UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2007

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

For the transition period from                                          to                                         

SUNOCO LOGISTICS PARTNERS L.P.

Delaware		23-3096839
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Mellon Bank Center 1735 Market Street, Suite LL, Philadelphia, PA		19103-7583
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (866) 248-4344

Former name, former address and formal fiscal year, if changed since last report: Not Applicable

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 o  No þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” and “large accelerated filer” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer o                    Accelerated filer þ                    Non-accelerated filer o

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

At October 31, 2007, the number of the registrant’s Common Units outstanding was 28,586,280.

 

 

SUNOCO LOGISTICS PARTNERS L.P.

INDEX

				Page No.
PART I. FINANCIAL INFORMATION
Item 1.		Financial Statements
		Condensed Consolidated Statements of Income for the Three Months Ended September 30, 2007 and 2006 (unaudited)			3
		Condensed Consolidated Statements of Income for the Nine Months Ended September 30, 2007 and 2006 (unaudited)			4
		Condensed Consolidated Balance Sheets at September 30, 2007 (unaudited) and December 31, 2006			5
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2007 and 2006 (unaudited)			6
		Notes to Condensed Consolidated Financial Statements (unaudited)			7
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			27
Item 3.		Quantitative and Qualitative Disclosures about Market Risk			32
Item 4.		Controls and Procedures			34
PART II. OTHER INFORMATION
Item 1.		Legal Proceedings			34
Item 1A.		Risk Factors			34
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			34
Item 3.		Defaults Upon Senior Securities			35
Item 4.		Submission of Matters to a Vote of Security Holders			35
Item 5.		Other Information			35
Item 6.		Exhibits			36
SIGNATURE					37
Statement of Computation of Ratio of Earnings to Fixed Charges
Chief Executive Officer Certification
Chief Financial Officer Certification
CEO and CFO Certification, Pursuant to Act Rule 13a-14(b)

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

SUNOCO LOGISTICS PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except unit and per unit amounts)

		Three Months Ended
		September 30,
		2007				2006
Revenues
Sales and other operating revenue:
Affiliates (Note 3)		$	439,776			$	484,710
Unaffiliated customers			1,496,439				1,118,932
Other income			8,388				5,281
Total Revenues			1,944,603				1,608,923
Costs and Expenses
Cost of products sold and operating expenses			1,875,714				1,561,819
Depreciation and amortization			9,556				9,079
Selling, general and administrative expenses			13,411				13,391
Total Costs and Expenses			1,898,681				1,584,289
Operating Income			45,922				24,634
Net interest cost paid to affiliates (Note 3)			861				324
Other interest cost and debt expense, net			8,499				7,354
Capitalized interest			(952	)			(720	)
Net Income		$	37,514			$	17,676
Calculation of Limited Partners’ interest in Net Income (Note 4):
Net Income		$	37,514			$	17,676
Less: General Partner’s interest in Net Income			(9,682	)			(819	)
Limited Partners’ interest in Net Income		$	27,832			$	16,857
Net Income per Limited Partner unit:
Basic		$	0.97			$	0.59
Diluted		$	0.97			$	0.59
Weighted average Limited Partners’ units outstanding (Note 4):
Basic			28,586,280				28,535,870
Diluted			28,739,232				28,663,319

(See Accompanying Notes)

SUNOCO LOGISTICS PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(in thousands, except unit and per unit amounts)

		Nine Months Ended
		September 30,
		2007				2006
Revenues
Sales and other operating revenue:
Affiliates (Note 3)		$	1,283,215			$	1,481,470
Unaffiliated customers			3,832,850				2,874,639
Other income			21,125				11,544
Total Revenues			5,137,190				4,367,653
Costs and Expenses
Cost of products sold and operating expenses			4,955,302				4,216,279
Depreciation and amortization			27,867				27,236
Selling, general and administrative expenses			42,417				41,916
Total Costs and Expenses			5,025,586				4,285,431
Operating Income			111,604				82,222
Net interest cost paid to affiliates (Note 3)			2,455				1,047
Other interest cost and debt expense, net			26,524				21,220
Capitalized interest			(2,450	)			(2,465	)
Net Income		$	85,075			$	62,420
Calculation of Limited Partners’ interest in Net Income (Note 4):
Net Income		$	85,075			$	62,420
Less: General Partner’s interest in Net Income			(15,313	)			(6,264	)
Limited Partners’ interest in Net Income		$	69,762			$	56,156
Net Income per Limited Partner unit:
Basic		$	2.44			$	2.06
Diluted		$	2.43			$	2.05
Weighted average Limited Partners’ units outstanding (Note 4):
Basic			28,579,263				27,296,067
Diluted			28,722,026				27,421,581

(See Accompanying Notes)

SUNOCO LOGISTICS PARTNERS L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

		September 30,				December 31,
		2007				2006
		(UNAUDITED)
Assets
Current Assets
Cash and cash equivalents		$	1,997			$	9,412
Advances to affiliates (Note 3)			28,428				7,431
Accounts receivable, affiliated companies (Note 3)			148,254				98,952
Accounts receivable, net			1,049,244				776,505
Inventories:
Crude oil			32,993				69,552
Materials, supplies and other			830				732
Total Current Assets			1,261,746				962,584
Properties, plants and equipment			1,593,348				1,506,350
Less accumulated depreciation and amortization			(527,041	)			(499,682	)
Properties, plants and equipment, net			1,066,307				1,006,668
Investment in affiliates (Note 6)			83,927				81,934
Deferred charges and other assets			25,368				30,891
Total Assets		$	2,437,348			$	2,082,077
Liabilities and Partners’ Capital
Current Liabilities
Accounts payable		$	1,174,206			$	922,495
Accrued liabilities			44,661				34,843
Accrued taxes other than income			27,874				22,869
Total Current Liabilities			1,246,741				980,207
Long-term debt (Note 7)			576,375				491,910
Other deferred credits and liabilities			29,611				27,049
Total Liabilities			1,852,727				1,499,166
Partners’ Capital:
Limited partners’ interest			578,617				576,004
General partner’s interest			6,004				6,907
Total Partners’ Capital			584,621				582,911
Total Liabilities and Partners’ Capital		$	2,437,348			$	2,082,077

(See Accompanying Notes)

SUNOCO LOGISTICS PARTNERS L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)

		Nine Months Ended
		September 30,
		2007				2006
Cash Flows from Operating Activities:
Net Income		$	85,075			$	62,420
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			27,867				27,236
Restricted unit incentive plan expense			4,421				2,905
Changes in working capital pertaining to operating activities net of the effect of acquisitions:
Accounts receivable, affiliated companies			(49,302	)			(3,999	)
Accounts receivable, net			(272,739	)			(174,940	)
Inventories			36,461				(10,299	)
Accounts payable and accrued liabilities			260,775				212,633
Accrued taxes other than income			5,005				1,563
Other			6,234				(6,863	)
Net cash provided by operating activities			103,797				110,656
Cash Flows from Investing Activities:
Capital expenditures			(73,601	)			(85,825	)
Acquisitions			(13,489	)			(121,382	)
Net cash used in investing activities			(87,090	)			(207,207	)
Cash Flows from Financing Activities:
Distributions paid to Limited Partners and General Partner			(87,004	)			(71,160	)
Payments of statutory withholding on net issuance of Limited Partner units under restricted unit incentive plan			(1,479	)			(1,443	)
Net proceeds from issuance of Limited Partner units			—				110,338
Contributions from General Partner for Limited Partner unit transactions			58				2,427
Net proceeds from issuance of Senior Notes			—				173,307
Advances to affiliates, net			(20,997	)			(7,799	)
Borrowings under credit facility			244,220				155,500
Repayments under credit facility			(159,900	)			(216,100	)
Contributions from / (Distributions to) affiliate			980				(51,357	)
Net cash (used in), provided by financing activities			(24,122	)			93,713
Net change in cash and cash equivalents			(7,415	)			(2,838	)
Cash and cash equivalents at beginning of year			9,412				21,645
Cash and cash equivalents at end of period		$	1,997			$	18,807

(See Accompanying Notes)

SUNOCO LOGISTICS PARTNERS L.P.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. Basis of Presentation

     Sunoco Logistics Partners L.P. (the “Partnership”) is a publicly traded Delaware limited partnership which owns and operates a geographically diverse portfolio of complementary assets, consisting of refined product pipelines, terminalling and storage assets, crude oil pipelines, and crude oil acquisition and marketing assets located in the Northeast, Midwest and South Central United States. Sunoco, Inc. and its wholly—owned subsidiaries including Sunoco, Inc. (R&M) are collectively referred to as “Sunoco”.

     The consolidated financial statements reflect the results of Sunoco Logistics Partners L.P. and its wholly-owned partnerships, including Sunoco Logistics Partners Operations L.P. (the “Operating Partnership”). Equity ownership interests in corporate joint ventures, which are not consolidated, are accounted for under the equity method.

     The accompanying condensed consolidated financial statements are presented in accordance with the requirements of Form 10-Q and accounting principles generally accepted in the United States for interim financial reporting. They do not include all disclosures normally made in financial statements contained in Form 10-K. In management’s opinion, all adjustments necessary for a fair presentation of the results of operations, financial position and cash flows for the periods shown have been made. All such adjustments are of a normal recurring nature. Results for the three and nine months ended September 30, 2007 are not necessarily indicative of results for the full year 2007.

2. Acquisitions

Syracuse Terminal Acquisition

     On June 4, 2007, the Partnership purchased a 50% undivided interest in a refined products terminal located in Syracuse, New York from Mobil Pipe Line Company, an affiliate of Exxon Mobil Corporation for approximately $13.2 million. Total terminal storage capacity is approximately 550,000 barrels. The purchase price of the acquisition was funded with borrowings under the Partnership’s previous credit facility (Note 7), and has been preliminarily allocated to property, plants and equipment based on the relative fair value of the assets acquired on the acquisition date. The results of the acquisition are included in the financial statements within the Terminal Facilities business segment from the date of acquisition.

Mid-Valley Pipeline Acquisition

     On August 18, 2006, the Partnership purchased from Sunoco a 100 percent interest in Sun Pipe Line Company of Delaware LLC, the owner of a 55.3 percent equity interest (50 percent voting rights) in Mid-Valley Pipeline Company (“Mid-Valley”) for approximately $65.0 million, subject to certain adjustments five years following the date of closing, based on the throughput of Sunoco. Mid-Valley owns a 994-mile pipeline, which originates in Longview, Texas and terminates in Samaria, Michigan, and has operating capacity of approximately 238,000 bpd and 4.2 million shell barrels of storage capacity. Mid-Valley provides crude oil to a number of refineries, primarily in the Midwest United States. The purchase price of the acquisition was funded with $46.0 million in borrowings under the Partnership’s previous credit facility (Note 7) and with cash on hand. Since the acquisition was from a related party, the interest in the entity was recorded by the Partnership at Sunoco’s historical cost of approximately $12.5 million and the $52.5 million difference between the purchase price and the cost basis of the assets was recorded by the Partnership as a capital distribution. The results of the acquisition are included in the financial statements within the Western Pipeline System business segment from the date of acquisition.

Millennium and Kilgore Pipeline Acquisition

     On March 1, 2006, the Partnership purchased a Texas crude oil pipeline system from affiliates of Black Hills Energy, Inc. for approximately $40.9 million. The system consists of (a) the Millennium Pipeline, a 200-mile, 12-inch crude oil pipeline with approximately 65,000 bpd operating capacity, originating near the Partnership’s Nederland Terminal, and terminating at Longview Texas; (b) the Kilgore Pipeline, a 190-mile, 10-inch crude oil pipeline with approximately 35,000 barrel per day capacity originating in Kilgore, Texas and terminating at refineries in the Houston, Texas region; (c) approximately 900,000 shell barrels of storage capacity at Kilgore, and Longview, Texas, approximately 550,000 of which are inactive; (d) a crude oil sales and marketing business; and (e) crude oil line fill and working inventory. The

purchase price of the acquisition was funded with borrowings under the Partnership’s previous credit facility (Note 7). The purchase price has been allocated to the assets acquired based on their relative fair values at the acquisition date. The following is a summary of the effects of the transaction on the Partnership’s consolidated financial position (in thousands of dollars):

Increase in:
Inventories		$	2,189
Properties, plants and equipment, net			38,711
Cash paid for acquisition		$	40,900

     The results of the acquisition are included in the financial statements within the Western Pipeline System business segment from the date of acquisition.

Amdel and White Oil Pipeline Acquisition

     On March 1, 2006, the Partnership acquired a Texas crude oil pipeline system from Alon USA Energy, Inc. for approximately $68.0 million. The system consists of (a) the Amdel Pipeline, a 503-mile, 10-inch common carrier crude oil pipeline with approximately 27,000 bpd operating capacity, originating at the Nederland Terminal, and terminating at Midland, Texas, and (b) the White Oil Pipeline, a 25-mile, 10-inch crude oil pipeline with approximately 40,000 bpd operating capacity, originating at the Amdel Pipeline and terminating at Alon’s Big Spring, Texas refinery. The pipelines were idle at the time of purchase, were re-commissioned by the Partnership during the second quarter 2006 and began making deliveries during the fourth quarter 2006. During the first quarter of 2007, the Partnership completed a project to expand the capacity on the Amdel Pipeline from approximately 27,000 to 40,000 bpd. Construction on new tankage at the Nederland Terminal to service these new volumes more efficiently is expected to be completed during 2008. The purchase price of the acquisition was funded with borrowings under the Partnership’s previous credit facility (Note 7), and has been allocated to property, plant and equipment based on the relative fair value of the assets acquired on the acquisition date. The results of the acquisition are included in the financial statements within the Western Pipeline System business segment from the date of acquisition.

3. Related Party Transactions

     Advances To and From Affiliates

     The Partnership has a treasury services agreement with Sunoco pursuant to which it, among other things, participates in Sunoco’s centralized cash management program. Under this program, all of the Partnership’s cash receipts and cash disbursements are processed, together with those of Sunoco and its other subsidiaries, through Sunoco’s cash accounts with a corresponding credit or charge to an intercompany account. The intercompany balances are settled periodically, but no less frequently than monthly. Amounts due from Sunoco earn interest at a rate equal to the average rate of the Partnership’s third-party money market investments, while amounts due to Sunoco bear interest at a rate equal to the interest rate provided in the Partnership’s revolving credit facility (see Note 6).

     Selling, general and administrative expenses in the condensed consolidated statements of income include costs incurred by Sunoco for the provision of certain centralized corporate functions such as legal, accounting, treasury, engineering, information technology, insurance and other corporate services, including the administration of employee benefit plans. These are provided to the Partnership under an omnibus agreement (“Omnibus Agreement”) with Sunoco for an annual administrative fee. The fee for the annual period ended December 31, 2006 was $7.7 million. In January 2007, the parties extended the term of Section 4.1 of the Omnibus Agreement (which concerns the Partnership’s obligation to pay the annual fee for provision of certain general and administrative services) by one year. The annual administrative fee applicable to this one-year extension is $6.5 million, which reflects the Partnership directly incurring some of these general and administrative costs. These costs may be increased if the acquisition or construction of new assets or businesses requires an increase in the level of general and administrative services received by the Partnership. There can be no assurance that Section 4.1 of the Omnibus Agreement will be extended beyond 2007, or that, if extended, the administrative fee charged by Sunoco will be at or below the current administrative fee. In the event that the Partnership is unable to obtain such services from Sunoco or third parties at or below the current cost, the Partnership’s financial condition and results of operations may be adversely impacted.

     The annual administrative fee does not include the costs of shared insurance programs, which are allocated to the Partnership based upon its share of the cash premiums incurred. This fee also does not include salaries of pipeline and terminal personnel or other employees of the general partner, or the cost of their employee benefits. These employees are employees of the Partnership’s general partner or its affiliates, which are wholly-owned subsidiaries of Sunoco. The Partnership has no employees. Allocated Sunoco employee benefit plan expenses for employees who work in the pipeline, terminalling, storage and crude oil gathering operations, including senior executives, include non-contributory defined benefit retirement plans, defined contribution 401(k) plans, employee and retiree medical, dental and life insurance plans, incentive compensation plans, and other such benefits. The Partnership is reimbursing Sunoco for these costs and other direct expenses incurred on its behalf. These expenses are reflected in cost of products sold and operating expenses and selling, general and administrative expenses in the condensed consolidated statements of income.

     Accounts Receivable, Affiliated Companies

     Affiliated revenues in the condensed consolidated statements of income consist of sales of crude oil as well as the provision of crude oil and refined product pipeline transportation, terminalling and storage services to Sunoco. Sales of crude oil are priced using market based rates. Pipeline revenues are generally determined using posted tariffs. In 2002, the Partnership entered into the pipelines and terminals storage and throughput agreement and various other agreements with Sunoco under which the Partnership is charging Sunoco fees for services provided under these agreements that, in management’s opinion, are comparable to those charged in arm’s-length, third-party transactions. During the first quarter of 2007, the agreement to throughput at the Partnership’s refined product terminals and to receive and deliver refined product into the Partnership’s Marcus Hook Tank Farm expired. During the second quarter of 2007, the Partnership executed new five year agreements with Sunoco to provide these services.

     Under various other agreements, Sunoco is, among other things, purchasing from the Partnership, at market-based rates, particular grades of crude oil that the Partnership’s crude oil acquisition and marketing business purchases for delivery to certain pipelines. These agreements automatically renew on a monthly basis unless terminated by either party on 30 days’ written notice. Sunoco also leases the Partnership’s 58 miles of interrefinery pipelines between Sunoco’s Philadelphia and Marcus Hook refineries for a term of 20 years.

     Capital Contributions

     The Partnership has agreements with Sunoco which require Sunoco to, among other things, reimburse the Partnership for certain expenditures. These agreements include:

	•		the Interrefinery Lease Agreement, which requires Sunoco to reimburse the Partnership for any non-routine maintenance expenditures incurred, as defined through February 2022; and
	•		the Eagle Point purchase agreement, which requires Sunoco to reimburse the Partnership for certain capital improvement projects incurred regarding the assets acquired, as defined, up to $5.0 million through March 2014. The Partnership has received $2.7 million to date under this agreement.

     During the nine months ended September 30, 2007 and 2006, the Partnership was reimbursed $1.0 million and $1.7 million, respectively, associated with these agreements. The reimbursement of these amounts was recorded by the Partnership as capital contributions to Partners’ Capital within the condensed consolidated balance sheet at September 30, 2007.

     In May 2006, the Partnership sold 2.4 million common units in a public offering. In June 2006, the Partnership sold an additional 280,000 common units to cover over-allotments in connection with the May 2006 sale (see Note 10). As a result of this issuance of 2.68 million common units, the general partner contributed $2.4 million to the Partnership to maintain its 2.0 percent general partner interest. The Partnership recorded this amount as a capital contribution to Partners’ Capital within its condensed consolidated balance sheet.

     In February 2007 and 2006, the Partnership issued 0.1 million common units in each period to participants in the Sunoco Partners LLC Long-Term Incentive Plan (“LTIP”) upon completion of award vesting requirements. As a result of these issuances of common units, the general partner contributed $0.1 million in each period to the Partnership to maintain its 2.0 percent general partner interest. The Partnership recorded these amounts as capital contributions to Partners’ Capital within its condensed consolidated balance sheets.

     Asset Acquisition

     On August 18, 2006, the Partnership purchased from Sunoco a 100 percent interest in Sun Pipe Line Company of Delaware LLC, the owner of a 55.3 percent equity interest (50 percent voting rights) in Mid-Valley Pipeline Company (“Mid-Valley”) for approximately $65 million, subject to certain adjustments five years following the date of closing, based on throughput of Sunoco (see Note 2). Since the acquisition was from a related party, the interest in the entity was recorded by the Partnership at Sunoco’s historical cost of approximately $12.5 million, and the $52.5 million difference between the purchase price and the cost basis of the assets was recorded by the Partnership as a capital distribution.

     Conversion of Subordinated Units

     A total of 11,383,639 subordinated limited partner units, equal to all of the originally issued subordinated units held by the general partner, have been converted into common units on a one-for-one basis, 2,845,910 each on February 15, 2005 and February 15, 2006 and 5,691,819 on February 15, 2007 (see Note 11).

4. Net Income Per Unit Data

     Basic and diluted net income per limited partner unit are calculated by dividing net income, after deducting the amount allocated to the general partner’s interest, by the weighted-average number of limited partner common and subordinated units outstanding (including the dilutive impact of unit incentive awards) during the period.

     The general partner’s interest in net income consists of its 2.0 percent general partner interest and “incentive distributions”, which are increasing percentages, up to 50 percent of quarterly distributions in excess of $0.50 per limited partner unit (see Note 11). The general partner was allocated net income of $9.7 million (representing 25.8 percent of total net income for the period) and $0.8 million (representing 4.6 percent of total net income for the period) for the three months ended September 30, 2007 and 2006, respectively, and $15.3 million (representing 18.0 percent of total net income for the period) and $6.3 million (representing 10.0 percent of total net income for the period) for the nine months ended September 30, 2007 and 2006, respectively. Diluted net income per limited partner unit is calculated by dividing net income applicable to limited partners’ by the sum of the weighted-average number of common and subordinated units outstanding and the dilutive effect of incentive unit awards, as calculated by the treasury stock method.

     The following table sets forth the reconciliation of the weighted average number of limited partner units used to compute basic net income per limited partner unit to those used to compute diluted net income per limited partner unit for the three and nine months ended September 30, 2007 and 2006:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
Weighted average number of limited partner units outstanding — basic			28,586,280				28,535,870				28,579,263				27,296,067
Add effect of dilutive unit incentive awards			152,952				127,449				142,763				125,514
Weighted average number of limited partner units — diluted			28,739,232				28,663,319				28,722,026				27,421,581

5. Inventory

     Inventories are valued at the lower of cost or market. Crude oil inventory cost has been determined using the last-in, first-out method (“LIFO”). Under this methodology, the cost of products sold consists of the actual crude oil acquisition costs of the Partnership. Such costs are adjusted to reflect increases or decreases in crude oil inventory quantities, which are valued based on the changes in the LIFO inventory layers. The cost of materials, supplies and other inventories is principally determined using the average cost method. During the third quarter, crude oil inventory balances declined in our Western Pipeline System, which resulted in liquidating a portion of the prior year layer carried at lower costs prevailing in 2006. The reduction resulted predominately from the elimination of contango inventory positions, and had the effect of increasing results of operations by $9.3 million.

6.

Investment in Affiliates

     The Partnership’s ownership percentages in corporate joint ventures as of September 30, 2007 and December 31, 2006 are as follows:

		Partnership
		Ownership
		Percentage
Mid-Valley Pipeline Company (1)			55.3	%
West Texas Gulf Pipe Line Company			43.8	%

		Partnership
		Ownership
		Percentage
Wolverine Pipe Line Company			31.5	%
Yellowstone Pipe Line Company			14.0	%
West Shore Pipe Line Company			12.3	%
Explorer Pipeline Company			9.4	%

     The following table provides summarized combined statement of income data on a 100 percent basis for the Partnership’s corporate joint venture interests for the three and nine months ended September 30, 2007 and 2006 (in thousands of dollars):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
Income Statement Data:
Total revenues		$	138,583			$	135,873			$	381,836			$	342,339
Net income		$	39,497			$	36,986			$	110,042			$	87,643

     The following table provides summarized combined balance sheet data on a 100 percent basis for the Partnership’s corporate joint venture interests as of September 30, 2007 and December 31, 2006 (in thousands of dollars):

		September 30,				December 31,
		2007				2006
Balance Sheet Data:
Current assets		$	117,848			$	104,276
Non-current assets		$	488,397			$	489,514
Current liabilities		$	98,076			$	111,476
Non-current liabilities		$	416,009			$	399,826
Net equity		$	92,160			$	83,028

     The Partnership’s investments in Wolverine, West Shore, Yellowstone, and West Texas Gulf at September 30, 2007 include an excess investment amount of approximately $54.5 million, net of accumulated amortization of $3.1 million. The excess investment is the difference between the investment balance and the Partnership’s proportionate share of the net assets of the entities. The excess investment was allocated to the underlying tangible and intangible assets. Other than land and indefinite-lived intangible assets, all amounts allocated, principally to pipeline and related assets, are amortized using the straight-line method over their estimated useful life of 40 years and included within depreciation and amortization in the condensed consolidated statements of income.

7. Long-Term Debt

     The components of long-term debt are as follows (in thousands of dollars):

		September 30,				December 31,
		2007				2006
Credit Facility		$	152,320			$	68,000
Senior Notes — 7.25%, due February 15, 2012			250,000				250,000
Senior Notes — 6.125%, due May 15, 2016			175,000				175,000
Less unamortized bond discount			(945	)			(1,090	)
		$	576,375			$	491,910

     On August 8, 2007, Sunoco Logistics Partners Operations L.P. (the “Operating Partnership”), a wholly-owned entity of the Partnership, entered into a new, five-year $400 million credit facility (“Credit Facility”). This Credit Facility replaces the Operating Partnership’s previous credit facility agreement that was scheduled to mature on November 22, 2010.

     The Credit Facility is available to fund the Operating Partnership’s working capital requirements, to finance future acquisitions, to finance future capital projects and for general partnership purposes. The Credit Facility matures in November

2012 and may be prepaid at any time. It bears interest at the Operating Partnership’s option, at either (i) LIBOR plus an applicable margin, (ii) the higher of the federal funds rate plus 0.50 percent or the Citibank prime rate (each plus the applicable margin) or (iii) the federal funds rate plus an applicable margin. There were $152.3 million of outstanding borrowings under the Credit Facility at September 30, 2007. The Credit Facility contains various covenants limiting the Operating Partnership’s ability to incur indebtedness; grant certain liens; make certain loans, acquisitions and investments; make any material change to the nature of its business; acquire another company; or enter into a merger or sale of assets, including the sale or transfer of interests in the Operating Partnership’s subsidiaries. The Credit Facility also requires the Operating Partnership to maintain, on a rolling four-quarter basis, a maximum total debt to EBITDA ratio of 4.75 to 1, which can generally be increased to 5.25 to 1 during an acquisition period. The Operating Partnership is in compliance with this requirement as of September 30, 2007. The Partnership’s ratio of total debt to EBITDA was 3.1 to 1 at September 30, 2007.

     On March 1, 2006, the Partnership completed its acquisition of two Texas crude oil pipeline systems for $108.9 million (see Note 2). The Partnership initially financed these transactions with $109.5 million of borrowings under the previous Credit Facility.

     During May 2006, the Operating Partnership issued $175 million of 6.125 percent Senior Notes, due May 15, 2016 at 99.858 percent of the principal amount, for net proceeds of $173.3 million after the underwriter’s commission and legal, accounting and other transaction expenses. The Senior Notes are redeemable, at a make-whole premium, and are not subject to sinking fund provisions. The Senior Notes contain various covenants limiting the Operating Partnership’s ability to incur certain liens, engage in sale/leaseback transactions, or merge, consolidate or sell substantially all of its assets. The Operating Partnership is in compliance with these covenants as of September 30, 2007. The net proceeds from the Senior Notes, together with the $110.3 million in net proceeds from the concurrent offering of 2.68 million limited partner common units (see Note 10), were used to repay all of the $216.1 million in outstanding borrowings under the Partnership’s Previous Credit Facility. The balance of the proceeds from the offerings were used to fund the Partnership’s organic growth program and for general Partnership purposes, including to finance pending and future acquisitions.

     On August 21, 2006, the Partnership purchased from Sunoco a 100 percent interest in Sun Pipe Line Company of Delaware LLC, the owner of a 55.3 percent equity interest in Mid-Valley Pipeline Company (“Mid-Valley”) for $65 million, subject to certain adjustments five years following the date of closing (see Note 2). The purchase price of the acquisition was funded with $46.0 million in borrowings under the Partnership’s Previous Credit Facility and with cash on hand.

     On June 4, 2007, the Partnership purchased a 50% undivided interest in a refined products terminal located in Syracuse, New York from Mobil Pipe Line Company, an affiliate of Exxon Mobil Corporation for approximately $13.2 million. The purchase price of the acquisition was funded with $11.9 million in borrowings under the Partnership’s Previous Credit Facility and with cash on hand.

     The Partnership and the operating partnerships of the Operating Partnership served as joint and several guarantors of the Senior Notes and of any obligations under the previous credit facility. The Partnership continues to serve as guarantor of the Senior Notes and of any obligations under the new Credit Facility. These guarantees are full and unconditional. In connection with the Partnership’s new Credit Facility the Subsidiary Guarantors (as defined in Note 14) were released from their obligations both under the Credit Facility, and the 7.25% and 6.125% Senior Notes. See Note 14 for supplemental condensed consolidating financial information.

8. Commitments and Contingent Liabilities

     The Partnership is subject to numerous federal, state and local laws which regulate the discharge of materials into the environment or that otherwise relate to the protection of the environment. These laws and regulations result in liabilities and loss contingencies for remediation at the Partnership’s facilities and at third-party or formerly owned sites. The accrued liability for environmental remediation in the condensed consolidated balance sheets was $1.5 million and $0.5 million as of September 30, 2007 and December 31, 2006, respectively. There are no liabilities attributable to unasserted claims, nor have any recoveries from insurance been assumed.

     Total future costs for environmental remediation activities will depend upon, among other things, the identification of any additional sites, the determination of the extent of any contamination at each site, the timing and nature of required remedial actions, the technology available and needed to meet the various existing legal requirements, the nature and extent of future environmental laws, inflation rates and the determination of the Partnership’s liability at multi-party sites, if any, in light of uncertainties with respect to joint and several liability, and the number, participation levels and financial viability of other parties. As discussed below, the Partnership’s future costs will also be impacted by an indemnification from Sunoco.

     Sunoco has indemnified the Partnership for 30 years from environmental and toxic tort liabilities related to the assets contributed to the Partnership that arise from the operation of such assets prior to the closing of the Partnership’s initial public offering (“IPO”) on February 8, 2002. Sunoco has indemnified the Partnership for 100 percent of all such losses asserted within the first 21 years of closing of the February 2002 IPO. Sunoco’s share of liability for claims asserted thereafter will decrease by 10 percent a year. For example, for a claim asserted during the twenty-third year after closing of the February 2002 IPO, Sunoco would be required to indemnify the Partnership for 80 percent of its loss. There is no monetary cap on the amount of indemnity coverage provided by Sunoco. The Partnership has agreed to indemnify Sunoco and its affiliates for events and conditions associated with the operation of the Partnership’s assets that occur on or after the closing of the February 2002 IPO and for environmental and toxic tort liabilities to the extent Sunoco is not required to indemnify the Partnership.

     Sunoco has also indemnified the Partnership for liabilities, other than environmental and toxic tort liabilities related to the assets contributed to the Partnership, that arise out of Sunoco’s ownership and operation of the assets prior to the closing of the February 2002 IPO and that are asserted within 10 years after closing of the February 2002 IPO. In addition, Sunoco has indemnified the Partnership from liabilities relating to certain defects in title to the assets contributed to the Partnership and associated with failure to obtain certain consents and permits necessary to conduct its business that arise within 10 years after closing of the February 2002 IPO as well as from liabilities relating to legal actions pending against Sunoco or its affiliates as of February 2, 2002, or events and conditions associated with any assets retained by Sunoco or its affiliates.

     Management of the Partnership does not believe that any liabilities which may arise from claims indemnified by Sunoco would be material in relation to the consolidated financial position of the Partnership at September 30, 2007. There are certain other pending legal proceedings related to matters arising after the February 2002 IPO which are not indemnified by Sunoco. Management believes that any liabilities that may arise from these legal proceedings will not be material in relation to the consolidated financial position of the Partnership at September 30, 2007.

     Sunoco Partners Marketing & Terminals L.P. (“SPMT”), which is wholly owned by the Partnership, has received a proposed penalty assessment from the Internal Revenue Service (“IRS”) in the aggregate amount of $5.1 million based on a failure to timely file excise tax information returns relating to its terminal operations during the calendar years 2004 and 2005. SPMT became current on its information return filings with the IRS in July of 2006. SPMT believes it had reasonable cause for the failure to not file the information returns on a timely basis, and intends to seek the elimination of the asserted penalties. The proposed penalties are for the failure to file information returns rather than any failure to pay taxes due, as no taxes were owed by SPMT in connection with such information. The timing or outcome of this claim, and the total costs to be incurred by SPMT in connection therewith, cannot be reasonably estimated at this time.

9. Management Incentive Plan

     Sunoco Partners LLC, the general partner of the Partnership, has adopted the Sunoco Partners LLC Long-Term Incentive Plan (“LTIP”) for employees and directors of the general partner who perform services for the Partnership. The LTIP is administered by the independent directors of the Compensation Committee of the general partner’s board of directors with respect to employee awards, and by the non-independent members of the general partners’ board of directors with respect to awards granted to the independent directors. The LTIP permits the grant of restricted units and unit options initially covering an aggregate of 1,250,000 common units. There have been no grants of unit options since the inception of the LTIP. Restricted unit awards under the Partnership’s LTIP generally vest upon completion of a three-year service period. For performance-based awards, adjustments for attainment of performance targets can range from 0—200 percent of the award grant, and are payable in common units. Restricted unit awards may also include tandem distribution equivalent rights (“DERs”) at the discretion of the Compensation Committee. Subject to applicable vesting criteria, a DER entitles the grantee to a cash payment equal to cash distributions paid on an outstanding common unit during the period the restricted unit is outstanding. DERs are recognized as a reduction of Partners’ Capital as they become vested.

     As of September 30, 2007, there were approximately 0.2 million unvested restricted units outstanding with a weighted average grant-date fair value of $46.37 per unit, and a contractual life of three years. As of September 30, 2007, total compensation cost related to non-vested awards not yet recognized was $2.6 million, and the weighted-average period over which this cost is expected to be recognized in expense is 2.0 years. The number of restricted stock units outstanding and the total compensation cost related to non-vested awards not yet recognized reflect the Partnership’s estimates of performance factors pertaining to performance-based restricted unit awards.

     Effective January 1, 2006, the Partnership adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS No. 123R”), using the modified-prospective method. SFAS No. 123R revised the accounting for stock-based compensation required by Statement of Financial Accounting Standards No. 123 “Accounting for Stock-Based Compensation” (“SFAS No. 123”). Among other things, SFAS No. 123R requires a fair-value-based method of accounting for share-based payment transactions, which is similar to the method followed by the Partnership under the provisions of SFAS No. 123.

     SFAS No. 123R also requires the use of a non-substantive vesting period approach for new share-based payment awards that vest when an employee becomes retirement eligible, as is the case under the Partnership’s LTIP (i.e., the vesting period cannot exceed the date an employee becomes retirement eligible). The effect will be to accelerate expense recognition compared to the vesting period approach that the Partnership previously followed under SFAS No. 123.

     The Partnership recognized share-based compensation expense related to the LTIP of approximately $4.4 million in the first nine months of 2007 and $2.9 million for the first nine months of 2006. During the first quarter of 2007, the Partnership issued 50,410 new common units (after netting for taxes of approximately $1.5 million) and made DER-related payments of approximately $0.6 million in connection with the vesting.

10. Equity Offerings

     In May 2006, the Partnership sold 2.4 million common units in a public offering at a price of $43.00 per unit. In June 2006, the Partnership sold an additional 280,000 common units to cover over-allotments in connection with the May 2006 sale. The purchase price for the over allotment was equal to the offering price in the May 2006 sale. The total sale of units resulted in gross proceeds of $115.2 million, and net proceeds of $110.3 million, after the underwriters’ commission and legal, accounting and other transaction expenses. Net proceeds of the offering, together with the $173.3 million in net proceeds from the concurrent offering of Senior Notes (see Note 7), were used to repay $216.1 million of the debt incurred under the revolving credit facility, to fund the Partnership’s 2006 organic growth program, and for general partnership purposes. Also as a result of the issuance of these units, the general partner contributed $2.4 million to the Partnership to maintain its 2.0 percent general partner interest. At September 30, 2007, Sunoco’s ownership in the Partnership, including its 2.0 percent general partner interest, was 43.4 percent.

11. Cash Distributions

     Within 45 days after the end of each quarter, the Partnership distributes all cash on hand at the end of the quarter, less reserves established by the general partner in its discretion. This is defined as “available cash” in the partnership agreement. The general partner has broad discretion to establish cash reserves that it determines are necessary or appropriate to properly conduct the Partnership’s business. The Partnership will make quarterly distributions to the extent there is sufficient cash from operations after establishment of cash reserves and payment of fees and expenses, including payments to the general partner.

     The Partnership issued 11,383,639 subordinated units to its general partner in connection with the February 2002 IPO. The Partnership had 5,691,819 subordinated units outstanding as of December 31, 2006, all of which were held by the general partner, and for which there is no established public trading market. Any subordinated units that remain outstanding at the end of the subordination period convert to common units on a one-for-one basis if the Partnership meets certain required financial tests set forth in the Partnership Agreement. Upon conversion to common units, the subordinated units will no longer be subordinated to the rights of the holders of common units (See Note 3).

     The Partnership has met the minimum quarterly distribution requirements on all outstanding units for each of the four-quarter periods in the three-years ended December 31, 2004, 2005 and 2006. As a result, the total of 11,383,639 subordinated units have been converted into common units on a one-for-one basis, 2,845,910 each on February 15, 2005 and February 15, 2006 and 5,691,819 on February 15, 2007.

     The Partnership will, in general, pay cash distributions each quarter in the following manner:

		Percentage of Distributions
Quarterly Cash Distribution Amount per Unit		Unitholders				General Partner
Up to minimum quarterly distribution ($0.45 per Unit)			98	%			2	%
Above $0.45 per Unit up to $0.50 per Unit			98	%			2	%
Above $0.50 per Unit up to $0.575 per Unit			85	%			15	%
Above $0.575 per Unit up to $0.70 per Unit			75	%			25	%
Above $0.70 per Unit			50	%			50	%

     If cash distributions exceed $0.50 per unit in a quarter, the general partner will receive increasing percentages, up to 50 percent, of the cash distributed in excess of that amount. These distributions are referred to as “incentive distributions”. The amounts shown in the table under “Percentage of Distributions” are the percentage interests of the general partner and the unitholders in any available cash from operating surplus that is distributed up to and including the corresponding amount in the column “Quarterly Cash Distribution Amount per Unit,” until the available cash that is distributed reaches the next target distribution level, if any. The percentage interests shown for the unitholders and the general partner for the minimum

quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution.

     Distributions paid by the Partnership for the period from January 1, 2006 through September 30, 2007 were as follows:

		Cash								Total Cash
		Distribution				Total Cash				Distribution to
		per Limited				Distribution to				the General
Date Cash Distribution Paid		Partner Unit				Limited Partners				Partner
						($ in millions)				($ in millions)
February 14, 2006		$	0.7125			$	18.4			$	2.0
May 15, 2006		$	0.7500			$	21.4			$	3.3
August 14, 2006		$	0.7750			$	22.1			$	4.0
November 14, 2006		$	0.7875			$	22.4			$	4.4
February 14, 2007		$	0.8125			$	23.2			$	5.1
May 15, 2007		$	0.8250			$	23.6			$	5.4
August 14, 2007		$	0.8375			$	23.9			$	5.8

     On October 22, 2007, Sunoco Partners LLC, the general partner of Sunoco Logistics Partners L.P., declared a cash distribution of $0.85 per common partnership unit ($3.40 annualized), representing the distribution for the second quarter 2007. The $30.4 million distribution, including $6.1 million to the general partner, will be paid on November 14, 2007 to unitholders of record at the close of business on November 7, 2007.

12. Exit Costs Associated with Western Pipeline Headquarters Relocation

     On June 10, 2005, the Partnership announced its intention to relocate its Western area headquarters operations from Tulsa, Oklahoma to the Houston, Texas area. The Partnership offered to relocate all affected employees. The Partnership substantially completed the relocation during the first quarter 2006.

     The total non-recurring expenses incurred in connection with the relocation plan amounted to $5.0 million, including $2.9 million recognized during the first quarter 2006. These costs consist primarily of employee relocation costs, one-time termination benefits and new hire expenses. These costs are included in selling, general and administrative expenses in the condensed statement of income, and are included in the operating results for the Western Pipeline System segment. In addition, the total capital expenditures associated with the move amounted to $5.5 million, including $2.8 million in the first quarter 2006. These capital expenditures include furniture and equipment, communication infrastructure and a pipeline control center. The Partnership has not incurred any material costs related to the move since the first quarter of 2006, and does not expect the remaining costs related to the relocation to be material.

13. Business Segment Information

     The following table sets forth condensed statement of income information concerning the Partnership’s business segments and reconciles total segment operating income to net income for the three months ended September 30, 2007 and 2006, respectively (in thousands of dollars):

		Three Months Ended
		September 30,
		2007				2006
Segment Operating Income
Eastern Pipeline System:
Sales and other operating revenue:
Affiliates		$	21,336			$	19,408
Unaffiliated customers			9,648				7,358
Other income			4,116				3,387
Total Revenues			35,100				30,153
Operating expenses			13,491				11,975
Depreciation and amortization			2,259				2,199
Selling, general and administrative expenses			4,626				4,377
Total Costs and Expenses			20,376				18,551
Operating Income		$	14,724			$	11,602
Terminal Facilities:
Sales and other operating revenue:
Affiliates		$	23,054			$	21,120
Unaffiliated customers			12,361				10,537
Other income			9				—
Total Revenues			35,874				31,657
Operating expenses			14,883				14,269
Depreciation and amortization			3,878				3,797
Selling, general and administrative expenses			4,550				3,914
Total Costs and Expenses			23,311				21,980
Operating Income		$	12,563			$	9,677
Western Pipeline System:
Sales and other operating revenue:
Affiliates		$	394,936			$	444,182
Unaffiliated customers			1,474,430				1,101,037
Other income			4,263				1,894
Total Revenues			1,873,629				1,547,113
Cost of products sold and operating expenses			1,847,340				1,535,575
Depreciation and amortization			3,419				3,083
Selling, general and administrative expenses			4,235				5,100
Total Costs and Expenses			1,854,994				1,543,758
Operating Income		$	18,635			$	3,355
Reconciliation of Segment Operating Income to Net Income:
Operating Income:
Eastern Pipeline System		$	14,724			$	11,602
Terminal Facilities			12,563				9,677
Western Pipeline System			18,635				3,355
Total segment operating income			45,922				24,634
Net interest expense			8,408				6,958
Net Income		$	37,514			$	17,676

     The following table sets forth condensed statement of income information concerning the Partnership’s business segments and reconciles total segment operating income to net income for the nine months ended September 30, 2007 and 2006, respectively (in thousands of dollars):

		Nine Months Ended
		September 30,
		2007				2006
Segment Operating Income
Eastern Pipeline System:
Sales and other operating revenue:
Affiliates		$	59,635			$	56,795
Unaffiliated customers			26,239				20,470
Other income			10,448				8,218
Total Revenues			96,322				85,483
Operating expenses			39,074				32,207
Depreciation and amortization			6,815				7,417
Selling, general and administrative expenses			15,206				13,049
Total Costs and Expenses			61,095				52,673
Operating Income		$	35,227			$	32,810
Terminal Facilities:
Sales and other operating revenue:
Affiliates		$	67,993			$	61,079
Unaffiliated customers			36,046				30,068
Other income			(6	)			7
Total Revenues			104,033				91,154
Operating expenses			40,161				39,565
Depreciation and amortization			11,368				11,377
Selling, general and administrative expenses			12,158				11,270
Total Costs and Expenses			63,687				62,212
Operating Income		$	40,346			$	28,942
Western Pipeline System:
Sales and other operating revenue:
Affiliates		$	1,155,587			$	1,363,596
Unaffiliated customers			3,770,565				2,824,101
Other income			10,683				3,319
Total Revenues			4,936,835				4,191,016
Cost of products sold and operating expenses			4,876,067				4,144,507
Depreciation and amortization			9,684				8,442
Selling, general and administrative expenses			15,053				17,597
Total Costs and Expenses			4,900,804				4,170,546
Operating Income		$	36,031			$	20,470
Reconciliation of Segment Operating Income to Net Income:
Operating Income:
Eastern Pipeline System		$	35,227			$	32,810
Terminal Facilities			40,346				28,942
Western Pipeline System			36,031				20,470
Total segment operating income			111,604				82,222
Net interest expense			26,529				19,802
Net Income		$	85,075			$	62,420

     The following table provides the identifiable assets for each segment as of September 30, 2007 and December 31, 2006 (in thousands):

		September 30,				December 31,
		2007				2006
Eastern Pipeline System		$	368,069			$	367,718
Terminal Facilities			382,369				341,878
Western Pipeline System			1,644,599				1,346,232
Corporate and other			42,311				26,249
Total identifiable assets		$	2,437,348			$	2,082,077

     Corporate and other assets consist primarily of cash and cash equivalents, advances to affiliates and deferred charges.

14. Supplemental Condensed Consolidating Financial Information

     The Partnership and the operating partnerships of the Operating Partnership served as joint and several guarantors of the Senior Notes and of any obligations under the previous credit facility. The Partnership continues to serve as guarantor of the Senior Notes and of any obligations under the new Credit Facility. These guarantees are full and unconditional. In connection with the Partnership’s new Credit Facility the Subsidiary Guarantors (as defined in Note 7) were released from their obligations both under the Credit Facility, and the 7.25% and 6.125% Senior Notes. Given that certain, but not all subsidiaries of the Partnership were guarantors, the Partnership was required to present the following supplemental condensed consolidating financial information. For purposes of the following footnote, Sunoco Logistics Partners, L.P. is referred to as “Parent” and Sunoco Logistics Partners Operations L.P. is referred to as “Subsidiary Issuer.” In the 2007 schedules Sunoco Partners Marketing and Terminals L.P., Sunoco Pipeline L.P., Sun Pipeline Company of Delaware LLC and Sunoco Pipeline Acquisition LLC, Sunoco Logistics Partners GP LLC, Sunoco Logistics Partners Operations GP LLC and Sunoco Partners Lease Acquisition & Marketing LLC, are collectively referred to as “Non-Guarantor Subsidiaries.” In the 2006 schedules Sunoco Partners Marketing and Terminals L.P., Sunoco Pipeline L.P., Sun Pipeline Company of Delaware LLC and Sunoco Pipeline Acquisition LLC are collectively referred to as the “Subsidiary Guarantors”, and Sunoco Logistics Partners GP LLC, Sunoco Logistics Partners Operations GP LLC and Sunoco Partners Lease Acquisition & Marketing LLC, are referred to as “Non-Guarantor Subsidiaries.”

     The following supplemental condensed consolidating financial information (in thousands) reflects the Parent’s separate accounts, the Subsidiary Issuer’s separate accounts, the combined accounts of the Subsidiary Guarantors, the combined accounts of the Non-Guarantor Subsidiaries, the combined consolidating adjustments and eliminations and the Parent’s consolidated accounts for the dates and periods indicated. For purposes of the following condensed consolidating information, the Parent’s investments in its subsidiaries and the Subsidiary Issuer’s investments in its subsidiaries are accounted for under the equity method of accounting.

Condensed Consolidating Statement of Income
Three Months Ended September 30, 2007
(unaudited)

										Non-
						Subsidiary				Guarantor				Consolidating
		Parent				Issuer				Subsidiaries				Adjustments				Total
Revenues
Sales and other operating revenue:
Affiliates		$	—			$	—			$	439,776			$	—			$	439,776
Unaffiliated customers			—				—				1,496,439				—				1,496,439
Equity in earnings of subsidiaries			37,509				45,091				5				(82,605	)			—
Other income			—				—				8,388				—				8,388
Total Revenues			37,509				45,091				1,944,608				(82,605	)			1,944,603
Costs and Expenses
Cost of products sold and operating expenses			—				—				1,875,714				—				1,875,714
Depreciation and amortization			—				—				9,556				—				9,556
Selling, general and administrative expenses			—				—				13,411				—				13,411
Total Costs and Expenses			—				—				1,898,681				—				1,898,681
Operating Income			37,509				45,091				45,927				(82,605	)			45,922
Net interest cost paid to affiliates			—				35				826				—				861
Other interest cost and debt expenses, net			—				8,499				—				—				8,499
Capitalized interest			—				(952	)			—				—				(952	)
Net Income (Loss)		$	37,509			$	37,509			$	45,101			$	(82,605	)		$	37,514

Condensed Consolidating Statement of Income
Three Months Ended September 30, 2006
(unaudited)

														Non-
						Subsidiary				Subsidiary				Guarantor				Consolidating
		Parent				Issuer				Guarantors				Subsidiaries				Adjustments				Total
Revenues
Sales and other operating revenue:
Affiliates		$	—			$	—			$	484,710			$	—			$	—			$	484,710
Unaffiliated customers			—				—				1,118,932				—				—				1,118,932
Equity in earnings of subsidiaries			17,676				24,242				—				2				(41,920	)			—
Other income			—				—				5,281				—				—				5,281
Total Revenues			17,676				24,242				1,608,923				2				(41,920	)			1,608,923
Costs and Expenses
Cost of products sold and operating expenses			—				—				1,561,819				—				—				1,561,819
Depreciation and amortization			—				—				9,079				—				—				9,079
Selling, general and administrative expenses			—				—				13,391				—				—				13,391
Total Costs and Expenses			—				—				1,584,289				—				—				1,584,289
Operating Income			17,676				24,242				24,634				2				(41,920	)			24,634
Net interest cost paid to / (received from) affiliates			—				(68	)			390				2				—				324
Other interest cost and debt expenses, net			—				7,354				—				—				—				7,354
Capitalized interest			—				(720	)			—				—				—				(720	)
Net Income		$	17,676			$	17,676			$	24,244			$	—			$	(41,920	)		$	17,676

Condensed Consolidating Statement of Income
Nine Months Ended September 30, 2007
(unaudited)

										Non-
						Subsidiary				Guarantor				Consolidating
		Parent				Issuer				Subsidiaries				Adjustments				Total
Revenues
Sales and other operating revenue:
Affiliates		$	—			$	—			$	1,283,215			$	—			$	1,283,215
Unaffiliated customers			—				—				3,832,850				—				3,832,850
Equity in earnings of subsidiaries			85,070				109,124				11				(194,205	)			—
Other income			—				—				21,125				—				21,125
Total Revenues			85,070				109,124				5,137,201				(194,205	)			5,137,190
Costs and Expenses
Cost of products sold and operating expenses			—				—				4,955,302				—				4,955,302
Depreciation and amortization			—				—				27,867				—				27,867
Selling, general and administrative expenses			—				—				42,417				—				42,417
Total Costs and Expenses			—				—				5,025,586				—				5,025,586
Operating Income			85,070				109,124				111,615				(194,205	)			111,604
Net interest cost paid to / (received from) affiliates			—				(20	)			2,475				—				2,455
Other interest cost and debt expenses, net			—				26,524				—				—				26,524
Capitalized interest			—				(2,450	)			—				—				(2,450	)
Net Income		$	85,070			$	85,070			$	109,140			$	(194,205	)		$	85,075

Condensed Consolidating Statement of Income
Nine Months Ended September 30, 2006
(unaudited)

														Non-
						Subsidiary				Subsidiary				Guarantor				Consolidating
		Parent				Issuer				Guarantors				Subsidiaries				Adjustments				Total
Revenues
Sales and other operating revenue:
Affiliates		$	—			$	—			$	1,481,470			$	—			$	—			$	1,481,470
Unaffiliated customers			—				—				2,874,639				—				—				2,874,639
Equity in earnings of subsidiaries			62,414				81,824				—				8				(144,246	)			—
Other income			—				—				11,544				—				—				11,544
Total Revenues			62,414				81,824				4,367,653				8				(144,246	)			4,367,653
Costs and Expenses
Cost of products sold and operating expenses			—				—				4,216,279				—				—				4,216,279
Depreciation and amortization			—				—				27,236				—				—				27,236
Selling, general and administrative expenses			—				—				41,916				—				—				41,916
Total Costs and Expenses			—				—				4,285,431				—				—				4,285,431
Operating Income			62,414				81,824				82,222				8				(144,246	)			82,222
Net interest cost paid to / (received from) affiliates			—				655				390				2				—				1,047
Other interest cost and debt expenses, net			—				21,220				—				—				—				21,220
Capitalized interest			—				(2,465	)			—				—				—				(2,465	)
Net Income		$	62,414			$	62,414			$	81,832			$	6			$	(144,246	)		$	62,420

Condensed Consolidating Balance Sheet

September 30, 2007
(unaudited)

										Non-
						Subsidiary				Guarantor				Consolidating
		Parent				Issuer				Subsidiaries				Adjustments				Total
Assets
Current Assets
Cash and cash equivalents		$	—			$	1,997			$	—			$	—			$	1,997
Advances to affiliates			23,474				45,907				(40,953	)			—				28,428
Accounts receivable, affiliated companies			—				—				148,254				—				148,254
Accounts receivable, net			—				—				1,049,244				—				1,049,244
Inventories
Crude oil			—				—				32,993				—				32,993
Materials, supplies and other			—				—				830				—				830
Total Current Assets			23,474				47,904				1,190,368				—				1,261,746
Properties, plants and equipment, net			—				—				1,066,307				—				1,066,307
Investment in affiliates			558,561				1,136,957				84,032				(1,695,623	)			83,927
Deferred charges and other assets			—				3,382				21,986				—				25,368
Total Assets		$	582,035			$	1,188,243			$	2,362,693			$	(1,695,623	)		$	2,437,348
Liabilities and Partners’ Capital
Current Liabilities
Accounts payable		$	—			$	—			$	1,174,206			$	—			$	1,174,206
Accrued liabilities			1,029				3,097				40,535				—				44,661
Accrued taxes other than income			—				—				27,874				—				27,874
Total Current Liabilities			1,029				3,097				1,242,615				—				1,246,741
Long-term debt			—				576,375				—				—				576,375
Other deferred credits and liabilities			—				—				29,611				—				29,611
Total Liabilities			1,029				579,472				1,272,226				—				1,852,727
Total Partners’ Capital			581,006				608,771				1,090,467				(1,695,623	)			584,621
Total Liabilities and Partners’ Capital		$	582,035			$	1,188,243			$	2,362,693			$	(1,695,623	)		$	2,437,348