1357371--3/17/2008--BreitBurn_Energy_Partners

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Risks Related to Our Business We may not have sufficient cash flow from operations to pay quarterly distributions on our Common Units following establishment of cash reserves and payment of fees and expenses, including reimbursement of expenses to our general partner. To fund our capital expenditures, we will be required to use cash generated from our operations, additional borrowings or the issuance of additional partnership interests, or some combination thereof. The amount of cash we have available for distribution to unitholders depends primarily on our cash flow and not solely on profitability. We may incur substantial additional debt to enable us to pay our quarterly distributions, which may negatively affect our ability to execute on our business plan. Our debt levels may limit our flexibility to obtain additional financing and pursue other business opportunities. Our credit facility has substantial restrictions and financial covenants that may restrict our business and financing activities and our ability to pay distributions. We are exposed to the volatility of both oil and natural gas prices. A decline in commodity prices will cause a decline in our cash flow from operations, which may force us to reduce our distributions or cease paying distributions altogether. Price differentials between published oil and natural gas prices and what we actually receive also have been very volatile historically. Future price declines may result in a write-down of our asset carrying values. Our derivative activities could result in financial losses or could reduce our income, which may adversely affect our ability to pay distributions to our unitholders. To the extent we have hedged a significant portion of our expected production and actual production is lower than expected or the costs of goods and services increase, our profitability would be adversely affected. Our estimated proved reserves are based on many assumptions that may prove to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves. Drilling for and producing oil and natural gas are costly and high-risk activities with many uncertainties that could adversely affect our financial condition or results of operations and, as a result, our ability to pay distributions to our unitholders. If we do not make acquisitions on economically acceptable terms, our future growth and ability to pay or increase distributions will be limited. Any acquisitions that we complete are subject to substantial risks that could reduce our ability to make distributions to unitholders. The integration of the oil and natural gas properties that we acquire may be difficult, and could divert our management s attention away from our other operations. Many of our leases are in mature fields that have produced large quantities of oil and natural gas to date. In 2007, we depended on three customers for a substantial amount of our sales. If these customers reduce the volumes of oil and natural gas that they purchase from us, our revenue and cash available for distribution will decline to the extent we are not able to find new customers for our production. Several companies have entered into purchase contracts with us for a significant portion of our production and, if they default on these contracts, we could be materially and adversely affected. We may be unable to compete effectively with other companies, which may adversely affect our ability to generate sufficient revenue to allow us to pay distributions to our unitholders. Delays in obtaining oil field equipment and increases in drilling and other service costs could adversely affect our ability to pursue our drilling program and our results of operations. We have limited control over the activities on properties we do not operate. Our operations are subject to operational hazards and unforeseen interruptions for which we may not be adequately insured. If third-party pipelines and other facilities interconnected to our well and gathering and processing facilities become partially or fully unavailable to transport natural gas, oil or NGLs, our revenues and cash available for distribution could be adversely affected. We are subject to complex federal, state, local and other laws and regulations that could adversely affect the cost, manner or feasibility of conducting our operations. Our operations expose us to significant costs and liabilities with respect to environmental and operational safety matters. We depend on our general partner's Co-Chief Executive Officers, who would be difficult to replace. If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential unitholders could lose confidence in our financial reporting, which would harm our business and the trading price of our Common Units. Potential Sale by Provident of its Interests in the Partnership and BreitBurn Energy A potential sale by Provident of its interests in our general partner could result in a change in the directors and officers of our general partner. A potential sale by Provident of its interests in us and BreitBurn Energy could trigger change in control provisions in employment agreements, benefit plans and our credit facility. A sale also may cause a technical tax termination of our partnership. Risks Related to Our Structure Our general partner and its affiliates own a controlling interest in us and may have conflicts of interest with us and limited fiduciary duties to us, which may permit them to favor their own interests to your detriment. Our partnership agreement limits the remedies available to you in the event you have a claim relating to conflicts of interest. A subsidiary of Provident, as the controlling owner of our general partner, has the power to appoint and remove our directors and management. Our general partner's interest in us and the control of our general partner may be transferred to a third party without unitholder consent. We do not have any officers or employees and rely solely on officers of our general partner and employees of BreitBurn Management and its affiliates. We may issue additional Common Units without your approval, which would dilute your existing ownership interests. Our partnership agreement limits our general partner's fiduciary duties to unitholders and restricts the remedies available to unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty. Unitholders have limited voting rights and are not entitled to elect our general partner or its directors to remove our general partner without a 66 2/3 percent vote, which could lower the trading price of our Common Units. Our partnership agreement restricts the voting rights of unitholders owning 20 percent or more of our Common Units. Unitholders who are not Eligible Holders will not be entitled to receive distributions on or allocations of income or loss on their Common Units and their Common Units will be subject to redemption. We have a holding company structure in which our subsidiaries conduct our operations and own our operating assets, which may affect our ability to make distributions to you. Unitholders may not have limited liability if a court finds that unitholder action constitutes control of our business. Unitholders may have liability to repay distributions. The market price of our Common Units could be adversely affected by sales of substantial amounts of our Common Units, including sales by our existing unitholders. An increase in interest rates may cause the market price of our Common Units to decline. Our tax treatment depends on our status as a partnership for federal income tax purposes, as well as our not being subject to entity-level taxation by individual states. If we were to be treated as a corporation for federal income tax purposes or we were to become subject to entity-level taxation for state tax purposes, taxes paid, if any, would reduce the amount of cash available for distribution. The tax treatment of publicly traded partnerships or an investment in our Common Units could be subject to potential legislative, judicial or administrative changes and differing interpretations, possibly on a retroactive basis. If the IRS contests the federal income tax positions we take, the market for our Common Units may be adversely impacted and the cost of any IRS contest will reduce our cash available for distribution to you. You may be required to pay taxes on income from us even if you do not receive any cash distributions from us. Tax gain or loss on the disposition of our Common Units could be more or less than expected because prior distributions in excess of allocations of income will decrease your tax basis in your Common Units. Tax-exempt entities and non-U.S. persons face unique tax issues from owning our Common Units that may result in adverse tax consequences to them. We will treat each purchaser of our units as having the same tax benefits without regard to the Common Units purchased. The IRS may challenge this treatment, which could adversely affect the value of the Common Units. We prorate our items of income, gain, loss and deduction between transferors and transferees of our Common Units each month based upon the ownership of our Common Units on the first day of each month, instead of on the basis of the date a particular Common Unit is transferred. The IRS may challenge this treatment, and, if successful, we would be required to change the allocation of items of income, gain, loss and deduction among our unitholders. A unitholder whose units are loaned to a short seller to cover a short sale of units may be considered as having disposed of those units. If so, he would no longer be treated for tax purposes as a partner with respect to those units during the period of the loan and may recognize gain or loss from the disposition. We may adopt certain valuation methodologies that could result in a shift of income, gain, loss and deduction between the general partner and the unitholders. The IRS may successfully challenge this treatment, which could adversely affect the value of the Common Units. The sale or exchange of 50 percent or more of our capital and profits interests during any twelve-month period will result in the termination of our partnership for federal income tax purposes. You may be subject to state and local taxes and return filing requirements.

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1357371--3/17/2008--BreitBurn_Energy_Partners_L.P.