income

	Year Ended December 31
	2010			2009		2008
	(In Thousands)
Storage revenues	$	119,299		$	81,525	$	54,529
Pipeline Transportation revenues	40,023			38,173		28,817
Fractionation and Processing revenues	187,192			136,969		241,337
Total revenues	346,514			256,667		324,683
Direct cost of Storage revenues	2,239			1,693		1,378
Direct cost of Pipeline Transportation revenues	486			1,598		5,468
Direct cost of Fractionation and Processing revenues	108,093			87,360		165,942
Total cost of revenues	110,818			90,651		172,788
Gross profit	235,696			166,016		151,895
Operating expenses	66,497			60,344		65,232
General and administrative expenses	35,641			28,111		9,989
Depreciation and amortization	25,597			22,279		15,773
Operating income	107,961			55,282		60,901
Interest expense, net	16,894			10,472		12,494
Other income (expense)	(481		)	6		186
Income before taxes	90,586			44,816		48,593
Income tax provision	—			—		—
Net income	$	90,586		$	44,816	$	48,593

See accompanying notes.

4

LDH Energy Asset Holdings LLC

Consolidated Statements of Member’s Equity

	Member’s Equity
	(In Thousands)
Balance at December 31, 2007	$	60,544
Net income	48,593
Capital contributions	156,798
Balance at December 31, 2008	265,935
Net income	44,816
Capital contributions	311,910
Distributions to member	(226,502		)
Balance at December 31, 2009	396,159
Net income	90,586
Capital contributions	6,975
Distributions to member	(68,000		)
Balance at December 31, 2010	$	425,720

See accompanying notes.

5

Asset Holdings LLC

Consolidated Statements of Cash Flows

	Year Ended December 31
	2010			2009			2008
	(In Thousands)
Operating activities
Net income	$	90,586		$	44,816		$	48,593
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	24,213			20,894			14,388
Amortization of intangibles	1,384			1,385			1,385
Amortization of deferred financing costs	3,107			254			—
Bad debt expense	2,044			—			—
Other	454			587			481
Non-cash compensation	6,975			7,078			—
Changes in operating assets and liabilities:
Trade accounts receivable	(2,453		)	(30,771		)	6,262
Trade receivables from related parties	5,441			(51,789		)	3,977
Inventories	(3,427		)	1,266			39
Prepaid expenses and other current assets	330			815			403
Accounts payable and accrued expenses	3,268			73,153			(15,374		)
Accounts payable to related parties	(2,560		)	1,888			5,092
Other liabilities to related parties	1,250			—			—
Other	(2,629		)	(1,761		)	(396		)
Net cash provided by operating activities	127,983			67,815			64,850
Investing activities
Purchases of property, plant and equipment	(63,087		)	(96,144		)	(172,786		)
Net cash used in investing activities	(63,087		)	(96,144		)	(172,786		)
Financing activities
Issuance of long term debt	—			250,000			—
Net borrowings from related parties	—			35,585			109,873
Distributions to member	(68,000		)	(224,155		)	—
Debt issuance costs	(331		)	(11,145		)	—
Net cash (used in) provided by financing activities	(68,331		)	50,285			109,873
(Decrease) increase in cash	(3,435		)	21,956			1,937
Cash at beginning of year	24,812			2,856			919
Cash at end of year	$	21,377		$	24,812		$	2,856
Non-cash activities
Distribution of subsidiary to member	$	—		$	(2,347	)	$	—
Contribution of due to related parties to member’s equity	$	6,975		$	311,910		$	156,798

See accompanying notes.

6

LDH Energy Asset Holdings LLC

Notes to Consolidated Financial Statements

December 31, 2010

1. Business, Organization and Summary of Significant Accounting Policies

Business – LDH Energy Asset Holdings LLC (the “Company”) provides services in the midstream sector of the energy industry, which is the link between upstream exploration and production activities and downstream end-user markets. The Company is engaged in the business of storing and transporting natural gas liquids; storing refined petroleum products; processing both natural gas and refinery off-gas; fractionating natural gas liquids and petrochemicals and storing and blending coal, primarily in the U.S. Gulf Coast. Operations are divided into three business segments: Storage, Pipeline Transportation, and Fractionation and Processing.

The activities of the Company are primarily conducted through its wholly owned subsidiary, LDH Energy Asset Holdings II LLC (“AH II”), which, in turn, conducts its activities through its wholly owned operating subsidiaries, which are as follows:

• LDH Energy Mont Belvieu L.P. (“MBLP”) (Storage) owns and operates approximately 43 million barrels of natural gas liquid, refined petroleum product and petrochemical storage capacity in 24 underground salt dome caverns located in Mont Belvieu, Texas, as well as 200 miles of natural gas liquids pipelines located in Brazoria, Chambers and Harris Counties, Texas. Its pipeline system and associated interconnects tie the Mont Belvieu facility to refineries and petrochemical facilities along the upper Texas Gulf Coast. MBLP also provides truck and rail car loading capacity. In addition, through interconnections with third party pipelines, natural gas liquids and refined petroleum products stored by MBLP may be transported to the Midwest, Southeast and Northeast.

• LDH Energy Hattiesburg LLC (Storage) owns and operates an underground natural gas liquid storage facility located in Petal, Mississippi. This storage facility consists of 3.9 million barrels of storage capacity, truck and rail loading racks, and drying equipment. The storage facility is principally used for the storage of propane and butane.

• LDH Energy Cyrus River Terminal LLC (Storage) owns and operates a coal terminal along the Big Sandy River in Kenova, West Virginia, within the delivery zone for the NYMEX Central Appalachian coal futures contracts. The facility is a blending terminal where 5 million tons of coal per year can be aggregated and stored, and/or blended to higher specifications, then loaded onto barges and trucks. The facility has approximately 1.1 million tons of surface storage and a fleeting capacity of 13 barges.

• LDH Energy Pipeline L.P. (Pipeline Transportation) owns and operates a 1,066-mile, intrastate, natural gas liquids pipeline system in the State of Texas. Originating in West Texas, the pipeline gathers Y-grade natural gas liquid streams from various third party gas processing plants in the Permian Basin and Barnett Shale and transports such liquids to locations in East Texas, including Hull, Texas and the Mont Belvieu, Texas area. Through third party interconnections, this pipeline system also transports Y-grade natural gas liquid streams produced in the Rocky Mountain region. The pipeline system, which includes a 200,000 barrel underground liquid storage facility used for system balancing, has an overall maximum capacity of 144,000 barrels per day at its current pump configuration.

• LDH Energy Gas Development L.P. (Pipeline Transportation) owns and operates a pipeline system that gathers raw natural gas from producers in the southern end of the Barnett Shale field for delivery to gas plants connected to the pipeline. The gathering system includes approximately 100 miles of pipeline with a capacity of 20 million cubic feet per day at current compression.

• LDH Energy Refinery Services LLC (Fractionation and Processing) owns and operates two cryogenic refinery off-gas processing facilities, a fractionator, and a pipeline connecting such facilities located along the Mississippi River corridor in South Louisiana. These plants process refinery off-gas from third party refineries and fractionate the resulting natural gas liquids and petrochemicals stream into its separate components.

• LDH Energy Sea Robin LLC (“Sea Robin”) (Fractionation and Processing) owns a 20% interest in a cryogenic gas processing facility that straddles the Sea Robin natural gas pipeline at Erath, Louisiana. Sea Robin is located directly adjacent to the Henry Hub and provides access to nine interstate and four intrastate natural gas pipelines.

7

LDH Energy Asset Holdings LLC

Notes to Consolidated Financial Statements (continued)

1. Business, Organization and Summary of Significant Accounting Policies (continued)

Organization – The Company, a limited liability company organized under the laws of the State of Delaware, is a wholly owned subsidiary of Louis Dreyfus Highbridge Energy LLC (“LDH Energy”). LDH Energy is a subsidiary of Louis Dreyfus Ventures Corp. (“LDV”), its U.S. parent, which owns a controlling interest in LDH Energy. LDV is a wholly owned subsidiary of Louis Dreyfus Energy Holdings Schweiz AG, whose ultimate parent is Akira B.V.

In accordance with the limited liability company agreement, no current or future member shall be liable for debts, obligations or other liabilities of the Company solely by reason of being a member. Profits and losses for any fiscal year are fully allocated to the member.

To reorganize its asset businesses, LDH Energy contributed AH II, which was a wholly owned subsidiary of LDH Energy, to the Company effective December 2, 2009. This transaction has been accounted for in accordance with Accounting Standards Codification (“ASC”) 805–Business Combinations, in a manner similar to a pooling of interests. Accordingly, the assets and liabilities of AH II are included in the accompanying consolidated balance sheets effective February 24, 2009 (the date of formation of AH II) and the results of its operations, which is a net loss of approximately $7.3 million through December 2, 2009, is included in the accompanying consolidated statement of income since the date of formation. In conjunction with this reorganization effort, all of the membership interests in LDH Energy Resources LLC (“LDR”), a wholly owned subsidiary of the Company, were distributed to LDH Energy effective December 2, 2009, which is reflected as a distribution to member in the consolidated statement of member’s equity. The assets and liabilities of LDR and the results of its operations are included in the accompanying consolidated financial statements through the date of distribution.

Effective December 31, 2008, the Company’s member agreed to recapitalize the Company to achieve a capital structure consisting of approximately 50% affiliated debt and 50% equity. Accordingly, the Company’s member converted a portion of the due to related parties balance to an equity contribution on December 31, 2008. During 2009, the remaining balance in the due to related parties account was converted into an equity contribution in connection with the aforementioned reorganization.

Consolidation – The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany transactions between the Company and its subsidiaries have been eliminated.

Use of Estimates – The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Reclassification – Certain reclassifications have been made to prior year amounts to conform to the current year presentations.

Revenue Recognition – Storage and Pipeline Transportation revenues are recognized when services are performed or products are delivered, respectively. Fractionation and Processing revenues are recognized when product is either loaded into a truck or injected into a third-party pipeline, which is when title and risk of loss pass to the customer.

Cash – At any time, cash in banks may exceed federally insured limits.

Trade Accounts Receivable – The Company regularly reviews its trade accounts receivable balances for collectibility in the event facts and circumstances indicate that the carrying amount may not be collectible and provides for any unrealizable amounts. Amounts are written off when they are deemed to be uncollectible. Past due status of accounts receivable is determined based on contract terms.

Concentration of Credit Risk – Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of trade accounts receivable. The Company performs ongoing credit evaluations of its customers’ financial condition but generally does not require collateral or other security to support customer receivables. A third-party customer accounted for approximately 15% and 21% of total trade accounts receivable, excluding related parties at December 31, 2010 and 2009, respectively. See Note 12 for further information on significant customers.

8

LDH Energy Asset Holdings LLC

Notes to Consolidated Financial Statements (continued)

1. Business, Organization and Summary of Significant Accounting Policies (continued)

Inventories – Storage and Pipeline Transportation inventories principally consist of physical quantities of natural gas liquids and coal recorded at the lower of cost or market. Fractionation and Processing inventories consist of fungible, physical quantities of natural gas liquids, which are acquired by the Company under various contracts with third parties and commingled in the Company’s facilities. As a result, the Company is unable to determine approximate cost of its Fractionation and Processing inventories. Since such inventories are immediately marketable at quoted market prices and have unit interchangeability, they have been recorded at fair value.

Investments – Sea Robin maintains an approximate 20% interest in a cryogenic gas processing facility. Capital expenditures for this facility are based on plant ownership; at December 31, 2010 and 2009, the Company’s cumulative share of these expenditures was approximately $8.8 million and is included in other assets in the accompanying consolidated balance sheets. Operating costs for this facility are allocated 50% based on plant ownership and 50% based on the ratio of the allocated share of an owner’s liquids produced to all liquids produced in the plant for a given month. For the years ended December 31, 2010, 2009 and 2008, operating expenses allocated to the Company were approximately $1.4 million, $1.5 million, and $1.2 million, respectively.

Fair Value of Financial Instruments – The carrying amount of the Company’s current assets and current liabilities approximate their fair value due to their short-term nature. The fair value of the Company’s senior debt approximates their carrying amounts due to their floating rates and the fact that the Company may repay the debt at any time at its carrying amount.

Property, Plant and Equipment, Net – Property, plant and equipment are carried at cost, which includes interest capitalized in accordance with ASC 835–Interest, and depreciated on a straight-line basis over their estimated useful lives. Maintenance and repairs are charged to expense as incurred.

Asset Retirement Obligations – ASC 410–Asset Retirement and Environmental Obligations, requires that the fair value of a liability for an asset retirement obligation be recorded when it is incurred. When the liability is initially recorded, the carrying amount of the related asset is correspondingly increased. Over time, the liability is accreted to its future value, with accretion recorded to expense, while the capitalized cost depreciates over the useful life of the related asset. Any changes in the estimate of an asset retirement obligation not attributable solely to the passage of time results in changes to both the carrying amount of the related asset and the liability for its retirement. In addition, ASC 410 denotes that when there is an obligation to perform an asset retirement activity, even though uncertainties exist about the timing or method of settlement, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value of the liability can be determined.

The Company believes that it is obligated by contractual or regulatory requirements to remove facilities or perform remediation upon retirement of certain of its assets; however, it is not able to reasonably determine the fair value of these asset retirement obligations since, at this time, the Company cannot reasonably predict when, or if, the pipelines, storage assets, processing facilities and related equipment would become completely obsolete and require decommissioning. The Company will record the appropriate asset retirement obligations in the period in which information allowing a reasonable estimate of such obligations becomes available.

Goodwill – In accordance with ASC 350–Intangibles-Goodwill and Other, goodwill, which represents the excess of cost over the fair value of net assets acquired in a business combination, is tested for impairment on an annual basis, or more frequently if impairment indicators exist. Goodwill has been allocated among, and evaluated for impairment at each of the Company’s reporting units. A reporting unit is defined under ASC 350 as an operating segment or a unit one level below an operating segment for which discrete financial information is available and regularly reviewed by management. The first step of the impairment test requires the comparison of the fair value of each of these reporting units to the respective carrying value. If the carrying value of the reporting unit is less than its fair value, no impairment exists and the second step is not performed. If the carrying value of the reporting unit is higher than its fair value, the second step must be performed to compute the amount of the goodwill impairment, if any. In the second step, the impairment is computed by comparing the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized for the excess.

9

LDH Energy Asset Holdings LLC

Notes to Consolidated Financial Statements (continued)

1. Business, Organization and Summary of Significant Accounting Policies (continued)

The Company uses an analysis of multiple methodologies, including comparable public company multiples, comparable acquisition transaction multiples, and discounted cash flow models to estimate the current fair value of its reporting units when testing for impairments. A number of significant assumptions and estimates are used in these methodologies, including estimates of revenues, operating and other costs, capital spending, discount rates, and the selection of appropriate comparable companies. The Company has selected December 31^st as its impairment measurement date and has determined that goodwill was not impaired as of December 31, 2010, 2009 or 2008.

Long-Lived Assets – The Company evaluates its long-lived assets for indicators of impairment, including finite-lived intangible assets (which are amortized over their estimated useful lives). When the Company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, the Company evaluates the projected undiscounted cash flows related to the assets. If these cash flows are less than the carrying value of the assets, the Company measures the impairment using discounted cash flows or other methods of determining fair value. No impairments occurred during the years ended December 31, 2010, 2009 or 2008.

Debt Financing Costs – Debt financing costs are deferred and amortized to interest expense over the term of the related debt (see Note 7).

Contingencies – Certain conditions may exist as of the date that the Company’s financial statements are issued, which may result in a loss but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise in judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in proceedings, the Company’s management and legal counsel evaluate the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of liability can be estimated, then the estimated liability would be accrued in the financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss (if determinable and material), is disclosed.

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.

Income Taxes – As a limited liability company, the Company is generally not subject to federal or state income taxes and, accordingly, its operating results are included in the income tax returns of its member. The tax returns of the Company are subject to examination by federal and state taxing authorities. If such examinations result in adjustments to distributive shares of taxable income or loss, the tax liability of the member would be adjusted accordingly.

Interest – During the years ended December 31, 2010, 2009 and 2008, the Company recorded net interest expense of $16.9 million, $10.5 million and $12.5 million, respectively. The Company made cash payments for interest of $11.4 million, $4.6 million, and $0 in the years ended December 31, 2010, 2009, and 2008 respectively. The 2009 interest was paid to a related party (see Note 8). There were no cash payments for interest during the year ended December 31, 2008, as such amounts were settled through the due to related parties balance.

In accordance with ASC 835, the Company capitalizes interest on borrowed funds during the construction phase of all capital projects based on the Company’s weighted-average borrowing rate. During the years ended December 31, 2010 and 2009, the Company capitalized approximately $0.3 million and $1.0 million in interest, respectively.

10

LDH Energy Asset Holdings LLC

Notes to Consolidated Financial Statements (continued)

2. Recently Issued Accounting Standards

Codification – In June 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2009-01, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 168 (“ASU 2009-01”). The ASC is intended to be the authoritative source of U.S. GAAP, other than guidance put forth by the U.S. Securities and Exchange Commission. All other accounting literature not included in the ASC will be considered non-authoritative. The Company adopted this standard in 2009 and revised its disclosures accordingly for references to U.S. GAAP. The adoption of ASU 2009-01 had no impact on the Company’s financial position, results of operations or cash flows.

Income Taxes – In June 2006, the FASB issued authoritative guidance clarifying the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return (ASC 740 – Income Taxes). The guidance also provides direction regarding de-recognition, classification, interest and penalties, disclosure, and recognition. The Company adopted this guidance effective January 1, 2009. There are no unrecognized tax benefits, and as such, the adoption of ASC 740 had no impact on the Company’s financial position, results of operations or cash flows.

Fair Value Measurements – In September 2006, the FASB issued authoritative guidance for fair value measurements, which defines fair value, establishes a framework for measuring fair value in accordance with U.S. GAAP, and expands disclosures about fair value measurements (ASC 820–Fair Value Measurements and Disclosures). In February 2008, the FASB clarified the effective date of such guidance, which delayed the effective date for the Company for all non-financial assets and liabilities that are recognized at fair value on a nonrecurring basis, including goodwill and other intangible assets, until January 1, 2009. The measurement and disclosure requirements related to financial assets and financial liabilities were effective for the Company beginning January 1, 2008. The impact of the adoption of this guidance did not have an effect on the Company’s fair value measurements.

Business Combinations – In December 2007, the FASB issued revised guidance for recognizing and measuring identifiable assets acquired, liabilities assumed and any noncontrolling interest in an acquiree (ASC 805). It also requires acquisition-related costs to be expensed in the period in which the costs are incurred rather than including such costs as part of the acquisition price. Furthermore, the guidance provides disclosure requirements to enable users of the financial statements to evaluate the nature and financial effects of a business combination. The Company has adopted this guidance as of January 1, 2009. The impact of the adoption of this guidance on the Company is dependent upon the extent to which it is involved in future business combinations.

Useful Life of Intangible Assets – In April 2008, the FASB amended the factors to be considered in determining the useful life of a recognized intangible asset, including assumptions regarding renewals or extensions (ASC 350). This guidance is intended to improve the consistency between the useful life of a recognized intangible asset and the period of expected cash flows used to measure the fair value of the asset. The Company adopted this guidance as of January 1, 2009, which did not have a material impact on the Company’s financial position, results of operations or cash flows.

Subsequent Events – In May 2009, and as amended in February 2010, the FASB issued guidance which established general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued (ASC 855–Subsequent Events). The Company adopted this guidance in 2009.

3. Inventories

Inventories as of December 31, 2010 and 2009, consisted of the following (in thousands):

	2010		2009
Natural gas	$	86	$	33
Natural gas liquids at lower of cost or market	3,376		—
Natural gas liquids at market	233		235
Coal at lower of cost or market	64		64
Total	$	3,759	$	332

11

LDH Energy Asset Holdings LLC

Notes to Consolidated Financial Statements (continued)

4. Property, Plant and Equipment, Net

Property, plant and equipment, net as of December 31, 2010 and 2009, consisted of the following (in thousands):

	Estimated Useful Lives	2010			2010
Land	—	$	22,117		$	22,043
Pipelines and related equipment	5 to 40 years	356,331			351,372
Cryogenic and fractionation facilities and related equipment	3 to 20 years	64,319			58,746
Storage facilities	20 to 40 years	213,773			168,812
Computer equipment and software	3 to 5 years	2,394			2,022
Other	3 to 20 years	12,743			12,738
Construction in progress	—	16,036			3,911
		687,713			619,644
Accumulated depreciation		(76,652		)	(52,503		)
Property, plant and equipment, net		$	611,061		$	567,141

Construction in progress represents capital improvements to existing storage facilities, pipelines and other property and equipment.

5. Intangible Assets

Intangible assets as of December 31, 2010 and 2009, were as follows (in thousands):

	Weighted-Average Amortization Period	2010			2009
Customer relationships	15 years	$	20,766		$	20,766
Total accumulated amortization		(5,307		)	(3,923		)
Intangibles, net		$	15,459		$	16,843

Amortization expense related to intangible assets is expected to be approximately $1.4 million for each of the next five years.

6. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses as of December 31, 2010 and 2009, consisted of the following (in thousands):

	2010		2009
Accounts payable	$	7,206	$	2,680
Accrued cost of revenues	69,983		75,269
Accrued operating expenses	3,586		4,155
Accrued capital expenditures	9,502		4,460
Accrued property taxes	3,231		3,010
Accrued interest	1,538		1,200
Accrued other	8,072		4,030
Accounts payable and accrued expenses	$	103,118	$	94,804

12

LDH Energy Asset Holdings LLC

Notes to Consolidated Financial Statements (continued)

7. Financing Agreement

Effective December 2, 2009, AH II entered into a credit agreement with a syndicate of lenders with UBS Securities LLC, Wells Fargo Securities LLC, and RBS Securities Inc. acting as arrangers, UBS AG acting as Administrative Agent, and the Company and AH II’s operating subsidiaries acting as Guarantors (the “Financing Agreement”). The Financing Agreement consists of a $250.0 million term loan and $100.0 million revolving credit facility. The term loan is scheduled to mature on December 2, 2013, and the revolving credit facility is scheduled to expire on December 2, 2012. For purposes of maintaining the revolving credit facility, a commitment fee is payable quarterly in arrears calculated based upon the average daily undrawn commitment during the period multiplied by a specific rate. Term loans and drawings under the revolving credit facility bear interest at a rate determined by the greater of LIBOR or 1%, the federal funds rate or a base rate (set by the Administrative Agent), plus a spread between 2.0% to 4.25%.

As of December 31, 2010 and 2009, outstanding borrowings under the term loan were $250.0 million and bore interest at approximately 4.25% and 5.25%, respectively. Proceeds from the term loan, net of deferred financing fees of approximately $11.1 million, were approximately $238.9 million. Immediately after the close of the Financing Agreement, AH II, through the Company, distributed approximately $224.2 million of the net proceeds to LDH Energy, its member, as a return of capital.

As of December 31, 2010 and 2009, there were no outstanding borrowings under the revolving credit facility. AH II may borrow under this facility at any time during its term for the purpose of funding the general working capital needs of AH II and its subsidiaries, as well as to fund capital expenditures and acquisitions.

In January 2010, AH II entered into three interest rate cap agreements to hedge exposure to rising interest rates from February 2011 through February 2012. The agreements provide for a LIBOR interest rate cap of 1% using 3-month LIBOR on $125.0 million of floating rate debt. These interest rate contracts are recorded at fair value with changes in fair value recorded through interest expense in the statement of income and are included in prepaid expenses and other current assets on the accompanying balance sheet. The Company did not apply hedge accounting and the fair value as of December 31, 2010 was not significant.

At December 31, 2010 and 2009, gross deferred financing costs were approximately $11.3 million and $11.1 million, respectively, with accumulated amortization of approximately $3.4 million and $0.2 million, respectively, and are included in other assets in the accompanying consolidated balance sheet. Amortization of deferred financing costs in the future is as follows (in thousands):

2011	$	3,102
2012	3,013
2013	1,855

The Financing Agreement contains certain ratios of debt-to-adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) and adjusted EBITDA to certain fixed charges to which the Company must adhere. In addition, the Financing Agreement restricts the payment of dividends, level of investments, and capital expenditures by the Company.

Concurrent with the execution of the Financing Agreement, a security agreement was executed among the Company, its subsidiaries, and its lenders, which provides for a security interest in substantially all of the Company’s assets to be granted to its lenders to secure the borrowings under the Financing Agreement.

8. Related Party Transactions

Louis Dreyfus Energy Services (“LDES”) was a significant customer of the Company during the years ended December 31, 2010, 2009, and 2008, representing approximately 32.6%, 38.1% and 35.8% of total revenues, respectively. The Company does not charge interest on past due trade receivables with related parties.

13

LDH Energy Asset Holdings LLC

Notes to Consolidated Financial Statements (continued)

8. Related Party Transactions (continued)

Until December 2, 2009, when the Company entered into the Financing Agreement, LDH Energy and its affiliates provided all funds to the Company. Generally, all cash generated or used by the Company was remitted to or received from LDH Energy on a daily basis. LDH Energy charged interest to the Company based upon the daily net intercompany balance. Intercompany balances bore interest at rates indexed to LIBOR. During the years ended December 31, 2009 and 2008, affiliated debt balances bore interest at an average annual rate of approximately 2.1% and 3.5%, respectively. The Company recorded net interest expense, which was recorded through the due to related parties account, of $5.4 million and $12.5 million for the years ended December 31, 2009 and 2008, respectively. The Company capitalized interest of $1.0 million during the year ended December 31, 2009, which is included in property, plant and equipment, net in the accompanying consolidated balance sheets. During 2008, the Company’s member converted a portion of the due to related parties balance into an equity contribution (see Note 1). During 2009, the remaining balance in the due to related parties account was converted into an equity contribution.

Effective March 1, 2009, AH II entered into a $100 million revolving credit facility (the “Facility”) with Louis Dreyfus Finanz A.G., an affiliate of the Company. For purposes of maintaining the Facility, a commitment fee was payable quarterly, in arrears, beginning three months after the effective date of the agreement. The commitment fee was calculated based upon the average daily available commitment during the period multiplied by 6.0%. Borrowings under the Facility bore interest at LIBOR plus 4.0%. This Facility was terminated as of December 1, 2009, prior to AH II entering into the Financing Agreement (see Note 7). Commitment fees paid to the affiliate in conjunction with the Facility during the year ended December 31, 2009, were approximately $4.6 million. The Company did not borrow any funds under the Facility prior to its termination.

LDH Energy and certain affiliates provided general and administrative services to the Company during the years ended December 31, 2010, 2009 and 2008, including accounting, asset operations, human resources, information technology, legal, payroll, tax, and treasury. The Company was also allocated general and administrative expenses related to corporate and executive services and costs related to LDH Energy’s variable incentive compensation programs. The Company was charged for such services and programs based upon methodologies designed by management of LDH Energy to reflect the consumption of resources by the Company. General and administrative expense allocations, which are included in general and administrative expenses in the accompanying consolidated statements of income, during the years ended December 31, 2010, 2009 and 2008, were as follows (in thousands):

	Year Ended December 31
	2010		2009		2008
Administrative services	$	17,766	$	10,349	$	5,822
Corporate and executive services	47		1,042		1,792
Direct variable incentive compensation	5,284		4,202		1,589
Indirect variable incentive compensation	6,928		4,628		1,259
Total expense allocations	$	30,025	$	20,221	$	10,462

Prior to December 2, 2009, the date on which the Company entered into the Financing Agreement, all allocations of general and administrative expenses were settled through the due to related parties balance. After such date, the Company settles allocations of administrative services and variable incentive compensation of employees who are providing direct services to the Company in cash. Allocations of corporate and executive costs and indirect variable incentive compensation after such date are accounted for as capital contributions to the Company.

The Company has been allocated costs related to a phantom incentive plan and a management equity plan adopted by LDH Energy (see Note 10).

During the years ended December 31, 2010, 2009 and 2008, substantially all of the employees of the Company were eligible for employee benefits under a defined contribution plan, a defined benefit pension plan, and an unfunded postretirement plan sponsored by either LDH Energy or its affiliate. The unfunded postretirement plan provided medical, dental and life insurance benefits. Costs or gains for these benefits were recorded by the Company based upon its calculated portion of the expenses under these plans. Expenses related to these employee benefit plans were approximately $3.3 million, $3.9 million and $2.0 million for the years ended December 31, 2010, 2009 and 2008, respectively.

14

LDH Energy Asset Holdings LLC

Notes to Consolidated Financial Statements (continued)

8. Related Party Transactions (continued)

Effective December 31, 2008, LDH Energy terminated the unfunded postretirement plan. The Company recognized a gain of $2.4 million during the year then ended as a result of this termination, which is recorded in general and administrative expenses in the accompanying consolidated statement of income. Effective January 2, 2009, LDH Energy froze the defined benefit pension plan to new entrants and, effective March 1, 2009, the benefit accrual was frozen.

As noted above, various costs incurred by LDH Energy and affiliates on behalf of the Company were allocated to the Company. The Company’s management believes that the basis used for allocating such costs was reasonable.

9. Commitments and Contingencies

The Company leases office space, automobiles, and office equipment under non-cancelable operating leases that have expiration dates extending through July 2015. Aggregate rent expense during the years ended December 31, 2010, 2009 and 2008, was approximately $0.5 million, $1.0 million and $1.1 million, respectively.

Future minimum lease payments under such leases with lease terms in excess of one year as of December 31, 2010, are as follows (in thousands):

2011	$	171
2012	86
2013	20
2014	19
2015	5
	$	301

In the normal course of business, the Company is subjected to various legal or environmental claims by third parties. The Company records accruals relating to such claims when a liability becomes probable and estimable. The Company has accrued approximately $0.5 million and $2.5 million related to such matters as of December 31, 2010 and 2009, respectively. The Company does not expect outstanding claims to have a material adverse effect on the Company’s financial condition or results of operations.

The Company leases long-term storage and transportation to third party customers and related parties. Future minimum rentals to be received by the Company under non-cancelable operating leases as of December 31, 2010, are as follows (in thousands):

2011	$	65,657
2012	57,631
2013	28,928
2014	14,690
2015	8,470
Thereafter	—
	$	175,376

The above amounts include leases with related parties in 2011 through 2013 of approximately $29.6 million, in the aggregate.

15

LDH Energy Asset Holdings LLC

Notes to Consolidated Financial Statements (continued)

10. Stock-Based Compensation

Phantom Equity Incentive Plan – Effective January 1, 2007, LDH Energy adopted a phantom equity incentive plan (“Phantom Equity Plan”) to provide certain employees, selected by the Board of Directors, an opportunity to participate in the realized and unrealized appreciation of the equity value of LDH Energy. Awards under the Phantom Equity Plan are subject to various vesting provisions, generally ranging from zero to three years, and may change on an annual basis. LDH Energy accounts for grants under the Phantom Equity Plan as liability awards under ASC 718–Compensation-Stock Compensation and uses fair value to measure compensation expense related thereto. The Company has been allocated compensation expense related to the Phantom Equity Plan based on the specific identification of participants who provided or are providing services to the Company. During the years ended December 31, 2010¸ 2009, and 2008, the Company recorded non-cash compensation (income) expense of approximately $0.3 million, $1.2 million, and $(8.5) million, respectively, which are included in general and administrative expenses in the accompanying consolidated statements of income.

Effective December 31, 2008, LDH Energy froze the Phantom Equity Plan. As such, no future benefits will accrue under the Phantom Equity Plan other than the continued vesting of existing grants. At December 31, 2009, total unvested awards for participants who are providing services to the Company were approximately $0.3 million. The awards are fully vested as of December 31, 2010.

Management Equity Plan – Effective December 1, 2009, LDH Energy adopted a profit participation plan (“Equity Plan”) to attract and retain certain employees, selected by the Board of Directors, by providing them with an opportunity to participate in the appreciation of the value of LDH Energy over time. Selected employees have been awarded membership interests that indirectly entitle them to 14.45% of the prospective profits and losses of LDH Energy, as defined by the agreement. The membership interests are subject to certain vesting provisions, which provide for 25% vesting on the date of grant with the remainder generally over a three year period. LDH Energy accounts for the Equity Plan as a liability plan under ASC 718.

During the years ended December 31, 2010 and 2009, the Company allocated non-cash compensation expense of approximately $2.9 million and $0.4 million, respectively, related to the Equity Plan, which is included in general and administrative expenses in the accompanying consolidated statement of income.

11. Insurance Settlement

In September 2005, Hurricane Rita caused the temporary cessation of operations at the facility in which Sea Robin owns an interest. During the year ended December 31, 2008, the Company recognized approximately $6.2 million in business interruption insurance proceeds, which is included in Fractionation and Processing revenues in the accompanying consolidated statement of income.

In 2008, Hurricane Ike caused the temporary cessation of operations at MBLP and LDH Energy Pipeline L.P. During 2010, the Company collected approximately $3.0 million in business interruption insurance proceeds, which are reflected as revenues in the Company’s 2010 consolidated financial statements.

In February 2010, the Company suffered an electrical failure which damaged equipment at one of the Company’s Storage facilities. During the year ended December 31, 2010, the Company recognized approximately $0.6 million in insurance proceeds, which is included in Operating expenses in the accompanying consolidated statement of income.

12. Segment Information

The Company’s consolidated financial statements reflect the following reportable business segments conducting business exclusively in the U.S.:

• Storage – Consists of operations associated with MBLP, LDH Energy Hattiesburg LLC, and LDH Energy Cyrus River Terminal LLC (see Note 1).

• Pipeline Transportation – Consists of operations associated with LDH Energy Pipeline L.P. and LDH Energy Gas Development L.P. (see Note 1).

• Fractionation and Processing – Consists of operations associated with LDH Energy Refinery Services LLC and Sea Robin (see Note 1).

16

LDH Energy Asset Holdings LLC

Notes to Consolidated Financial Statements (continued)

12. Segment Information (continued)

The financial results for each segment are prepared using a management approach, which is consistent with the basis and manner in which the Company internally segregates financial information for the purpose of assisting in making internal operating decisions. Corporate/Other contains certain assets (primarily cash and deferred financing costs), and related expenses that are not allocated to the segments (including compensation expense associated with the Phantom Equity Plan and Equity Plan), except to the extent that the expense can be directly attributable to the segment. Corporate/Other is shown to reconcile to the Company’s consolidated results.

	Year ended December 31
	2010			2009			2008
	(In Thousands)
Revenues
Storage:
Revenues from third parties	$	81,635		$	53,411		$	46,458
Revenues from related parties	37,664			28,114			8,071
Total Storage revenues	119,299			81,525			54,529
Pipeline Transportation:
Revenues from third parties	27,588			7,100			610
Revenues from related parties	12,435			31,073			28,207
Total Pipeline Transportation revenues	40,023			38,173			28,817
Fractionation and Processing:
Revenues from third parties	124,315			98,317			161,217
Revenues from related parties	62,877			38,652			80,120
Total Fractionation and Processing revenues	187,192			136,969			241,337
Total revenues	$	346,514		$	256,667		$	324,683
	Year ended December 31
	2010			2009			2008
	(In Thousands)
Operating income (loss)
Storage	$	61,881		$	33,424		$	14,795
Pipeline Transportation	12,288			11,171			512
Fractionation and Processing	50,273			23,104			41,196
Corporate/other	(16,481		)	(12,417		)	4,398
Total operating income	$	107,961		$	55,282		$	60,901

17

LDH Energy Asset Holdings LLC

Notes to Consolidated Financial Statements (continued)

12. Segment Information (continued)

	Year ended December 31
	2010			2009		2008
	(In Thousands)
Interest expense, net
Storage	$	3,736		$	3,351	$	999
Pipeline Transportation	2,011			1,805		3,930
Fractionation and Processing	(19		)	804		(20		)
Corporate/other	11,166			4,512		7,585
Total interest expense, net	$	16,894		$	10,472	$	12,494
	Year ended December 31
	2010			2009		2008
	(In Thousands)
Depreciation and amortization
Storage	$	17,301		$	13,695	$	8,535
Pipeline Transportation	4,710			4,440		3,263
Fractionation and Processing	3,585			3,991		3,815
Corporate/other	1			153		160
Total depreciation and amortization	$	25,597		$	22,279	$	15,773

	Year ended December 31
	2010		2009		2008
	(In Thousands)
Capital expenditures
Storage	$	48,343	$	79,659	$	103,551
Pipeline Transportation	8,591		14,430		56,244
Fractionation and Processing	6,148		2,010		12,808
Corporate/other	5		45		183
Total capital expenditures	$	63,087	$	96,144	$	172,786

18

LDH Energy Asset Holdings LLC

Notes to Consolidated Financial Statements (continued)

12. Segment Information (continued)

	December 31
	2010		2009
	(In Thousands)
Assets
Storage	$	428,183	$	388,489
Pipeline Transportation	238,278		233,793
Fractionation and Processing	100,260		98,446
Corporate/other	18,318		29,956
Total assets	$	785,039	$	750,684
	December 31
	2010		2009
	(In Thousands)
Goodwill
Storage	$	15,820	$	15,820
Pipeline Transportation	2,679		2,679
Fractionation and Processing	5,939		5,939
Total goodwill	$	24,438	$	24,438

Significant Customers – Revenues from LDES, which is a customer of each of the operating segments, comprised 32.6%, 38.1% and 35.8% of the Company’s revenues during the years ended December 31, 2010, 2009 and 2008, respectively. A third-party customer and its affiliates also accounted for approximately 29.8%, 30.5%, and 37.9% of the Company’s revenues for the years ended December 31, 2010, 2009, and 2008, respectively, of which the majority of those revenues (27.9%, 28.8%, and 36.7% for the years ended December 31, 2010, 2009, and 2008, respectively) were in the Fractionation and Processing segment.

13. Subsequent Events

Subsequent events have been evaluated through February 28, 2011, the date on which the financial statements were available to be issued.

19

XML

Fair Value Measures (Tables)

12 Months Ended

Dec. 31, 2011

Fair Value Measures [Abstract]

Partnership's Derivative Assets And Liabilities Measured At Fair Value On A Recurring Basis

The following table presents the Partnership’s derivative assets and liabilities measured at fair value on a recurring basis:

	Fair Value Measurement at December 31, 2011						Fair Value Measurement at December 31, 2010
	Fair Value Total		Level 2		Level 3		Fair Value Total		Level 2		Level 3
Assets
Commodity Derivatives:
Natural Gas	$	3,907	$	3,907	$	—	$	2,481	$	2,481	$	—
Natural Gas Liquids	94		94		—		192		192		—
Condensate	538		538		—		—		—		—
Ethane - Put Options	309		309		—		—		—		—
Total Assets	$	4,848	$	4,848	$	—	$	2,673	$	2,673	$	—
Liabilities
Interest Rate Derivatives	$	470	$	470	$	—	$	2,584	$	2,584	$	—
Commodity Derivatives:
Natural Gas	—		—		—		427		427		—
Natural Gas Liquids	8,561		8,561		—		10,684		10,684		—
Condensate	1,567		1,567		—		3,581		3,581		—
Embedded Derivatives in Series A Preferred Units	39,049		—		39,049		57,023		—		57,023
Total Liabilities	$	49,647	$	10,598	$	39,049	$	74,299	$	17,276	$	57,023

Changes In Level 3 Derivatives Measured On A Recurring Basis

The following table presents the changes in Level 3 derivatives measured on a recurring basis for the years ended December 31, 2011 and 2010. There were no transfers between Level 2 and Level 3 derivatives for the years ended December 31, 2011 and 2010.

	Embedded Derivatives in Series A Preferred Units
Balance at January 1, 2010	$	44,594
Change in fair value	4,039
Balance at May 25, 2010	48,633
Change in fair value	8,390
Balance at December 31, 2010	57,023
Additions	—
Change in fair value	(17,974		)
Balance at December 31, 2011	$	39,049

Schedule Of Estimated Fair Value Of Senior Notes

The following table presents the estimated fair value of senior notes, based on third party market value quotations, as of December 31, 2011 and 2010:

Outstanding Senior Notes	December 31, 2011		December 31, 2010
2016 Notes	$	276,250	$	274,375
2018 Notes	643,500		607,500
2021 Notes	516,250		N/A

_______________________

N/A:    The 2021 Notes were issued in May 2011.

XML

Acquisitions And Dispositions (Schedule of Purchase Price Allocation) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 01, 2010
Business Acquisition [Line Items]
Cash and cash equivalents	$ 1,983
Trade accounts receivable	6,580
Other current assets	128
Gas plants and buildings	80,859
Other property, plant and equipment	303
Intangible assets	119,379
Total assets acquired	209,232
Trade accounts payable	(8,364)
Deferred revenues	(6,408)
Other current liabilities	(1,164)
Net assets acquired	$ 193,296

XML

Summary of Significant Accounting Policies (Narrative) (Details) (USD $)	5 Months Ended	7 Months Ended	12 Months Ended							5 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended
	May 25, 2010	Dec. 31, 2010	Dec. 31, 2011 years	Dec. 31, 2009	Dec. 31, 2011 Gathering and Transmission Systems [Member] years	Dec. 31, 2011 Compression Equipment [Member] years	Dec. 31, 2011 Gas Plants And Buildings [Member] years	Dec. 31, 2011 Other property, plant and equipment [Member] years	Dec. 31, 2011 Successor [Member]	May 25, 2010 Predecessor [Member]	Dec. 31, 2010 Change in Tax Status [Member]	May 25, 2010 ETE [Member]	Dec. 31, 2009 ETE [Member]
Property, Plant and Equipment [Line Items]
Reimbursement of all direct and indirect expenses		$ 44,200,000	$ 58,000,000									$ 31,100,000	$ 33,800,000
Depreciation expense	37,100,000	60,100,000	138,400,000	89,700,000
Property, plant and equipment, useful life, minimum					10	3	10	3
Property, plant and equipment, useful life, maximum					20	30	35	15
Maximum asset retirement obligation period, in years			95
Accounting Policies [Abstract]
Inventory		4,400,000	21,200,000
Accrued interest payable		11,800,000	26,800,000
Partnership capitalized interest	900,000	1,400,000	1,200,000	1,700,000
Intangible assets useful life, minimum									20	3
Intangible assets useful life, maximum									30	30
Contributions by employer	500,000	2,000,000	2,700,000	1,300,000
Deferred tax liabilities related to property, plant, and equipment		6,200,000	5,800,000
Current federal tax expense (benefit)	(200,000)	600,000	0	(400,000)							200,000
Deferred federal income tax expense (benefit)	$ 300,000	$ (100,000)	$ (400,000)	$ (1,200,000)
Effective income tax rate			35.00%

XML

Series A Preferred Units (Details) (USD $) In Millions, except Share data, unless otherwise specified	1 Months Ended	12 Months Ended
	Sep. 30, 2009	Dec. 31, 2011 quarters	May 25, 2010	Sep. 02, 2009
Other Ownership Interests [Line Items]
Preferred stock, shares issued				4,371,586
Preferred units issued at a discount				4.00%
Discount related to the issuance of preferred partner units, amount				$ 3.2
Preferred units issuance costs				0.2
Proceeds from issuance of preferred units, net	76.6
General Partners' Contributed Capital				1.6
Mandatorily redeemable all accrued but unpaid distributions		80
Distributions paid per unit		$ 0.445
Maximum distribution made to member or Limited Partner, period of consecutive fiscal quarters		20
Series A preferred units convertible to common units		4,632,389
Series A convertible redeemable preferred units, fair value			70.8
Preferred Units Net Proceeds From Issuance Excluding Embedded Derivative Value				47.7
Series A Preferred Unit [Member]
Other Ownership Interests [Line Items]
Series A price per unit				$ 18.30
Distributions paid per unit		$ 0.35375
Increase in distribution made to member or Limited Partner distributions, declared per unit, due to covenant default		$ 0.1825
Accumulated and unpaid distributions, quarterly accrual interest rate percentage		2.432%
Covenant default, accumulated and unpaid distributions, quarterly accrual interest rate percentage		3.429%
Preferred Stock, Redemption Price Per Share		$ 18.30
Due to change of control, required purchase offer as percentage of liquidation value		101.00%
Cash event, required purchase offer as percentage of liquidation value		120.00%
Common Unit Distribution [Member]
Other Ownership Interests [Line Items]
Distributions paid per unit		$ 0.09125
PIK Distribution [Member]
Other Ownership Interests [Line Items]
Distributions paid per unit		$ 0.09125
Maximum [Member]
Other Ownership Interests [Line Items]
Maximum Distribution amount for Preferred Units		$ 1.6
Maximum [Member] | Series A Preferred Unit [Member]
Other Ownership Interests [Line Items]
Conversion Price Adjusted Common Unit Issue Price		$ 16.47
Minimum [Member] | Series A Preferred Unit [Member]
Other Ownership Interests [Line Items]
Minimum unit conversion request by holders		375,000
Commencing On September 2, 2014 [Member] | Series A Preferred Unit [Member]
Other Ownership Interests [Line Items]
Percenatge component of denominator, used in conversion ratio when conversion price is less than volume-weighted average trading price		91.00%
Conversion requirements, daily volume-weighted average trading price over conversion price, percentage		150.00%
Conversion price requirements met, number of trading days		20
Range of trailing trading days, assess conversion price requirements		30
Commencing On September 2, 2014 [Member] | Minimum [Member] | Series A Preferred Unit [Member]
Other Ownership Interests [Line Items]
Conversion price, per share minimum		$ 10

XML

Investment In Unconsolidated Affiliates (Narrative) (Details) (USD $)	12 Months Ended	0 Months Ended	8 Months Ended	0 Months Ended	1 Months Ended	7 Months Ended	12 Months Ended			0 Months Ended						0 Months Ended
	Dec. 31, 2011	May 02, 2011 Lone Star [Member]	Dec. 31, 2011 Lone Star [Member]	Sep. 01, 2011 MEP [Member]	May 31, 2010 MEP [Member]	Dec. 31, 2010 MEP [Member]	Dec. 31, 2011 MEP [Member]	Aug. 30, 2011 MEP [Member]	May 25, 2010 MEP [Member]	May 25, 2010 HPC [Member] years	Apr. 30, 2010 HPC [Member]	Dec. 31, 2011 HPC [Member]	Dec. 31, 2010 HPC [Member]	Dec. 31, 2011 ETP [Member]	Dec. 31, 2011 Ranch JV [Member]	May 02, 2011 Private Common Unit Offering [Member]	May 25, 2010 Private Common Unit Offering [Member]
Ownership in affiliate			30.00%	50.00%					49.90%		49.99%			70.00%	33.33%
Partnership's interest, carrying value			$ 628,700,000			$ 652,500,000	$ 613,900,000					$ 682,100,000	$ 698,800,000
Equity method investment, excess fair value over book value adjustment, long-lived assets										154,900,000
Addtional ownership in affiliate acquired								0.10%			6.99%
Payments to acquire additional interest in affiliates				1,200,000		0	1,355,000
Long-lived assets, useful life, minimum										15
Long-lived assets, useful life, maximum										30
Equity method investment, excess fair value over book value adjustment, not attributed to specific assets										32,400,000
Payments for (Proceeds from) Businesses and Interest in Affiliates											92,100,000
Contributions		592,700,000	645,265,000			85,828,000	0
Private common unit offering																8,500,001	26,266,791
Proceeds from common unit issuances, net of issuance costs	$ 203,900,000
Partneship ownership interest percentage					49.90%

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Equity-Based Compensation (Narrative) (Details) (USD $)	1 Months Ended	12 Months Ended	0 Months Ended	2 Months Ended	12 Months Ended	0 Months Ended	5 Months Ended	12 Months Ended	7 Months Ended	12 Months Ended
	Nov. 30, 2010	Dec. 31, 2011 years	May 07, 2010 Senior Management and Certain Key Employees [Member] Phantom Units [Member]	Dec. 31, 2010 Senior Management and Certain Key Employees [Member] Phantom Units [Member]	Dec. 31, 2011 Senior Management and Certain Key Employees [Member] Phantom Units [Member]	Nov. 21, 2010 Former President And Chief Executive Officer [Member] Phantom Units [Member]	May 25, 2010 Predecessor [Member]	Dec. 31, 2009 Predecessor [Member]	Dec. 31, 2010 Successor [Member]	Dec. 31, 2011 Successor [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Partnership's LTIP units		3,000,000
Due to change in control, one-time charge due to vesting of outstanding restricted and phantom units under LTIP		$ 9,900,000
Share-based Compensation							12,070,000	6,008,000	1,827,000	3,610,000
LTIP compensation expense							12,070,000	6,008,000	1,827,000
Due to change in control, phantom units service condiiton grants, vesting percentage		100.00%
Service condition grants, Units			247,500	574,700	596,320	33,000
Due to change in control, phantom units market condiiton grants, vesting percentage	150.00%
Partnership expects to recognize compensation expense		$ 20,700,000
Non-vested phantom units period, in years		4.2

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Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2011

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Information

	Successor
2011	Quarter Ended December 31		Quarter Ended September 30		Quarter Ended June 30		Quarter Ended March 31
Operating revenues	$	369,881	$	390,267	$	356,498	$	317,252
Operating income	13,215		13,616		4,820		8,058
Net income attributable to Regency Energy Partners LP	13,524		30,300		14,544		14,074
Earnings per common units:
Basic net income per common unit	0.06		0.18		0.08		0.08
Diluted net income per common unit	0.06		0.09		0.07		0.07

	Successor									Predecessor
2010	Quarter Ended December 31			Quarter Ended September 30			Period from May 26 to June 30			Period from  April 1 to May 25			Quarter Ended March 31
Operating revenues	$	322,745		$	296,888		$	96,980		$	200,265		$	304,785
Operating income (loss)	16,742			(927		)	(1,256		)	1,726			18,405
(Loss) income from continuing operations	(7,269		)	7,522			(4,981		)	(5,081		)	462
(Loss) income from discontinued operations	(1,654		)	324			86			585			(912		)
Net (loss) income attributable to Regency Energy Partners LP	(8,992		)	7,788			(4,924		)	(4,740		)	(612		)
Earnings per common units:
Basic and diluted (loss) income from continuing operations per common unit	(0.07		)	0.03			(0.05		)	(0.07		)	(0.02		)
Basic and diluted (loss) income from discontinued operations per common unit	(0.01		)	0.00			0.00			0.01			(0.01		)
Basic and diluted net (loss) income per common unit	(0.09		)	0.04			(0.05		)	(0.07		)	(0.03		)

XML

Income (Loss) Per Limited Partner Unit (Tables)

12 Months Ended

Dec. 31, 2011

Earnings Per Share [Abstract]

Basic And Diluted Income (Loss) From Continuing Operations

The following table provides a reconciliation of the numerator and denominator of the basic and diluted earnings per unit computations for the years ended December 31, 2011 and 2009. For the periods from May 26, 2010 to December 31, 2010 and from January 1, 2010 to May 25, 2010, diluted earnings per unit equals basic because all instruments were antidilutive.

	Successor						Predecessor
	For the Year Ended December 31, 2011						For the Year Ended December 31, 2009
	Income (Numerator)			Units (Denominator)	Per-Unit Amount		Income (Numerator)		Units (Denominator)	Per-Unit Amount
Amounts allocated to common units	$	57,450		145,490,869	$	0.39	$	131,752	80,582,705	$	1.63
Effect of Dilutive Securities
Common unit options	—			19,192			—		—
Phantom units	—			148,388			—		100,764
Series A Preferred Units	(9,991		)	4,632,389			—		—
Class D common units	$	—		—			$	820	797,425
Diluted Earnings per Unit	$	47,459		150,290,838	$	0.32	$	132,572	81,480,894	$	1.63

Weighted Average Outstanding Amount Of Securities

The following data show securities that could potentially dilute earnings per unit in the future that were not included in the computation of diluted earnings per unit because to do so would have been antidilutive for the periods presented:

	Successor		Predecessor
	Year Ended December 31, 2011	Period from Acquisition (May 26, 2010) to  December 31, 2010	Period from January 1, 2010 to (May 25, 2010)	Year Ended December 31, 2009
Restricted (non-vested) common units	—	—	396,918	566,493
Common unit options	—	259,650	298,400	357,489
Phantom units*	—	366,489	369,346	—
Series A Preferred Units	—	4,584,192	4,584,192	1,449,211

 _______________________

* Amount assumes maximum conversion rate for market condition awards.

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Equity-Based Compensation (Common Unit Options Activity) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011 years	Dec. 31, 2010 years	Dec. 31, 2009 years
Equity-Based Compensation [Abstract]
Outstanding at the beginning of period, Units	201,950	306,651	431,918
Granted, Units	0	0	0
Exercised, Units	(38,300)	(100,200)	0
Forfeited or expired, Units	(6,800)	(4,501)	(125,267)
Outstanding at end of period, Units	156,850	201,950	306,651
Exercisable at the end of the period, Units	156,850	201,950	306,651
Outstanding at the beginning of period, Weighted Average Exercise Price	$ 21.93	$ 21.50	$ 21.31
Granted, Weighted Average Exercise Price	$ 0.00	$ 0.00	$ 0.00
Exercised, Weighted Average Exercise Price	$ 20.84	$ 20.60	$ 0.00
Forfeited or expired, Weighted Average Exercise Price	$ 26.72	$ 23.73	$ 20.87
Outstanding at end of period, Weighted Average Exercise Price	$ 21.99	$ 21.93	$ 21.50
Outstanding at end of period, Weighted Average Contractual Term (Years)	4.3	5.3	6.3
Exercised, Aggregate Intrinsic Value	$ 224	$ 444	$ 0
Outstanding at end of period, Aggregate Intrinsic Value	498	1,087	184
Exercisable at the end of the period, Aggregate Intrinsic Value	$ 498	$ 1,087	$ 184

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Related Party Transactions (Related Party Transactions) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Related party receivables	$ 45,204	$ 32,342
Related party payables	12,625	3,338
EPD And Its Subsidiaries [Member]
Related party receivables	41,781	25,539
Related party payables	1,469	1,323
HPC [Member]
Related party receivables	1,360	5,823
Related party payables	475	760
ETE And Its Subsidiaries [Member]
Related party receivables	554	970
Related party payables	10,605	1,245
Other [Member]
Related party receivables	1,509	10
Related party payables	$ 76	$ 10

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Derivative Instruments (Narrative) (Details) (USD $)	12 Months Ended	24 Months Ended
	Dec. 31, 2011 years	Apr. 30, 2012	Dec. 31, 2010	Mar. 31, 2010
Hedging gains or losses amortized in accumulated other comprehensive loss	$ 4,800,000
Amortization period of deferred gain (loss) on discontinuation of cash flow hedge	2.25
Outstanding borrowings in interest rate risk	332,000,000		285,000,000
Notional Amount of Interest Rate Derivatives				300,000,000
Borrowings subject to interest rate hedges		250,000,000
Interest rate swaps, interest rate	1.325%
Maximum [Member]
Credit risk of derivatives	4,800,000
Reduction in credit risk of derivatives due to netting feature	4,600,000
One Year from Balance Sheet Date [Member]
Hedging gains or losses amortized in accumulated other comprehensive loss	$ 5,200,000

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Segment Information (Amounts Related To Balance Sheets For Each Segment) (Details) (USD $) In Thousands, unless otherwise specified			7 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended			7 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended			7 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended			7 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended			7 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended			7 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended			7 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2010 Successor [Member]	Dec. 31, 2011 Successor [Member]	May 25, 2010 Predecessor [Member]	Dec. 31, 2009 Predecessor [Member]	Dec. 31, 2011 Gathering And Processing [Member]	Dec. 31, 2010 Gathering And Processing [Member]	Dec. 31, 2010 Gathering And Processing [Member] Successor [Member]	Dec. 31, 2011 Gathering And Processing [Member] Successor [Member]	May 25, 2010 Gathering And Processing [Member] Predecessor [Member]	Dec. 31, 2009 Gathering And Processing [Member] Predecessor [Member]	Dec. 31, 2011 Corporate Joint Venture [Member]	Dec. 31, 2010 Corporate Joint Venture [Member]	Dec. 31, 2010 Corporate Joint Venture [Member] Successor [Member]	Dec. 31, 2011 Corporate Joint Venture [Member] Successor [Member]	May 25, 2010 Corporate Joint Venture [Member] Predecessor [Member]	Dec. 31, 2009 Corporate Joint Venture [Member] Predecessor [Member]	Dec. 31, 2011 Contract Compression [Member]	Dec. 31, 2010 Contract Compression [Member]	Dec. 31, 2010 Contract Compression [Member] Successor [Member]	Dec. 31, 2011 Contract Compression [Member] Successor [Member]	May 25, 2010 Contract Compression [Member] Predecessor [Member]	Dec. 31, 2009 Contract Compression [Member] Predecessor [Member]	Dec. 31, 2011 Contract Treating [Member]	Dec. 31, 2010 Contract Treating [Member]	Dec. 31, 2010 Contract Treating [Member] Successor [Member]	Dec. 31, 2011 Contract Treating [Member] Successor [Member]	May 25, 2010 Contract Treating [Member] Predecessor [Member]	Dec. 31, 2009 Contract Treating [Member] Predecessor [Member]	Dec. 31, 2011 Corporate And Others [Member]	Dec. 31, 2010 Corporate And Others [Member]	Dec. 31, 2010 Corporate And Others [Member] Successor [Member]	Dec. 31, 2011 Corporate And Others [Member] Successor [Member]	May 25, 2010 Corporate And Others [Member] Predecessor [Member]	Dec. 31, 2009 Corporate And Others [Member] Predecessor [Member]	Dec. 31, 2011 Eliminations [Member]	Dec. 31, 2010 Eliminations [Member]	Dec. 31, 2010 Eliminations [Member] Successor [Member]	Dec. 31, 2011 Eliminations [Member] Successor [Member]	May 25, 2010 Eliminations [Member] Predecessor [Member]	Dec. 31, 2009 Eliminations [Member] Predecessor [Member]
External Revenue			$ 716,613	$ 1,433,898	$ 505,050	$ 1,043,277			$ 606,944	$ 1,226,260	$ 438,804	$ 879,439			$ 0	$ 0	$ 0	$ 9,078			$ 86,099	$ 150,496	$ 58,971	$ 148,846			$ 13,662	$ 39,604	$ 0	$ 0			$ 9,908	$ 17,538	$ 7,275	$ 5,914			$ 0	$ 0	$ 0	$ 0
Intersegment Revenue			0	0	0	0			0	0	0	(8,755)			0	0	0	4,933			14,079	16,346	9,126	4,604			0	397	0	0			185	296	91	296			(14,264)	(17,039)	(9,217)	(1,078)
Cost of Sales			504,327	1,012,826	357,778	674,944			496,933	992,797	352,807	656,764			0	0	0	2,297			8,325	11,269	5,741	12,422			2,208	10,545	0	0			(2,954)	(1,450)	(679)	(65)			(185)	(335)	(91)	3,526
Total segment margin			212,286	421,072	147,272	368,333			110,011	233,463	85,997	213,920			0	0	0	11,714			91,853	155,573	62,356	141,028			11,454	29,456	0	0			13,047	19,284	8,045	6,275			(14,079)	(16,704)	(9,126)	(4,604)
Operation and maintenance			77,808	147,643	47,842	117,080			53,421	97,566	33,430	74,962			0	0	0	2,112			37,067	63,442	23,476	45,744			1,227	2,974	0	0			172	365	59	238			(14,079)	(16,704)	(9,123)	(5,976)
Depreciation and Amortization			75,967	168,684	41,784	100,098			45,547	87,377	25,422	59,654			0	0	0	2,448			25,771	65,201	15,560	36,548			3,684	12,325	0	0			965	3,781	802	1,448			0	0	0	0
Income from Unconsolidated Affiliates			53,493	119,540	15,872	7,886			0	0	0	0			53,493	119,540	15,872	7,886			0	0	0	0			0	0	0	0			0	0	0	0			0	0	0	0
Expenditures for Long-Lived Assets			159,223	406,339	63,787	193,083			93,398	280,199	43,666	84,097			0	0	0	22,367			44,316	112,338	18,418	83,707			18,106	7,445	0	0			3,403	6,357	1,703	2,912			0	0	0	0
Assets	5,567,856	4,770,204					1,959,697	1,724,682					1,924,705	1,351,256					1,405,600	1,411,325					215,172	220,584					62,682	62,357					0	0
Investment in unconsolidated affiliates	1,924,705	1,351,256					0	0					1,924,705	1,351,256					0	0					0	0					0	0					0	0
Goodwill	$ 789,789	$ 789,789					$ 313,361	$ 313,361					$ 0	$ 0					$ 476,428	$ 476,428					$ 0	$ 0					$ 0	$ 0					$ 0	$ 0

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Equity-Based Compensation (Phantom Units) (Details) (Phantom Units [Member], USD $)	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Phantom Units [Member]
Outstanding at the beginning of the period, Units	742,517	301,700	0
Service condition grants, Units	596,320	716,200	133,480
Market condition grants, Units	0	148,500	174,720
Vested service condition, Units	(142,520)	(166,173)	0
Vested market condition, Units	(8,550)	(200,610)	0
Forfeited or expired, Units	(88,474)	(18,787)	(2,600)
Forfeited market condition, Units	(12,900)	(38,313)	(3,900)
Outstanding at the end of period, Units	1,086,393	742,517	301,700
Outstanding at the beginning of the period, Weighted Average Grant Date Fair Value	$ 23.61	$ 8.63	$ 0.00
Service condition grants, Weighted Average Grant Date Fair Value	$ 24.55	$ 24.72	$ 13.43
Market condition grants, Weighted Average Grant Date Fair Value	$ 0.00	$ 11.89	$ 4.64
Vested service condition, Weighted Average Grant Date Fair Value	$ 24.73	$ 11.63	$ 0.00
Vested market condition, Weighted Average Grant Date Fair Value	$ 19.52	$ 5.85	$ 0.00
Forfeited service condition, Weighted Average Grant Date Fair Value	$ 24.99	$ 20.18	$ 12.46
Forfeited market condition, Weighted Average Grant Date Fair Value	$ 19.52	$ 11.43	$ 4.49
Outstanding at the end of the period, Weighted Average Grant Date Fair Value	$ 24.51	$ 23.61	$ 8.63

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Segment Information (Reconciliation Of Total Segment Margin To Net Income (Loss) From Continuing Operations Before Income Taxes) (Details) (USD $) In Thousands, unless otherwise specified	5 Months Ended	12 Months Ended	7 Months Ended	12 Months Ended
	May 25, 2010 Predecessor [Member]	Dec. 31, 2009 Predecessor [Member]	Dec. 31, 2010 Successor [Member]	Dec. 31, 2011 Successor [Member]
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	$ (4,215)	$ 141,663	$ (4,176)	$ 74,084
Operation and maintenance	47,842	117,080	77,808	147,643
General and administrative, including related party	37,212	57,863	43,739	67,408
(Gain) loss on asset sales, net	303	(133,282)	213	(2,372)
Depreciation and amortization	41,784	100,098	75,967	168,684
Income from unconsolidated affiliates	(15,872)	(7,886)	(53,493)	(119,540)
Interest expense, net	34,541	77,665	48,251	102,474
Gains (Losses) on Restructuring of Debt	1,780	0	15,748	0
Other income and deductions, net	3,897	15,132	8,229	(17,309)
Total segment margin	$ 147,272	$ 368,333	$ 212,286	$ 421,072

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Series A Preferred Units (Beginning And Ending Balances Of The Series A Preferred Units) (Details) (USD $)	0 Months Ended	5 Months Ended	7 Months Ended	12 Months Ended
	May 25, 2010	May 25, 2010	Dec. 31, 2010	Dec. 31, 2011		May 24, 2010	Sep. 02, 2009
Temporary Equity Disclosure [Abstract]
Beginning balance, shares		4,371,586	4,371,586	4,371,586		4,371,586
Beginning balance, values		$ 51,711,000	$ 70,793,000	$ 70,943,000		$ 51,766,000
Accretion to redemption, shares		0	0	0
Accretion to redemption, value		55,000	150,000	201,000
Fair value adjustment, shares	0
Fair value adjustment, value	19,027,000
Ending balance as of September 30, 2011, shares	4,371,586	4,371,586	4,371,586	4,371,586	[1]	4,371,586
Ending balance as of September 30, 2011, values	70,793,000	70,793,000	70,943,000	71,144,000	[1]	51,766,000
Mandatory redemption date				Sep. 02, 2029
Deducting amounts from partners' capital over the remaining years				80,000,000
Initial fair value of preferred stock upon issuance							76,600,000
Embedded Derivative, Fair Value of Embedded Derivative Liability							$ 28,900,000

[1] The amount will be accreted to $80 million plus any accrued and unpaid distributions by deducting amounts from partners’ capital over the remaining periods until the mandatory redemption date of September 2, 2029.

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Concentration Risk

12 Months Ended

Dec. 31, 2011

Risks and Uncertainties [Abstract]

Concentration Risk

Concentration Risk

The following table provides information about the extent of reliance on major customers and gas suppliers. Total revenues and cost of sales from transactions with an external customer or supplier amounting to 10% or more of revenue or cost of gas and liquids are disclosed below, together with the identity of the reporting segment.

		Successor				Predecessor
	Reportable Segment	Year Ended December 31, 2011		Period from  May 26, 2010 to December 31, 2010		Period from January 1, 2010 to May 25, 2010		Year Ended December 31, 2009
Customer
Customer A	Gathering and  Processing	$	366,259	$	131,724	$	88,003	$	123,524
Customer B	Gathering and Processing	—		*		52,372		*
Supplier
Supplier A	Joint Ventures	$	—	$	—	$	—	$	14,053
Supplier A	Gathering and Processing	*		*		*		143,435
Supplier B	Gathering and Processing	132,679		—		—		—

_______________________

* Amounts are less than 10% of the total revenue or cost of sales.

The Partnership is a party to various commercial netting agreements that allow it and contractual counterparties to net receivable and payable obligations. These agreements are customary and the terms follow standard industry practice. In the opinion of management, these agreements reduce the overall counterparty risk exposure.

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Partners' Capital and Distributions (Quarterly Distributions Of Available Cash) (Details) (USD $)	3 Months Ended
	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009
Partners’ Capital and Distributions [Abstract]
Distribution date	Feb. 13, 2012	Nov. 14, 2011	Aug. 12, 2011	May 13, 2011	Feb. 14, 2011	Nov. 12, 2010	Aug. 13, 2010	May 14, 2010	Feb. 14, 2010
Cash distribution per unit	$ 0.46	$ 0.455	$ 0.450	$ 0.445	$ 0.445	$ 0.445	$ 0.445	$ 0.445	$ 0.445

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Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2011

Related Party Transactions [Abstract]

Related Party Transactions

As of December 31, 2011 and 2010, details of the Partnership’s related party receivables and related party payables were as follows:

	December 31, 2011		December 31, 2010
Related party receivables
EPD	$	41,781	$	25,539
HPC	1,360		5,823
ETE	554		970
Other	1,509		10
Total related party receivables	$	45,204	$	32,342
Related party payables
EPD	$	1,469	$	1,323
HPC	475		760
ETE	10,605		1,245
Other	76		10
Total related party payables	$	12,625	$	3,338

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Segment Information (Narrative) (Details)		12 Months Ended		12 Months Ended
	Dec. 31, 2011 Lone Star [Member]	Dec. 31, 2011 HPC [Member]	Apr. 30, 2010 HPC [Member]	Dec. 31, 2011 MEP [Member]	Sep. 01, 2011 MEP [Member]	May 25, 2010 MEP [Member]
Total general partner interest	30.00%		49.99%		50.00%	49.90%
Length Of Gas Pipeline System		450		500

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Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2011

Debt Instrument [Line Items]

Partnership's Long-Term Debt

Obligations in the form of senior notes and borrowings under the credit facilities are as follows:

	December 31, 2011			December 31, 2010
Senior notes	$	1,355,147		$	856,061
Revolving loans	332,000			285,000
Total	1,687,147			1,141,061
Less: current portion	—			—
Long-term debt	$	1,687,147		$	1,141,061
Availability under revolving credit facility:
Total credit facility limit	$	900,000		$	900,000
Revolving loans	(332,000		)	(285,000		)
Letters of credit	(19,000		)	(16,015		)
Total available	$	549,000		$	598,985

Long-Term Debt Maturities

Long-term debt maturities as of December 31, 2011 for each of the next five years are as follows:

Year Ended December 31,	Amount
2012	$	—
2013	—
2014	332,000
2015	—
2016	250,000
Thereafter	1,100,000
Total	$	1,682,000	*

_______________________

* Excludes an unamortized premium of $5.1 million as of December 31, 2011.

Senior Notes Due 2016 [Member]

Debt Instrument [Line Items]

Senior Note Redemption Price [Table TextBlock]

Beginning June 1, 2013, the Partnership may redeem all or part of these notes at the redemption prices, expressed as percentages of the principal amount, set forth below:

June 1 of year ending:	Percentage of Redemption
2013	104.688%
2014	102.344%
2015 and thereafter	100.000%

Senior Notes Due 2018 [Member]

Debt Instrument [Line Items]

Senior Note Redemption Price [Table TextBlock]

Beginning December 1, 2014, the Partnership may redeem all or part of these notes at the redemption prices, expressed as percentages of the principal amount, set forth below:

December 1 of year ending:	Percentage of Redemption
2014	103.438%
2015	101.719%
2016 and thereafter	100.000%

Senior Notes Due 2021 [Member]

Debt Instrument [Line Items]

Senior Note Redemption Price [Table TextBlock]

Beginning on July 15 of the years indicated below, the Partnership may redeem all or part of the 2021 Notes at the redemption prices, expressed as percentages of the principal amount, set forth below:

July 15 of year ending:	Percentage of Redemption
2016	103.250	%
2017	102.167	%
2018	101.083	%
2019 and thereafter at 100%	100.000	%

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Income (Loss) Per Limited Partner Unit (Schedule of Antidilutive Securities Excluded from Computations of Earnings Per Share) (Details)	12 Months Ended	5 Months Ended	12 Months Ended	5 Months Ended		12 Months Ended		5 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended	7 Months Ended	12 Months Ended	7 Months Ended		12 Months Ended		7 Months Ended	12 Months Ended	7 Months Ended	12 Months Ended
	Dec. 31, 2011	May 25, 2010 Predecessor [Member] Common Unit Options [Member]	Dec. 31, 2009 Predecessor [Member] Common Unit Options [Member]	May 25, 2010 Predecessor [Member] Phantom Units [Member]		Dec. 31, 2009 Predecessor [Member] Phantom Units [Member]		May 25, 2010 Predecessor [Member] Restricted Non-Vested Common Units [Member]	Dec. 31, 2009 Predecessor [Member] Restricted Non-Vested Common Units [Member]	May 25, 2010 Predecessor [Member] Series A Preferred Units [Member]	Dec. 31, 2009 Predecessor [Member] Series A Preferred Units [Member]	Dec. 31, 2010 Successor [Member] Common Unit Options [Member]	Dec. 31, 2011 Successor [Member] Common Unit Options [Member]	Dec. 31, 2010 Successor [Member] Phantom Units [Member]		Dec. 31, 2011 Successor [Member] Phantom Units [Member]		Dec. 31, 2010 Successor [Member] Restricted Non-Vested Common Units [Member]	Dec. 31, 2011 Successor [Member] Restricted Non-Vested Common Units [Member]	Dec. 31, 2010 Successor [Member] Series A Preferred Units [Member]	Dec. 31, 2011 Successor [Member] Series A Preferred Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share		298,400	357,489	369,346	[1]	0	[1]	396,918	566,493	4,584,192	1,449,211	259,650	0	366,489	[1]	0	[1]	0	0	4,584,192	0
General partner percentage allocation of income until made whole for net losses allocatted to it in prior years	100.00%

[1] Amount assumes maximum conversion rate for market condition awards.

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Fair Value Measures Fair Value Measures (Schedule Of Estimated Fair Value Of Senior Notes) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Senior Notes Due 2016 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt instrument fair value	$ 276,250	$ 274,375
Senior Notes Due 2018 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt instrument fair value	643,500	607,500
Senior Notes Due 2021 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Debt instrument fair value	$ 516,250

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Long-Term Debt (Partnership's Long-Term Debt) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Long-Term Debt Disclosure [Abstract]
Senior notes	$ 1,355,147	$ 856,061
Revolving loans	332,000	285,000
Total	1,687,147	1,141,061
Less: current portion	0	0
Long-term debt, net	1,687,147	1,141,061
Total credit facility limit	900,000	900,000
Revolving loans	(332,000)	(285,000)
Letters of credit	(19,000)	(16,015)
Total available	$ 549,000	$ 598,985

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Organization and Basis of Presentation Organization and Basis of Presentation (Fair Value, by Balance Sheet Grouping) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010	May 25, 2010
Partners' Capital, Including Portion Attributable to Noncontrolling Interest	$ 3,531,076	$ 3,294,402
Successor [Member]
Partners' Capital, Including Portion Attributable to Noncontrolling Interest	3,531,076	3,294,402	2,409,932
General Partner [Member] | Successor [Member]
Partners' Capital, Including Portion Attributable to Noncontrolling Interest	329,876	333,077	304,950
Noncontrolling Interest [Member] | Successor [Member]
Partners' Capital, Including Portion Attributable to Noncontrolling Interest	32,869	31,692	31,450
ETE Acquisition [Member] | Successor [Member]
Fair Value of limited partners interest			2,073,532
Fair Value of considerations paid			304,950
Fair value of Noncontrolling interest			31,450
Partners' Capital, Including Portion Attributable to Noncontrolling Interest			2,409,932
Working capital			(3,286)
Gathering and transmission systems			471,169
Compression equipment			745,838
Gas plants and buildings			116,967
Other Property, plant, and equipment fair value			100,264
Fair value construction in progress			114,146
Fair value of other long-term assets			37,694
Investment in unconsolidated affiliate			739,164
Intangible assets			666,360
Goodwill			789,789
Total assets including working capital			3,778,105
Series A Preferred Units			70,793
Fair value of long-term debt			1,239,863
Other long-term liabilities			57,517
Total partners' capital and noncontrolling interest			$ 2,409,932

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Consolidated Statements of Partners' Capital and Noncontrolling Interest (Predecessor) (USD $) In Thousands, except Share data	Total	Predecessor [Member] USD ($)	Predecessor [Member] Common Units [Member]	Predecessor [Member] Common Unitholders [Member] USD ($)	Predecessor [Member] Class D and Subordinated Units [Member]	Predecessor [Member] Class D and Subordinated Unitholders [Member] USD ($)	Predecessor [Member] General Partner Interest [Member] USD ($)	Predecessor [Member] Accumulated Other Comprehensive Income (Loss) [Member] USD ($)	Predecessor [Member] Noncontrolling Interest [Member] USD ($)
Balance at Dec. 31, 2008		$ 1,099,413		$ 764,161		$ 225,368	$ 29,283	$ 67,440	$ 13,161
Balance - (in Units) at Dec. 31, 2008			54,796,701		26,380,402
Revision of partner interest				6,073			(6,073)
Issuance of restricted common units, net of forfeitures - (in units)			(63,750)
Public common units offerings		220,318		220,318
Public common units offerings - (in Units)			12,075,000
Conversion of subordinated units				(1,391)		1,391
Conversion of subordinated units - (in Units)			19,103,896		(19,103,896)
Unit-based compensation expenses		6,008		6,008
Accrued distributions to phantom units		(249)		(249)
Acquisition of assets between entities under common control in excess of historical cost		(10,197)					(10,197)
Partner distributions		(146,585)		(141,225)			(5,360)
Partners capital contributions, amount		6,344					6,344
Net income		140,489		134,326		820	5,252		91
Conversion of Class D common units - (in Units)			7,276,506		(7,276,506)
Conversion of Class D common units				227,579		(227,579)
Contributions from noncontrolling interest		898							898
Accrued distributions to Series A convertible redeemable preferred units		(3,891)		(3,891)
Accretion of Series A convertible redeemable preferred units		(104)		(104)
Net cash flow hedge amounts reclassified to earnings		(47,394)						(47,394)
Net change in fair value of cash flow hedges		(22,040)						(22,040)
Balance at Dec. 31, 2009		1,243,010		1,211,605			19,249	(1,994)	14,150
Balance - (in Units) at Dec. 31, 2009			93,188,353		0
Issuance of common units under LTIP, net of forfeitures and tax withholding		(4,994)		(4,994)
Issuance of common units under LTIP, net of forfeitures and tax withholding - (in Units)			152,075
Issuance of common units, net of costs		(89)		(89)
Proceeds from exercise of common unit options		120		120
Unit-based compensation expenses		12,070		12,070
Accrued distributions to phantom units		(473)		(473)
Acquisition of assets between entities under common control in excess of historical cost		(16,973)					(16,973)
Partner distributions		86,078		82,930			3,148
Distributions to noncontrolling interest		(1,135)							(1,135)
Net income		(4,946)		(6,014)			662		406
Accrued distributions to Series A convertible redeemable preferred units		(1,945)		(1,906)			(39)
Accretion of Series A convertible redeemable preferred units		(55)		(55)
Net cash flow hedge amounts reclassified to earnings		2,145						2,145
Net change in fair value of cash flow hedges		18,486						18,486
Balance at May. 25, 2010		$ 1,159,143		$ 1,127,334			$ (249)	$ 18,637	$ 13,421
Balance - (in Units) at May. 25, 2010			93,340,428

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Long-Term Debt (Long-Term Debt Maturities) (Details) (USD $)	12 Months Ended
	Dec. 31, 2011
Long-Term Debt Disclosure [Abstract]
2012	$ 0
2013	0
2014	332,000,000
2015	0
2016	250,000,000
Thereafter	1,100,000,000
Total	1,682,000,000	[1]
Unamortized premium	$ 5,100,000

[1] Excludes an unamortized premium of $5.1 million as of December 31, 2011.

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Concentration Risk (Tables)

12 Months Ended

Dec. 31, 2011

Risks and Uncertainties [Abstract]

Schedule Of Revenues And Cost Of Sales By Major Customer And Supplier

The following table provides information about the extent of reliance on major customers and gas suppliers. Total revenues and cost of sales from transactions with an external customer or supplier amounting to 10% or more of revenue or cost of gas and liquids are disclosed below, together with the identity of the reporting segment.

		Successor				Predecessor
	Reportable Segment	Year Ended December 31, 2011		Period from  May 26, 2010 to December 31, 2010		Period from January 1, 2010 to May 25, 2010		Year Ended December 31, 2009
Customer
Customer A	Gathering and  Processing	$	366,259	$	131,724	$	88,003	$	123,524
Customer B	Gathering and Processing	—		*		52,372		*
Supplier
Supplier A	Joint Ventures	$	—	$	—	$	—	$	14,053
Supplier A	Gathering and Processing	*		*		*		143,435
Supplier B	Gathering and Processing	132,679		—		—		—

_______________________

* Amounts are less than 10% of the total revenue or cost of sales.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2011

Summary of Significant Accounting Policies [Abstract]

Income Tax, Policy [Policy Text Block]

Income Taxes. The Partnership is generally not subject to income taxes, except as discussed below, because its income is taxed directly to its partners. The Partnership is subject to the gross margins tax enacted by the state of Texas. The Partnership has a wholly-owned subsidiary that is subject to income tax and provides for deferred income taxes using the asset and liability method. Accordingly, deferred taxes are recorded for differences between the tax and book basis that will reverse in future periods. The Partnership’s deferred tax liabilities of $5.8 million and $6.2 million as of December 31, 2011 and 2010, respectively, relate to the difference between the book and tax basis of property, plant and equipment and intangible assets and is included in other long-term liabilities in the accompanying consolidated balance sheets. The Partnership follows the guidance for uncertainties in income taxes where a liability for an unrecognized tax benefit is recorded for a tax position that does not meet the “more likely than not” criteria. The Partnership has not recorded any uncertain tax positions meeting the more likely than not criteria as of December 31, 2011 and 2010. The Partnership recognized current federal income tax expense (benefit) of $0.0 million, $0.6 million, $(0.2) million and $(0.4) million and deferred income tax expense (benefit) of $(0.4) million, $(0.1) million, $0.3 million and $(1.2) million using a 35% effective rate for the year ended December 31, 2011, the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010 and the year ended December 31, 2009, respectively.

On December 31, 2010, Gulf States Transmission Corporation converted to a limited liability company, resulting in a $0.2 million net tax expense.

The IRS commenced audits of our 2007 and 2008 federal income tax returns on January 27, 2010. The IRS has now completed its audit of these returns and proposed certain adjustments.  We have filed a protest with the IRS to initiate the appeals process and appeal certain of these adjustments.  Until this matter is fully resolved, it is not known whether any amounts ultimately recorded would be material, or how such adjustments would affect unitholders.  The IRS is also conducting an audit of the 2007 through 2009 tax returns of one of our wholly-owned subsidiaries and has proposed certain adjustments which we expect to appeal. The

statute of limitations for each of these audits has been extended to December 31, 2012. We, through our tax matters partner and our tax advisers, will cooperate with the IRS examiners auditing these returns.

Use of Estimates

Use of Estimates. These consolidated financial statements have been prepared in conformity with GAAP, which includes the use of estimates and assumptions by management that affect the reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and liabilities that exist at the date of the financial statements. Although these estimates are based on management’s available knowledge of current and expected future events, actual results could be different from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents. Cash and cash equivalents include temporary cash investments with original maturities of three months or less.

Equity Method Investments

Equity Method Investments. The equity method of accounting is used to account for the Partnership’s interest in investments of greater than 20% voting interest or exerts significant influence over an investee and where the Partnership lacks control over the investee.

Other Current Assets and Other Current Liabilities [Policy Text Block]

Other Current Assets and Other Current Liabilities. As of December 31, 2011 and 2010, other current assets included inventories of $21.2 million and $4.4 million, respectively, and other current liabilities included accrued interest of $26.8 million and $11.8 million, respectively.

Property, Plant and Equipment

Property, Plant and Equipment. Property, plant and equipment is recorded at historical cost of construction or, upon acquisition, the fair value of the assets acquired. Gains or losses on sales or retirements of assets are included in operating income unless the disposition is treated as discontinued operations. Natural gas and NGLs used to maintain pipeline minimum pressures is capitalized and classified as property, plant and equipment. Financing costs associated with the construction of larger assets requiring ongoing efforts over a period of time are capitalized. For the year ended December 31, 2011, the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009, the Partnership capitalized interest of $1.2 million, $1.4 million, $0.9 million and $1.7 million, respectively. The costs of maintenance and repairs, which are not significant improvements, are expensed when incurred. Expenditures to extend the useful lives of the assets are capitalized.

The Partnership accounts for its asset retirement obligations by recognizing on its balance sheet the net present value of any legally-binding obligation to remove or remediate the physical assets that it retires from service, as well as any similar obligations for which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the Partnership. While the Partnership is obligated under contractual agreements to remove certain facilities upon their retirement, management is unable to reasonably determine the fair value of such asset retirement obligations because the settlement dates, or ranges thereof, were indeterminable and could range up to 95 years, or the undiscounted amounts are immaterial. An asset retirement obligation will be recorded in the periods wherein management can reasonably determine the settlement dates.

Depreciation expense related to property, plant and equipment was $138.4 million, $60.1 million, $37.1 million and $89.7 million for the year ended December 31, 2011, the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009, respectively.

Intangible Assets and Goodwill

Intangible Assets. As of December 31, 2011, intangible assets consisted of trade names and customer relations, and are amortized on a straight line basis over their estimated useful lives, which is the period over which the assets are expected to contribute directly or indirectly to the Partnership’s future cash flows. The estimated useful lives range from 20 to 30 years. Prior to the ETE Acquisition, the Partnership’s intangible assets consisted of (i) permits and licenses, (ii) customer contracts, (iii) trade names, and (iv) customer relations. The intangibles were amortized on a straight line basis over their estimated useful lives which ranged from 3 to 30 years.

The Partnership assesses long-lived assets, including property, plant and equipment and intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is assessed by comparing the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amounts exceed the fair value of the assets. The Partnership did not record any impairment in 2011, 2010 or 2009.

Goodwill. Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill is not amortized, but is tested for impairment annually based on the carrying values as of December 31, or more frequently if impairment indicators arise that suggest the carrying value of goodwill may not be recovered. Impairment is indicated when the carrying amount of a reporting unit exceeds its fair value. To estimate the fair value of the reporting units, the Partnership makes estimates and judgments about future cash flows, as well as revenues, cost of sales, operating expenses, capital expenditures and net working capital based on assumptions that are consistent with the Partnership’s most recent forecast. At the time it is determined that an impairment has occurred, the carrying value of the goodwill is written down to its fair value. The Partnership did not record any impairment in 2011, 2010 or 2009.

Other Assets, net

Other Assets, net. Other assets, net primarily consists of debt issuance costs, which are capitalized and amortized to interest expense, net over the life of the related debt.

Gas Imbalances

Gas Imbalances. Quantities of natural gas or NGLs over-delivered or under-delivered related to imbalance agreements are recorded monthly as other current assets or other current liabilities using then current market prices or the weighted average prices of natural gas or NGLs at the plant or system pursuant to imbalance agreements for which settlement prices are not contractually established. Within certain volumetric limits determined at the sole discretion of the creditor, these imbalances are generally settled by deliveries of natural gas. Imbalance receivables and payables as of December 31, 2011 and 2010 were immaterial.

Revenue Recognition

Revenue Recognition. The Partnership earns revenue from (i) domestic sales of natural gas, NGLs and condensate, (ii) natural gas gathering, processing and transportation, (iii) contract compression services, and (iv) contract treating services. Revenue associated with sales of natural gas, NGLs and condensate are recognized when title passes to the customer, which is when the risk of ownership passes to the purchaser and physical delivery occurs. Revenue associated with transportation and processing fees are recognized when the service is provided. For contract compression and contract treating services, revenue is recognized when the service is performed. For gathering and processing services, the Partnership receives either fees or commodities from natural gas producers depending on the type of contract. Commodities received are in turn sold and recognized as revenue in accordance with the criteria outlined above. Under the percentage-of-proceeds contract type, the Partnership is paid for its services by keeping a percentage of the NGLs produced and a percentage of the residue gas resulting from processing the natural gas. Under the percentage-of-index contract type, the Partnership earns revenue by purchasing wellhead natural gas at a percentage of the index price and selling processed natural gas and NGLs at a price approximating the index price to third parties. The Partnership generally reports revenue gross in the consolidated statements of operations when it acts as the principal, takes title to the product, and incurs the risks and rewards of ownership. Revenue for fee-based arrangements is presented net, because the Partnership takes the role of an agent for the producers. Allowance for doubtful accounts is determined based on historical write-off experience and specific identification.

Derivatives Instruments

Derivative Instruments. The Partnership’s net income and cash flows are subject to volatility stemming from changes in market prices such as natural gas prices, NGLs prices, processing margins and interest rates. The Partnership uses natural gas, ethane, propane, butane, natural gasoline, and condensate swaps as well as ethane put options to create offsetting positions to specific commodity price exposures, and uses interest rate swap contracts to create offsetting positions to specific interest rate exposures. Derivative financial instruments are recorded on the balance sheet at their fair value based on their settlement date. The Partnership employs derivative financial instruments in connection with an underlying asset, liability and/or anticipated transaction and not for speculative purposes. Derivative financial instruments qualifying for hedge accounting treatment have been designated by the Partnership as cash flow hedges. The Partnership enters into cash flow hedges to hedge the variability in cash flows related to a forecasted transaction. At inception, the Partnership formally documents the relationship between the hedging instrument and the hedged item, the risk management objectives, and the methods used for assessing and testing correlation and hedge effectiveness. The Partnership also assesses, both at the inception of the hedge and on an on-going basis, whether the derivatives are highly effective in offsetting changes in cash flows of the hedged item. Furthermore, the Partnership regularly assesses the creditworthiness of counterparties to manage the risk of default. If the Partnership determines that a derivative is no longer highly effective as a hedge, it discontinues hedge accounting prospectively by including changes in the fair value of the derivative in current earnings. For cash flow hedges, changes in the derivative fair values, to the extent that the hedges are effective, are recorded as a component of accumulated other comprehensive income (loss) until the hedged transactions occur and are recognized in earnings. Any ineffective portion of a cash flow hedge’s change in value is recognized immediately in earnings. In the statement of cash flows, the effects of settlements of derivative instruments are classified consistent with the related hedged transactions. For the Partnership’s derivative financial instruments that were not designated for hedge accounting, the change in market value is recorded as a component of net realized and unrealized (loss) gain from derivatives in the consolidated statements of operations.

Benefits

Benefits. The Partnership previously provided medical, dental, and other healthcare benefits to employees, including providing a matching contribution for employee contributions to their 401(k) accounts, which vested ratably over 3 years. Effective January 1, 2011, the Partnership's 401(k) plan merged with and into that of ETP. As a result of the merger, the Partnership’s matching contributions that had not yet fully vested became fully vested, effective immediately. All future matching contributions from the Partnership to the employee 401(k) accounts will vest immediately. The amount of matching contributions for the year ended December 31, 2011, the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009, were $2.7 million, $2 million, $0.5 million and $1.3 million, respectively, and were recorded in general and administrative expenses. The Partnership has no pension obligations or other post employment benefits.

Equity-Based Compensation

Equity-Based Compensation. The Partnership accounts for equity-based compensation by recognizing the grant-date fair value of awards into expense as they are earned, using an estimated forfeiture rate. The forfeiture rate assumption is reviewed annually to determine whether any adjustments to expense are required.

Earnings per Unit

Earnings per Unit. Basic net income per common unit is computed through the use of the two-class method, which allocates earnings to each class of equity security based on their participation in distributions and deemed distributions. Accretion of the Series A Preferred Units and the beneficial conversion feature related to the Class D common units are considered deemed distributions. Distributions and deemed distributions to the Series A Preferred Units as well as the beneficial conversion feature of the Class D common units reduce the amount of net income available to the general partner and limited partner interests. The general partners’ interest in net income or loss consists of its respective percentage interest, make- whole allocations for any losses allocated in a prior tax year and IDRs. After deducting the General Partner’s interest, the limited partners’ interest in the remaining net income or loss is allocated to each class of equity units based on distributions and beneficial conversion feature amounts, if applicable, then divided by the weighted average number of common and subordinated units outstanding in each class of security. Diluted net income per common unit is computed by dividing limited partners’ interest in net income, after deducting the General Partner’s interest, by the weighted average number of units outstanding and the effect of non-vested restricted units, phantom units, Series A Preferred Units and unit options. Common and subordinated units were considered to be a single class for the year ended December 31, 2009. For special classes of common units issued with a beneficial conversion feature, the amount of the benefit associated with the period is added back to net income and the unconverted class is added to the denominator.

Revision to Partners' Capital Accounts [Policy Text Block]

Revision to Partners’ Capital Accounts. In 2009, the Partnership revised the allocation of net income between the General Partner and common unitholders to reflect the income allocation provisions of the Partnership agreement. The effect of this revision was not material to the prior financial statements.

New Accounting Pronouncement, Early Adoption [Policy Text Block]

Recently Issued Accounting Standards. In September 2011, the FASB issued Accounting Standards Update No. 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment ("ASU 2011-08"), which gives entities the option, under certain circumstances, to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether further impairment testing is necessary. The Partnership adopted and applied this standard to its annual impairment tests performed for certain of our reporting units during the year ended December 31, 2011. There was no material impact to the Partnership's financial position or results of operations as a result of the adoption of this standard.

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Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2011

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data (Unaudited)

Quarterly Financial Data (Unaudited)

	Successor
2011	Quarter Ended December 31		Quarter Ended September 30		Quarter Ended June 30		Quarter Ended March 31
Operating revenues	$	369,881	$	390,267	$	356,498	$	317,252
Operating income	13,215		13,616		4,820		8,058
Net income attributable to Regency Energy Partners LP	13,524		30,300		14,544		14,074
Earnings per common units:
Basic net income per common unit	0.06		0.18		0.08		0.08
Diluted net income per common unit	0.06		0.09		0.07		0.07

	Successor									Predecessor
2010	Quarter Ended December 31			Quarter Ended September 30			Period from May 26 to June 30			Period from  April 1 to May 25			Quarter Ended March 31
Operating revenues	$	322,745		$	296,888		$	96,980		$	200,265		$	304,785
Operating income (loss)	16,742			(927		)	(1,256		)	1,726			18,405
(Loss) income from continuing operations	(7,269		)	7,522			(4,981		)	(5,081		)	462
(Loss) income from discontinued operations	(1,654		)	324			86			585			(912		)
Net (loss) income attributable to Regency Energy Partners LP	(8,992		)	7,788			(4,924		)	(4,740		)	(612		)
Earnings per common units:
Basic and diluted (loss) income from continuing operations per common unit	(0.07		)	0.03			(0.05		)	(0.07		)	(0.02		)
Basic and diluted (loss) income from discontinued operations per common unit	(0.01		)	0.00			0.00			0.01			(0.01		)
Basic and diluted net (loss) income per common unit	(0.09		)	0.04			(0.05		)	(0.07		)	(0.03		)

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Investment In Unconsolidated Affiliates (Changes In Partnership's Investment) (Details) (USD $) In Thousands, unless otherwise specified	0 Months Ended	8 Months Ended	0 Months Ended	7 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended	5 Months Ended	9 Months Ended	7 Months Ended	12 Months Ended	7 Months Ended	12 Months Ended
	May 02, 2011 Lone Star [Member]	Dec. 31, 2011 Lone Star [Member]	Sep. 01, 2011 MEP [Member]	Dec. 31, 2010 MEP [Member]	Dec. 31, 2011 MEP [Member]	May 25, 2010 Predecessor [Member]	Dec. 31, 2009 Predecessor [Member]	May 25, 2010 Predecessor [Member] HPC [Member]	Dec. 31, 2009 Predecessor [Member] HPC [Member]	Dec. 31, 2010 Successor [Member]	Dec. 31, 2011 Successor [Member]	Dec. 31, 2010 Successor [Member] HPC [Member]	Dec. 31, 2011 Successor [Member] HPC [Member]
Contributions	$ 592,700	$ 645,265		$ 85,828	$ 0	$ 20,210	$ 0	$ 20,210	$ 401,356	$ 85,828	$ 52,601	$ 0	$ 0
Payments to acquire additional interest in affiliates			1,200	0	1,355			75,114	52,803			0	0
Distributions received		22,037		43,306	82,512	12,446	7,886	12,446	8,926	56,903	119,236	52,668	65,465
Return of investment received		22,698						0	0			19,995	0
Share of unconsolidated affiliate net income		28,188		21,219	42,617			15,872	7,886			35,684	54,582
Amortization of excess fair value of unconsoildated affilaites						$ 0	$ 0	$ 0	$ 0	$ 3,410	$ 5,847	$ 3,410	$ 5,847

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2011

Segment Information [Abstract]

Amounts Related To Balance Sheets For Each Segment

Results for each period, together with amounts related to balance sheets for each segment are shown below:

	Successor						Predecessor
	Year Ended December 31, 2011			Period from Acquisition (May 26, 2010) to December 31, 2010				Period from January 1, 2010 to May 25, 2010			Year Ended December 31, 2009
External Revenue
Gathering and Processing	$	1,226,260		$	606,944			$	438,804		$	879,439
Joint Ventures	—			—				—			9,078
Contract Compression	150,496			86,099				58,971			148,846
Contract Treating	39,604			13,662				—			—
Corporate and Others	17,538			9,908				7,275			5,914
Eliminations	—			—				—			—
Total	$	1,433,898		$	716,613			$	505,050		$	1,043,277
Intersegment Revenue
Gathering and Processing	$	—		$	—			$	—		$	(8,755	)
Joint Ventures	—			—				—			4,933
Contract Compression	16,346			14,079				9,126			4,604
Contract Treating	397			—				—			—
Corporate and Others	296			185				91			296
Eliminations	(17,039		)	(14,264		)		(9,217		)	(1,078		)
Total	$	—		$	—			$	—		$	—
Cost of Sales
Gathering and Processing	$	992,797		$	496,933			$	352,807		$	656,764
Joint Ventures	—			—				—			2,297
Contract Compression	11,269			8,325				5,741			12,422
Contract Treating	10,545			2,208				—			—
Corporate and Others	(1,450		)	(2,954		)		(679		)	(65		)
Eliminations	(335		)	(185		)		(91		)	3,526
Total	$	1,012,826		$	504,327			$	357,778		$	674,944
Segment Margin
Gathering and Processing	$	233,463		$	110,011			$	85,997		$	213,920
Joint Ventures	—			—				—			11,714
Contract Compression	155,573			91,853				62,356			141,028
Contract Treating	29,456			11,454				—			—
Corporate and Others	19,284			13,047				8,045			6,275
Eliminations	(16,704		)	(14,079		)		(9,126		)	(4,604		)
Total	$	421,072		$	212,286			$	147,272		$	368,333

Operation and Maintenance
Gathering and Processing	$	97,566		$	53,421		$	33,430		$	74,962
Joint Ventures	—			—			—			2,112
Contract Compression	63,442			37,067			23,476			45,744
Contract Treating	2,974			1,227			—			—
Corporate and Others	365			172			59			238
Eliminations	(16,704		)	(14,079		)	(9,123		)	(5,976		)
Total	$	147,643		$	77,808		$	47,842		$	117,080
Depreciation and Amortization
Gathering and Processing	$	87,377		$	45,547		$	25,422		$	59,654
Joint Ventures	—			—			—			2,448
Contract Compression	65,201			25,771			15,560			36,548
Contract Treating	12,325			3,684			—			—
Corporate and Others	3,781			965			802			1,448
Eliminations	—			—			—			—
Total	$	168,684		$	75,967		$	41,784		$	100,098
Income from Unconsolidated Affiliates
Gathering and Processing	$	—		$	—		$	—		$	—
Joint Ventures	119,540			53,493			15,872			7,886
Contract Compression	—			—			—			—
Contract Treating	—			—			—			—
Corporate and Others	—			—			—			—
Eliminations	—			—			—			—
Total	$	119,540		$	53,493		$	15,872		$	7,886
Expenditures for Long-Lived Assets
Gathering and Processing	$	280,199		$	93,398		$	43,666		$	84,097
Joint Ventures	—			—			—			22,367
Contract Compression	112,338			44,316			18,418			83,707
Contract Treating	7,445			18,106			—			—
Corporate and Others	6,357			3,403			1,703			2,912
Eliminations	—			—			—			—
Total	$	406,339		$	159,223		$	63,787		$	193,083
							December 31, 2011			December 31, 2010
Assets
Gathering and Processing							$	1,959,697		$	1,724,682
Joint Ventures							1,924,705			1,351,256
Contract Compression							1,405,600			1,411,325
Contract Treating							215,172			220,584
Corporate and Others							62,682			62,357
Eliminations							—			—
Total							$	5,567,856		$	4,770,204
Investment in Unconsolidated Affiliates
Gathering and Processing							$	—		$	—
Joint Ventures							1,924,705			1,351,256
Contract Compression							—			—
Contract Treating							—			—
Corporate and Others							—			—
Eliminations							—			—
Total							$	1,924,705		$	1,351,256
Goodwill
Gathering and Processing							$	313,361		$	313,361
Joint Ventures							—			—

Contract Compression	476,428		476,428
Contract Treating	—		—
Corporate and Others	—		—
Eliminations	—		—
Total	$	789,789	$	789,789

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Reconciliation Of Total Segment Margin To Net Income (Loss) From Continuing Operations Before Income Taxes

The table below provides a reconciliation of total segment margin to net income (loss) from continuing operations before income taxes:

	Successor						Predecessor
	Year Ended December 31, 2011			Period from  Acquisition (May 26, 2010) to December 31, 2010			Period from  January 1, 2010 to (May 25, 2010)			Year Ended December 31, 2009
Net income (loss) from continuing operations before income taxes	$	74,084		$	(4,176	)	$	(4,215	)	$	141,663
Add (deduct):
Operation and maintenance	147,643			77,808			47,842			117,080
General and administrative	67,408			43,739			37,212			57,863
(Gain) loss on assets sales, net	(2,372		)	213			303			(133,282		)
Depreciation and amortization	168,684			75,967			41,784			100,098
Income from unconsolidated affiliates	(119,540		)	(53,493		)	(15,872		)	(7,886		)
Interest expense, net	102,474			48,251			34,541			77,665
Loss on debt refinancing, net	—			15,748			1,780			—
Other income and deductions, net	(17,309		)	8,229			3,897			15,132
Total segment margin	$	421,072		$	212,286		$	147,272		$	368,333

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Organization and Basis of Presentation (Tables)

12 Months Ended

Dec. 31, 2011

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Fair Value, by Balance Sheet Grouping

The Partnership then developed the fair value of its assets and liabilities, with the assistance of third-party valuation experts, using the guidance in FASB ASC 820.

	May 26, 2010
Working capital	$	(3,286	)
Gathering and transmission systems	471,169
Compression equipment	745,838
Gas plants and buildings	116,967
Other property, plant and equipment	100,264
Construction-in-progress	114,146
Other long-term assets	37,694
Investment in unconsolidated affiliate	739,164
Intangible assets	666,360
Goodwill	789,789
	$	3,778,105
Less:
Series A Preferred Units	70,793
Fair value of long-term debt	1,239,863
Other long-term liabilities	57,517
Total fair value of partners’ capital	$	2,409,932

The Partnership applied the guidance in FASB ASC 820, Fair Value Measurements and Disclosures (“FASB ASC 820”), in determining the fair value of partners’ capital, which is comprised of the following items:

	May 26, 2010
Fair value of limited partners interest, based on the number of outstanding Partnership common units and the trading price on May 26, 2010	$	2,073,532
Fair value of consideration paid for general partner interest	304,950
Noncontrolling interest	31,450
	$	2,409,932

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2011

Summary of Significant Accounting Policies [Abstract]

Schedule Of Property, Plant, And Equipment, Useful Lifes

Depreciation of property, plant and equipment is recorded on a straight-line basis over the following estimated useful lives:

Functional Class of Property	Useful Lives (Years)
Gathering and Transmission Systems	10 - 20
Compression Equipment	3 - 30
Gas Plants and Buildings	10 - 35
Other property, plant and equipment	3 - 15

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Consolidated Statements of Cash Flows (Parenthetical) (USD $) In Thousands, unless otherwise specified	7 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended
	Dec. 31, 2010 Successor [Member]	Dec. 31, 2011 Successor [Member]	May 25, 2010 Predecessor [Member]	Dec. 31, 2009 Predecessor [Member]
Cash received, due to acquisition	$ 1,983	$ 0	$ 0	$ 0

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Partners' Capital and Distributions (Tables)

12 Months Ended

Dec. 31, 2011

Partners’ Capital and Distributions [Abstract]

Quarterly Distributions Of Available Cash

Distributions. The Partnership made the following cash distributions per unit during the years ended December 31, 2011 and 2010:

Distribution Date	Cash Distribution (per common unit)
November 14, 2011	$	0.455
August 12, 2011	0.450
May 13, 2011	0.445
February 14, 2011	0.445
November 12, 2010	0.445
August 13, 2010	0.445
May 14, 2010	0.445
February 14, 2010	0.445

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Leases (Tables)

12 Months Ended

Dec. 31, 2011

Leases [Abstract]

Schedule Of Future Minimum Lease Payments That Had Initial Or Remaining Noncancelable Lease Terms

The following table is a schedule of future minimum lease payments for office space and certain equipment leased by the Partnership, that had initial or remaining noncancelable lease terms in excess of one year as of December 31, 2011:

For the year ending December 31,	Operating
2012	$	2,684
2013	1,793
2014	1,163
2015	1,072
2016	956
Thereafter	2,629
Total minimum lease payments	$	10,297

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Acquisitions And Dispositions (Narrative) (Details) (USD $)	1 Months Ended	5 Months Ended	7 Months Ended	12 Months Ended		0 Months Ended			0 Months Ended	8 Months Ended	0 Months Ended	1 Months Ended	12 Months Ended	0 Months Ended		7 Months Ended	12 Months Ended		0 Months Ended			0 Months Ended	4 Months Ended		1 Months Ended		0 Months Ended
	Jul. 31, 2010	May 25, 2010	Dec. 31, 2010	Dec. 31, 2011	Dec. 31, 2009	Sep. 01, 2011 ETP [Member]	Dec. 31, 2011 ETP [Member]	Dec. 31, 2011 Ranch JV [Member]	May 02, 2011 Lone Star [Member]	Dec. 31, 2011 Lone Star [Member]	Apr. 30, 2010 HPC [Member]	Mar. 31, 2009 HPC [Member]	Dec. 31, 2011 HPC [Member]	Sep. 01, 2011 MEP [Member]	May 25, 2010 MEP [Member]	Dec. 31, 2010 MEP [Member]	Dec. 31, 2011 MEP [Member]	Aug. 30, 2011 MEP [Member]	Apr. 30, 2010 EFS Haynesville [Member]	Mar. 31, 2009 EFS Haynesville [Member]	Mar. 31, 2009 Alinda Investors [Member]	Sep. 01, 2011 Zephyr [Member]	Dec. 31, 2010 Zephyr [Member]	Mar. 31, 2009 Partnership [Member]	Sep. 30, 2009 Partnership [Member] HPC [Member]	Mar. 31, 2009 Partnership [Member] HPC [Member]	May 02, 2011 Private Common Unit Offering [Member]	May 25, 2010 Private Common Unit Offering [Member]
Business Acquisition [Line Items]
Payments to Acquire Interest in Subsidiaries and Affiliates									$ 592,700,000	$ 645,265,000						$ 85,828,000	$ 0
Ownership in affiliate							70.00%	33.33%		30.00%	49.99%			50.00%	49.90%									38.00%	43.00%	38.00%
Business acquisition, cost of acquired entity, purchase price										1,980,000,000
Private common unit offering																											8,500,001	26,266,791
Proceeds from common unit issuances, net of issuance costs				203,900,000
Deemed contributions (distributions)																									10,200,000
Addtional ownership in affiliate acquired											6.99%							0.10%							5.00%
Payments to acquire additional interest in affiliates														1,200,000		0	1,355,000
Payments for (Proceeds from) Businesses and Interest in Affiliates											92,100,000
Partners' Capital Account, Contributions											17,000,000			(200,000)	(8,900,000)
Working capital adjustment															4,600,000
Equity method investment sold, carrying amount						1,400,000									588,700,000				75,100,000
Partners' Capital Account, Private Placement of Units															584,400,000
Length Of Gas Pipeline System													450				500
Proceeds from sale of gathering and processing assets	70,200,000
Total revenues		24,200,000	9,500,000		46,200,000																		13,700,000
Payments to acquire businesses, net of cash acquired																						193,300,000
Net income																							5,900,000
Investment by third party percentage ownership																				12.00%	50.00%
Equity method investment, fair value																										401,400,000
Gain on disposition of assets												133,500,000														52,800,000
Business acquisition, cash paid by third party																				126,900,000	528,300,000
Transaction costs due to acquisition												5,500,000
Cash paid for acquisition																									$ 63,000,000

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Related Party Transactions (Narrative) (Details) (USD $)	7 Months Ended	12 Months Ended		5 Months Ended	7 Months Ended	12 Months Ended		0 Months Ended	12 Months Ended	0 Months Ended	5 Months Ended	7 Months Ended	12 Months Ended		0 Months Ended		7 Months Ended	12 Months Ended		12 Months Ended
	Dec. 31, 2010	Dec. 31, 2011	Jan. 18, 2012	May 25, 2010 ETE [Member]	Dec. 31, 2010 ETE [Member]	Dec. 31, 2011 ETE [Member]	Dec. 31, 2009 ETE [Member]	Sep. 01, 2011 ETP [Member]	Dec. 31, 2011 ETP [Member]	Apr. 30, 2010 HPC [Member]	May 25, 2010 HPC [Member]	Dec. 31, 2010 HPC [Member]	Dec. 31, 2011 HPC [Member]	Dec. 31, 2009 HPC [Member]	Sep. 01, 2011 MEP [Member]	May 25, 2010 MEP [Member]	Dec. 31, 2010 MEP [Member]	Dec. 31, 2011 MEP [Member]	Aug. 30, 2011 MEP [Member]	Dec. 31, 2009 Cdm Max [Member]	Dec. 31, 2011 May Twenty Six Service Agreement [Member] ETE [Member]
Annual fees to affiliates																					$ 10,000,000
General partners interest in initial distribution		2.00%
Reimbursement of all direct and indirect expenses	44,200,000	58,000,000		31,100,000			33,800,000
Reimbursement of all direct and indirect expenses					5,800,000	16,600,000
Cash distributions received					27,700,000	57,400,000
Proceeds Received That Represents The Portion Of The Common Unit Distribution For The Period Of Time That The Units Were Not Outstanding	7,200,000
Partner contributions					20,800,000
Sale of compression equipment									7,900,000
Purchase of comrpession equipment									33,100,000
Addtional ownership in affiliate acquired										6.99%									0.10%
Payments to acquire additional interest in affiliates															1,200,000		0	1,355,000
Payments for (Proceeds from) Businesses and Interest in Affiliates										92,100,000
Ownership in affiliate									70.00%	49.99%					50.00%	49.90%
Transaction of entities under common control, investment carrying amount								1,400,000								588,700,000
General and administrative, including related party											6,900,000	9,800,000	16,800,000	4,700,000
Operating expenses or general and administrative expenses									21,600,000
Reimbursement for construction in progress														80,600,000
Investment by third party percentage ownership			5.00%
Revenues from transactions with related party																				$ 1,100,000

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Current Assets:
Cash and cash equivalents	$ 990	$ 9,400
Trade accounts receivable, net of allowance of $1,190 and $297	43,917	35,212
Accrued revenues	68,011	74,017
Related party receivables	45,204	32,342
Derivative assets	4,374	2,650
Other current assets	24,628	7,384
Total current assets	187,124	161,005
Property, Plant and Equipment:
Gathering and transmission systems	698,906	543,286
Compression equipment	846,914	812,428
Gas plants and buildings	195,231	185,741
Other property, plant and equipment	147,967	81,295
Construction-in-progress	191,914	97,439
Total property, plant and equipment	2,080,932	1,720,189
Less accumulated depreciation	(195,404)	(59,971)
Property, plant and equipment, net	1,885,528	1,660,218
Other Assets:
Investment in unconsolidated affiliates	1,924,705	1,351,256
Long-term derivative assets	474	23
Other, net of accumulated amortization of debt issuance costs of $10,186 and $3,326	39,353	37,758
Total other assets	1,964,532	1,389,037
Intangible Assets and Goodwill:
Intangible assets, net of accumulated amortization of $44,856 and $15,584	740,883	770,155
Goodwill	789,789	789,789
Total intangible assets and goodwill	1,530,672	1,559,944
TOTAL ASSETS	5,567,856	4,770,204
Current Liabilities:
Drafts Payable	2,507	0
Trade accounts payable	73,462	50,208
Accrued cost of gas and liquids	84,943	80,756
Related party payables	12,625	3,338
Deferred revenues, including related party amounts of $41 and $8,765	16,225	25,257
Derivative liabilities	10,535	13,172
Other current liabilities	33,009	23,419
Total current liabilities	233,306	196,150
Long-term derivative liabilities	39,112	61,127
Other long-term liabilities	6,071	6,521
Long-term debt, net	1,687,147	1,141,061
Commitments and contingencies
Series A Preferred Units, redemption amount of $84,773 and $83,891	71,144	70,943
Partners' Capital and Noncontrolling Interest:
Common units (161,233,046 and 138,255,919 units authorized; 157,437,608 and 137,281,336 units issued and outstanding at December 31, 2011 and December 31, 2010)	3,173,090	2,940,732
General partner interest	329,876	333,077
Accumulated other comprehensive loss	(4,759)	(11,099)
Total partners' capital	3,498,207	3,262,710
Noncontrolling interest	32,869	31,692
Total partners' capital and noncontrolling interest	3,531,076	3,294,402
TOTAL LIABILITIES AND PARTNERS' CAPITAL AND NONCONTROLLING INTEREST	$ 5,567,856	$ 4,770,204

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Equity-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2011

Restricted (Non-Vested) Common Unit Activity

Restricted (non-vested) common unit activity for the years ended December 31, 2010, and 2009 is as follows:

2010
Restricted (Non-Vested) Common Units	Units		Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period	464,009		$	28.36
Granted	—		—
Vested	(444,759	)	28.19
Forfeited or expired	(19,250	)	32.35
Outstanding at the end of period	—		—
2009
Restricted (Non-Vested) Common Units	Units		Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period	704,050		$	29.26
Granted	24,500		11.13
Vested	(176,291	)	29.78
Forfeited or expired	(88,250	)	27.96
Outstanding at the end of period	464,009		28.36

Common Unit Options [Member]

Common Unit Options Activity

The common unit options activity for the years ended December 31, 2011, 2010, and 2009 is as follows:

2011
Common Unit Options	Units		Weighted Average Exercise Price		Weighted Average Contractual Term (Years)	Aggregate Intrinsic Value* (in thousands)
Outstanding at the beginning of period	201,950		$	21.93
Granted	—		—
Exercised	(38,300	)	20.84			$	224
Forfeited or expired	(6,800	)	26.72
Outstanding at end of period	156,850		21.99		4.3	498
Exercisable at the end of the period	156,850					498
2010
Common Unit Options	Units		Weighted Average Exercise Price		Weighted Average Contractual Term (Years)	Aggregate Intrinsic Value* (in thousands)
Outstanding at the beginning of period	306,651		$	21.50
Granted	—		—
Exercised	(100,200	)	20.60			$	444
Forfeited or expired	(4,501	)	23.73
Outstanding at end of period	201,950		21.93		5.3	1,087
Exercisable at the end of the period	201,950					1,087
2009
Common Unit Options	Units		Weighted Average Exercise Price		Weighted Average Contractual Term (Years)	Aggregate Intrinsic Value* (in thousands)
Outstanding at the beginning of period	431,918		$	21.31
Granted	—		—
Exercised	—		—			$	—
Forfeited or expired	(125,267	)	20.87
Outstanding at end of period	306,651		21.50		6.3	184
Exercisable at the end of the period	306,651					184

 _______________________

* Intrinsic value equals the closing market price of a unit less the option strike price, multiplied by the number of unit options outstanding as of the end of the period presented. Unit options with an exercise price greater than the end of the period closing market price are excluded.

Phantom Units [Member]

Restricted (Non-Vested) Common Unit Activity

The following table presents phantom unit activity for the years ended December 31, 2011, 2010 and 2009:

2011
Phantom Units	Units		Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period	742,517		$	23.61
Service condition grants	596,320		24.55
Market condition grants	—		—
Vested service condition	(142,520	)	24.73
Vested market condition	(8,550	)	19.52
Forfeited service condition	(88,474	)	24.99
Forfeited market condition	(12,900	)	19.52
Total outstanding at end of period	1,086,393		24.51
2010
Phantom Units	Units		Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period	301,700		$	8.63
Service condition grants	716,200		24.72
Market condition grants	148,500		11.89
Vested service condition	(166,173	)	11.63
Vested market condition	(200,610	)	5.85
Forfeited service condition	(18,787	)	20.18
Forfeited market condition	(38,313	)	11.43
Total outstanding at end of period	742,517		23.61
2009
Phantom Units	Units		Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period	—		$	—
Service condition grants	133,480		13.43
Market condition grants	174,720		4.64
Vested service condition	—		—
Vested market condition	—		—
Forfeited service condition	(2,600	)	12.46
Forfeited market condition	(3,900	)	4.49
Total outstanding at end of period	301,700		8.63

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Consolidated Statements of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	7 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended
	Dec. 31, 2010 Successor [Member]	Dec. 31, 2011 Successor [Member]	May 25, 2010 Predecessor [Member]	Dec. 31, 2009 Predecessor [Member]
Net income (loss)	$ (5,972)	$ 73,619	$ (4,946)	$ 140,489
Net cash flow hedge amounts reclassified to earnings	0	19,018	2,145	(47,394)
Net change in fair value of cash flow hedges	(11,099)	(12,678)	18,486	(22,040)
Comprehensive income (loss)	(17,071)	79,959	15,685	71,055
Comprehensive income attributable to noncontrolling interest	156	1,177	406	91
Comprehensive income (loss) attributable to Regency Energy Partners LP	$ (17,227)	$ 78,782	$ 15,279	$ 70,964

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Derivative Instruments (Detail Effect Of Derivative Assets And Liabilities In Statement Of Operations) (Details) (USD $) In Thousands, unless otherwise specified	7 Months Ended	12 Months Ended	7 Months Ended	12 Months Ended	7 Months Ended	12 Months Ended	7 Months Ended	12 Months Ended	7 Months Ended	12 Months Ended	7 Months Ended	12 Months Ended	7 Months Ended	12 Months Ended	7 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended
	Dec. 31, 2010 Successor [Member] Derivatives In Cash Flow Hedging Relationship [Member]	Dec. 31, 2011 Successor [Member] Derivatives In Cash Flow Hedging Relationship [Member]	Dec. 31, 2010 Successor [Member] Derivatives In Cash Flow Hedging Relationship [Member] Commodity Derivatives [Member] Revenues [Member]	Dec. 31, 2011 Successor [Member] Derivatives In Cash Flow Hedging Relationship [Member] Commodity Derivatives [Member] Revenues [Member]	Dec. 31, 2010 Successor [Member] Derivatives In Cash Flow Hedging Relationship [Member] Interest Rate [Member] Revenues [Member]	Dec. 31, 2011 Successor [Member] Derivatives In Cash Flow Hedging Relationship [Member] Interest Rate [Member] Revenues [Member]	Dec. 31, 2010 Successor [Member] Derivatives In Cash Flow Hedging Relationship [Member] Interest Rate [Member] Interest Expense, Net [Member]	Dec. 31, 2011 Successor [Member] Derivatives In Cash Flow Hedging Relationship [Member] Interest Rate [Member] Interest Expense, Net [Member]	Dec. 31, 2010 Successor [Member] Derivatives Not Designated In A Hedging Relationships [Member]	Dec. 31, 2011 Successor [Member] Derivatives Not Designated In A Hedging Relationships [Member]	Dec. 31, 2010 Successor [Member] Derivatives Not Designated In A Hedging Relationships [Member] Commodity Derivatives [Member] Revenues [Member]	Dec. 31, 2011 Successor [Member] Derivatives Not Designated In A Hedging Relationships [Member] Commodity Derivatives [Member] Revenues [Member]	Dec. 31, 2010 Successor [Member] Derivatives Not Designated In A Hedging Relationships [Member] Interest Rate [Member] Interest Expense, Net [Member]	Dec. 31, 2011 Successor [Member] Derivatives Not Designated In A Hedging Relationships [Member] Interest Rate [Member] Interest Expense, Net [Member]	Dec. 31, 2010 Successor [Member] Derivatives Not Designated In A Hedging Relationships [Member] Embedded Derivatives [Member] Other Income and Deductions, Net [Member]	Dec. 31, 2011 Successor [Member] Derivatives Not Designated In A Hedging Relationships [Member] Embedded Derivatives [Member] Other Income and Deductions, Net [Member]	May 25, 2010 Predecessor [Member] Derivatives In Cash Flow Hedging Relationship [Member]	Dec. 31, 2009 Predecessor [Member] Derivatives In Cash Flow Hedging Relationship [Member]	May 25, 2010 Predecessor [Member] Derivatives In Cash Flow Hedging Relationship [Member] Commodity Derivatives [Member] Revenues [Member]	Dec. 31, 2009 Predecessor [Member] Derivatives In Cash Flow Hedging Relationship [Member] Commodity Derivatives [Member] Revenues [Member]	May 25, 2010 Predecessor [Member] Derivatives In Cash Flow Hedging Relationship [Member] Interest Rate [Member] Revenues [Member]	Dec. 31, 2009 Predecessor [Member] Derivatives In Cash Flow Hedging Relationship [Member] Interest Rate [Member] Revenues [Member]	May 25, 2010 Predecessor [Member] Derivatives In Cash Flow Hedging Relationship [Member] Interest Rate [Member] Interest Expense, Net [Member]	Dec. 31, 2009 Predecessor [Member] Derivatives In Cash Flow Hedging Relationship [Member] Interest Rate [Member] Interest Expense, Net [Member]	May 25, 2010 Predecessor [Member] Derivatives Not Designated In A Hedging Relationships [Member]	Dec. 31, 2009 Predecessor [Member] Derivatives Not Designated In A Hedging Relationships [Member]	May 25, 2010 Predecessor [Member] Derivatives Not Designated In A Hedging Relationships [Member] Commodity Derivatives [Member] Revenues [Member]	Dec. 31, 2009 Predecessor [Member] Derivatives Not Designated In A Hedging Relationships [Member] Commodity Derivatives [Member] Revenues [Member]	May 25, 2010 Predecessor [Member] Derivatives Not Designated In A Hedging Relationships [Member] Interest Rate [Member] Interest Expense, Net [Member]	Dec. 31, 2009 Predecessor [Member] Derivatives Not Designated In A Hedging Relationships [Member] Interest Rate [Member] Interest Expense, Net [Member]	May 25, 2010 Predecessor [Member] Derivatives Not Designated In A Hedging Relationships [Member] Embedded Derivatives [Member] Other Income and Deductions, Net [Member]	Dec. 31, 2009 Predecessor [Member] Derivatives Not Designated In A Hedging Relationships [Member] Embedded Derivatives [Member] Other Income and Deductions, Net [Member]
Change in value recognized in OCI on derivatives (effective portion)	$ (11,099)	$ (12,678)	$ (11,099)	$ (12,678)	$ 0	$ 0											$ 14,371	$ (22,040)	$ 14,371	$ (19,958)	$ 0	$ (2,082)
Amount of gain (loss) reclassified from AOCI into income (effective portion)	0	(19,018)	0	(19,018)			0	0									(6,260)	48,005	(5,200)	54,260			(1,060)	(6,255)
Amount of gain (loss) recognized in income on ineffective portion			(88)	3															(799)	108
Derivative Instruments, Gain (Loss) Reclassified Amortized from Accumulated OCI into Income, Effective Portion, Net											0	0															4115	-611
Amount of gain (loss) recognized in income on derivatives									$ (19,756)	$ 17,521	$ (7,778)	$ (58)	$ (3,588)	$ (395)	$ (8,390)	$ 17,974									$ (3,695)	$ (29,355)	$ 1,168	$ (13,669)	$ (824)	$ 0	$ (4,039)	$ (15,686)

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Investment In Unconsolidated Affiliates (Tables)

12 Months Ended

Dec. 31, 2011

Lone Star [Member]

Changes In The Partnership's Investment

Amounts recorded with respect to Lone Star for the period ended December 31, 2011 are summarized in the table below:

Lone Star	Period from Initial Contribution (May 2, 2011) to December 31, 2011
Contributions to Lone Star	$	645,265
Return of investments from Lone Star	22,698
Distributions received from Lone Star	22,037
Partnership’s share of Lone Star’s net income	28,188

HPC [Member]

Changes In The Partnership's Investment

The following table summarizes the changes in the Partnership's investment in HPC:

	Successor				Predecessor
HPC	Year Ended December 31, 2011		Period from  Acquisition (May 26, 2010) to December 31, 2010		Period from January 1, 2010 to Disposition (May 25, 2010)		Period from Inception (March 18, 2009) to December 31, 2009
Contributions to HPC	$	—	$	—	$	20,210	$	401,356
Purchase of additional HPC general partner interest	—		—		75,114		52,803
Distributions received from HPC	65,465		52,668		12,446		8,926
Return of investment received from HPC	—		19,995		—		—
Partnership’s share of HPC’s net income	54,582		35,684		15,872		7,886
Amortization of excess fair value of investment in HPC	5,847		3,410		—		—

MEP [Member]

Changes In The Partnership's Investment

The following table summarizes the changes in the Partnership's investment in MEP:

MEP	Year Ended December 31, 2011		Period from Acquisition (May 26, 2010) to December 31, 2010
Contributions to MEP	$	—	$	85,828
Purchase of additional MEP interest	1,355		—
Distributions received from MEP	82,512		43,306
Partnership’s share of MEP’s net income	42,617		21,219

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Fair Value Measures (Partnership's Derivative Assets And Liabilities Measured At Fair Value On A Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010	Sep. 02, 2009
Fair Value Measurement, Assets	$ 4,848	$ 2,673
Embedded Derivatives in Series A Preferred Units			28,900
Transfers Between Level 2 Level 3 Derivatives Amount	0
Fair Value, Measurements, Recurring [Member]
Fair Value Measurement, Assets	4,848	2,673
Interest Rate Derivatives	470	2,584
Fair Value Measurement, Liabilities	49,647	74,299
Embedded Derivatives in Series A Preferred Units	39,049	57,023
Fair Value, Measurements, Recurring [Member] | Significant Observable Inputs (Level 2) [Member]
Fair Value Measurement, Assets	4,848	2,673
Interest Rate Derivatives	470	2,584
Fair Value Measurement, Liabilities	10,598	17,276
Embedded Derivatives in Series A Preferred Units	0	0
Fair Value, Measurements, Recurring [Member] | Unobservable Inputs (Level 3) [Member]
Fair Value Measurement, Assets	0	0
Interest Rate Derivatives	0	0
Fair Value Measurement, Liabilities	39,049	57,023
Embedded Derivatives in Series A Preferred Units	39,049	57,023
Fair Value, Measurements, Recurring [Member] | Natural Gas [Member]
Fair Value Measurement, Assets	3,907	2,481
Fair Value Measurement, Liabilities	0	427
Fair Value, Measurements, Recurring [Member] | Natural Gas [Member] | Significant Observable Inputs (Level 2) [Member]
Fair Value Measurement, Assets	3,907	2,481
Fair Value Measurement, Liabilities	0	427
Fair Value, Measurements, Recurring [Member] | Natural Gas [Member] | Unobservable Inputs (Level 3) [Member]
Fair Value Measurement, Assets	0	0
Fair Value Measurement, Liabilities	0	0
Fair Value, Measurements, Recurring [Member] | NGLs [Member]
Fair Value Measurement, Assets	94	192
Fair Value Measurement, Liabilities	8,561	10,684
Fair Value, Measurements, Recurring [Member] | NGLs [Member] | Significant Observable Inputs (Level 2) [Member]
Fair Value Measurement, Assets	94	192
Fair Value Measurement, Liabilities	8,561	10,684
Fair Value, Measurements, Recurring [Member] | NGLs [Member] | Unobservable Inputs (Level 3) [Member]
Fair Value Measurement, Assets	0	0
Fair Value Measurement, Liabilities	0	0
Fair Value, Measurements, Recurring [Member] | Condensate [Member]
Fair Value Measurement, Assets	538	0
Fair Value Measurement, Liabilities	1,567	3,581
Fair Value, Measurements, Recurring [Member] | Condensate [Member] | Significant Observable Inputs (Level 2) [Member]
Fair Value Measurement, Assets	538	0
Fair Value Measurement, Liabilities	1,567	3,581
Fair Value, Measurements, Recurring [Member] | Condensate [Member] | Unobservable Inputs (Level 3) [Member]
Fair Value Measurement, Assets	0	0
Fair Value Measurement, Liabilities	0	0
Fair Value, Measurements, Recurring [Member] | Ethane - Put Options [Member]
Fair Value Measurement, Assets	309	0
Fair Value, Measurements, Recurring [Member] | Ethane - Put Options [Member] | Significant Observable Inputs (Level 2) [Member]
Fair Value Measurement, Assets	309	0
Fair Value, Measurements, Recurring [Member] | Ethane - Put Options [Member] | Unobservable Inputs (Level 3) [Member]
Fair Value Measurement, Assets	$ 0	$ 0

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Commitments And Contingencies

12 Months Ended

Dec. 31, 2011

Commitments And Contingencies [Abstract]

Commitments And Contingencies

Commitments and Contingencies

Legal. The Partnership is involved in various claims, lawsuits and audits by taxing authorities incidental to its business. These claims and lawsuits in the aggregate are not expected to have a material adverse effect on the Partnership’s business, financial condition, results of operations or cash flows.

Keyes Litigation. In August 2008, Keyes Helium Company, LLC (“Keyes”) filed suit against RGS, the Partnership, the General Partner and various other subsidiaries. Keyes entered into an output contract with the Partnership’s predecessor-in-interest in 1996 under which it purchased all of the helium produced at the Lakin, Kansas processing plant. In September 2004, the Partnership decided to shut down its Lakin plant and contract with a third party for the processing of volumes processed at Lakin; as a result, the Partnership no longer delivered any helium to Keyes. In its suit, Keyes alleges it is entitled to damages for the costs of covering its purchases of helium. On May 7, 2010, the jury rendered a verdict in favor of the Partnership. No damages were awarded to the Plaintiffs. Plaintiffs have appealed the verdict. The hearing on appeal is expected to take place in the first half of 2012.

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Derivative Instruments (Tables)

12 Months Ended

Dec. 31, 2011

Derivative Instruments [Abstract]

Schedule Of Derivative Assets And Liabilities Statement

The Partnership’s derivative assets and liabilities, including credit risk adjustments, for the years ended December 31, 2011 and 2010 are detailed below:

	Assets				Liabilities
	December 31, 2011		December 31, 2010		December 31, 2011		December 31, 2010
Derivatives designated as cash flow hedges
Current amounts
Commodity contracts	$	4,065	$	2,650	$	10,065	$	11,421
Long-term amounts
Commodity contracts	474		23		63		3,271
Total cash flow hedging instruments	4,539		2,673		10,128		14,692
Derivatives not designated as cash flow hedges
Current amounts
Ethane put options	309		—		—		—
Interest rate contracts	—		—		470		1,751
Long-term amounts
Interest rate contracts	—		—		—		833
Embedded derivatives in Series A Preferred Units	—		—		39,049		57,023
Total derivatives not designated as cash flow hedges	309		—		39,519		59,607
Total derivatives	$	4,848	$	2,673	$	49,647	$	74,299

Detail Effect Of Derivative Assets And Liabilities In Statement Of Operations

The Partnership's statement of operation for the year ended December 31, 2011 and 2010 were impacted by derivative instruments activities as detailed below:

		Successor						Predecessor
		Year Ended December 31, 2011			Period from May 26, 2010 to December 31, 2010			Period from January 1, 2010 to May 25, 2010			Year Ended December 31, 2009
		Change in Value Recognized in AOCI on Derivatives (Effective Portion)
Derivatives in cash flow hedging relationships:
Commodity derivatives		$	(12,678	)	$	(11,099	)	$	14,371		$	(19,958	)
Interest rate swap derivatives		—			—			—			(2,082		)
		$	(12,678	)	$	(11,099	)	$	14,371		$	(22,040	)
	Location of Gain/(Loss) Recognized in Income	Amount of Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)
Derivatives in cash flow hedging relationships:
Commodity derivatives	Revenue	$	(19,018	)	$	—		$	(5,200	)	$	54,260
Interest rate swap derivatives	Interest expense	—			—			(1,060		)	(6,255		)
		$	(19,018	)	$	—		$	(6,260	)	$	48,005
	Location of Gain/(Loss) Recognized in Income	Amount of Gain/(Loss) Recognized in Income on Ineffective Portion
Derivatives in cash flow hedging relationships:
Commodity derivatives	Revenue	$	3		$	(88	)	$	(799	)	$	108

	Location of Gain/(Loss) Recognized in  Income	Amount of Gain/(Loss) from De-designation Amortized from AOCI into Income
Derivatives not designated in a hedging relationship:
Commodity derivatives	Revenue	$	—		$	—		$	4,115		$	(611	)
	Location of  Gain/(Loss) Recognized in  Income	Amount of Gain/(Loss) Recognized in Income on Derivatives
Derivatives not designated in a hedging relationship:
Commodity derivatives	Revenue	$	(58	)	$	(7,778	)	$	1,168		$	(13,669	)
Interest rate swap derivatives	Interest expense	(395		)	(3,588		)	(824		)	—
Embedded derivatives	Other  income & deductions	17,974			(8,390		)	(4,039		)	(15,686		)
		$	17,521		$	(19,756	)	$	(3,695	)	$	(29,355	)

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Related Party Transactions

12 Months Ended

Dec. 31, 2011

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

As of December 31, 2011 and 2010, details of the Partnership’s related party receivables and related party payables were as follows:

	December 31, 2011		December 31, 2010
Related party receivables
EPD	$	41,781	$	25,539
HPC	1,360		5,823
ETE	554		970
Other	1,509		10
Total related party receivables	$	45,204	$	32,342
Related party payables
EPD	$	1,469	$	1,323
HPC	475		760
ETE	10,605		1,245
Other	76		10
Total related party payables	$	12,625	$	3,338

Transactions with ETE and its subsidiaries.Under a May 26, 2010 service agreement with Services Co., Services Co. performs certain services for the Partnership. The Partnership pays Services Co.’s direct expenses for these services, plus an annual fee of $10 million, and receives the benefit of any cost savings recognized for these services. The services agreement has a five year term from May 26, 2010 to May 26, 2015, subject to earlier termination rights in the event of a change in control, the failure to achieve certain cost savings for the Partnership or upon an event of default. Also, the Partnership, together with the General Partner and RGS entered into an operation and service agreement (the “Operations Agreement”) with ETC. Under the Operations Agreement, ETC will perform certain operations, maintenance and related services reasonably required to operate and maintain certain facilities owned by the Partnership. Pursuant to the Operations Agreement, the Partnership will reimburse ETC for actual costs and expenses incurred in connection with the provision of these services based on an annual budget agreed-upon by both parties. The Operations Agreement has an initial term of one year and automatically renews on a year-to-year basis upon expiration of the initial term. The Partnership incurred total service fees of $16.6 million and $5.8 million for the year ended December 31, 2011 and during the period from May 26, 2010 to December 31, 2010, respectively.

In conjunction with distributions made by the Partnership to the limited and general partner interests, ETE received cash distributions of $57.4 million and $27.7 million for the year ended December 31, 2011 and for the period from May 26, 2010 to December 31, 2010. During the period from May 26, 2010 to December 31, 2010, the Partnership received cash of $7.2 million from ETE, which represents the portion of the amount of the Partnership’s common unit distribution to be paid to ETE for the period of time that those units were not outstanding (April 1, 2010 to May 25, 2010).

ETE made capital contributions aggregating to $20.8 million, to maintain the General Partner’s 2% interest in the Partnership for the period from May 26, 2010 to December 31, 2010. The General Partner has the right, but not the obligation, to contribute a proportionate amount of capital to the Partnership to maintain its general partner interest.

Prior to December 31, 2010, the employees operating the assets of the Partnership and its subsidiaries and all those providing staff or support services were employees of the General Partner. Pursuant to the Partnership agreement, the General Partner receives a monthly reimbursement for all direct and indirect expenses incurred on behalf of the Partnership. Reimbursements of $58 million, $44.2 million, $31.1 million and $33.8 million were recorded in the Partnership’s financial statements for the year ended December 31, 2011, for the period from May 26, 2010 to December 31, 2010, for the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009, respectively, as operation and maintenance expenses or general and administrative expenses, as appropriate. Effective January 1, 2011, certain employees of the General Partner became employees of ETP, and the Partnership reimburses ETP for all direct and indirect expenses incurred on behalf of the Partnership related to those employees. For the year ended December 31, 2011, a reimbursement of $21.6 million was recorded to ETP in the Partnership’s financial statements as operating expenses or general and administrative expenses.

In September 2011, the Partnership purchased a 0.1% interest in MEP from ETP for $1.2 million in cash.

The Partnership's Gathering and Processing segment, in the ordinary course of business, sells natural gas and NGLs to subsidiaries of ETE and records the revenue in gas sales and NGL sales. The Partnership’s Contract Compression segment provides contract compression services to ETP and records revenue in gathering, transportation and other fees on the statement of operations. The Partnership’s Contract Compression segment sold compression equipment to a subsidiary of ETP for $7.9 million for the year ended December 31, 2011. As these transactions are between entities under common control, partners’ capital was increased, which represented a deemed contribution of the excess sales price over the carrying amounts. The Partnership’s Contract Compression segment purchased compression equipment from a subsidiary of ETP for $33.1 million during the year ended December 31, 2011.

Transactions with HPC. Under a Master Services Agreement with HPC, the Partnership operates and provides all employees and services for the operation and management of HPC. For the year ended December 31, 2011, during the periods from May 26, 2010 to December 31, 2010, from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009, the related party general and administrative expenses reimbursed to the Partnership were $16.8 million, $9.8 million, $6.9 million and $4.7 million respectively, which is recorded in gathering, transportation and other fees on the statements of operations.

Upon the formation of HPC in March 2009, the Partnership was reimbursed by HPC for construction-in-progress incurred prior to formation of HPC at the cost of $80.6 million.

The Partnership’s Contract Compression segment provides contract compression services to HPC and records revenue in gathering, transportation and other fees on the statement of operations. The Partnership also receives transportation services from HPC and records the cost as cost of sales.

Transactions with EPD and its subsidiaries. EPD owns a portion of ETE’s outstanding common units and therefore is considered a related party along with any of its subsidiaries. The Partnership, in the ordinary course of business, sells natural gas and NGLs to subsidiaries of EPD and records the revenue in gas sales and NGL sales. The Partnership also incurs NGL processing fees and transportation fees with subsidiaries of EPD and records these fees as cost of sales. On January 18, 2012, EPD sold a significant portion of its ownership in ETE's common units. Subsequent to that transaction, EPD owns less than 5% of ETE's outstanding common units.

The Partnership’s Contract Compression segment provided contract compression services to CDM MAX LLC (“CDM MAX”), which was partially owned by an officer of CDM. In 2009, CDM MAX was purchased by a third party and, as a result, CDM MAX is no longer a related party. The Partnership’s related party revenue associated with CDM MAX was $1.1 million during the year ended December 31, 2009.

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Leases (Schedule Of Future Minimum Lease Payments That Had Initial Or Remaining Noncancelable Lease Terms) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011
Operating Leased Assets [Line Items]
2012	$ 2,684
2013	1,793
2014	1,163
2015	1,072
2016	956
Thereafter	2,629
Total minimum lease payments	$ 10,297

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	7 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended
	Dec. 31, 2010 Successor [Member]	Dec. 31, 2011 Successor [Member]	May 25, 2010 Predecessor [Member]	Dec. 31, 2009 Predecessor [Member]
OPERATING ACTIVITIES:
Net income (loss)	$ (5,972)	$ 73,619	$ (4,946)	$ 140,489
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
Depreciation and amortization, including debt issuance cost, amortization and bond premium amortization	79,323	174,630	49,363	116,307
Write-off of debt issuance costs and bond premium	(1,422)	0	1,780	0
Amortization of excess fair value of unconsoildated affilaites	3,410	5,847	0	0
Income from unconsolidated affiliates	(56,903)	(125,387)	(15,872)	(7,886)
Derivative valuation changes	33,189	(20,486)	12,004	5,163
(Gain) loss on asset sales, net	268	(2,372)	303	(133,284)
Unit-based compensation expenses	1,827	3,610	12,070	6,008
Cash flow changes in current assets and liabilities:
Trade accounts receivable, accrued revenues and related party receivables	(401)	(8,328)	(11,272)	10,727
Other current assets	(107)	734	2,516	10,471
Trade accounts payable, accrued cost of gas and liquids, related party payables and deferred revenues	(15,302)	23,221	8,649	(3,762)
Other current liabilities	(12,853)	9,590	22,614	(6,726)
Distributions received from unconsolidated affiliates	56,903	119,236	12,446	7,886
Cash flow changes in other assets and liabilities	(2,174)	(159)	(234)	(1,433)
Net cash flows provided by operating activities	79,786	253,755	89,421	143,960
INVESTING ACTIVITIES:
Capital expenditures	(159,223)	(406,339)	(63,787)	(193,083)
Capital contributions to unconsolidated affiliates	(85,828)	(52,601)	(20,210)	0
Distributions in excess of earnings of unconsolidated affiliates	59,066	73,476	0	1,039
Acquisition of investment in unconsolidated affiliates, net of cash received	4,632	(593,843)	(75,114)	0
Acquisitions, net of cash $0, $1,983, $0, and $0	(191,313)	0	0	(52,803)
Net proceeds from asset sales	76,237	24,024	10,661	88,682
Net cash flows used in investing activities	(296,429)	(955,283)	(148,450)	(156,165)
FINANCING ACTIVITIES:
Net borrowings (repayments) under revolving credit facility	(333,650)	47,000	199,008	(349,087)
Proceeds from issuance of senior notes	600,000	500,000	0	236,240
Redemption of senior notes	(357,500)	0	0	0
Debt issuance costs	(12,389)	(9,768)	(15,728)	(12,224)
Partner contributions	27,999	0	0	6,344
Partner distributions	(118,630)	(274,488)	(86,078)	(146,585)
Acquisition of assets between entities under common control in excess of historical cost	0	72	(16,973)	(10,197)
Contributions from noncontrolling interest	86	0	0	0
Distributions to noncontrolling interest	0	0	(1,135)	0
Drafts payable	0	2,507	0	0
(Payments) proceeds associated with issuance of common units under LTIP, net of tax withholding	1,452	(109)	(4,874)	0
Proceeds from common unit issuances, net of issuance costs	399,582	435,685	(89)	220,318
Proceeds from Series A Preferred Units issuance, net of issuance costs	0	0	0	76,624
Distributions to Series A Preferred Units	(3,891)	(7,781)	(1,945)	0
Net cash flows provided by financing activities	203,059	693,118	72,186	21,433
Net change in cash and cash equivalents	(13,584)	(8,410)	13,157	9,228
Cash and cash equivalents at beginning of period	22,984	9,400	9,827	599
Cash and cash equivalents at end of period	9,400	990	22,984	9,827
Supplemental cash flow information:
Non-cash capital expenditures	19,635	24,111	18,051	9,688
Issuance of common units for investment in unconsolidated affiliate	584,436	0	0	0
Deemed contribution from acquisition of assets between entities under common control	8,937	177	0	0
Release of escrow payable from restricted cash	1,011	0	500	8,501
Interest paid, net of amounts capitalized	58,335	82,602	5,410	69,401
Income taxes paid	937	1,778	378	6
Contribution of RIG to HPC	0	0	0	263,921
Non-cash proceeds from contribution of RIG to HPC	0	0	0	403,568
Distributions accrued but not paid to Series A Preferred Units	$ 0	$ 0	$ 0	$ 3,891

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Statement of Financial Position [Abstract]
Trade accounts receivable, allowance	$ 1,190	$ 297
Other, accumulated amortization of debt issuance costs	10,186	3,326
Intangible assets, accumulated amortization	44,856	15,584
Deferred revenues, related party amounts	41	8,765
Series A convertible redeemable preferred units, redemption amount	$ 84,773	$ 83,891
Common units, authorized	161,233,046	138,255,919
Common units, issued	157,437,608	137,281,336
Common units, outstanding	157,437,608	137,281,336

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Derivative Instruments

12 Months Ended

Dec. 31, 2011

Derivative Instruments [Abstract]

Derivative Instruments

Derivative Instruments

Policies. The Partnership established comprehensive risk management policies and procedures to monitor and manage the market risks associated with commodity prices, counterparty credit, and interest rates. The General Partner is responsible for delegation of transaction authority levels, and the Audit and Risk Committee of the General Partner is responsible for the overall management of these risks, including monitoring exposure limits. The Audit and Risk Committee receives regular briefings on exposures and overall risk management in the context of market activities.

Commodity Price Risk. The Partnership is a net seller of NGLs, condensate and natural gas as a result of its gathering and processing operations. The prices of these commodities are impacted by changes in the supply and demand as well as market focus. Both the Partnership's profitability and cash flow are affected by the inherent volatility of these commodities which could adversely affect its ability to make distributions to its unitholders. The Partnership manages this commodity price exposure through an integrated strategy that includes management of its contract portfolio, matching sales prices of commodities with purchases, optimization of its portfolio by monitoring basis and other price differentials in operating areas, and the use of derivative contracts. In some cases, the Partnership may not be able to match pricing terms or to cover its risk to price exposure with financial hedges, and it may be exposed to commodity price risk. Speculative positions with derivative contracts are prohibited under the Partnership's policies.

The Partnership has swap contracts settled against NGLs (ethane, propane, butane, and natural gasoline), condensate and natural gas market prices. The Partnership also has put options settled against ethane. The Partnership will exercise these options only when the market prices for ethane is below the price that the Partnership has locked on these options.

As of December 31, 2011 all of the Partnership's commodity swap contracts were accounted for as cash flow hedges, and the Partnership's put options were accounted for on mark-to-market basis. On January 1, 2012, the Partnership, for accounting purposes, de-designated its swap contracts and will account for these contracts using the mark-to-market method of accounting. Upon the de-designation of these trades, the Partnership has $4.8 million in net hedging losses in accumulated other comprehensive loss which will be amortized to earnings over the next 2.25 years, of which $5.2 million of net hedging losses will be amortized to revenues in the next 12 months.

Interest Rate Risk. The Partnership is exposed to variable interest rate risk as a result of borrowings under its credit facility. As of December 31, 2011 and December 31, 2010, the Partnership had $332 million and $285 million, respectively, of outstanding borrowings exposed to variable interest rate risk. The Partnership’s $300 million interest rate swaps expired in March 2010. In April 2010, the Partnership entered into two-year interest rate swaps related to $250 million of borrowings under its revolving credit facility, effectively locking the base rate for these borrowings at 1.325% through April 2012. As of December 31, 2011 the interest rate swaps were accounted for using the mark-to-market method of accounting.

Credit Risk. The Partnership's resale of NGLs, condensate, and natural gas exposes it to credit risk, as the margin on any sale is generally a very small percentage of the total sales price. Therefore, a credit loss can be very large relative to overall profitability on these transactions. The Partnership attempts to ensure that it issues credit only to creditworthy counterparties and that in appropriate circumstances any such extension of credit is backed by adequate collateral, such as a letter of credit or parental guarantee from a parent company with potentially better credit.

The Partnership is exposed to credit risk from its derivative counterparties. The Partnership does not require collateral from these counterparties. The Partnership deals primarily with financial institutions when entering into financial derivatives, and utilizes master netting agreements that allow for netting of swap contract receivables and payables in the event of default by either party. If the Partnership's counterparties failed to perform under existing swap contracts, the Partnership's maximum loss as of December 31, 2011 was $4.8 million, which would be reduced by $4.6 million due to the netting feature. The Partnership has elected to present assets and liabilities under master netting agreements gross on the condensed consolidated balance sheets.

Embedded Derivatives. The Series A Preferred Units contain embedded derivatives which are required to be bifurcated and accounted for separately, such as the holders' conversion option and the Partnership's call option. These embedded derivatives are accounted for using mark-to-market accounting. The Partnership does not expect the embedded derivatives to affect its cash flows.

The Partnership’s derivative assets and liabilities, including credit risk adjustments, for the years ended December 31, 2011 and 2010 are detailed below:

	Assets				Liabilities
	December 31, 2011		December 31, 2010		December 31, 2011		December 31, 2010
Derivatives designated as cash flow hedges
Current amounts
Commodity contracts	$	4,065	$	2,650	$	10,065	$	11,421
Long-term amounts
Commodity contracts	474		23		63		3,271
Total cash flow hedging instruments	4,539		2,673		10,128		14,692
Derivatives not designated as cash flow hedges
Current amounts
Ethane put options	309		—		—		—
Interest rate contracts	—		—		470		1,751
Long-term amounts
Interest rate contracts	—		—		—		833
Embedded derivatives in Series A Preferred Units	—		—		39,049		57,023
Total derivatives not designated as cash flow hedges	309		—		39,519		59,607
Total derivatives	$	4,848	$	2,673	$	49,647	$	74,299

The Partnership's statement of operation for the year ended December 31, 2011 and 2010 were impacted by derivative instruments activities as detailed below:

		Successor						Predecessor
		Year Ended December 31, 2011			Period from May 26, 2010 to December 31, 2010			Period from January 1, 2010 to May 25, 2010			Year Ended December 31, 2009
		Change in Value Recognized in AOCI on Derivatives (Effective Portion)
Derivatives in cash flow hedging relationships:
Commodity derivatives		$	(12,678	)	$	(11,099	)	$	14,371		$	(19,958	)
Interest rate swap derivatives		—			—			—			(2,082		)
		$	(12,678	)	$	(11,099	)	$	14,371		$	(22,040	)
	Location of Gain/(Loss) Recognized in Income	Amount of Gain/(Loss) Reclassified from AOCI into Income (Effective Portion)
Derivatives in cash flow hedging relationships:
Commodity derivatives	Revenue	$	(19,018	)	$	—		$	(5,200	)	$	54,260
Interest rate swap derivatives	Interest expense	—			—			(1,060		)	(6,255		)
		$	(19,018	)	$	—		$	(6,260	)	$	48,005
	Location of Gain/(Loss) Recognized in Income	Amount of Gain/(Loss) Recognized in Income on Ineffective Portion
Derivatives in cash flow hedging relationships:
Commodity derivatives	Revenue	$	3		$	(88	)	$	(799	)	$	108

	Location of Gain/(Loss) Recognized in  Income	Amount of Gain/(Loss) from De-designation Amortized from AOCI into Income
Derivatives not designated in a hedging relationship:
Commodity derivatives	Revenue	$	—		$	—		$	4,115		$	(611	)
	Location of  Gain/(Loss) Recognized in  Income	Amount of Gain/(Loss) Recognized in Income on Derivatives
Derivatives not designated in a hedging relationship:
Commodity derivatives	Revenue	$	(58	)	$	(7,778	)	$	1,168		$	(13,669	)
Interest rate swap derivatives	Interest expense	(395		)	(3,588		)	(824		)	—
Embedded derivatives	Other  income & deductions	17,974			(8,390		)	(4,039		)	(15,686		)
		$	17,521		$	(19,756	)	$	(3,695	)	$	(29,355	)

XML

Document And Entity Information (USD $)	12 Months Ended
	Dec. 31, 2011	Feb. 15, 2012	Jun. 30, 2011
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY
Trading Symbol	rgp
Entity Registrant Name	Regency Energy Partners LP
Entity Central Index Key	0001338613
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		157,437,608
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 3,092,104,793

XML

Long-Term Debt

12 Months Ended

Dec. 31, 2011

Long-Term Debt Disclosure [Abstract]

Long-Term Debt

Long-term Debt

Obligations in the form of senior notes and borrowings under the credit facilities are as follows:

	December 31, 2011			December 31, 2010
Senior notes	$	1,355,147		$	856,061
Revolving loans	332,000			285,000
Total	1,687,147			1,141,061
Less: current portion	—			—
Long-term debt	$	1,687,147		$	1,141,061
Availability under revolving credit facility:
Total credit facility limit	$	900,000		$	900,000
Revolving loans	(332,000		)	(285,000		)
Letters of credit	(19,000		)	(16,015		)
Total available	$	549,000		$	598,985

Long-term debt maturities as of December 31, 2011 for each of the next five years are as follows:

Year Ended December 31,	Amount
2012	$	—
2013	—
2014	332,000
2015	—
2016	250,000
Thereafter	1,100,000
Total	$	1,682,000	*

_______________________

* Excludes an unamortized premium of $5.1 million as of December 31, 2011.

In the year ended December 31, 2011, the Partnership borrowed $940 million under its revolving credit facility; these borrowings were primarily to fund capital expenditures and acquisitions. During the same period, the Partnership repaid $893 million with proceeds from an equity offering and an issuance of senior notes. In the years ended December 31, 2010 and 2009, the Partnership borrowed $603 million and $191.7 million, respectively; these funds were used primarily to finance capital expenditures and acquisitions. During the same periods, the Partnership repaid $737.6 million, and $540.8 million, respectively, of these borrowings with proceeds from equity offerings.

Revolving Credit Facility. The Partnership, through RGS, has a $900 million revolving credit facility, including the availability for letters of credit of $200 million, that expires on June 15, 2014. RGS also has the option to request an additional $250 million in revolving commitments with ten business days written notice provided that no event of default has occurred or would result due to such increase, and all other additional conditions for the increase of the commitments set forth in the revolving credit facility have been met.

In March 2010, RGS entered into the Fifth Amended and Restated Credit Agreement that extended the maturity date of this facility to June 15, 2014 from August 15, 2011. The Partnership treated the March 2010 amendment of the revolving credit facility as a modification of an existing revolving credit agreement and, therefore, wrote off debt issuance costs of $1.8 million to interest expense, net in the period from January 1, 2010 to May 25, 2010. In addition, the Partnership paid and capitalized $15.9 million of loan fees which will be amortized over the remaining term. In May 2010, the Fifth Amended and Restated Credit Agreement amended certain definitions to include MEP, to allow for the pledge of the equity interest in MEP as indirect collateral, to permit certain investments in MEP by the Partnership and its affiliates and to require that the Partnership and its subsidiaries maintain a senior consolidated secured leverage ratio not to exceed three to one.

In May 2011, RGS amended its Fifth Amended and Restated Credit Agreement to permit the acquisition of equity interests in Lone Star and to allow for additional investments in Lone Star of up to $150 million. In December 2011, certain definitions were amended to include ELG and Ranch JV, allow for additional investments in Lone Star and ELG and allow for investments in Ranch JV. As of December 31, 2011, RGS is allowed additional investments in Lone Star of up to $550 million; additional investment in ELG of up to $250 million; investment in Ranch JV of up to $50 million; and additional investment in HPC of up to $250 million less the Partnership's ownership portion of HPC's indebtedness. In addition, RGS is allowed an additional investment in any joint venture of up to $250 million.

The revolving credit facility and the guarantees are senior to the Partnership’s and the guarantors’ unsecured obligations, to the extent of the value of the assets securing such obligations.

The outstanding balance under the of revolving credit facility bears interest at LIBOR plus a margin or alternative base rate (equivalent to the U.S. prime lending rate) plus a margin, or a combination of both. The alternate base rate used to calculate interest on base rate loans will be calculated based on the greatest to occur of a base rate, a federal funds effective rate plus 0.50% and an adjusted one-month LIBOR rate plus 1.00%. The applicable margin shall range from 1.50% to 2.25% for base rate loans, 2.50% to 3.25% for Eurodollar loans. The weighted average interest rates on the total amounts outstanding under the Partnership's revolving credit facility was 3.18%, 2.96%, 3.30% and 3.24% as of December 31, 2011, December 31, 2010, May 25, 2010 and December 31, 2009, respectively.

RGS must pay (i) a commitment fee ranging from 0.375% to 0.50% per annum of the unused portion of the revolving loan commitments, (ii) a participation fee for each revolving lender participating in letters of credit ranging from 2.50% to 3.25% per annum of the average daily amount of such lender’s letter of credit exposure and (iii) a fronting fee to the issuing bank of letters of credit equal to 0.125% per annum of the average daily amount of the letter of credit exposure. These fees are included in interest expense, net in the consolidated statement of operations.

The revolving credit facility contains financial covenants requiring RGS and its subsidiaries to maintain debt to consolidated EBITDA (as defined in the credit agreement) ratio less than 5.25, consolidated EBITDA to consolidated interest expense ratio greater than 2.75 and a secured debt to consolidated EBITDA ratio less than 3. At December 31, 2011 and 2010, RGS and its subsidiaries were in compliance with these covenants.

The revolving credit facility restricts the ability of RGS to pay dividends and distributions other than reimbursements of the Partnership for expenses and payment of dividends to the Partnership to the amount of available cash (as defined) so long as no default or event of default has occurred or is continuing. The revolving credit facility also contains various covenants that limit (subject to certain exceptions), among other things, the ability of RGS to:

• incur indebtedness;

• grant liens;

• enter into sale and leaseback transactions;

• make certain investments, loans and advances;

• dissolve or enter into a merger or consolidation;

• enter into asset sales or make acquisitions;

• enter into transactions with affiliates;

• prepay other indebtedness or amend organizational documents or transaction documents (as defined in the revolving credit facility);

• issue capital stock or create subsidiaries; or

• engage in any business other than those businesses in which it was engaged at the time of the effectiveness of the revolving credit facility or reasonable extensions thereof.

Senior Notes due 2013. During the fourth quarter of 2010, in connection with the issuance of $600 million of senior notes due 2018 as further described below, the Partnership redeemed all of its $357.5 million senior notes due 2013. Accordingly, a redemption premium of $17.2 million was charged to loss on debt refinancing, net in the consolidated statement of operations. In addition, the Partnership wrote off the unamortized loan fee of $5 million and unamortized bond premium of $6.4 million to a loss on debt refinancing, net in the consolidated statement of operations.

Senior Notes due 2016. In May 2009, the Partnership and Finance Corp. issued $250 million of senior notes in a private placement that mature on June 1, 2016 ("2016 Notes"). The 2016 Notes bear interest at 9.375% with interest payable semi-annually in arrears on June 1 and December 1. The Partnership received net proceeds of $236.2 million upon issuance. The net proceeds were used to partially repay revolving loans under the Partnership’s revolving credit facility.

At any time before June 1, 2012, up to 35% of the 2016 Notes can be redeemed at a price of 109.375% plus accrued interest. Beginning June 1, 2013, the Partnership may redeem all or part of these notes at the redemption prices, expressed as percentages of the principal amount, set forth below:

June 1 of year ending:	Percentage of Redemption
2013	104.688%
2014	102.344%
2015 and thereafter	100.000%

At any time prior to June 1, 2013, the Partnership may also redeem all or part of the notes at a price equal to 100% of the principal amount of notes redeemed plus accrued interest and the applicable premium, which equals to the greater of (1) 1% of the principal amount of the note; or (2) the excess of the present value at such redemption date of (i) the redemption price of the note at June 1, 2013 plus (ii) all required interest payments due on the note through June 1, 2013, computed using a discount rate equal to the treasury rate (as defined) as of such redemption date plus 50 basis points, over the principal amount of the note.

Upon a change of control (as defined), each noteholder will be entitled to require the Partnership to purchase all or a portion of its notes at a purchase price of 101% plus accrued interest and liquidated damages, if any. The Partnership’s ability to purchase the notes upon a change of control will be limited by the terms of our debt agreements, including the Partnership’s revolving credit facility. Subsequent to the ETE Acquisition, no noteholder exercised this option.

The 2016 Notes contain various covenants that limit, among other things, the Partnership’s ability, and the ability of certain of its subsidiaries, to:

• incur additional indebtedness;

• pay distributions on, or repurchase or redeem equity interests;

• make certain investments;

• incur liens;

• enter into certain types of transactions with affiliates; and

• sell assets, consolidate or merge with or into other companies.

If the 2016 Notes achieve investment grade ratings by both Moody’s and S&P and no default or event of default has occurred and is continuing, the Partnership will no longer be subject to many of the foregoing covenants. At December 31, 2011, the Partnership was in compliance with these covenants.

Senior Notes due 2018. In October, 2010, the Partnership and Finance Corp. issued $600 million of senior notes that mature on December 1, 2018 ("2018 Notes"). The 2018 Notes bear interest at 6.875% paid semi-annually in arrears on June 1 and December 1, commencing June 1, 2011. The Partnership capitalized $12.2 million in debt issuance costs that will be amortized to interest expense, net over the term of the senior notes. The proceeds were used to redeem the senior notes due 2013 and to partially repay outstanding borrowings under the Partnership’s revolving credit facility.

At any time before December 1, 2013, up to 35% of the 2018 Notes can be redeemed at a price of 106.875% plus accrued interest. Beginning December 1, 2014, the Partnership may redeem all or part of these notes at the redemption prices, expressed as percentages of the principal amount, set forth below:

December 1 of year ending:	Percentage of Redemption
2014	103.438%
2015	101.719%
2016 and thereafter	100.000%

At any time prior to December 1, 2014, the Partnership may also redeem all or part of the notes at a price equal to 100% of the principal amount redeemed plus accrued interest and the applicable premium, which equals the greater of (1) 1% of the principal amount of the note; or (2) the excess of the present value at such redemption date of (i) the redemption price of the note at December 1, 2014 plus (ii) all required interest payments due on the note through December 1, 2014, computed using a discount rate equal to the treasury rate (as defined) as of such redemption date plus 50 basis points, over the principal amount of the note.

Upon a change of control (as defined) followed by a rating decline within 90 days, each holder of the 2018 Notes will be entitled to require the Partnership to purchase all or a portion of its notes at a purchase price of 101% plus accrued interest and liquidated damages, if any. The Partnership's ability to purchase the notes upon a change of control will be limited by the terms of its debt agreements, including the Partnership’s revolving credit facility.

The 2018 Notes contain various covenants that limit, among other things, our ability, and the ability of certain of our subsidiaries, to:

• incur additional indebtedness;

• pay distributions on, or repurchase or redeem equity interests;

• make certain investments;

• incur liens;

• enter into certain types of transactions with affiliates; and

• sell assets, consolidate or merge with or into other companies.

If the 2018 Notes achieve investment grade ratings by both Moody’s and S&P and no default or event of default has occurred and is continuing, the Partnership will no longer be subject to many of the foregoing covenants. At December 31, 2011, the Partnership was in compliance with these covenants.

Senior Notes due 2021. In May 2011, the Partnership and Finance Corp. issued $500 million in senior notes that mature on July 15, 2021 ("2021 Notes"). The 2021 Notes bear interest at 6.5% payable semi-annually in arrears on January 15 and July 15, commencing January 15, 2012. The Partnership capitalized $9.8 million in debt issuance costs that will be amortized to interest expense, net over the term of the 2021 Notes. The proceeds were used to repay borrowings outstanding under the Partnership’s revolving credit facility.

At any time prior to July 15, 2014, the Partnership may redeem up to 35% of the 2021 Notes at a price equal to 106.5% plus accrued interest. Beginning on July 15 of the years indicated below, the Partnership may redeem all or part of the 2021 Notes at the redemption prices, expressed as percentages of the principal amount, set forth below:

July 15 of year ending:	Percentage of Redemption
2016	103.250	%
2017	102.167	%
2018	101.083	%
2019 and thereafter at 100%	100.000	%

At any time prior to July 15, 2016, the Partnership may also redeem all or part of the notes at a price equal to 100% of the principal amount redeemed plus accrued interest and the applicable premium, which equals the greater of (1) 1% of the principal amount of the note; or (2) the excess of the present value at such redemption date of (i) the redemption price of the note at July 15, 2016 plus (ii) all required interest payments due on the note through July 15, 2016, computed using a discount rate equal to the treasury rate (as defined) as of such redemption date plus 50 basis points, over the principal amount of the note.

Upon a change of control, as defined in the indenture, followed by a rating decline within 90 days, each holder of the 2021 Notes will be entitled to require the Partnership to purchase all or a portion of its notes at a purchase price of 101% plus accrued interest and liquidated damages, if any. The Partnership’s ability to purchase the notes upon a change of control will be limited by the terms of our debt agreements, including the Partnership’s revolving credit facility.

The 2021 Notes contain various covenants that limit, among other things, the Partnership’s ability, and the ability of certain of its subsidiaries, to:

• incur additional indebtedness;

• pay distributions on, or repurchase or redeem equity interests;

• make certain investments;

• incur liens;

• enter into certain types of transactions with affiliates; and

• sales assets, consolidate or merge with or into other companies.

If the 2021 Notes achieve investment grade ratings by both Moody’s and S&P and no default or event of default has occurred and is continuing, the Partnership will no longer be subject to many of the foregoing covenants. At December 31, 2011, the Partnership was in compliance with these covenants.

The 2016 Notes, 2018 Notes, and 2021 Notes are jointly and severally guaranteed by all of the Partnership’s current consolidated subsidiaries, other than Finance Corp. and a minor subsidiary, and by certain of its future subsidiaries. The senior notes and the guarantees are unsecured and rank equally with all of the Partnership’s and the guarantors’ existing and future unsecured obligations. The senior notes and the guarantees will be senior in right of payment to any of the Partnership’s and the guarantors’ future obligations that are, by their terms, expressly subordinated in right of payment to the notes and the guarantees. The senior notes and the guarantees will be effectively subordinated to the Partnership’s and the guarantors’ secured obligations, including the Partnership’s revolving credit facility, to the extent of the value of the assets securing such obligations.

Finance Corp. has no operations and will not have revenues other than as may be incidental as co-issuer of the senior notes. Since the Partnership has no independent operations, the guarantees are fully unconditional and joint and several of its subsidiaries, except for a minor subsidiary, the Partnership has not included condensed consolidated financial information of guarantors of the senior notes.

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Equity-Based Compensation Equity-Based Compensation (Restricted (Non-Vested) Common Unit Activity) (Details) (Restricted Non-Vested Common Units [Member], USD $)	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009
Restricted Non-Vested Common Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding at the beginning of the period, Units	464,009	704,050
Granted	0	24,500
Vested	(444,759)	(176,291)
Forfeited or expired	(19,250)	(88,250)
Outstanding at the end of period, Units	0	464,009
Outstanding at the beginning of the period, Weighted Average Grant Date Fair Value	$ 28.36	$ 29.26
Granted, Weighted Average Grant Date Fair Value	$ 0.00	$ 11.13
Vested, Weighted Average Grant Date Fair Value	$ 28.19	$ 29.78
Forfeited or expired, Weighted Average Grant Date Fair Value	$ 32.35	$ 27.96
Outstanding at the end of the period, Weighted Average Grant Date Fair Value	$ 0.00	$ 28.36

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Consolidated Statements of Operations (USD $) In Thousands, except Share data, unless otherwise specified	7 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended
	Dec. 31, 2010 Successor [Member]	Dec. 31, 2011 Successor [Member]	May 25, 2010 Predecessor [Member]	Dec. 31, 2009 Predecessor [Member]
REVENUES:
Gas sales, including related party amounts of $22,715, $3,298, $0, and $0	$ 291,247	$ 455,746	$ 228,097	$ 476,077
NGL sales, including related party amounts of $364,906, $136,960, $0, and $0	238,076	603,219	152,803	239,255
Gathering, transportation and other fees, including related party amounts of $23,716, $14,004, $12,200, and $11,162	178,769	350,745	114,526	270,071
Net realized and unrealized (loss) gain from derivatives	(7,866)	(19,214)	(716)	37,712
Other, including related party amounts of $9,799, $2,725, $0, and $0	16,387	43,402	10,340	20,162
Total revenues	716,613	1,433,898	505,050	1,043,277
OPERATING COSTS AND EXPENSES:
Cost of sales, including related party amounts of $21,957, $12,998, $6,564, and $10,913	504,327	1,012,826	357,778	674,944
Operation and maintenance	77,808	147,643	47,842	117,080
General and administrative, including related party amounts of $16,579, $5,833, $0, and $0	43,739	67,408	37,212	57,863
(Gain) loss on asset sales, net	213	(2,372)	303	(133,282)
Depreciation and amortization	75,967	168,684	41,784	100,098
Total operating costs and expenses	702,054	1,394,189	484,919	816,703
OPERATING INCOME	14,559	39,709	20,131	226,574
Income from unconsolidated affiliates	53,493	119,540	15,872	7,886
Interest expense, net	(48,251)	(102,474)	(34,541)	(77,665)
Loss on debt refinancing, net	(15,748)	0	(1,780)	0
Other income and deductions, net	(8,229)	17,309	(3,897)	(15,132)
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(4,176)	74,084	(4,215)	141,663
Income tax expense (benefit)	552	465	404	(1,095)
INCOME (LOSS) FROM CONTINUING OPERATIONS	(4,728)	73,619	(4,619)	142,758
DISCONTINUED OPERATIONS:
Net (loss) income from operations of east Texas assets, including loss on disposal of $55 in 2010	(1,244)	0	(327)	(2,269)
NET INCOME (LOSS)	(5,972)	73,619	(4,946)	140,489
Net income attributable to noncontrolling interest	(156)	(1,177)	(406)	(91)
NET INCOME (LOSS) ATTRIBUTABLE TO REGENCY ENERGY PARTNERS LP	(6,128)	72,442	(5,352)	140,398
Amounts attributable to Series A Preferred Units	4,651	7,982	3,336	3,995
General partner's interest, including IDRs	2,800	7,010	662	5,252
Amount allocated to non-vested common units	0	0	(79)	965
Beneficial conversion feature for Class D common units	0	0	0	820
Limited partners' interest in net income (loss)	(13,579)	57,450	(9,271)	129,366
Basic and diluted income (loss) from continuing operations per unit:
Amount allocated to common units	(12,359)	57,450	(8,966)	131,752
Weighted average number of common units outstanding	130,619,554	145,490,869	92,788,319	80,582,705
Basic income (loss) from continuing operations per common unit	$ (0.09)	$ 0.39	$ (0.10)	$ 1.63
Diluted income (loss) from continuing operations per common unit	$ (0.09)	$ 0.32	$ (0.10)	$ 1.63
Distributions per unit	$ 0.89	$ 1.81	$ 0.89	$ 1.78
Basic and diluted loss on discontinued operations per unit	$ (0.01)	$ 0.00	$ 0.00	$ (0.03)
Basic and diluted net income (loss) per unit:
Amount allocated to common units	(13,579)	57,450	(9,271)	129,366
Basic net income (loss) per common unit	$ (0.10)	$ 0.39	$ (0.10)	$ 1.61
Diluted net income (loss) per common unit	$ (0.10)	$ 0.32	$ (0.10)	$ 1.60
Amount allocated to Class D common units	$ 0	$ 0	$ 0	$ 820
Total number of Class D common units outstanding	0	0	0	7,276,506
Income per Class D common unit due to beneficial conversion feature	$ 0.00	$ 0.00	$ 0.00	$ 0.11
Distributions paid per unit	$ 0.00	$ 0.00	$ 0.00	$ 0.00

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2011

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Use of Estimates. These consolidated financial statements have been prepared in conformity with GAAP, which includes the use of estimates and assumptions by management that affect the reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and liabilities that exist at the date of the financial statements. Although these estimates are based on management’s available knowledge of current and expected future events, actual results could be different from those estimates.

Cash and Cash Equivalents. Cash and cash equivalents include temporary cash investments with original maturities of three months or less.

Equity Method Investments. The equity method of accounting is used to account for the Partnership’s interest in investments of greater than 20% voting interest or exerts significant influence over an investee and where the Partnership lacks control over the investee.

Other Current Assets and Other Current Liabilities. As of December 31, 2011 and 2010, other current assets included inventories of $21.2 million and $4.4 million, respectively, and other current liabilities included accrued interest of $26.8 million and $11.8 million, respectively.

Property, Plant and Equipment. Property, plant and equipment is recorded at historical cost of construction or, upon acquisition, the fair value of the assets acquired. Gains or losses on sales or retirements of assets are included in operating income unless the disposition is treated as discontinued operations. Natural gas and NGLs used to maintain pipeline minimum pressures is capitalized and classified as property, plant and equipment. Financing costs associated with the construction of larger assets requiring ongoing efforts over a period of time are capitalized. For the year ended December 31, 2011, the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009, the Partnership capitalized interest of $1.2 million, $1.4 million, $0.9 million and $1.7 million, respectively. The costs of maintenance and repairs, which are not significant improvements, are expensed when incurred. Expenditures to extend the useful lives of the assets are capitalized.

The Partnership accounts for its asset retirement obligations by recognizing on its balance sheet the net present value of any legally-binding obligation to remove or remediate the physical assets that it retires from service, as well as any similar obligations for which the timing and/or method of settlement are conditional on a future event that may or may not be within the control of the Partnership. While the Partnership is obligated under contractual agreements to remove certain facilities upon their retirement, management is unable to reasonably determine the fair value of such asset retirement obligations because the settlement dates, or ranges thereof, were indeterminable and could range up to 95 years, or the undiscounted amounts are immaterial. An asset retirement obligation will be recorded in the periods wherein management can reasonably determine the settlement dates.

Depreciation expense related to property, plant and equipment was $138.4 million, $60.1 million, $37.1 million and $89.7 million for the year ended December 31, 2011, the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009, respectively. Depreciation of property, plant and equipment is recorded on a straight-line basis over the following estimated useful lives:

Functional Class of Property	Useful Lives (Years)
Gathering and Transmission Systems	10 - 20
Compression Equipment	3 - 30
Gas Plants and Buildings	10 - 35
Other property, plant and equipment	3 - 15

Intangible Assets. As of December 31, 2011, intangible assets consisted of trade names and customer relations, and are amortized on a straight line basis over their estimated useful lives, which is the period over which the assets are expected to contribute directly or indirectly to the Partnership’s future cash flows. The estimated useful lives range from 20 to 30 years. Prior to the ETE Acquisition, the Partnership’s intangible assets consisted of (i) permits and licenses, (ii) customer contracts, (iii) trade names, and (iv) customer relations. The intangibles were amortized on a straight line basis over their estimated useful lives which ranged from 3 to 30 years.

The Partnership assesses long-lived assets, including property, plant and equipment and intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is assessed by comparing the carrying amount of an asset to undiscounted future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amounts exceed the fair value of the assets. The Partnership did not record any impairment in 2011, 2010 or 2009.

Goodwill. Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination. Goodwill is not amortized, but is tested for impairment annually based on the carrying values as of December 31, or more frequently if impairment indicators arise that suggest the carrying value of goodwill may not be recovered. Impairment is indicated when the carrying amount of a reporting unit exceeds its fair value. To estimate the fair value of the reporting units, the Partnership makes estimates and judgments about future cash flows, as well as revenues, cost of sales, operating expenses, capital expenditures and net working capital based on assumptions that are consistent with the Partnership’s most recent forecast. At the time it is determined that an impairment has occurred, the carrying value of the goodwill is written down to its fair value. The Partnership did not record any impairment in 2011, 2010 or 2009.

Other Assets, net. Other assets, net primarily consists of debt issuance costs, which are capitalized and amortized to interest expense, net over the life of the related debt.

Gas Imbalances. Quantities of natural gas or NGLs over-delivered or under-delivered related to imbalance agreements are recorded monthly as other current assets or other current liabilities using then current market prices or the weighted average prices of natural gas or NGLs at the plant or system pursuant to imbalance agreements for which settlement prices are not contractually established. Within certain volumetric limits determined at the sole discretion of the creditor, these imbalances are generally settled by deliveries of natural gas. Imbalance receivables and payables as of December 31, 2011 and 2010 were immaterial.

Revenue Recognition. The Partnership earns revenue from (i) domestic sales of natural gas, NGLs and condensate, (ii) natural gas gathering, processing and transportation, (iii) contract compression services, and (iv) contract treating services. Revenue associated with sales of natural gas, NGLs and condensate are recognized when title passes to the customer, which is when the risk of ownership passes to the purchaser and physical delivery occurs. Revenue associated with transportation and processing fees are recognized when the service is provided. For contract compression and contract treating services, revenue is recognized when the service is performed. For gathering and processing services, the Partnership receives either fees or commodities from natural gas producers depending on the type of contract. Commodities received are in turn sold and recognized as revenue in accordance with the criteria outlined above. Under the percentage-of-proceeds contract type, the Partnership is paid for its services by keeping a percentage of the NGLs produced and a percentage of the residue gas resulting from processing the natural gas. Under the percentage-of-index contract type, the Partnership earns revenue by purchasing wellhead natural gas at a percentage of the index price and selling processed natural gas and NGLs at a price approximating the index price to third parties. The Partnership generally reports revenue gross in the consolidated statements of operations when it acts as the principal, takes title to the product, and incurs the risks and rewards of ownership. Revenue for fee-based arrangements is presented net, because the Partnership takes the role of an agent for the producers. Allowance for doubtful accounts is determined based on historical write-off experience and specific identification.

Derivative Instruments. The Partnership’s net income and cash flows are subject to volatility stemming from changes in market prices such as natural gas prices, NGLs prices, processing margins and interest rates. The Partnership uses natural gas, ethane, propane, butane, natural gasoline, and condensate swaps as well as ethane put options to create offsetting positions to specific commodity price exposures, and uses interest rate swap contracts to create offsetting positions to specific interest rate exposures. Derivative financial instruments are recorded on the balance sheet at their fair value based on their settlement date. The Partnership employs derivative financial instruments in connection with an underlying asset, liability and/or anticipated transaction and not for speculative purposes. Derivative financial instruments qualifying for hedge accounting treatment have been designated by the Partnership as cash flow hedges. The Partnership enters into cash flow hedges to hedge the variability in cash flows related to a forecasted transaction. At inception, the Partnership formally documents the relationship between the hedging instrument and the hedged item, the risk management objectives, and the methods used for assessing and testing correlation and hedge effectiveness. The Partnership also assesses, both at the inception of the hedge and on an on-going basis, whether the derivatives are highly effective in offsetting changes in cash flows of the hedged item. Furthermore, the Partnership regularly assesses the creditworthiness of counterparties to manage the risk of default. If the Partnership determines that a derivative is no longer highly effective as a hedge, it discontinues hedge accounting prospectively by including changes in the fair value of the derivative in current earnings. For cash flow hedges, changes in the derivative fair values, to the extent that the hedges are effective, are recorded as a component of accumulated other comprehensive income (loss) until the hedged transactions occur and are recognized in earnings. Any ineffective portion of a cash flow hedge’s change in value is recognized immediately in earnings. In the statement of cash flows, the effects of settlements of derivative instruments are classified consistent with the related hedged transactions. For the Partnership’s derivative financial instruments that were not designated for hedge accounting, the change in market value is recorded as a component of net realized and unrealized (loss) gain from derivatives in the consolidated statements of operations.

Benefits. The Partnership previously provided medical, dental, and other healthcare benefits to employees, including providing a matching contribution for employee contributions to their 401(k) accounts, which vested ratably over 3 years. Effective January 1, 2011, the Partnership's 401(k) plan merged with and into that of ETP. As a result of the merger, the Partnership’s matching contributions that had not yet fully vested became fully vested, effective immediately. All future matching contributions from the Partnership to the employee 401(k) accounts will vest immediately. The amount of matching contributions for the year ended December 31, 2011, the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009, were $2.7 million, $2 million, $0.5 million and $1.3 million, respectively, and were recorded in general and administrative expenses. The Partnership has no pension obligations or other post employment benefits.

Income Taxes. The Partnership is generally not subject to income taxes, except as discussed below, because its income is taxed directly to its partners. The Partnership is subject to the gross margins tax enacted by the state of Texas. The Partnership has a wholly-owned subsidiary that is subject to income tax and provides for deferred income taxes using the asset and liability method. Accordingly, deferred taxes are recorded for differences between the tax and book basis that will reverse in future periods. The Partnership’s deferred tax liabilities of $5.8 million and $6.2 million as of December 31, 2011 and 2010, respectively, relate to the difference between the book and tax basis of property, plant and equipment and intangible assets and is included in other long-term liabilities in the accompanying consolidated balance sheets. The Partnership follows the guidance for uncertainties in income taxes where a liability for an unrecognized tax benefit is recorded for a tax position that does not meet the “more likely than not” criteria. The Partnership has not recorded any uncertain tax positions meeting the more likely than not criteria as of December 31, 2011 and 2010. The Partnership recognized current federal income tax expense (benefit) of $0.0 million, $0.6 million, $(0.2) million and $(0.4) million and deferred income tax expense (benefit) of $(0.4) million, $(0.1) million, $0.3 million and $(1.2) million using a 35% effective rate for the year ended December 31, 2011, the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010 and the year ended December 31, 2009, respectively.

On December 31, 2010, Gulf States Transmission Corporation converted to a limited liability company, resulting in a $0.2 million net tax expense.

The IRS commenced audits of our 2007 and 2008 federal income tax returns on January 27, 2010. The IRS has now completed its audit of these returns and proposed certain adjustments.  We have filed a protest with the IRS to initiate the appeals process and appeal certain of these adjustments.  Until this matter is fully resolved, it is not known whether any amounts ultimately recorded would be material, or how such adjustments would affect unitholders.  The IRS is also conducting an audit of the 2007 through 2009 tax returns of one of our wholly-owned subsidiaries and has proposed certain adjustments which we expect to appeal. The

statute of limitations for each of these audits has been extended to December 31, 2012. We, through our tax matters partner and our tax advisers, will cooperate with the IRS examiners auditing these returns.

Equity-Based Compensation. The Partnership accounts for equity-based compensation by recognizing the grant-date fair value of awards into expense as they are earned, using an estimated forfeiture rate. The forfeiture rate assumption is reviewed annually to determine whether any adjustments to expense are required.

Earnings per Unit. Basic net income per common unit is computed through the use of the two-class method, which allocates earnings to each class of equity security based on their participation in distributions and deemed distributions. Accretion of the Series A Preferred Units and the beneficial conversion feature related to the Class D common units are considered deemed distributions. Distributions and deemed distributions to the Series A Preferred Units as well as the beneficial conversion feature of the Class D common units reduce the amount of net income available to the general partner and limited partner interests. The general partners’ interest in net income or loss consists of its respective percentage interest, make- whole allocations for any losses allocated in a prior tax year and IDRs. After deducting the General Partner’s interest, the limited partners’ interest in the remaining net income or loss is allocated to each class of equity units based on distributions and beneficial conversion feature amounts, if applicable, then divided by the weighted average number of common and subordinated units outstanding in each class of security. Diluted net income per common unit is computed by dividing limited partners’ interest in net income, after deducting the General Partner’s interest, by the weighted average number of units outstanding and the effect of non-vested restricted units, phantom units, Series A Preferred Units and unit options. Common and subordinated units were considered to be a single class for the year ended December 31, 2009. For special classes of common units issued with a beneficial conversion feature, the amount of the benefit associated with the period is added back to net income and the unconverted class is added to the denominator.

Revision to Partners’ Capital Accounts. In 2009, the Partnership revised the allocation of net income between the General Partner and common unitholders to reflect the income allocation provisions of the Partnership agreement. The effect of this revision was not material to the prior financial statements.

Recently Issued Accounting Standards. In September 2011, the FASB issued Accounting Standards Update No. 2011-08, Intangibles - Goodwill and Other (Topic 350): Testing Goodwill for Impairment ("ASU 2011-08"), which gives entities the option, under certain circumstances, to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether further impairment testing is necessary. The Partnership adopted and applied this standard to its annual impairment tests performed for certain of our reporting units during the year ended December 31, 2011. There was no material impact to the Partnership's financial position or results of operations as a result of the adoption of this standard.

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Organization and Basis of Presentation

12 Months Ended

Dec. 31, 2011

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure

Organization and Basis of Presentation

Organization. The consolidated financial statements presented herein contain the results of Regency Energy Partners LP and its subsidiaries (“Partnership”), a Delaware limited partnership. The Partnership was formed on September 8, 2005, and completed its IPO on February 3, 2006. The Partnership and its subsidiaries are engaged in the business of gathering and processing, contract compression, treating, transportation, fractionation and storage of natural gas and NGLs. Regency GP LP is the Partnership’s general partner and Regency GP LLC (collectively the “General Partner”) is the managing general partner of the Partnership and the general partner of Regency GP LP.

In March 2009, the Partnership contributed RIG to HPC in exchange for a noncontrolling general partner interest in that joint venture. Accordingly, the Partnership no longer consolidates RIG in its financial statements, and accounts for its investment in HPC under the equity method. Transactions between the Partnership and HPC involve the transportation of natural gas, contract compression services, and the provision of administrative support. Because these transactions are immediately realized, the Partnership does not eliminate these transactions with its equity method investee.

In May 2010, GP Seller completed the sale of all of the outstanding membership interests of the General Partner pursuant to a Purchase Agreement (the “Purchase Agreement”) among itself, ETE and ETE GP (the “ETE Acquisition”). Prior to the closing of the Purchase Agreement, GP Seller, an affiliate of GE EFS, owned all of the outstanding limited partner interests in the General Partner and all of the member interests in the general partner of the General Partner and, as a result of that position, controlled the Partnership. As a result of this transaction, the outstanding voting interests of the General Partner and control of the Partnership were transferred from GE EFS to ETE.

In connection with this change in control, the Partnership’s assets and liabilities were adjusted to fair value on the closing date (May 26, 2010) by application of “push-down” accounting (the “Push-down Adjustments”).

The Partnership applied the guidance in FASB ASC 820, Fair Value Measurements and Disclosures (“FASB ASC 820”), in determining the fair value of partners’ capital, which is comprised of the following items:

	May 26, 2010
Fair value of limited partners interest, based on the number of outstanding Partnership common units and the trading price on May 26, 2010	$	2,073,532
Fair value of consideration paid for general partner interest	304,950
Noncontrolling interest	31,450
	$	2,409,932

The Partnership then developed the fair value of its assets and liabilities, with the assistance of third-party valuation experts, using the guidance in FASB ASC 820.

	May 26, 2010
Working capital	$	(3,286	)
Gathering and transmission systems	471,169
Compression equipment	745,838
Gas plants and buildings	116,967
Other property, plant and equipment	100,264
Construction-in-progress	114,146
Other long-term assets	37,694
Investment in unconsolidated affiliate	739,164
Intangible assets	666,360
Goodwill	789,789
	$	3,778,105
Less:
Series A Preferred Units	70,793
Fair value of long-term debt	1,239,863
Other long-term liabilities	57,517
Total fair value of partners’ capital	$	2,409,932

Due to the Push-down Adjustments, the Partnership’s consolidated financial statements and certain footnote disclosures are presented in two distinct periods to indicate the application of two different bases of accounting between the periods presented: (1) the period prior to the acquisition date (May 26, 2010), identified as “Predecessor” and (2) the period from May 26, 2010 forward, identified as “Successor”.

Basis of presentation. The consolidated financial statements of the Partnership have been prepared in accordance with GAAP and include the accounts of all controlled subsidiaries after the elimination of all intercompany accounts and transactions. Certain prior year numbers have been conformed to the current year presentation.

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Series A Preferred Units

12 Months Ended

Dec. 31, 2011

Temporary Equity Disclosure [Abstract]

Series A Preferred Units

Series A Preferred Units

On September 2, 2009, the Partnership issued 4,371,586 Series A Preferred Units at a price of $18.30 per unit, less a 4% discount of $3.2 million and issuance costs of $0.2 million for net proceeds of $76.6 million, exclusive of the General Partner’s contribution of $1.6 million. The Series A Preferred Units are convertible to common units under terms described below, and if outstanding, are mandatorily redeemable on September 2, 2029 for $80 million plus all accrued but unpaid distributions thereon (the “Series A Liquidation Value”). The Series A Preferred Units receive fixed quarterly cash distributions of $0.445 per unit which began with the quarter ending March 31, 2010.

Distributions on the Series A Preferred Units were accrued for the first two quarters (and not paid in cash) and will result in an increase in the number of common units issuable upon conversion. If on any distribution payment date beginning March 31, 2010, the Partnership (1) fails to pay distributions on the Series A Preferred Units, (2) reduces the distributions on the common units to zero and (3) is prohibited by its material financing agreements from paying cash distributions, such distributions shall automatically accrue and accumulate until paid in cash. If the Partnership has failed to pay cash distributions in full for two quarters (whether or not consecutive) from and including the quarter ended on March 31, 2010, then if the Partnership fails to pay cash distributions on the Series A Preferred Units, all future distributions on the Series A Preferred Units that are accrued rather than being paid in cash by the Partnership will consist of the following: (1) $0.35375 per Series A Preferred Unit per quarter, (2) $0.09125 per Series A Preferred Unit per quarter (the “Common Unit Distribution Amount”), payable solely in common units, and (3) $0.09125 per Series A Preferred Unit per quarter (the “PIK Distribution Additional Amount”), payable solely in common units. The total number of common units payable in connection with the Common Unit Distribution Amount or the PIK Distribution Additional Amount cannot exceed $1.6 million in any period of 20 consecutive fiscal quarters.

Upon the Partnership’s breach of certain covenants (a “Covenant Default”), the holders of the Series A Preferred Units will be entitled to an increase of $0.1825 per quarterly distribution, payable solely in common units (the “Covenant Default Additional Amount”). All accumulated and unpaid distributions will accrue interest (i) at a rate of 2.432% per quarter, or (ii) if the Partnership has failed to pay all PIK Distribution Additional Amounts or Covenant Default Additional Amounts or any Covenant Default has occurred and is continuing, at a rate of 3.429% per quarter while such failure to pay or such Covenant Default continues.

The Series A Preferred Units are convertible, at the holder’s option, into common units, provided that the holder must request conversion of at least 375,000 Series A Preferred Units. The conversion price will initially be $18.30, subject to adjustment for customary events (such as unit splits) and until December 31, 2011, based on a weighted average formula in the event the Partnership issues any common units (or securities convertible or exercisable into common units) at a per common unit price below $16.47 per common unit (subject to typical exceptions). The number of common units issuable is equal to the issue price of the Series A Preferred Units (i.e. $18.30) being converted plus all accrued but unpaid distributions and accrued but unpaid interest thereon (the “Redeemable Face Amount”), divided by the applicable conversion price.

Commencing on September 2, 2014, if at any time the volume-weighted average trading price of the common units over the trailing 20-trading day period (the “VWAP Price”) is less than the then-applicable conversion price, the conversion ratio will be increased to: the quotient of (1) the Redeemable Face Amount on the date that the holder’s conversion notice is delivered, divided by (2) the product of (x) the VWAP Price set forth in the applicable conversion notice and (y) 91%, but will not be less than $10.

Also commencing on September 2, 2014, the Partnership will have the right at any time to convert all or part of the Series A Preferred Units into common units, if (1) the daily volume-weighted average trading price of the common units is greater than 150% of the then-applicable conversion price for 20 out of the trailing 30 trading days, and (2) certain minimum public float and trading volume requirements are satisfied.

In the event of a change of control, the Partnership will be required to make an offer to the holders of the Series A Preferred Units to purchase their Series A Preferred Units for an amount equal to 101% of their Series A Liquidation Value. In addition, in the event of certain business combinations or other transactions involving the Partnership in which the holders of common units receive cash consideration exclusively in exchange for their common units (a “Cash Event”), the Partnership must use commercially reasonable efforts to ensure that the holders of the Series A Preferred Units will be entitled to receive a security issued by the surviving entity in the Cash Event with comparable powers, preferences and rights to the Series A Preferred Units. If the Partnership is unable to ensure that the holders of the Series A Preferred Units will be entitled to receive such a security, then the Partnership will be required to make an offer to the holders of the Series A Preferred Units to purchase their Series A Preferred Units for an amount equal to 120% of their Series A Liquidation Value. If the Partnership enters into any recapitalization, reorganization, consolidation, merger, spin-off that is not a Cash Event, the Partnership will make appropriate provisions to ensure that the holders of the Series A Preferred Units receive a security with comparable powers, preferences and rights to the Series A Preferred Units upon consummation of such transaction. Subsequent to the ETE Acquisition, no unitholder exercised this option.

Holders may elect to convert Series A Preferred Units to common units beginning on March 2, 2010. As of December 31, 2011, the Series A Preferred Units were convertible to 4,632,389 common units.

Net proceeds from the issuance of Series A Preferred Units on September 2, 2009 was $76.6 million, of which $28.9 million was allocated to the initial fair value of the embedded derivatives and recorded into long-term derivative liabilities on the balance sheet. The remaining $47.7 million represented the initial value of the Series A Preferred Units and will be accreted to $80 million by deducting the accretion amounts from partners’ capital over 20 years. As disclosed in Note 1, the Series A Preferred Units were adjusted to fair value of $70.8 million on May 26, 2010.

The following table provides a reconciliation of the beginning and ending balances of the Series A Preferred Units for all income statement periods presented:

	Units	Amount
Balance at January 1, 2010	4,371,586	$	51,711
Accretion to redemption value	—	55
Balance at May 25, 2010	4,371,586	51,766
Fair value adjustment	—	19,027
Balance at May 26, 2010	4,371,586	70,793
Accretion to redemption value	—	150
Balance at December 31, 2010	4,371,586	70,943
Accretion to redemption value	—	201
Balance at December 31, 2011	4,371,586	$	71,144	*

 _______________________

* The amount will be accreted to $80 million plus any accrued and unpaid distributions by deducting amounts from partners’ capital over the remaining periods until the mandatory redemption date of September 2, 2029.

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Intangible Assets

12 Months Ended

Dec. 31, 2011

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Assets

Activity related to intangible assets, net consisted of the following:

	Contracts			Customer Relations			Trade Names			Permits and Licenses			Total
Predecessor
Balance at January 1, 2010	$	126,332		$	35,362		$	30,508		$	5,092		$	197,294
Amortization	(3,322		)	(817		)	(975		)	(214		)	(5,328		)
Balance at May 25, 2010	$	123,010		$	34,545		$	29,533		$	4,878		$	191,966
	Customer Relations			Trade Names			Total
Successor
Balance at May 26, 2010	$	600,860		$	65,500		$	666,360
Additions	119,379			—			119,379
Amortization	(13,673		)	(1,911		)	(15,584		)
Balance at December 31, 2010	706,566			63,589			770,155
Amortization	(25,998		)	(3,274		)	(29,272		)
Balance at December 31, 2011	$	680,568		$	60,315		$	740,883

The average remaining amortization periods for customer relations and trade names are 26 and 18 years, respectively. The expected amortization of the intangible assets for each of the five succeeding years is $29.3 million.

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Acquisitions And Dispositions

12 Months Ended

Dec. 31, 2011

Acquisitions and Dispositions [Abstract]

Acquisitions and Dispositions

Acquisitions and Dispositions

2011

Lone Star. On May 2, 2011, the Partnership contributed $592.7 million in cash to Lone Star, in exchange for its 30% interest. Lone Star, a newly formed joint venture that is owned 70% by ETP and 30% by the Partnership, completed its acquisition of all of the membership interest in LDH, a wholly-owned subsidiary of Louis Dreyfus Highbridge Energy LLC, for $1.98 billion in cash. To fund a portion of this capital contribution, the Partnership issued 8,500,001 common units representing limited partnership interests with net proceeds of $203.9 million. The remaining portion of the Partnership’s capital contribution was funded by additional borrowings under its revolving credit facility.

Lone Star owns and operates an NGL storage, fractionation and transportation business. Lone Star’s storage assets are primarily located in Mont Belvieu, Texas and its West Texas Pipeline transports NGLs through an intrastate pipeline system that originates in the Permian Basin in west Texas, passes through the Barnett shale production area in north Texas and terminates at the Mont Belvieu storage and fractionation complex. Lone Star also owns and operates fractionation and processing assets located in Louisiana. Lone Star is managed by a two-person board of directors, with the Partnership and ETP each having the right to appoint one director, and is operated by ETP.

MEP. On September 1, 2011, the Partnership purchased an additional 0.1% interest in MEP from ETP for $1.2 million in cash, bringing its total interest in MEP to 50%. Because this transaction occurred between entities under common control, partners' capital was increased by $0.2 million, which represented a deemed contribution of the excess carrying amount of ETP's investment of $1.4 million over the purchase price.

Ranch JV. On December 2, 2011, Ranch JV was formed by the Partnership, APM and CM, each owning a 33.33% interest in the joint venture. Ranch JV, upon completion of construction in 2012, will process natural gas delivered from the NGLs-rich Bone Spring and Avalon shale formations in west Texas.

2010

HPC. On April 30, 2010, the Partnership purchased an additional 6.99% general partner interest in HPC from EFS Haynesville, bringing its total general partner interest in HPC to 49.99%. The purchase price of $92.1 million was funded by borrowings under the Partnership’s revolving credit facility. Because this transaction occurred between two entities under common control, partners’ capital was decreased by $17 million, which represented a deemed distribution of the excess purchase price over EFS Haynesville’s carrying amount of $75.1 million.

MEP. On May 26, 2010, the Partnership purchased a 49.9% interest in MEP from ETE. The Partnership issued 26,266,791 common units to ETE, valued at $584.4 million, and received a working capital adjustment of $4.6 million from ETE that was recorded as an adjustment to investment in unconsolidated affiliates. Because this transaction occurred between two entities under common control, partners’ capital was increased by $8.9 million, which represented a deemed contribution of the excess carrying amount of ETE’s investment of $588.7 million over the purchase price. MEP owns approximately 500 miles of natural gas pipelines that extend from the southeast corner of Oklahoma, across northeast Texas, northern Louisiana, central Mississippi and into Alabama.

Disposition of East Texas Assets. In July 2010, the Partnership sold its gathering and processing assets located in east Texas for $70.2 million in cash. The financial results of these assets have been reclassified to discontinued operations in accordance with applicable accounting standards. Revenues for these assets for the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010, and the year ended December 31, 2009 were $9.5 million, $24.2 million and $46.2 million, respectively.

Zephyr. On September 1, 2010, the Partnership completed the Zephyr acquisition for $193.3 million in cash that was funded by borrowings under the Partnership’s revolving credit facility. Zephyr owns and operates a fleet of equipment used in gas treating. The primary treatment services include carbon dioxide and hydrogen sulfide removal, dehydration, natural gas cooling and BTU management. The acquisition of Zephyr further increased the Partnership’s fee-based revenues. From September 1, 2010 through December 31, 2010, revenues and net income attributable to Zephyr’s operations of $13.7 million and $5.9 million, respectively are included in the Partnership’s results of operations. The total purchase price was allocated as follows:

	September 1, 2010
Cash and cash equivalents	$	1,983
Trade accounts receivable	6,580
Other current assets	128
Gas plants and buildings	80,859
Other property, plant and equipment	303
Intangible assets	119,379
Total assets acquired	$	209,232
Trade accounts payable	(8,364		)
Deferred revenues	(6,408		)
Other current liabilities	(1,164		)
Net assets acquired	$	193,296

2009

HPC. In March 2009, the Partnership completed a joint venture arrangement among Regency HIG, EFS Haynesville, and the Alinda Investors. The Partnership contributed RIG, which owns RIGS, with a fair value of $401.4 million, to HPC, in exchange for a 38% general partner interest in HPC. EFS Haynesville and Alinda Investors contributed $126.9 million and $528.3 million in cash, respectively, to HPC in return for a 12% general partner and a 50% general partner interest, respectively. The disposition and deconsolidation resulted in the recording of a $133.5 million gain (of which $52.8 million represents the remeasurement of the Partnership’s retained 38% general partner interest to its fair value), net of transaction costs of $5.5 million.

In September 2009, the Partnership purchased a 5% general partner interest in HPC from EFS Haynesville for $63 million, increasing the Partnership’s general partner ownership percentage from 38% to 43%. Because the transaction occurred between two entities under common control, the Partnership’s general partner interest was reduced by $10.2 million, which represented a deemed distribution of the excess purchase price over EFS Haynesville’s carrying amount.

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Long-Term Debt (Narrative) (Details) (USD $)	1 Months Ended			5 Months Ended	7 Months Ended	12 Months Ended			3 Months Ended	1 Months Ended		1 Months Ended		12 Months Ended		12 Months Ended								1 Months Ended	12 Months Ended
	Oct. 31, 2010	Mar. 31, 2010	May 31, 2009	May 25, 2010	Dec. 31, 2010	Dec. 31, 2011 days	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2010 Senior Notes Due 2013 [Member]	Oct. 31, 2010 Senior Notes Due 2018 [Member]	Oct. 27, 2010 Senior Notes Due 2018 [Member]	May 31, 2010 Senior Notes Due 2016 [Member]	May 31, 2009 Senior Notes Due 2016 [Member]	Dec. 31, 2011 Senior Notes Due 2021 [Member]	May 31, 2011 Senior Notes Due 2021 [Member]	Dec. 31, 2011 Minimum [Member]	Dec. 31, 2011 Maximum [Member]	Dec. 31, 2011 Federal Funds Effective Rate [Member]	Dec. 31, 2011 LIBOR [Member]	Dec. 31, 2011 Base Rate Loans [Member] Minimum [Member]	Dec. 31, 2011 Base Rate Loans [Member] Maximum [Member]	Dec. 31, 2011 Eurodollar Loans [Member] Minimum [Member]	Dec. 31, 2011 Eurodollar Loans [Member] Maximum [Member]	May 31, 2011 Lone Star [Member]	Dec. 31, 2011 Lone Star [Member]	Dec. 31, 2011 ELG [Member]	Dec. 31, 2011 Ranch JV [Member]	Dec. 31, 2011 HPC [Member]	Dec. 31, 2011 Other Affiliates [Member]	Dec. 31, 2011 Redemption After June 1, 2013 [Member] Senior Notes Due 2016 [Member]	Dec. 31, 2011 Redemption Before June 1 2013 [Member] Senior Notes Due 2016 [Member]	Dec. 31, 2011 Redemption Before July 15 2016 [Member] Senior Notes Due 2018 [Member]	Dec. 31, 2011 Redemption Before July 15 2016 [Member] Senior Notes Due 2021 [Member]	Dec. 31, 2011 Redemption After June 1 2014 [Member] Senior Notes Due 2016 [Member]	Dec. 31, 2011 Redemption June 1, 2015 and thereafter [Member] Senior Notes Due 2016 [Member]
Senior notes					$ 856,061,000	$ 1,355,147,000	$ 856,061,000
Additional borrowing under line of credit facility during the year						940,000,000	603,000,000	191,700,000
Repayments to line of credit facility						893,000,000	737,600,000	540,800,000
Amount borrowed under line of credit facility					900,000,000	900,000,000	900,000,000
Capacity available for letters of credit						200,000,000
Revolving credit facility maximum allowable additional borrowings						250,000,000																		150,000,000	550,000,000	250,000,000	50,000,000	250,000,000	250,000,000
Number of Business Days Written Notice Needed For Additional Revolving Commitment Amount						10
Basis spread on variable rate																		0.50%	1.00%	1.50%	2.25%	2.50%	3.25%
Commitment fee percentage on unused capacity of line of credit facility																0.375%	0.50%
Participation fee																2.50%	3.25%
Fronting fee percentage						0.125%
Long-term debt weighted-average interest rate				3.30%	2.96%	3.18%		3.24%
Write off of deferred debt issuance cost		1,800,000
Unamortized loan fees to be capitalized				15,900,000
Maximum percentage of consolidated EBITDA						5.25
Consolidated Interest Expense Ratio						2.75
Secured Debt to Consolidated EBITDA Ratio						3.00
Proceeds from Issuance of Private Placement												236,200,000
Re-measurement of the senior notes										600,000,000	600,000,000		250,000,000		500,000,000
Redeemed senior notes, amount									357,500,000
Loss On Debt Refinancing									17,200,000
Writeoff of unamortized loan fee									5,000,000
Writeoff of unamortized bond premium									6,400,000
Interest percent on senior notes										6.875%			9.375%	6.50%
Capitalized debt issuance costs										$ 12,200,000					$ 9,800,000
Senior notes redemption percentage										35.00%			35.00%	35.00%
Purchase of senior notes	101.00%		101.00%			101.00%				106.875%			109.375%	106.50%																104.688%	100.00%	100.00%	100.00%	102.344%	100.00%
Premium Percentage Applied To Principal Due To Debt Redemption																															1.00%	1.00%	1.00%
Indenture Terms, Days of Rating Decline	90													90
Spread on varaiable rate utilized in determining premium due to debt redemption																															0.50%	0.50%	0.50%

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Partners' Capital and Distributions

12 Months Ended

Dec. 31, 2011

Partners’ Capital and Distributions [Abstract]

Partners' Capital and Distributions

Partners’ Capital and Distributions

Public Common Unit Offerings. In October 2011, the Partnership issued 11,500,000 common units representing limited partnership interests in a public offering at a price of $20.92 per common unit, resulting in net proceeds of $231.8 million which were used to repay outstanding borrowings under the revolving credit facility. In August 2010, the Partnership sold 17,537,500 common units and received $408.1 million in proceeds, inclusive of the General Partner’s proportionate capital contribution. In December 2009, the Partnership sold 12,075,000 common units and received $225 million in proceeds, inclusive of the General Partner’s proportionate capital contribution.

Private Common Unit Offerings. In May 2011, the Partnership sold 8,500,001 common units representing limited partnership interests resulting in net proceeds of $203.9 million, to partially fund its capital contribution to Lone Star. These units were issued in a private placement conducted in accordance with the exemption from the registration requirements of the Securities Act of 1933, as amended, under section 4(2) thereof. These units were subsequently registered with the SEC.

In May 2010, the Partnership issued 26,266,791 common units, valued at $584.4 million, to ETE, to purchase a 49.9% interest in MEP. These units were issued in a private placement conducted in accordance with the exemption from the registration requirements of the Securities Act of 1933, as amended, under Section 4(2) thereof. Subsequently, ETE contributed $12.3 million as the General Partner’s proportionate capital.

Subordinated Units. The subordinated units converted into common units on a one-for-one basis on February 17, 2009.

Class D Common Units. On January 15, 2008, the Partnership issued 7,276,506 of Class D common units to CDM as partial consideration for the CDM acquisition. The Class D common units had the same terms and conditions as the Partnership’s common units, except that the Class D common units were not entitled to participate in earnings or distributions by the Partnership. The Class D common units were issued in a private placement conducted in accordance with the exemption from the registration requirements of the Securities Act of 1933, as amended, under Section 4(2) thereof. The Class D common units converted into common units without the payment of further consideration on a one-for-one basis on February 9, 2009.

Noncontrolling Interest. The Partnership operates a gas gathering joint venture in south Texas in which other third party companies own a 40% interest, which is reflected on the balance sheet as noncontrolling interest.

Distributions. The partnership agreement requires the distribution of all of the Partnership’s Available Cash (defined below) within 45 days after the end of each quarter to unitholders of record on the applicable record date, as determined by the General Partner.

Available Cash. Available Cash, for any quarter, generally consists of all cash and cash equivalents on hand at the end of that quarter less the amount of cash reserves established by the general partner to: (i) provide for the proper conduct of the Partnership’s business; (ii) comply with applicable law, any debt instruments or other agreements; or (iii) provide funds for distributions to the unitholders and to the General Partner for any one or more of the next four quarters and plus, all cash on hand on that date of determination of available cash for the quarter resulting from working capital borrowings made after the end of the quarter for which the determination is being made.

General Partner Interest and Incentive Distribution Rights. The General Partner is entitled to its proportionate share of all quarterly distributions that the Partnership makes prior to its liquidation. The General Partner has the right, but not the obligation, to contribute a proportionate amount of capital to the Partnership to maintain its current general partner interest. The General Partner’s initial 2% interest in these distributions has been reduced since the Partnership has issued additional units and the General Partner has not contributed a proportionate amount of capital to the Partnership to maintain its General Partner interest. The General Partnership ownership interest as of December 31, 2011 was 1.8%. This General Partner interest is represented by 2,804,592 equivalent units as of December 31, 2011.

The IDRs held by the General Partner entitle it to receive an increasing share of Available Cash when pre-defined distribution targets are achieved. The General Partner’s IDRs are not reduced if the Partnership issues additional units in the future and the general partner does not contribute a proportionate amount of capital to the Partnership to maintain its general partner interest.

Distributions of Available Cash. The partnership agreement requires that it make distributions of Available Cash from operating surplus for any quarter after the subordination period as set forth in the partnership agreement.

Distributions. The Partnership made the following cash distributions per unit during the years ended December 31, 2011 and 2010:

Distribution Date	Cash Distribution (per common unit)
November 14, 2011	$	0.455
August 12, 2011	0.450
May 13, 2011	0.445
February 14, 2011	0.445
November 12, 2010	0.445
August 13, 2010	0.445
May 14, 2010	0.445
February 14, 2010	0.445

The Partnership paid a cash distribution of $0.46 per common unit on February 13, 2012 .

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Income (Loss) Per Limited Partner Unit

12 Months Ended

Dec. 31, 2011

Earnings Per Share [Abstract]

Income (Loss) Per Limited Partner Unit

Income (Loss) per Limited Partner Unit

The following table provides a reconciliation of the numerator and denominator of the basic and diluted earnings per unit computations for the years ended December 31, 2011 and 2009. For the periods from May 26, 2010 to December 31, 2010 and from January 1, 2010 to May 25, 2010, diluted earnings per unit equals basic because all instruments were antidilutive.

	Successor						Predecessor
	For the Year Ended December 31, 2011						For the Year Ended December 31, 2009
	Income (Numerator)			Units (Denominator)	Per-Unit Amount		Income (Numerator)		Units (Denominator)	Per-Unit Amount
Amounts allocated to common units	$	57,450		145,490,869	$	0.39	$	131,752	80,582,705	$	1.63
Effect of Dilutive Securities
Common unit options	—			19,192			—		—
Phantom units	—			148,388			—		100,764
Series A Preferred Units	(9,991		)	4,632,389			—		—
Class D common units	$	—		—			$	820	797,425
Diluted Earnings per Unit	$	47,459		150,290,838	$	0.32	$	132,572	81,480,894	$	1.63

In connection with the CDM acquisition, the Partnership issued 7,276,506 Class D common units. At the commitment date, the sales price of $30.18 per unit represented a $1.10 discount from the fair value of the Partnership’s common units. This discount represented a beneficial conversion feature that is treated as a non-cash distribution for purposes of calculating earnings per unit. The beneficial conversion feature is reflected in income per unit using the effective yield method over the period the Class D common units were outstanding, as indicated on the statements of operations in the line item entitled “beneficial conversion feature for Class D common units.” The Class D common units converted into common units without the payment of further consideration on a one-for-one basis on February 9, 2009 and no additional Class D common units have been issued.

The following data show securities that could potentially dilute earnings per unit in the future that were not included in the computation of diluted earnings per unit because to do so would have been antidilutive for the periods presented:

	Successor		Predecessor
	Year Ended December 31, 2011	Period from Acquisition (May 26, 2010) to  December 31, 2010	Period from January 1, 2010 to (May 25, 2010)	Year Ended December 31, 2009
Restricted (non-vested) common units	—	—	396,918	566,493
Common unit options	—	259,650	298,400	357,489
Phantom units*	—	366,489	369,346	—
Series A Preferred Units	—	4,584,192	4,584,192	1,449,211

 _______________________

* Amount assumes maximum conversion rate for market condition awards.

The partnership agreement requires that the General Partner shall receive a 100% allocation of income until its capital account is made whole for all of the net losses allocated to it in prior years.

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Investment In Unconsolidated Affiliates

12 Months Ended

Dec. 31, 2011

Investment In Unconsolidated Affiliates [Abstract]

Investment In Unconsolidated Affiliates

Investment in Unconsolidated Affiliates

Investment in HPC. HPC was established in March 2009 and as of December 31, 2011, the Partnership owned a 49.99% general partner interest in HPC. As of December 31, 2011 and December 31, 2010, the carrying value of the Partnership’s general partner interest in HPC was $682.1 million and $698.8 million, respectively. The following table summarizes the changes in the Partnership's investment in HPC:

	Successor				Predecessor
HPC	Year Ended December 31, 2011		Period from  Acquisition (May 26, 2010) to December 31, 2010		Period from January 1, 2010 to Disposition (May 25, 2010)		Period from Inception (March 18, 2009) to December 31, 2009
Contributions to HPC	$	—	$	—	$	20,210	$	401,356
Purchase of additional HPC general partner interest	—		—		75,114		52,803
Distributions received from HPC	65,465		52,668		12,446		8,926
Return of investment received from HPC	—		19,995		—		—
Partnership’s share of HPC’s net income	54,582		35,684		15,872		7,886
Amortization of excess fair value of investment in HPC	5,847		3,410		—		—

As discussed in Note 1, the Partnership’s investment in HPC was adjusted to its fair value on May 26, 2010 and the excess fair value over net book value was comprised of two components: (1) $154.9 million was attributed to HPC’s long-lived assets and is being amortized as a reduction of income from unconsolidated affiliates over the useful lives of the respective assets, which vary from 15 to 30 years, and (2) $32.4 million could not be attributed to a specific asset and therefore will not be amortized in future periods.

Investment in MEP. The Partnership purchased a 49.9% interest in MEP from ETE on May 26, 2010. On September 1, 2011, the Partnership purchased an additional 0.1% interest in MEP from ETP for $1.2 million in cash, bringing the total membership interest to 50%. As of December 31, 2011 and December 31, 2010, the carrying value of the Partnership’s interest in MEP was $613.9 million and $652.5 million, respectively. The following table summarizes the changes in the Partnership's investment in MEP:

MEP	Year Ended December 31, 2011		Period from Acquisition (May 26, 2010) to December 31, 2010
Contributions to MEP	$	—	$	85,828
Purchase of additional MEP interest	1,355		—
Distributions received from MEP	82,512		43,306
Partnership’s share of MEP’s net income	42,617		21,219

Investment in Lone Star. On May 2, 2011, the Partnership contributed $592.7 million to Lone Star, in exchange for its 30% interest. To fund a portion of this capital contribution, the Partnership issued 8,500,001 common units representing limited partnership interests with net proceeds of $203.9 million. The remaining portion of the Partnership’s capital contribution was funded by additional borrowings under its revolving credit facility.

As of December 31, 2011, the carrying value of the Partnership’s interest in Lone Star was $628.7 million. Amounts recorded with respect to Lone Star for the period ended December 31, 2011 are summarized in the table below:

Lone Star	Period from Initial Contribution (May 2, 2011) to December 31, 2011
Contributions to Lone Star	$	645,265
Return of investments from Lone Star	22,698
Distributions received from Lone Star	22,037
Partnership’s share of Lone Star’s net income	28,188

Investment in Ranch JV. Ranch JV was created by the Partnership, APM and CM in December 2011, each owns an equal 33.33% interest of the joint venture. As of December 31, 2011, the Partnership has not made any capital contributions into Ranch JV; and Ranch JV has not commenced its business operations.

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Intangible Assets (Schedule of Finite-Lived Intangible Assets by Major Class) (Details) (USD $)	12 Months Ended			5 Months Ended					7 Months Ended	12 Months Ended	7 Months Ended	12 Months Ended	7 Months Ended	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2011 Customer Relations [Member] years	Dec. 31, 2011 Trade Names [Member] years	May 25, 2010 Predecessor [Member]	May 25, 2010 Predecessor [Member] Contracts [Member]	May 25, 2010 Predecessor [Member] Customer Relations [Member]	May 25, 2010 Predecessor [Member] Trade Names [Member]	May 25, 2010 Predecessor [Member] Permits and Licenses [Member]	Dec. 31, 2010 Successor [Member]	Dec. 31, 2011 Successor [Member]	Dec. 31, 2010 Successor [Member] Customer Relations [Member]	Dec. 31, 2011 Successor [Member] Customer Relations [Member]	Dec. 31, 2010 Successor [Member] Trade Names [Member]	Dec. 31, 2011 Successor [Member] Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Net finite-lived intangible assets, beginning of period	$ 770,155,000			$ 197,294,000	$ 126,332,000	$ 35,362,000	$ 30,508,000	$ 5,092,000	$ 666,360,000	$ 770,155,000	$ 600,860,000	$ 706,566,000	$ 65,500,000	$ 63,589,000
Additions									119,379,000		119,379,000		0
Amortization				(5,328,000)	(3,322,000)	(817,000)	(975,000)	(214,000)	(15,584,000)	(29,272,000)	(13,673,000)	(25,998,000)	(1,911,000)	(3,274,000)
Net finite-lived intangible assets, end of period	740,883,000			191,966,000	123,010,000	34,545,000	29,533,000	4,878,000	770,155,000	740,883,000	706,566,000	680,568,000	63,589,000	60,315,000
Finite-Lived Intangible Assets, Future Amortization [Abstract]
Average remaining amortization periods, years		26	18
Future annual amortization of finite intangible assets	$ 29,300,000

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Fair Value Measures (Changes In Level 3 Derivatives Measured On A Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	5 Months Ended	7 Months Ended	12 Months Ended
	May 25, 2010	Dec. 31, 2010	Dec. 31, 2011
Beginning Balance	$ 44,594	$ 48,633	$ 57,023
Change in fair value	4,039	8,390	(17,974)
Ending Balance	48,633	57,023	39,049
Senior Notes Due 2016 [Member]
Debt instrument fair value		274,375	276,250
Senior Notes Due 2018 [Member]
Debt instrument fair value		607,500	643,500
Senior Notes Due 2021 [Member]
Debt instrument fair value			$ 516,250

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Long-Term Debt Long-Term Debt (Redemption Percentages) (Details)	1 Months Ended		12 Months Ended
	Oct. 31, 2010	May 31, 2009	Dec. 31, 2011
Extinguishment of Debt [Line Items]
Senior Note Redemption Price	101.00%	101.00%	101.00%
Senior Notes Due 2016 [Member]
Extinguishment of Debt [Line Items]
Senior Note Redemption Price		109.375%
Senior Notes Due 2016 [Member] | Redemption After June 1, 2013 [Member]
Extinguishment of Debt [Line Items]
Senior Note Redemption Price			104.688%
Senior Notes Due 2016 [Member] | Redemption After June 1 2014 [Member]
Extinguishment of Debt [Line Items]
Senior Note Redemption Price			102.344%
Senior Notes Due 2016 [Member] | Redemption June 1, 2015 and thereafter [Member]
Extinguishment of Debt [Line Items]
Senior Note Redemption Price			100.00%
Senior Notes Due 2018 [Member]
Extinguishment of Debt [Line Items]
Senior Note Redemption Price	106.875%
Senior Notes Due 2018 [Member] | Redemption After December 1, 2014 [Member]
Extinguishment of Debt [Line Items]
Senior Note Redemption Price			103.438%
Senior Notes Due 2018 [Member] | Redemption After December 1, 2015 [Member]
Extinguishment of Debt [Line Items]
Senior Note Redemption Price			101.719%
Senior Notes Due 2018 [Member] | Redemption December 1, 2016 and thereafter [Member]
Extinguishment of Debt [Line Items]
Senior Note Redemption Price			100.00%
Senior Notes Due 2021 [Member]
Extinguishment of Debt [Line Items]
Senior Note Redemption Price			106.50%
Senior Notes Due 2021 [Member] | Redemption After July 15, 2016 [Member]
Extinguishment of Debt [Line Items]
Senior Note Redemption Price			103.25%
Senior Notes Due 2021 [Member] | Redemption After July 15, 2017 [Member]
Extinguishment of Debt [Line Items]
Senior Note Redemption Price			102.167%
Senior Notes Due 2021 [Member] | Redemption After July 15, 2018 [Member]
Extinguishment of Debt [Line Items]
Senior Note Redemption Price			101.083%
Senior Notes Due 2021 [Member] | Redemption July 15, 2019 and thereafter [Member]
Extinguishment of Debt [Line Items]
Senior Note Redemption Price			100.00%

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Acquisitions And Dispositions (Tables)

12 Months Ended

Dec. 31, 2010

Acquisitions and Dispositions [Abstract]

Schedule of Purchase Price Allocation

From September 1, 2010 through December 31, 2010, revenues and net income attributable to Zephyr’s operations of $13.7 million and $5.9 million, respectively are included in the Partnership’s results of operations. The total purchase price was allocated as follows:

	September 1, 2010
Cash and cash equivalents	$	1,983
Trade accounts receivable	6,580
Other current assets	128
Gas plants and buildings	80,859
Other property, plant and equipment	303
Intangible assets	119,379
Total assets acquired	$	209,232
Trade accounts payable	(8,364		)
Deferred revenues	(6,408		)
Other current liabilities	(1,164		)
Net assets acquired	$	193,296

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Income (Loss) Per Limited Partner Unit (Basic And Diluted Income (Loss) From Continuing Operations) (Details) (USD $) In Thousands, except Share data, unless otherwise specified					7 Months Ended	12 Months Ended					5 Months Ended	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2008 Class D Common Units [Member]	Jan. 15, 2008 Class D Common Units [Member]	Dec. 31, 2010 Successor [Member]	Dec. 31, 2011 Successor [Member]	Dec. 31, 2011 Successor [Member] Common Unit Options [Member]	Dec. 31, 2011 Successor [Member] Phantom Units [Member]	Dec. 31, 2011 Successor [Member] Series A Preferred Units [Member]	Dec. 31, 2011 Successor [Member] Class D Common Units [Member]	May 25, 2010 Predecessor [Member]	Dec. 31, 2009 Predecessor [Member]	Dec. 31, 2009 Predecessor [Member] Common Unit Options [Member]	Dec. 31, 2009 Predecessor [Member] Phantom Units [Member]	Dec. 31, 2009 Predecessor [Member] Series A Preferred Units [Member]	Dec. 31, 2009 Predecessor [Member] Class D Common Units [Member]
Amount allocated to common units					$ (12,359)	$ 57,450					$ (8,966)	$ 131,752
Dilutive Securities, Effect on Basic Earnings Per Share, Other							19,192	148,388	4,632,389	0			0	100,764	0	797,425
Diluted income from continuing operations amount						47,459						132,572
Basic income from continuing operations units					130,619,554	145,490,869					92,788,319	80,582,705
Income Allocated to Dilutive Securities							$ 0	$ 0	$ (9,991)	$ 0			$ 0	$ 0	$ 0	$ 820
Diluted income from continuing operations units						150,290,838						81,480,894
Basic and diluted income from continuing operations per common unit						$ 0.39						$ 1.63
Diluted income from continuing operations per common unit						$ 0.32						$ 1.63
Limited Partners' Capital account, units issued	157,437,608	137,281,336		7,276,506
Sales price per unit at commitment date			$ 30.18
Discount from fair value of Partnership's common units at commitment date			$ 1.10

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Leases

12 Months Ended

Dec. 31, 2011

Leases [Abstract]

Leases

Leases

The following table is a schedule of future minimum lease payments for office space and certain equipment leased by the Partnership, that had initial or remaining noncancelable lease terms in excess of one year as of December 31, 2011:

For the year ending December 31,	Operating
2012	$	2,684
2013	1,793
2014	1,163
2015	1,072
2016	956
Thereafter	2,629
Total minimum lease payments	$	10,297

On January 14, 2011, CDM exercised an early buyout option on a Master Lease Agreement between CDM and Caterpillar Financial Services Corporation to purchase the leased compression equipment for $9 million and terminated the agreement. The related annual rent expense of $1.2 million has been removed from the above table.

Total rent expense for operating leases, including those leases with terms of less than one year, was $3.2 million, $2.7 million, $2.4 million and $5.5 million, during the year ended December 31, 2011, the period from May 26, 2010 to December 31, 2010, the period from January 1, 2010 to May 25, 2010 and for the year ended December 31, 2009, respectively.

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Segment Information

12 Months Ended

Dec. 31, 2011

Segment Information [Abstract]

Segment Information

Segment Information

During 2011, the Partnership changed the name of the Transportation segment to Joint Ventures segment, which represents the Partnership’s equity method investments in its four unconsolidated affiliates: HPC, MEP, Lone Star and Ranch JV.

Gathering and Processing. The Partnership provides “wellhead-to-market” services to producers of natural gas, which include transporting raw natural gas from the wellhead through gathering systems, processing raw natural gas to separate NGLs from the raw natural gas and selling or delivering pipeline-quality natural gas and NGLs to various markets and pipeline systems.

Joint Ventures. The Partnership owns investments in four joint ventures:

• a 49.99% general partner interest in HPC, which owns RIGS, a 450-mile intrastate pipeline that delivers natural gas from northwest Louisiana to downstream pipelines and markets;

• a 50% membership interest in MEP, which owns an interstate natural gas pipeline with approximately 500  miles stretching from southeast Oklahoma through northeast Texas, northern Louisiana and central Mississippi to an interconnect with the Transcontinental Gas Pipe Line system in Butler, Alabama;

• a 30% membership interest in Lone Star, an entity owning a diverse set of midstream energy assets including pipelines, storage, fractionation and processing facilities located in the states of Texas, Mississippi and Louisiana; and

• a 33.33% membership interest in Ranch JV, which, upon completion of construction in 2012, will process natural gas delivered from the NGLs-rich Bone Spring and Avalon shale formations in west Texas.

Contract Compression. The Partnership owns and operates a fleet of compressors used to provide turn-key natural gas compression services for customer specific systems.

Contract Treating. The Partnership owns and operates a fleet of equipment used to provide treating services, such as carbon dioxide and hydrogen sulfide removal, natural gas cooling, dehydration and BTU management, to natural gas producers and midstream pipeline companies.

Corporate and Others. The Corporate and Others segment comprises a small regulated pipeline and the Partnership’s corporate offices.

The Partnership accounts for intersegment revenues as if the revenues were to third parties, exclusive of certain cost of capital charges.

Management evaluates the performance of each segment and makes capital allocation decisions through the separate consideration of segment margin and operation and maintenance expenses. Segment margin, for the Gathering and Processing and the Corporate and Others segments is defined as total revenues, including service fees, less cost of sales. In the Contract Compression segment and Contract Treating segment, segment margin is defined as revenues less direct costs.

Management believes segment margin is an important measure because it directly relates to volume, commodity price changes, revenue generating horsepower and revenue generating gallons per minute. Operation and maintenance expenses are a separate measure used by management to evaluate performance of field operations. Direct labor, insurance, property taxes, repair and maintenance, utilities and contract services comprise the most significant portion of operation and maintenance expenses. These expenses fluctuate depending on the activities performed during a specific period. The Partnership does not deduct operation and maintenance expenses from total revenues in calculating segment margin because management separately evaluates commodity volume and price changes in segment margin. The Partnership does not record segment margin for the Joint Ventures segment because it records its ownership percentages of the net income in HPC, MEP, Lone Star and Ranch JV as income from unconsolidated affiliates in accordance with the equity method of accounting.

Results for each period, together with amounts related to balance sheets for each segment are shown below:

	Successor						Predecessor
	Year Ended December 31, 2011			Period from Acquisition (May 26, 2010) to December 31, 2010				Period from January 1, 2010 to May 25, 2010			Year Ended December 31, 2009
External Revenue
Gathering and Processing	$	1,226,260		$	606,944			$	438,804		$	879,439
Joint Ventures	—			—				—			9,078
Contract Compression	150,496			86,099				58,971			148,846
Contract Treating	39,604			13,662				—			—
Corporate and Others	17,538			9,908				7,275			5,914
Eliminations	—			—				—			—
Total	$	1,433,898		$	716,613			$	505,050		$	1,043,277
Intersegment Revenue
Gathering and Processing	$	—		$	—			$	—		$	(8,755	)
Joint Ventures	—			—				—			4,933
Contract Compression	16,346			14,079				9,126			4,604
Contract Treating	397			—				—			—
Corporate and Others	296			185				91			296
Eliminations	(17,039		)	(14,264		)		(9,217		)	(1,078		)
Total	$	—		$	—			$	—		$	—
Cost of Sales
Gathering and Processing	$	992,797		$	496,933			$	352,807		$	656,764
Joint Ventures	—			—				—			2,297
Contract Compression	11,269			8,325				5,741			12,422
Contract Treating	10,545			2,208				—			—
Corporate and Others	(1,450		)	(2,954		)		(679		)	(65		)
Eliminations	(335		)	(185		)		(91		)	3,526
Total	$	1,012,826		$	504,327			$	357,778		$	674,944
Segment Margin
Gathering and Processing	$	233,463		$	110,011			$	85,997		$	213,920
Joint Ventures	—			—				—			11,714
Contract Compression	155,573			91,853				62,356			141,028
Contract Treating	29,456			11,454				—			—
Corporate and Others	19,284			13,047				8,045			6,275
Eliminations	(16,704		)	(14,079		)		(9,126		)	(4,604		)
Total	$	421,072		$	212,286			$	147,272		$	368,333

Operation and Maintenance
Gathering and Processing	$	97,566		$	53,421		$	33,430		$	74,962
Joint Ventures	—			—			—			2,112
Contract Compression	63,442			37,067			23,476			45,744
Contract Treating	2,974			1,227			—			—
Corporate and Others	365			172			59			238
Eliminations	(16,704		)	(14,079		)	(9,123		)	(5,976		)
Total	$	147,643		$	77,808		$	47,842		$	117,080
Depreciation and Amortization
Gathering and Processing	$	87,377		$	45,547		$	25,422		$	59,654
Joint Ventures	—			—			—			2,448
Contract Compression	65,201			25,771			15,560			36,548
Contract Treating	12,325			3,684			—			—
Corporate and Others	3,781			965			802			1,448
Eliminations	—			—			—			—
Total	$	168,684		$	75,967		$	41,784		$	100,098
Income from Unconsolidated Affiliates
Gathering and Processing	$	—		$	—		$	—		$	—
Joint Ventures	119,540			53,493			15,872			7,886
Contract Compression	—			—			—			—
Contract Treating	—			—			—			—
Corporate and Others	—			—			—			—
Eliminations	—			—			—			—
Total	$	119,540		$	53,493		$	15,872		$	7,886
Expenditures for Long-Lived Assets
Gathering and Processing	$	280,199		$	93,398		$	43,666		$	84,097
Joint Ventures	—			—			—			22,367
Contract Compression	112,338			44,316			18,418			83,707
Contract Treating	7,445			18,106			—			—
Corporate and Others	6,357			3,403			1,703			2,912
Eliminations	—			—			—			—
Total	$	406,339		$	159,223		$	63,787		$	193,083
							December 31, 2011			December 31, 2010
Assets
Gathering and Processing							$	1,959,697		$	1,724,682
Joint Ventures							1,924,705			1,351,256
Contract Compression							1,405,600			1,411,325
Contract Treating							215,172			220,584
Corporate and Others							62,682			62,357
Eliminations							—			—
Total							$	5,567,856		$	4,770,204
Investment in Unconsolidated Affiliates
Gathering and Processing							$	—		$	—
Joint Ventures							1,924,705			1,351,256
Contract Compression							—			—
Contract Treating							—			—
Corporate and Others							—			—
Eliminations							—			—
Total							$	1,924,705		$	1,351,256
Goodwill
Gathering and Processing							$	313,361		$	313,361
Joint Ventures							—			—

Contract Compression	476,428		476,428
Contract Treating	—		—
Corporate and Others	—		—
Eliminations	—		—
Total	$	789,789	$	789,789

The table below provides a reconciliation of total segment margin to net income (loss) from continuing operations before income taxes:

	Successor						Predecessor
	Year Ended December 31, 2011			Period from  Acquisition (May 26, 2010) to December 31, 2010			Period from  January 1, 2010 to (May 25, 2010)			Year Ended December 31, 2009
Net income (loss) from continuing operations before income taxes	$	74,084		$	(4,176	)	$	(4,215	)	$	141,663
Add (deduct):
Operation and maintenance	147,643			77,808			47,842			117,080
General and administrative	67,408			43,739			37,212			57,863
(Gain) loss on assets sales, net	(2,372		)	213			303			(133,282		)
Depreciation and amortization	168,684			75,967			41,784			100,098
Income from unconsolidated affiliates	(119,540		)	(53,493		)	(15,872		)	(7,886		)
Interest expense, net	102,474			48,251			34,541			77,665
Loss on debt refinancing, net	—			15,748			1,780			—
Other income and deductions, net	(17,309		)	8,229			3,897			15,132
Total segment margin	$	421,072		$	212,286		$	147,272		$	368,333

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Partners' Capital and Distributions (Narrative) (Details) (USD $)	3 Months Ended									12 Months Ended	1 Months Ended		12 Months Ended	0 Months Ended		1 Months Ended
	Dec. 31, 2011 days	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Sep. 30, 2010	Jun. 30, 2010	Mar. 31, 2010	Dec. 31, 2009	Dec. 31, 2011 days	Oct. 31, 2011 Common Unit Public Offering [Member]	Aug. 31, 2010 Common Unit Public Offering [Member]	Dec. 31, 2009 Common Unit Public Offering [Member]	May 02, 2011 Private Common Unit Offering [Member]	May 25, 2010 Private Common Unit Offering [Member]	May 31, 2010 Private Common Unit Offering [Member]	Jan. 15, 2008 Class D Common Units [Member]	Dec. 31, 2011 Gathering And Processing [Member]	Dec. 31, 2011 General Partner [Member]
Capital Unit [Line Items]
Distributions per unit	$ 0.46	$ 0.455	$ 0.450	$ 0.445	$ 0.445	$ 0.445	$ 0.445	$ 0.445	$ 0.445
Public common units offerings - (in Units)											11,500,000	17,537,500	12,075,000
Price per common unit issued in public offering											$ 20.92
Proceeds from common unit issuances, net of issuance costs										$ 203,900,000	$ 231,800,000
Partnership sale of units, amount												408,100,000	225,000,000
Private common unit offering														8,500,001	26,266,791
Partnership units issued, value																584,400,000
Noncontrolling interest, ownership percentage by parent																49.90%
Partner contributions																$ 12,300,000
Limited Partners' Capital account, units issued	157,437,608				137,281,336					157,437,608							7,276,506
Noncontrolling interest ownership percentage in joint ventures, by third party																		40.00%
Required distribution of all Partnership's available cash, number of days after each quarter	45									45
General partners interest in initial distribution										2.00%
Current general partners ownership interest	1.80%									1.80%
Partners' Capital Account, Units																			2,804,592
Payment Date	Feb. 13, 2012	Nov. 14, 2011	Aug. 12, 2011	May 13, 2011	Feb. 14, 2011	Nov. 12, 2010	Aug. 13, 2010	May 14, 2010	Feb. 14, 2010

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Series A Preferred Units (Tables)

12 Months Ended

Dec. 31, 2011

Temporary Equity Disclosure [Abstract]

Beginning And Ending Balances Of The Series A Preferred Units

The following table provides a reconciliation of the beginning and ending balances of the Series A Preferred Units for all income statement periods presented:

	Units	Amount
Balance at January 1, 2010	4,371,586	$	51,711
Accretion to redemption value	—	55
Balance at May 25, 2010	4,371,586	51,766
Fair value adjustment	—	19,027
Balance at May 26, 2010	4,371,586	70,793
Accretion to redemption value	—	150
Balance at December 31, 2010	4,371,586	70,943
Accretion to redemption value	—	201
Balance at December 31, 2011	4,371,586	$	71,144	*

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Consolidated Statements of Operations (Parenthetical) (USD $) In Thousands, unless otherwise specified	7 Months Ended	12 Months Ended	5 Months Ended	12 Months Ended
	Dec. 31, 2010 Successor [Member]	Dec. 31, 2011 Successor [Member]	May 25, 2010 Predecessor [Member]	Dec. 31, 2009 Predecessor [Member]
Gas sales, related party amounts	$ 3,298	$ 22,715	$ 0	$ 0
NGL sales, related party amounts	136,960	364,906	0	0
Gathering, transportation and other fees, related party amounts	14,004	23,716	12,200	11,162
Other revenues, related party amounts	2,725	9,799	0	0
Cost of sales, related party amounts	12,998	21,957	6,564	10,913
General and administrative, related party amounts	5,833	16,597	0	0
Net income from operations of east Texas assets, gain on disposal	$ 55

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Consolidated Statements of Partners' Capital and Noncontrolling Interest (Successor) (USD $) In Thousands, except Share data	Total USD ($)	Successor [Member] USD ($)	Successor [Member] Common Units [Member]	Successor [Member] Common Unitholders [Member] USD ($)	Successor [Member] General Partner Interest [Member] USD ($)	Successor [Member] Accumulated Other Comprehensive Income (Loss) [Member] USD ($)	Successor [Member] Noncontrolling Interest [Member] USD ($)
Balance at May. 25, 2010		$ 2,409,932		$ 2,073,532	$ 304,950		$ 31,450
Balance - (in Units) at May. 25, 2010			93,340,428
Partners' Capital Account, Private Placement of Units		584,436		584,436
Private common unit offering, net of costs - (in Units)			26,266,791
Partners' Capital Account, Public Sale of Units		399,582		399,582
Public common unit offerings, net of costs - (in Units)			17,537,500
Issuance of common units under LTIP, net of forfeitures and tax withholding		(485)		(485)
Issuance of common units under LTIP, net of forfeitures and tax withholding - (in Units)			42,417
Proceeds from exercise of common unit options		1,937		1,937
Proceeds from exercise of common unit options - (in Units)			94,200
Unit-based compensation expenses		1,827		1,827
Acquisition of assets between entities under common control below historical cost		8,937			8,937
Partner contributions		27,999		7,193	20,806
Partner distributions		(118,630)		(114,292)	(4,338)
Contributions from noncontrolling interest		86					86
Accrued distributions to phantom units		(107)		(107)
Net income		(5,972)		(8,928)	2,800		156
Distributions to Series A convertible redeemable preferred units		(3,891)		(3,813)	(78)
Accretion of Series A convertible redeemable preferred units		(150)		(150)
Net change in fair value of cash flow hedges		(11,099)				(11,099)
Net cash flow hedge amounts reclassified to earnings		0
Balance at Dec. 31, 2010	3,294,402	3,294,402		2,940,732	333,077	(11,099)	31,692
Balance - (in Units) at Dec. 31, 2010			137,281,336
Partners' Capital Account, Units, Sale of Units			20,000,001
Partners' Capital Account, Sale of Units		435,685		435,685
Issuance of common units under LTIP, net of forfeitures and tax withholding		(109)		(109)
Issuance of common units under LTIP, net of forfeitures and tax withholding - (in Units)			156,271
Unit-based compensation expenses		3,610		3,610
Disposition of assets between entities under common control in excess of historical cost		249			249
Partner distributions		(274,488)		(264,174)	(10,314)
Contributions from noncontrolling interest		0
Accrued distributions to phantom units		(250)		(250)
Net income		73,619		65,432	7,010		1,177
Distributions to Series A convertible redeemable preferred units		(7,781)		(7,635)	(146)
Accretion of Series A convertible redeemable preferred units		(201)		(201)
Net change in fair value of cash flow hedges		(12,678)				(12,678)
Net cash flow hedge amounts reclassified to earnings		19,018				19,018
Balance at Dec. 31, 2011	$ 3,531,076	$ 3,531,076		$ 3,173,090	$ 329,876	$ (4,759)	$ 32,869
Balance - (in Units) at Dec. 31, 2011			157,437,608

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Derivative Instruments (Schedule Of Derivative Assets And Liabilities Statement) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Derivative asset, fair value, gross asset	$ 4,848	$ 2,673
Derivative liability, fair value, gross liability	49,647	74,299
Derivatives Designated as Cash Flow Hedges [Member]
Derivative asset, fair value, gross asset	4,539	2,673
Derivative liability, fair value, gross liability	10,128	14,692
Derivatives Not Designated as Cash Flow Hedges [Member]
Derivative asset, fair value, gross asset	309	0
Derivative liability, fair value, gross liability	39,519	59,607
Current [Member] | Derivatives Designated as Cash Flow Hedges [Member] | Commodity Derivatives [Member]
Derivative asset, fair value, gross asset	4,065	2,650
Derivative liability, fair value, gross liability	10,065	11,421
Current [Member] | Derivatives Not Designated as Cash Flow Hedges [Member] | Ethane - Put Options [Member]
Derivative asset, fair value, gross asset	309	0
Derivative liability, fair value, gross liability	0	0
Current [Member] | Derivatives Not Designated as Cash Flow Hedges [Member] | Interest Rate [Member]
Derivative asset, fair value, gross asset	0	0
Derivative liability, fair value, gross liability	470	1,751
Long Term [Member] | Derivatives Designated as Cash Flow Hedges [Member] | Commodity Derivatives [Member]
Derivative asset, fair value, gross asset	474	23
Derivative liability, fair value, gross liability	63	3,271
Long Term [Member] | Derivatives Not Designated as Cash Flow Hedges [Member] | Interest Rate [Member]
Derivative asset, fair value, gross asset	0	0
Derivative liability, fair value, gross liability	0	833
Long Term [Member] | Derivatives Not Designated as Cash Flow Hedges [Member] | Embedded Derivatives [Member]
Derivative asset, fair value, gross asset	0	0
Derivative liability, fair value, gross liability	$ 39,049	$ 57,023

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Quarterly Financial Data (Unaudited) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	5 Months Ended	7 Months Ended	12 Months Ended	1 Months Ended	3 Months Ended						7 Months Ended	12 Months Ended	2 Months Ended	3 Months Ended	5 Months Ended	12 Months Ended
	May 25, 2010	Dec. 31, 2010	Dec. 31, 2009	Jun. 30, 2010 Successor [Member]	Dec. 31, 2011 Successor [Member]	Sep. 30, 2011 Successor [Member]	Jun. 30, 2011 Successor [Member]	Mar. 31, 2011 Successor [Member]	Dec. 31, 2010 Successor [Member]	Sep. 30, 2010 Successor [Member]	Dec. 31, 2010 Successor [Member]	Dec. 31, 2011 Successor [Member]	May 25, 2010 Predecessor [Member]	Mar. 31, 2010 Predecessor [Member]	May 25, 2010 Predecessor [Member]	Dec. 31, 2009 Predecessor [Member]
Segment Reporting Information [Line Items]
Operating Revenues	$ 24,200	$ 9,500	$ 46,200	$ 96,980	$ 369,881	$ 390,267	$ 356,498	$ 317,252	$ 322,745	$ 296,888	$ 716,613	$ 1,433,898	$ 200,265	$ 304,785	$ 505,050	$ 1,043,277
Operating income (Loss)				(1,256)	13,215	13,616	4,820	8,058	16,742	(927)	14,559	39,709	1,726	18,405	20,131	226,574
(Loss) income from continuing operations				(4,981)					(7,269)	7,522	(4,728)	73,619	(5,081)	462	(4,619)	142,758
(Loss) income from discontinued operations				86					(1,654)	324	(1,244)	0	585	(912)	(327)	(2,269)
Net income (loss) attributable to Regency Energy Partners LP				$ (4,924)	$ 13,524	$ 30,300	$ 14,544	$ 14,074	$ (8,992)	$ 7,788	$ (6,128)	$ 72,442	$ (4,740)	$ (612)	$ (5,352)	$ 140,398
Basic income from continuing operations per common unit											$ (0.10)	$ 0.39			$ (0.10)	$ 1.61
Diluted income from continuing operations per common unit											$ (0.10)	$ 0.32			$ (0.10)	$ 1.60
Basic and diluted (loss) income from continuing operations per common unit				$ (0.05)					$ (0.07)	$ 0.03			$ (0.07)	$ (0.02)
Basic and diluted (loss) income from discontinued operations per common unit				$ 0.00					$ (0.01)	$ 0.00			$ 0.01	$ (0.01)
Basic net income per common unit					$ 0.06	$ 0.18	$ 0.08	$ 0.08			$ (0.09)	$ 0.39			$ (0.10)	$ 1.63
Diluted net income per common unit					$ 0.06	$ 0.09	$ 0.07	$ 0.07			$ (0.09)	$ 0.32			$ (0.10)	$ 1.63
Basic and diluted net (loss) income per common unit				$ (0.05)					$ (0.09)	$ 0.04			$ (0.07)	$ (0.03)

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Leases (Narrative) (Details) (USD $)	0 Months Ended	5 Months Ended	7 Months Ended	12 Months Ended
	Jan. 14, 2011	May 25, 2010	Dec. 31, 2010	Dec. 31, 2011	Dec. 31, 2009
Operating Leased Assets [Line Items]
Future annual rent expense				$ 10,297,000
Payment for early buyout option to purchase leased equipment	9,000,000
Operating Leases, Rent Expense		2,400,000	2,700,000	3,200,000	5,500,000
CDM and Caterpillar Financial Services Corporation [Member]
Operating Leased Assets [Line Items]
Future annual rent expense				$ 1,200,000

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Equity-Based Compensation

12 Months Ended

Dec. 31, 2011

Equity-Based Compensation [Abstract]

Equity-Based Compensation

Equity-Based Compensation

In December 2011, the Partnership's unitholders approved the Regency Energy Partners LP 2011 Long-Term Incentive Plan (the “2011 Incentive Plan”), which provides for awards of options to purchase the Partnership's common units; awards of the Partnership's restricted units, phantom units and common units; awards of distribution equivalent rights; awards of common unit appreciation rights; and other unit-based awards to employees, directors and consultants of the Partnership and its affiliates and subsidiaries. The 2011 Incentive Plan will be administered by the Compensation Committee of the board of directors, which may, in its sole discretion, delegate its powers and duties under the 2011 Incentive Plan to the Chief Executive Officer. Up to 3,000,000 of the Partnership’s common units may be granted as awards under the 2011 Incentive Plan, with such amount subject to adjustment as provided for under the terms of the 2011 Incentive Plan.

The 2011 Incentive Plan may be amended or terminated at any time by the board of directors or the Compensation Committee without the consent of any participant or unitholder, including an amendment to increase the number of common units available for awards under the plan; however, any material amendment, such as a change in the types of awards available under the plan, would require the approval of the unitholders of the Partnership. The Compensation Committee is also authorized to make adjustments in the terms and conditions of, and the criteria included in awards under the 2011 Incentive Plan in specified circumstances. The 2011 Incentive Plan is effective until December 19, 2021 or, if earlier, the time at which all available units under the 2011 Incentive Plan have been issued to participants or the time of termination of the plan by the board of directors.

In 2010, upon the change of control from GE EFS to ETE, all then non-vested restricted and phantom units, exclusive of the May 7, 2010 phantom unit grants described below, vested during the predecessor period and the Partnership recorded a one-time general and administrative charge of $9.9 million as a result of such unit vesting. LTIP compensation expense of $3.6 million, $1.8 million, $12.1 million and $6 million is recorded in general and administrative expense in the statement of operations for the year ended December 31, 2011, for the periods from May 26, 2010 to December 31, 2010 and from January 1, 2010 to May 25, 2010 and for the year ended December 31, 2009, respectively.

Common Unit Options. The fair value of each option award is estimated on the date of grant using the Black-Scholes Option Pricing Model. Upon the exercise of the common unit options, the Partnership intends to settle these obligations with new issues of common units on a net basis. The common unit options activity for the years ended December 31, 2011, 2010, and 2009 is as follows:

2011
Common Unit Options	Units		Weighted Average Exercise Price		Weighted Average Contractual Term (Years)	Aggregate Intrinsic Value* (in thousands)
Outstanding at the beginning of period	201,950		$	21.93
Granted	—		—
Exercised	(38,300	)	20.84			$	224
Forfeited or expired	(6,800	)	26.72
Outstanding at end of period	156,850		21.99		4.3	498
Exercisable at the end of the period	156,850					498
2010
Common Unit Options	Units		Weighted Average Exercise Price		Weighted Average Contractual Term (Years)	Aggregate Intrinsic Value* (in thousands)
Outstanding at the beginning of period	306,651		$	21.50
Granted	—		—
Exercised	(100,200	)	20.60			$	444
Forfeited or expired	(4,501	)	23.73
Outstanding at end of period	201,950		21.93		5.3	1,087
Exercisable at the end of the period	201,950					1,087
2009
Common Unit Options	Units		Weighted Average Exercise Price		Weighted Average Contractual Term (Years)	Aggregate Intrinsic Value* (in thousands)
Outstanding at the beginning of period	431,918		$	21.31
Granted	—		—
Exercised	—		—			$	—
Forfeited or expired	(125,267	)	20.87
Outstanding at end of period	306,651		21.50		6.3	184
Exercisable at the end of the period	306,651					184

 _______________________

* Intrinsic value equals the closing market price of a unit less the option strike price, multiplied by the number of unit options outstanding as of the end of the period presented. Unit options with an exercise price greater than the end of the period closing market price are excluded.

Restricted (Non-Vested) Units. The fair value of each restricted (non-vested) unit is determined using the grant date closing price of the Partnership’s common units. All outstanding restricted units vested on May 25, 2010, and the Partnership did not issue any additional restricted units during the remainder of 2010 or 2011. Restricted (non-vested) common unit activity for the years ended December 31, 2010, and 2009 is as follows:

2010
Restricted (Non-Vested) Common Units	Units		Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period	464,009		$	28.36
Granted	—		—
Vested	(444,759	)	28.19
Forfeited or expired	(19,250	)	32.35
Outstanding at the end of period	—		—
2009
Restricted (Non-Vested) Common Units	Units		Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period	704,050		$	29.26
Granted	24,500		11.13
Vested	(176,291	)	29.78
Forfeited or expired	(88,250	)	27.96
Outstanding at the end of period	464,009		28.36

Phantom Units. All phantom units granted prior to November 2010 were in substance two grants composed of (1) service condition grants with graded vesting over three years; and (2) market condition grants with cliff vesting based upon the Partnership’s relative ranking in total unitholder return among 20 peer companies. Upon the change in control from GE EFS to ETE, all then-outstanding phantom units, exclusive of the May 7, 2010 grant described below, vested. The service condition grants vested at a rate of 100% and the market condition grants vested at a rate of 150% pursuant to the terms of the awards. Subsequent to November 2010, all phantom units granted are service condition grants that vest at a rate of 100%.

On May 7, 2010, the Partnership awarded 247,500 phantom units to senior management and certain key employees. These phantom units include a provision that will accelerate vesting (1) upon a change in control and (2) within 12 months of a change in control, if the grantee’s employment is terminated by the Partnership without “Cause” (as defined in the Form of Grant of Phantom Units) or the grantee resigns for “Good Reason” (as defined in the Form of Grant of Phantom Units). Distributions related to these unvested phantom units will be accrued and paid upon vesting.

On November 21, 2010, Mr. Byron R. Kelley, the Partnership’s former President and Chief Executive Officer, retired. The Partnership entered into a consulting agreement with Mr. Kelley, pursuant to which Mr. Kelley will provide consulting services to the Partnership for a term of three years and received a grant of 33,000 service condition (time-based) phantom units. Distributions on the phantom units (including non-vested units) will be paid concurrent with the Partnership’s distribution for common units.

In November and December 2010, the Partnership awarded 574,700 phantom units to senior management and certain key employees. These awards are service condition (time-based) grants that generally vest ratably over the next five years. Distributions on the phantom units (including non-vested units) will be paid concurrent with the Partnership’s distribution for common units.

During 2011, the Partnership awarded 596,320 phantom units to senior management and certain key employees. These awards are service condition (time-based) grants that generally vest ratably over the next five years. Distributions on the phantom units (including non-vested units) will be paid concurrent with the Partnership’s distribution for common units.

The following table presents phantom unit activity for the years ended December 31, 2011, 2010 and 2009:

2011
Phantom Units	Units		Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period	742,517		$	23.61
Service condition grants	596,320		24.55
Market condition grants	—		—
Vested service condition	(142,520	)	24.73
Vested market condition	(8,550	)	19.52
Forfeited service condition	(88,474	)	24.99
Forfeited market condition	(12,900	)	19.52
Total outstanding at end of period	1,086,393		24.51
2010
Phantom Units	Units		Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period	301,700		$	8.63
Service condition grants	716,200		24.72
Market condition grants	148,500		11.89
Vested service condition	(166,173	)	11.63
Vested market condition	(200,610	)	5.85
Forfeited service condition	(18,787	)	20.18
Forfeited market condition	(38,313	)	11.43
Total outstanding at end of period	742,517		23.61
2009
Phantom Units	Units		Weighted Average Grant Date Fair Value
Outstanding at the beginning of the period	—		$	—
Service condition grants	133,480		13.43
Market condition grants	174,720		4.64
Vested service condition	—		—
Vested market condition	—		—
Forfeited service condition	(2,600	)	12.46
Forfeited market condition	(3,900	)	4.49
Total outstanding at end of period	301,700		8.63

The Partnership expects to recognize $20.7 million of compensation expense related to non-vested phantom units over a period of 4.2 years.

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Concentration Risk (Schedule Of Revenues And Cost Of Sales By Major Customer And Supplier) (Details) (USD $) In Thousands, unless otherwise specified	5 Months Ended	7 Months Ended	12 Months Ended
	May 25, 2010	Dec. 31, 2010	Dec. 31, 2011	Dec. 31, 2009
Gathering And Processing [Member] | Successor [Member] | Customer A [Member]
Concentration Risk [Line Items]
Major customer, revenue amount		$ 131,724	$ 366,259
Gathering And Processing [Member] | Successor [Member] | Customer B [Member]
Concentration Risk [Line Items]
Major customer, revenue amount			0
Gathering And Processing [Member] | Successor [Member] | Supplier B [Member]
Concentration Risk [Line Items]
Major supplier, cost of sales amount	0	0	132,679	0
Gathering And Processing [Member] | Predecessor [Member] | Customer A [Member]
Concentration Risk [Line Items]
Major customer, revenue amount	88,003			123,524
Gathering And Processing [Member] | Predecessor [Member] | Customer B [Member]
Concentration Risk [Line Items]
Major customer, revenue amount	52,372
Gathering And Processing [Member] | Predecessor [Member] | Supplier A [Member]
Concentration Risk [Line Items]
Major supplier, cost of sales amount				143,435
Transportation [Member] | Successor [Member] | Supplier A [Member]
Concentration Risk [Line Items]
Major supplier, cost of sales amount		0	0
Transportation [Member] | Predecessor [Member] | Supplier A [Member]
Concentration Risk [Line Items]
Major supplier, cost of sales amount	$ 0			$ 14,053

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Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2011

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets by Major Class

Activity related to intangible assets, net consisted of the following:

	Contracts			Customer Relations			Trade Names			Permits and Licenses			Total
Predecessor
Balance at January 1, 2010	$	126,332		$	35,362		$	30,508		$	5,092		$	197,294
Amortization	(3,322		)	(817		)	(975		)	(214		)	(5,328		)
Balance at May 25, 2010	$	123,010		$	34,545		$	29,533		$	4,878		$	191,966
	Customer Relations			Trade Names			Total
Successor
Balance at May 26, 2010	$	600,860		$	65,500		$	666,360
Additions	119,379			—			119,379
Amortization	(13,673		)	(1,911		)	(15,584		)
Balance at December 31, 2010	706,566			63,589			770,155
Amortization	(25,998		)	(3,274		)	(29,272		)
Balance at December 31, 2011	$	680,568		$	60,315		$	740,883

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Fair Value Measures

12 Months Ended

Dec. 31, 2011

Fair Value Measures [Abstract]

Fair Value Measures

Fair Value Measures

The fair value measurement provisions establish a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair value calculations. The three levels of inputs are defined as follows:

• Level 1—unadjusted quoted prices for identical assets or liabilities in active accessible markets;

• Level 2—inputs that are observable in the marketplace other than those classified as Level 1; and

• Level 3—inputs that are unobservable in the marketplace and significant to the valuation.

Entities are encouraged to maximize the use of observable inputs and minimize the use of unobservable inputs. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation.

The Partnership's financial assets and liabilities measured at fair value on a recurring basis are derivatives related to interest rate swaps, commodity swaps, ethane put options and embedded derivatives in the Series A Preferred Units. Derivatives related to interest rate, commodity swaps and ethane put options are valued using discounted cash flow techniques. These techniques incorporate Level 1 and Level 2 inputs such as future interest rates and commodity prices. These market inputs are utilized in the discounted cash flow calculation considering the instrument's term, notional amount, discount rate and credit risk and are classified as Level 2 in the hierarchy. Embedded derivatives related to Series A Preferred Units are valued using a binomial lattice model. The market inputs utilized in the model include credit spread, probabilities of the occurrence of certain events, common unit price, dividend yield, and expected volatility, and are classified as Level 3 in the hierarchy.

The following table presents the Partnership’s derivative assets and liabilities measured at fair value on a recurring basis:

	Fair Value Measurement at December 31, 2011						Fair Value Measurement at December 31, 2010
	Fair Value Total		Level 2		Level 3		Fair Value Total		Level 2		Level 3
Assets
Commodity Derivatives:
Natural Gas	$	3,907	$	3,907	$	—	$	2,481	$	2,481	$	—
Natural Gas Liquids	94		94		—		192		192		—
Condensate	538		538		—		—		—		—
Ethane - Put Options	309		309		—		—		—		—
Total Assets	$	4,848	$	4,848	$	—	$	2,673	$	2,673	$	—
Liabilities
Interest Rate Derivatives	$	470	$	470	$	—	$	2,584	$	2,584	$	—
Commodity Derivatives:
Natural Gas	—		—		—		427		427		—
Natural Gas Liquids	8,561		8,561		—		10,684		10,684		—
Condensate	1,567		1,567		—		3,581		3,581		—
Embedded Derivatives in Series A Preferred Units	39,049		—		39,049		57,023		—		57,023
Total Liabilities	$	49,647	$	10,598	$	39,049	$	74,299	$	17,276	$	57,023

The following table presents the changes in Level 3 derivatives measured on a recurring basis for the years ended December 31, 2011 and 2010. There were no transfers between Level 2 and Level 3 derivatives for the years ended December 31, 2011 and 2010.

	Embedded Derivatives in Series A Preferred Units
Balance at January 1, 2010	$	44,594
Change in fair value	4,039
Balance at May 25, 2010	48,633
Change in fair value	8,390
Balance at December 31, 2010	57,023
Additions	—
Change in fair value	(17,974		)
Balance at December 31, 2011	$	39,049

The carrying amount of cash and cash equivalents, accounts receivable and accounts payable approximates fair value due to their short-term maturities. Long-term debt, other than the senior notes, is comprised of borrowings under which interest accrues under a floating interest rate structure. Accordingly, the carrying value approximates fair value.

The following table presents the estimated fair value of senior notes, based on third party market value quotations, as of December 31, 2011 and 2010:

Outstanding Senior Notes	December 31, 2011		December 31, 2010
2016 Notes	$	276,250	$	274,375
2018 Notes	643,500		607,500
2021 Notes	516,250		N/A

_______________________

N/A:    The 2021 Notes were issued in May 2011.