Duncan Energy Partners L.P. on Thursday announced its financial and operating results for the three and six months ended June 30, 2008 and 2007. The partnership reported a 45 percent increase in net income to $6.6 million for the second quarter of 2008, or $0.32 per common unit on a fully diluted basis, compared to net income of $4.5 million, or $0.22 per common unit on a fully diluted basis, for the second quarter of 2007.

Distributable cash flow increased 65 percent to $10.8 million in the second quarter of 2008 from $6.6 million in the second quarter of 2007. On July 16, 2008, the board of directors of DEP's general partner approved an increase in the partnership's quarterly cash distribution rate paid to partners in respect of the second quarter of 2008 to $0.42 per common unit, or $1.68 per unit on an annualized basis. This represents a five percent increase over the $0.40 per unit quarterly distribution that was paid with respect to the second quarter of 2007. Distributable cash flow for the second quarter of 2008 provided 1.2 times coverage of the quarterly cash distribution to be paid to the partnership's limited partners.

"We're pleased to report another quarter of solid operating results and strong cash flow for the partnership, enabling us to increase our quarterly cash distribution to our partners by five percent over the second quarter of last year," said Richard H. Bachmann, president and chief executive officer of the general partner of DEP. "In fact this quarter the partnership recorded its highest net income and distributable cash flow since its IPO, supported by increases in distributable cash flow from our Acadian natural gas pipeline system and NGL storage business as well as lower sustaining capital expenditures."

Revenue increased 52 percent to $360.4 million for the second quarter of 2008 from $236.9 million for the second quarter of 2007. Gross operating margin for the second quarter of 2008 decreased to $18.7 million from $21.5 million reported in the second quarter of 2007. Earnings before interest, taxes, depreciation, amortization and accretion ("EBITDA") was $15.3 million for the second quarter of this year, a 30 percent increase over $11.7 million for the second quarter of last year. Gross operating margin and EBITDA are non-GAAP financial measures that are defined and reconciled later in this press release to their most directly comparable GAAP financial measure.

Review of Segment Quarterly Performance

DEP owns a 66 percent equity interest in the assets described below, and Enterprise Products Operating LLC ("EPO") owns the remaining 34 percent equity interest. EPO is a wholly-owned subsidiary of Enterprise Products Partners L.P. and owns the general partner of DEP. EPO's interest in DEP's subsidiaries is accounted for as "Parent Interest" in a manner similar to minority interest. However, from a gross operating margin standpoint, the amounts shown are on a 100 percent basis before the deduction for Parent Interest.

NGL & Petrochemical Storage Services -- Gross operating margin for the second quarter of 2008 decreased to $3.5 million from $10.7 million in the second quarter of 2007. This decrease was due primarily to an operational measurement loss of $5.7 million in the second quarter of 2008 compared to a $2.8 million operational measurement gain recorded in the second quarter of 2007. In the partnership agreement for Mont Belvieu Caverns, LLC, operational measurement gains and losses are allocated to EPO through its Parent Interest. As such, EPO is required to contribute cash to Mont Belvieu Caverns for operational measurement losses and is entitled to receive distributions for operational measurement gains. Net of measurement gains and losses allocated to EPO, gross operating margin was $9.2 million for the second quarter of 2008 compared to $7.9 million for the second quarter of 2007. Storage revenues increased quarter-to-quarter as a result of higher storage fees and volumes. The increase in revenues was partially offset by higher operating expenses.

Onshore Natural Gas Pipelines & Services - Gross operating margin for the second quarter of 2008 increased 211 percent to $6.8 million from $2.2 million in the second quarter of 2007. This increase was primarily due to improved natural gas sales margins and higher sales volumes on the Acadian gas system. Total natural gas volumes, which include both sales and transportation volumes, were 731 billion British thermal units per day ("BBtus/d") this quarter compared to 746 BBtus/d in the second quarter of 2007.

Petrochemical Pipeline Services - This segment generated gross operating margin of $3.4 million in the second quarter of 2008 compared to $3.3 million in the second quarter of 2007. Higher transportation volumes on the Lou-Tex propylene pipeline were the primary reason for the increase in gross operating margin. Total petrochemical transportation volumes increased 11 percent to an average 41,000 barrels per day ("BPD") for the second quarter of 2008, from an average of 37,000 BPD for the second quarter last year.

NGL Pipeline Services - Gross operating margin for the second quarter of 2008 was $5.0 million compared to $5.3 million in the second quarter of 2007. Dedicated natural gas liquid ("NGL") volumes averaged 73,000 BPD in the second quarter of 2008 compared to 74,000 BPD in the second quarter last year.

Capitalization

Total debt outstanding at June 30, 2008 was $208.0 million. DEP had total liquidity of approximately $104 million from unrestricted cash and availability under the partnership's $300 million credit facility.

Basis of Presentation of Financial Information

The partnership's results of operations for 2007 are reported separately from those of its predecessor, Duncan Energy Partners Predecessor, following completion of the partnership's initial public offering ("IPO") on February 5, 2007 (effective February 1, 2007 for financial accounting and reporting purposes). We acquired substantially all of the assets and operations of Duncan Energy Partners Predecessor that are included in our consolidated financial statements.

There were a number of agreements and other items that went into effect at the time of our IPO that affect the comparability of the partnership's operating results for the six months ended June 30, 2008 with the combined historical operating results of the partnership and Duncan Energy Partners Predecessor for the six months ended June 30, 2007. These agreements and other items include:

• The fees Mont Belvieu Caverns, LLC ("Mont Belvieu Caverns") charges EPO for underground storage services increased to market rates as a result of new agreements.
• Storage well measurement gains and losses are retained by EPO rather than being allocated to Mont Belvieu Caverns.
• Mont Belvieu Caverns makes a special allocation of operational measurement gains and losses to EPO, which results in such gains and losses not impacting the net income or loss of Mont Belvieu Caverns. However, operational measurement gains and losses continue to be a component of gross operating margin.
• Transportation revenues recorded by Enterprise Lou-Tex Propylene Pipeline L.P. and Sabine Propylene Pipeline L.P. decreased due to the assignment of certain exchange agreements to us by EPO.

Duncan Energy Partners is a publicly traded partnership that provides midstream energy services, including gathering, transportation, marketing and storage of natural gas, in addition to transportation and storage of NGLs and petrochemicals. Duncan Energy Partners' assets, located primarily in the Gulf Coast region of Texas and Louisiana, include interests in more than 1,000 miles of natural gas pipelines with a transportation capacity of approximately 1 Bcf per day; nearly 600 miles of NGL and petrochemical pipelines featuring access to the world's largest fractionation complex at Mont Belvieu, Texas; and 33 underground salt dome caverns with about 100 MMBbls of NGL storage capacity.