As used in this quarterly report, unless we indicate otherwise: (1) "SemGroup Energy Partners," "our," "we," "us" and similar terms refer to SemGroup Energy Partners, L.P., together with our subsidiaries and (2) the "Private Company" refers to SemGroup, L.P. and its subsidiaries and affiliates (other than our general partner and us). The following discussion analyzes the historical financial condition and results of operations of the Partnership and should be read in conjunction with our financial statements and notes thereto, and Management's Discussion and Analysis of Financial Condition and Results of Operations presented in our Annual Report on Form 10-K for the year ended December 31, 2008.

This report contains "forward-looking statements" intended to qualify for the safe harbors from liability established by the federal securities laws. Statements included in this quarterly report that are not historical facts (including any statements concerning the benefits of the Settlement (as defined below) or the Credit Agreement Amendment (as defined below), the impact of the Bankruptcy Filings (as defined below) and any statements regarding plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto), including, without limitation, the information set forth in Management's Discussion and Analysis of Financial Condition and Results of Operations, are forward-looking statements. These statements can be identified by the use of forward-looking terminology including "may," "will," "should," "believe," "expect," "intend," "anticipate," "estimate," "continue," or other similar words. These statements discuss future expectations, contain projections of results of operations or of financial condition, or state other "forward-looking" information. We and our representatives may from time to time make other oral or written statements that are also forward-looking statements.

Such forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of the filing of this report. Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, no assurance can be given that these expectations will prove to be correct. Important factors that could cause our actual results to differ materially from the expectations reflected in these forward-looking statements include, among other things, those set forth in Part I, "Item 1A. Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2008, which was filed with the Securities and Exchange Commission (the "SEC") on July 2, 2009 (the "2008 Form 10-K"), and those set forth in Part II, "Item 1A. Risk Factors" of this report.

All forward-looking statements included in this report are based on information available to us on the date of this report. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this report.

We are a publicly traded master limited partnership with operations in twenty-three states. We provide integrated terminalling, storage, gathering and transportation services for companies engaged in the production, distribution and marketing of crude oil and liquid asphalt cement. We manage our operations through three operating segments: (i) crude oil terminalling and storage services, (ii) crude oil gathering and transportation services and (iii) asphalt services. We were formed in February 2007 as a Delaware master limited partnership initially to own, operate and develop a diversified portfolio of complementary midstream energy assets.

From our formation until the Settlement (as defined below), we relied on the Private Company for a substantial portion of our revenues, which were derived from services provided to the finished asphalt product processing and marketing operations of the Private Company pursuant to the Terminalling and Storage Agreement (the "Terminalling Agreement") and from services provided to the crude oil purchasing, marketing and distribution operations of the Private Company pursuant to the Throughput Agreement (the "Throughput Agreement"). Additionally, during that time period, we paid the Private Company a fixed administrative fee for the provision by the Private Company of various general and administrative services to us pursuant to the Amended and Restated Omnibus Agreement between us and the Private Company (the "Amended Omnibus Agreement").

On July 22, 2008 and thereafter, the Private Company and certain of its subsidiaries filed voluntary petitions (the "Bankruptcy Filings") for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"), Case No. 08-11547-BLS. The Private Company and its subsidiaries continue to operate their businesses and own and manage their properties as debtors-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code (the "Bankruptcy Cases"). None of us, our general partner, our subsidiaries nor the subsidiaries of our general partner are debtors in the Bankruptcy Cases.

On April 7, 2009, we and the Private Company executed definitive documentation relating to the settlement of certain matters between the Private Company and us, to be effective as of 11:59 PM CDT March 31, 2009 (the "Settlement"). The Settlement provided for the following, among other items:

· we transferred certain crude oil assets located in Kansas and northern Oklahoma to the Private Company. These transfers included real property and associated personal property at locations where the Private Company owned the pipeline. We retained certain access and connection rights to enable us to continue to operate our crude oil trucking business in such areas. In addition, we transferred our interests in the SCADA System, a crude oil inventory tracking system, to the Private Company (collectively, the "Transferred Settlement Assets");

· the Private Company transferred to us (i) 355,000 barrels of crude oil line fill and tank bottoms, which are necessary for us to operate our crude oil tank storage operations and our Oklahoma and Texas crude oil pipeline systems,
(ii) certain personal property located in Oklahoma, Texas and Kansas used in connection with our crude oil trucking business and (iii) certain real property located in Oklahoma, Kansas, Texas and New Mexico that was intended to be transferred in connection with our initial public offering (the "Crude Oil Assets"). In addition, the Private Company transferred certain asphalt processing assets that were connected to, adjacent to, or otherwise contiguous with our existing asphalt facilities and associated real property interests to us (the "Asphalt Assets"). The transfer of the Asphalt Assets in connection with the Settlement provides us with outbound logistics for our existing asphalt assets and, therefore, allows us to provide asphalt terminalling, storage and processing services to third parties;

· the Private Company rejected the Throughput Agreement and we and the Private Company entered into a new Throughput Agreement (the "New Throughput Agreement") pursuant to which we provide certain crude oil gathering, transportation, terminalling and storage services to the Private Company;

· the Private Company rejected the Terminalling Agreement and we and the Private Company entered into a new Terminalling and Storage Agreement (the "New Terminalling Agreement") pursuant to which we provide liquid asphalt cement terminalling and storage services for the Private Company's remaining asphalt inventory;

· the Private Company rejected the Amended Omnibus Agreement and we and the Private Company entered into a Shared Services Agreement (the "Shared Services Agreement") pursuant to which the Private Company provides certain operational services for us;

· we and the Private Company entered into a Transition Services Agreement (the "Transition Services Agreement"), pursuant to which the Private Company provides certain corporate, crude oil and asphalt transition services, in each case for a limited amount of time, to us;

· we offered employment to certain crude oil employees; and

· certain pre-petition claims by the Private Company and us were netted and waived.

Please see "Item 1. Business-Impact of the Bankruptcy of the Private Company and Certain of its Subsidiaries and Related Events" in the 2008 Form 10-K for a further discussion of the Settlement.

Impact of the Bankruptcy of the Private Company and Certain of its Subsidiaries and Related Events

The Bankruptcy Filings and the events related thereto have had a significant impact upon our business and results of operations and may in the future impact us in various ways. These items include, among others: (i) the reconstitution of our general partner's Board of Directors (the "Board") and management in connection with a change of control that occurred in July 2008 (the "Change of Control"), (ii) the events of default that were triggered under our credit facility, the corresponding forbearance agreement (the "Forbearance Agreement") and amendments thereto and the Credit Agreement Amendment that we entered into in order to waive such events of default, (iii) the uncertainty relating to and the rebuilding of our business to provide services to and derive revenues from third parties instead of relying upon the Private Company for substantially all of our revenues, (iv) the hiring of certain operational employees in connection with the Settlement and the rejection of the Amended Omnibus Agreement, (v) becoming a party to securities and other litigation as well as governmental investigations, (vi) being delisted from the Nasdaq Global Market ("Nasdaq"),
(vii) failing to make distributions for the second, third and fourth quarters of 2008 and the first and second quarters of 2009, and the expectation that we will not make a distribution for the third quarter of 2009, (viii) experiencing increased general and administrative expenses due to the costs related to legal and financial advisors as well as other related costs, (ix) experiencing increased interest expense as a result of the Forbearance Agreement and amendments thereto, (x) the entering into the Settlement with the Private Company and (xi) uncertainty related to future taxation as a result of the transactions described above. Certain of these items are discussed in more detail below. In addition, please see "Item 1. Business-Impact of the Bankruptcy of the Private Company and Certain of its Subsidiaries and Related Events" and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations-Impact of the Bankruptcy of the Private Company and Certain of its Subsidiaries and Related Events" in the 2008 Form 10-K for a further discussion of the impact of the Bankruptcy Filings upon our business.

Our Revenues

For the three months ended March 31, 2009, we derived approximately 42% of our revenues, excluding fuel surcharge revenues related to fuel and power consumed to operate our liquid asphalt cement storage tanks, from services we provided to the Private Company and its subsidiaries. Prior to an order relating to the settlement of certain matters between us and the Private Company issued by the Bankruptcy Court on September 9, 2008 (the "Order") and the Settlement, the Private Company was obligated to pay us minimum monthly fees totaling $76.1 million annually and $58.9 million annually in respect of the minimum commitments under the Throughput Agreement and the Terminalling Agreement, respectively, regardless of whether such services were actually utilized by the Private Company. The Order required the Private Company to make certain payments under the Throughput Agreement and Terminalling Agreement during a portion of the third and fourth quarters of 2008, including the contractual minimum payments under the Terminalling Agreement. In connection with the Settlement, we waived the fees due under the Terminalling Agreement during March 2009. In addition, the Private Company rejected the Throughput Agreement and the Terminalling Agreement and we and the Private Company entered into the New Throughput Agreement and the New Terminalling Agreement. Revenues from services provided to the Private Company under the New Throughput Agreement and New Terminalling Agreement are substantially less than prior revenues from services provided to the Private Company as the new agreements are based upon actual volumes gathered, transported, terminalled and stored instead of certain minimum volumes and are at reduced rates when compared to the Throughput Agreement and Terminalling Agreement. Also in connection with the Settlement, the Private Company transferred certain asphalt assets to us that were connected to our existing asphalt assets. The transfer of the Private Company's asphalt assets in connection with the Settlement provides us with outbound logistics for our existing asphalt assets and, therefore, allows us to provide asphalt services for third parties.

We have been pursuing opportunities to provide crude oil terminalling and storage services, crude oil gathering and transportation services and asphalt services to third parties. As a result of new crude oil third-party storage contracts, we increased our third-party crude oil terminalling and storage revenue from approximately $1.0 million, or approximately 10% of total terminalling and storage revenue during the second quarter of 2008, to approximately $10.2 million and $10.2 million, or approximately 88% and 96% of total terminalling and storage revenue for the first and second quarter of 2009, respectively.

In addition, as a result of new third-party crude oil transportation contracts and reduced commitments of usage by the Private Company under the Throughput Agreement and New Throughput Agreement, we increased our third-party gathering and transportation revenue from approximately $5.0 million, or approximately 21% of total gathering and transportation revenue during the second quarter of 2008, to approximately $13.9 million and $14.0 million, or approximately 93% and 97% of total gathering and transportation revenue for the first and second quarter of 2009, respectively.

The significant majority of the increase in third party revenues results from an increase in third-party crude oil services provided and a corresponding decrease in the Private Company's crude oil services provided due to the termination of the monthly contract minimum revenues under the Throughput Agreement in September 2008 and reduced revenues under the New Throughput Agreement. Average rates for the new third-party crude oil terminalling and storage and transportation and gathering contracts are comparable with those previously received from the Private Company. However, the volumes being terminalled, stored, transported and gathered have decreased as compared to periods prior to the Bankruptcy Filings, which has negatively impacted total revenues. As an example, first quarter 2009 total revenues are approximately $9.0 million (or approximately 18%) less than second quarter 2008 total revenues, in each case excluding fuel surcharge revenues related to fuel and power consumed to operate our liquid asphalt cement storage tanks.

In addition, as of July 31, 2009, we have entered into leases and storage agreements with third party customers relating to 45 of our 46 asphalt facilities. The majority of these leases and storage agreements with third parties extend through December 31, 2011. We operate the asphalt facilities pursuant to the storage agreements while our contract counterparties operate the asphalt facilities that are subject to the lease agreements. The revenues we receive pursuant to these leases and storage agreements are less than the revenues received under the Terminalling Agreement with the Private Company. We expect annual revenues from these leases and storage agreements to be approximately $40 million.

We are continuing to pursue additional contracts with third parties; however, these additional efforts may not be successful. In addition, certain third parties may be less likely to enter into business transactions with us due to the Bankruptcy Filings. As a result, unless we are able to generate additional third party revenues, we will continue to experience lower volumes in our system which could have a material adverse effect on our results of operations and cash flows.

Our Expenses

Events related to the Bankruptcy Filings, the securities litigation and governmental investigations, and our efforts to enter into storage contracts with third party customers and pursue strategic opportunities has resulted in increased expenses beginning in the third quarter of 2008 due to the costs related to legal and financial advisors as well as other related costs. General and administrative expenses (exclusive of non-cash compensation expense related to the vesting of the units under the Plan (the "Plan")) increased by approximately $6.4 million, or approximately 278%, to approximately $8.7 million for the first quarter of 2009, compared to $2.3 million in the second quarter of 2008. We expect this increased level of general and administrative expenses to continue throughout 2009.

In addition, we have experienced increased interest expenses and other costs due to the events of default that existed under our credit agreement and the entering into the Forbearance Agreement, the amendments thereto and the Credit Agreement Amendment. Please see "-Liquidity and Capital Resources" for a discussion of these agreements and the associated expenses.

We also may experience increased operational expenses as a result of directly employing individuals associated with our operations. Historically, we did not directly employ any persons responsible for managing or operating us or for providing services relating to day-to-day business affairs as these services were provided to us by the Private Company pursuant to the Amended Omnibus Agreement. In connection with the Settlement, the Private Company rejected the Amended Omnibus Agreement and we and the Private Company entered into the Shared Services Agreement and the Transition Services Agreement relating to the provision of such services. In addition, we now directly employ approximately 400 individuals associated with our crude oil and asphalt operations. The costs to directly employ these individuals as well as the costs under the Shared Services Agreement and the Transition Services Agreement may be higher than those previously paid by us under the Amended Omnibus Agreement, which could have a material adverse effect on our business, financial condition, results of operations, cash flows, ability to make distributions to our unitholders, the trading price of our common units and our ability to conduct our business.

Expansions

On February 20, 2008, we purchased land, receiving infrastructure, storage tanks, machinery, pumps and piping at 46 liquid asphalt cement and residual fuel oil terminalling and storage facilities (the "Acquired Asphalt Assets") from the Private Company for aggregate consideration of $379.5 million, including $0.7 million of acquisition-related costs. For accounting purposes, the acquisition has been reflected as a purchase of assets, with the Acquired Asphalt Assets recorded at the historical cost of the Private Company, which was approximately $145.5 million, with the additional purchase price of $234.0 million reflected in the statement of changes in partners' capital as a distribution to the Private Company.

On May 12, 2008, we purchased the Eagle North Pipeline System, a 130-mile, 8-inch pipeline that originates in Ardmore, Oklahoma and terminates in Drumright, Oklahoma as well as other real and personal property related to the pipeline (the "Acquired Pipeline Assets") from the Private Company for aggregate consideration of $45.1 million, including $0.1 million of acquisition-related costs. For accounting purposes, the acquisition has been reflected as a purchase of assets, with the Acquired Pipeline Assets recorded at the historical cost of the Private Company, which was approximately $35.1 million, with the additional purchase price of $10.0 million reflected in the statement of changes in partners' capital as a distribution to the Private Company. We have suspended capital expenditures on this pipeline due to the continuing impact of the Bankruptcy Filings. Management currently intends to put the asset into service in early 2010 and is exploring various alternatives to complete the project.

On May 30, 2008, we purchased certain land, crude oil storage and terminalling facilities with an aggregate of approximately 2.0 million barrels of storage capacity and related assets located at the Cushing Interchange from the Private Company and we assumed a take-or-pay, fee-based, third party contract through August 2010 relating to the 2.0 million barrels of storage capacity (the "Acquired Storage Assets") for aggregate consideration of $90.3 million, including $0.3 million of acquisition-related costs. For accounting purposes, the acquisition has been reflected as a purchase of assets, with the Acquired Storage Assets recorded at the historical cost of the Private Company, which was approximately $17.2 million, inclusive of $0.6 million of completion costs subsequent to the close of the acquisition, with the additional purchase price of $73.1 million reflected in the statement of changes in partners' capital as a distribution to the Private Company.

 Results of Operations

The table below summarizes the financial results of the Partnership for the
three months ended March 31, 2008 and 2009. Due to the events related to the
Bankruptcy Filings, including uncertainties related to future revenues and cash
flows, we do not expect our financial results for the three months ended March
31, 2009 to be indicative of our future financial results. In addition, the
effects of the Bankruptcy Filings and expansions discussed above affected the
comparability of results for the periods presented.

                                                     Three Months Ended
                                                          March 31,
                                                     2008          2009
                                                       (in thousands)
Service revenues:
Crude oil terminalling and storage revenues:
Third party                                        $      31     $  10,217
Related party                                          9,832         1,419
Total crude oil terminalling and storage               9,863        11,636
Crude oil gathering and transportation revenues:
Third party                                            4,593        13,893
Related party                                         18,010         1,056
Total crude oil gathering and transportation          22,603        14,949
Asphalt services revenues:
Third party                                                -             -
Related party                                          7,748        15,585
Total asphalt services                                 7,748        15,585
Total revenues                                        40,214        42,170

Operating expenses:
Crude oil terminalling and storage                     1,388         1,827
Crude oil gathering and transportation                17,258        14,238
Asphalt services                                       3,620         6,148
Total operating expenses                              22,266        22,213

General and administrative expenses:                   3,010         8,707

Operating income                                      14,938        11,250
Interest expense                                       5,089        12,849
Income tax expense                                        91            61
Net income (loss)                                  $   9,758     $ (1,660)

Three Months Ended March 31, 2009 Compared to the Three Months Ended March 31, 2008

Service revenues. Service revenues were $42.2 million for the three months ended March 31, 2009 compared to $40.2 million for the three months ended March 31, 2008 (including fuel surcharge revenues of $0.9 million and $1.2 million related to fuel and power consumed to operate our liquid asphalt cement storage tanks), an increase of $2.0 million, or 5%. Service revenues include revenues from crude oil terminalling and storage services, crude oil gathering and transportation services and asphalt services. Crude oil terminalling and storage revenues increased by $1.7 million to $11.6 million for the three months ended March 31, 2009 compared to $9.9 million for the three months ended March 31, 2008, primarily due to an increase in our storage capacity that resulted from our purchase of the Acquired Storage Assets in May 2008. In connection with the Bankruptcy Filings, the Private Company rejected the Throughput Agreement, and we concurrently began to replace this business with services provided to third party customers. This resulted in a $10.2 million increase in our third party crude oil terminalling and storage revenues during the three months ended March 31, 2009 as compared to the three months ended March 31, 2008.

Our crude oil gathering and transportation services revenue decreased by $7.7 million to $14.9 million for the three months ended March 31, 2009 compared to $22.6 million for the three months ended March 31, 2008. The decrease is primarily due to the impact of the Bankruptcy Filings and the resulting decrease in the volume of crude oil we gathered and transported for our customers. Historically, the Private Company was a first purchaser of crude oil and it utilized our gathering and transportation assets to deliver its crude oil to market. As we are not in the business of purchasing crude oil, the utilization of our crude oil gathering and transportation assets is now dependent on third party purchasers of crude oil, some of whom own alternative gathering and transportation assets. Our reliance on third party purchasers of crude oil has resulted in a decrease in the utilization of our crude oil gathering and transportation assets, and we continue to expect a similar level of utilization of these assets for the remainder of 2009. In connection with the Bankruptcy Filings, the Private Company rejected the Throughput Agreement, and we concurrently began to replace this business with services provided to third party customers. Third parties accounted for 93% of our total crude oil gathering and transportation revenue of $14.9 million for the three months ended March 31, 2009 compared to 20% of our total crude oil gathering and transportation revenue for the three months ended March 31, 2008.

Our asphalt services revenue increased by $7.9 million to $15.6 million for the three months ended March 31, 2009 compared to $7.7 million for the three months ended March 31, 2008. The increase is primarily due to the different time . . .