• Results of Operations

• Other Consolidated Results

• Financial Measures

• Liquidity and Capital Resources

• Commitments and Off-Balance Sheet Arrangements

• Critical Accounting Policies and Estimates

• Recent Accounting Pronouncements

Overview of 2012 Results and Operational Update We reported net income of $96.3 million, or $1.23 per common unit, in 2012 compared to net income of $51.2 million, or $0.75 per common unit, in 2011. Segment Margin (as defined below in "Financial Measures") was $262.3 million in 2012, an increase of $59.8 million, or 30%, as compared to 2011. This increase resulted from improvement in Segment Margin in our pipeline transportation and supply and logistics segments of 42% and 55%, respectively. The contribution from our interests in certain Gulf of Mexico pipelines that we acquired in 2012 and higher crude oil tariff revenues were the primary factors increasing pipeline transportation segment margin. Results for our pipeline transportation segment were somewhat reduced during both years due to ongoing improvements at several dedicated fields. Improvements at those fields were substantially completed late in the third quarter of 2012. Our supply and logistics segment benefited from acquisitions and other growth initiatives completed in the second half of 2011 as well as higher volumes handled by our expanded trucking and barge fleets. Our refinery services segment margin decreased 2% primarily as a result of increased costs due to longer than anticipated refinery turnarounds at some of our largest refinery service locations in the first half of 2012. To ensure uninterrupted NaHS supplies to our customers, we incurred increased costs as a result of processing at and shipping from less efficient locations. The information below provides certain updates regarding various operations and projects:
• Cameron Highway Pipeline. Production from several fields dedicated to our Cameron Highway pipeline in the offshore Gulf of Mexico began to ramp back up in August 2012 after an extended period of maintenance on the third-

party operated surface and sub-sea production facilities, and total throughput levels on the pipeline have returned to levels last seen in the first quarter of 2011.
• Gulf Coast Infrastructure.We plan to invest approximately $125 million to improve existing assets and develop new infrastructure in Louisiana, including connecting to Exxon Mobil Corporation's Baton Rouge refinery, one of the largest refinery complexes in North America, with more than 500,000 barrels per day of refining capacity. Our investment includes improving our existing terminal at Port Hudson, Louisiana, constructing a new 18-mile 20-inch diameter crude oil pipeline connecting Port Hudson to the Baton Rouge Maryland Terminal and continuing downstream to the Anchorage Tank Farm and building a new crude oil unit train facility at the Maryland Terminal. The Port Hudson upgrades and new crude oil pipeline are expected to be completed by the end of 2013 and the Maryland Terminal completion is scheduled for the second quarter of 2014.

• Walnut Hill Rail Facility. We continue to receive unit trains of crude oil at Walnut Hill, Florida for further delivery downstream on our Jay Pipeline System, and would anticipate our new tank and related facilities to be fully operational in March of 2013, allowing us to handle more trains, more efficiently.

• Wink Rail Facility. At our new crude loading facility outside Wink, Texas in the Permian Basin, we have continued to support manifest service of crude oil volumes and in early February 2013 loaded our first full unit train. Construction of our tanks and expanded trucking capabilities remains on track to be fully operational by late third quarter or early fourth quarter of 2013.

• Natchez Terminal. At our terminal in Natchez, Mississippi, we have steamed and unloaded into tanks the first railcars loaded with bitumen/dilbit originating in Alberta, Canada. As volumes continue to ramp up, we will begin loading barges for further shipment to refineries along the Mississippi River.

• Texas City Facility. We have commissioned our new crude oil terminal and barge dock in Texas City. We would expect the terminal and barge dock to see increasing levels of throughput in the latter half of 2013 upon the completion of our new 18-inch pipeline from Webster to Texas City in the late second quarter or early third quarter of 2013.

• Wyoming. We have entered into an agreement with a local refinery in Wyoming which will support our investment to expand and place into service certain segments of our crude oil gathering system in the Niobrara shale development in Wyoming, with start-up operations expected in the second quarter of 2013.

• SEKCO. Construction has commenced on the SEKCO lateral in the Keathley Canyon area of the deepwater Gulf of Mexico, and we expect significant contribution from this investment beginning mid-2014.

Distribution Increase
On January 10, 2013, we declared our thirtieth consecutive increase in our quarterly distribution to our common unitholders relative to the fourth quarter of 2012. During that period, twenty-five of those quarterly increases have been 10% or greater year-over-year. In February 2013, we paid a distribution of $0.485 per unit related to the fourth quarter of 2012 representing a 10.2% increase from our distribution of $0.44 per unit related to the fourth quarter of 2011. During the fourth quarter of 2012, we paid a distribution of $0.4725 per unit related to the third quarter of 2012. Results of Operations
In the discussions that follow, we will focus on our revenues, expenses and net income, as well as two measures that we use to manage the business and to review the results of our operations--Segment Margin and Available Cash before Reserves. Segment Margin and Available Cash before Reserves are defined in the "Financial Measures" section below.
Revenues, Costs and Expenses and Net Income Our revenues for the year ended December 31, 2012 increased $980.4 million, or 32% from 2011. Additionally, our costs and expenses increased $949.2 million or 32% between the two periods. The majority of our revenues and our costs are derived from the purchase and sale of crude oil and petroleum products. The significant increase in our revenues and costs between 2012 and 2011 is primarily attributable to increased volumes from our continuing operations and our acquisitions, partially offset by slight decreases in the market prices for crude oil and petroleum products as described below.
Volumes in 2012 increased in our supply and logistics segment by 32% from 2011, as explained in our supply and logistics Segment Margin discussion below. The average closing prices for West Texas Intermediate ("WTI") crude oil on the New York Mercantile Exchange ("NYMEX") were consistent, decreasing 1% to $94.21 per barrel in 2012, as compared to $95.12 per barrel in 2011.

Net income increased $45.1 million in 2012 from 2011. The increase in net income during 2012 primarily reflects improved segment margin results due to our acquisitions and increased volumes. Our income tax expense decreased due to the reversal of uncertain tax positions as a result of tax audit settlements and the expiration of statutes of limitations. These increases to net income were partially offset by increases in general and administrative expenses and interest costs.
Revenues in 2011 increased $988.3 million, or 47% from 2010. Additionally, our costs and expenses increased $878.5 million or 41% between the two periods. The significant increase in our revenues and costs between 2011 and 2010 is primarily attributable to the fluctuations in the market prices for crude oil and petroleum products. For example, prices for WTI crude oil on the NYMEX averaged $95.12 per barrel in 2011, as compared to $79.53 per barrel in 2010, or a 20% increase. Net income (attributable to us) increased $99.7 million in 2011 to $51.2 million from a net loss (attributable to us) of $48.5 million in 2010. The increase in net income during 2011 primarily reflects the non-cash charges of $76.9 million we recorded in 2010 for executive and equity-based compensation borne by our general partner. In addition, segment results for all of our segments improved during 2011 as volumes increased. Our increased segment results were partially offset by increases in depreciation and amortization expense and interest costs.
Included below is additional detailed discussion of the results of our operations focusing on Segment Margin and other costs including general and administrative expenses, depreciation and amortization, interest and income taxes.
Segment Margin
The contribution of each of our segments to total Segment Margin in each of the last three years was as follows:

                              Year Ended December 31,
                           2012         2011         2010
                                   (in thousands)
Pipeline transportation $  96,539    $  67,908    $  48,305
Refinery services          72,883       74,618       62,923
Supply and logistics       92,911       59,975       38,336
Total Segment Margin    $ 262,333    $ 202,501    $ 149,564

Year Ended December 31, 2012 Compared with Year Ended December 31, 2011 Pipeline Transportation Segment
In January 2012, we acquired from Marathon Oil Company interests in several Gulf of Mexico crude oil pipeline systems. The acquired pipeline interests include a 28% interest in Poseidon Oil Pipeline Company, L.L.C. (or "Poseidon"), a 100% interest in Marathon Offshore Pipeline, LLC (subsequently re-named GEL Offshore Pipeline, LLC, or "GOPL") and a 29% interest in Odyssey Pipeline L.L.C. (or "Odyssey"). GOPL owns a 23% interest in the Eugene Island crude oil pipeline system and a 100% interest in two smaller offshore pipelines. The purchase price, net of post-closing adjustments, was $205.6 million. We funded the purchase price with cash available under our credit facility.
This acquisition complements our existing infrastructure in the Gulf of Mexico and enhances our ability to provide capacity and market optionality to producers for their existing and future developments as well as our refining customers onshore Texas and Louisiana. The Poseidon pipeline system is comprised of a 367-mile network of crude oil pipelines, varying in diameter from 16 to 24 inches, with capacity to deliver approximately 400,000 barrels per day of crude oil from developments in the central and western offshore Gulf of Mexico to other pipelines and terminals onshore and offshore Louisiana. Affiliates of Enterprise Products and Shell each own a 36% interest in Poseidon. An affiliate of Enterprise Products serves as the operator of Poseidon. The Eugene Island pipeline system is primarily comprised of a 183-mile network of crude oil pipelines, the main pipeline of which is 20 inches in diameter, with capacity to deliver approximately 200,000 barrels per day of crude oil from developments in the central Gulf of Mexico to other pipelines and terminals onshore Louisiana. Other owners in Eugene Island include affiliates of Exxon-Mobil, Chevron-Texaco, ConocoPhillips and Shell. An affiliate of Shell serves as the operator of Eugene Island. The Odyssey pipeline system is comprised of a 120-mile network of crude oil pipelines, varying in diameter from 12 to 20 inches, with capacity to deliver up to 200,000 barrels per day of crude oil from developments in the eastern Gulf of Mexico to other pipelines and terminals onshore Louisiana. An affiliate of Shell owns the remaining 71% interest in Odyssey, and an affiliate of Shell serves as the operator of Odyssey.

Operating results and volumetric data for our pipeline transportation segment are presented below:

                                                               Year Ended December 31,
                                                                2012              2011
                                                                   (in thousands)
Crude oil tariffs and revenues from direct financing
leases-onshore crude oil pipelines                         $     31,931       $   24,870
Segment margin from offshore crude oil pipelines,
including pro-rata share of distributable cash from equity
investees                                                        38,500           15,772
CO2 tariffs and revenues from direct financing leases of
CO2 pipelines                                                    26,603           26,334
Sales of crude oil pipeline loss allowance volumes                9,165            7,756
Onshore pipeline operating costs, excluding non-cash
charges for equity-based compensation and other non-cash
expenses                                                        (15,607 )        (12,222 )
Payments received under direct financing leases not
included in income                                                5,016            4,615
Other                                                               931              783
Segment Margin                                             $     96,539       $   67,908

Volumetric Data (barrels/day unless otherwise noted):
Onshore crude oil pipelines:
Texas                                                            51,880           45,183
Jay                                                              22,306           16,900
Mississippi                                                      18,711           20,629
Offshore crude oil pipelines:
CHOPS (1)                                                        96,664          120,723
Poseidon (1) (2)                                                211,375                -
Odyssey (1) (2)                                                  36,157                -
GOPL (2)                                                         15,191                -
CO2 pipeline (Mcf/day):
Free State                                                      186,479          169,962

(1) Volumes for our equity method investees are presented on a 100% basis.
(2) Acquired in January 2012.

During 2012, crude oil volumes shipped on our Texas System and Jay System increased 6,697 barrels per day (or 15%) and 5,406 barrels per day (or 32%), respectively. Volumes on our Texas System increased primarily as a result of increased demand by one of the refiners connected to our system with capabilities for processing light crude oil such as that being produced in the Eagle Ford Shale area. Additional barrels received at our new crude-by-rail unloading terminal at Walnut Hill, Florida, increased volumes on the Jay System. On CHOPS, crude oil volumes declined 24,059 barrels per day (or 20%) during 2012 due to ongoing improvements being made by producers at several connected fields. Improvements at those fields were substantially completed late in the third quarter of 2012, and total throughput levels on the pipeline have returned to levels last seen in the first quarter of 2011.
We deliver CO2 on our Free State Pipeline for use in tertiary recovery operations in east Mississippi. Denbury currently has rights to exclusive use of the pipeline and is required to use the pipeline to supply CO2 to its current and certain of its other tertiary operations in east Mississippi. We have a twenty-year financing lease (through 2028) with Denbury for their use of our NEJD System. Denbury makes fixed quarterly base rent payments to us of $5.2 million per quarter or approximately $20.7 million per year.

Segment Margin for our pipeline transportation segment increased $28.6 million, or 42%, in 2012 as compared to 2011. The significant components of this change were as follows:

• Crude oil tariff revenues of onshore crude oil pipelines increased $7.1 million primarily due to upward tariff indexing of 6.9% and 8.6% for our FERC-regulated pipelines effective in July 2011 and 2012, respectively, and increased volumes of 10,185 barrels per day transported on our onshore crude oil pipelines as described above.

• Segment margin from our offshore crude oil pipelines increased $22.7 million reflecting a contribution of $29.1 million from our interests in the Gulf of Mexico pipelines that we acquired in 2012. The contribution to Segment Margin by CHOPS declined by $6.4 million from 2011 due to ongoing improvements being made by producers at several connected fields as discussed above.

• Revenues from sales of pipeline loss allowance volumes improved Segment Margin by $1.4 million due to an increase of approximately 10,200 barrels sold in 2012 compared to 2011.

• Pipeline operating costs, excluding non-cash charges, increased $3.4 million, due to pipeline integrity maintenance on the pipelines and employee compensation and related benefit costs.

Refinery Services Segment
Operating results for our refinery services segment were as follows:
                                                              Year Ended December 31,
                                                                2012             2011
Volumes sold (in Dry short tons "DST"):
NaHS volumes                                                    142,712         147,670
NaOH (caustic soda) volumes                                      77,492          99,702
Total                                                           220,204         247,372

Revenues (in thousands):
NaHS revenues                                              $    153,689      $  152,422
NaOH (caustic soda) revenues                                     44,322          47,339
Other revenues                                                    7,099          10,633
Total external segment revenues                            $    205,110      $  210,394

Segment Margin (in thousands)                              $     72,883      $   74,618

Average index price for NaOH per DST (1)                   $        575      $      513
Raw material and processing costs as % of segment revenues           48 %            48 %

(1) Source: IHS Chemical

Refinery services Segment Margin for 2012 decreased $1.7 million, or 2%, from 2011. The significant components of this fluctuation were as follows:
• NaHS sales volumes during 2012 decreased 3% from 2011 primarily due to the timing of sales to South American customers. In late 2011, we experienced a high volume of sales to these customers. Sales volumes to customers in South America can fluctuate due to scheduling of shipments.

• NaHS revenues increased primarily as a function of the increase in the average index price for caustic soda. The pricing in our sales contracts for NaHS includes adjustments for fluctuations in commodity benchmarks, freight, labor, energy costs and government indexes. The frequency at which these adjustments are applied varies by contract, geographic region and supply point.

• Our raw material costs related to NaHS increased correspondingly to the rise in the average index price for caustic soda. In addition, in the first half of 2012, longer than anticipated refinery turnarounds at some of our largest refinery service locations resulted in increased costs as a result of processing at and shipping from less efficient locations to ensure uninterrupted supplies of NaHS to our customers.

• Caustic soda sales volumes decreased 22% primarily due to turnarounds at some of our refinery customers in the first half of 2012. Although caustic sales volumes may fluctuate, the contribution to Segment Margin from these sales is not a significant portion of our refinery services activities. Caustic soda is a key component in the provision of our sulfur-removal service, from which we receive the by-product NaHS. Consequently, we are a very large consumer of caustic soda. In addition, our economies of scale and logistics capabilities allow us to effectively purchase additional caustic soda for re-sale to third parties. Our ability to purchase caustic soda volumes is currently sufficient to meet the demands of our refinery services operations and third-party sales.

• Average index prices for caustic soda increased to $575 per DST during 2012 compared to $513 per DST during 2011. Those price movements affect the revenues and costs related to our sulfur removal services as well as our caustic soda sales activities. However, generally changes in caustic soda prices do not materially affect Segment Margin attributable to our sulfur processing services because we usually pass those costs through to our NaHS sales customers. Additionally, our bulk purchase and storage capabilities related to caustic soda allow us to somewhat mitigate the effects of changes in index prices for caustic on our operating costs.

Supply and Logistics Segment
Our supply and logistics segment is focused on utilizing our knowledge of the crude oil and petroleum markets and our logistics capabilities from our terminals, railcars, rail loading and unloading facilities, trucks and barges to provide suppliers and customers with a full suite of services. These services include:
• purchasing and/or transporting crude oil from the wellhead to markets for ultimate use in refining;

• supplying petroleum products (primarily fuel oil, asphalt, and other heavy refined products) to wholesale markets and some end-users such as paper mills and utilities;

• purchasing products from refiners, transporting the products to one of our terminals and blending the products to a quality that meets the requirements of our customers;

• utilizing our fleet of trucks and trailers, railcars, and barges to take advantage of logistical opportunities primarily in the Gulf Coast states and inland waterways; and

• industrial gas activities, including wholesale marketing of CO2 and processing of syngas through a joint venture.

We also use our terminal facilities to take advantage of contango market conditions for crude oil gathering and marketing, and to capitalize on regional opportunities which arise from time to time for both crude oil and petroleum products.
Despite crude oil being considered a somewhat homogeneous commodity, many refiners are very particular about the quality of crude oil feedstock they process. Many U.S. refineries have distinct configurations and product slates that require crude oil with specific characteristics, such as gravity, sulfur content and metals content. The refineries evaluate the costs to obtain, transport and process their preferred feedstocks. That particularity provides us with opportunities to help the refineries in our areas of operation identify crude oil sources meeting their requirements, and to purchase the crude oil and transport it to the refineries for sale. The imbalances and inefficiencies relative to meeting the refiners' requirements can provide opportunities for us to utilize our purchasing and logistical skills to meet their demands. The pricing in the majority of our purchase contracts contain a market price component and a deduction to cover the cost of transporting the crude oil and to provide us with a margin. Contracts sometimes contain a grade differential which considers the chemical composition of the crude oil and its appeal to different customers. Typically the pricing in a contract to sell crude oil will consist of the market price components and the grade differentials. The margin on individual transactions is then dependent on our ability to manage our transportation costs and to capitalize on grade differentials.
In our petroleum products marketing operations, we supply primarily fuel oil, asphalt, and other heavy refined products to wholesale markets and some end-users such as paper mills and utilities. We also provide a service to refineries by purchasing "heavier" petroleum products that are the residual fuels from gasoline production, transporting them to one of our terminals and blending them to a quality that meets the requirements of our customers. The opportunities to provide this service cannot be predicted, but their contribution to margin as a percentage of their revenues tend to be higher than the same percentage attributable to our recurring operations.
We utilize our fleet of 300 trucks, 350 trailers, 180 rail cars, 50 barges, 22 push/tow boats, and 1.7 million barrels of leased and owned storage capacity to service our crude oil and refining customers and to store and blend the intermediate and finished refined products.

Operating results for our supply and logistics segment were as follows:

                                                              Year Ended December 31,
                                                               2012            2011
                                                                  (in thousands)
Supply and logistics revenue                               $ 3,797,750     $ 2,825,768
Crude oil and products costs, excluding unrealized gains
and losses from derivative transactions                     (3,541,562 )    (2,642,964 )
Operating costs, excluding non-cash charges for
equity-based compensation and other non-cash expenses         (163,489 )      (122,925 )
Other                                                              212              96
Segment Margin                                             $    92,911     $    59,975

Volumes of crude oil and petroleum products (barrels per
day)                                                            94,043          71,043

As discussed above in "Revenues, Costs and Expenses and Net Income," the average market prices of crude oil and petroleum products were consistent between 2012 and 2011. Fluctuations in these prices, however, have a limited impact on our Segment Margin.
Segment Margin for our supply and logistics segment increased $32.9 million, or 55%, in 2012 as compared to 2011. The increase in Segment Margin resulted . . .