1379661--3/31/2008--Targa_Resources_Partners

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Because of the natural decline in production from existing wells in our operating regions, our success depends on our ability to obtain new sources of supplies of natural gas and NGLs, which depends on certain factors beyond our control. Any decrease in supplies of natural gas or NGLs could adversely affect our business and operating results. If we fail to balance our purchases of natural gas and our sales of residue gas and NGLs, our exposure to commodity price risk will increase. Our hedging activities may not be effective in reducing the variability of our cash flows and may, in certain circumstances, increase the variability of our cash flows. Moreover, our hedges may not fully protect us against volatility in basis differentials. Finally, the percentage of our expected equity commodity volumes that are hedged decreases substantially over time. We depend on one natural gas producer for a significant portion of our supply of natural gas. The loss of this customer or the replacement of its contracts on less favorable terms could result in a decline in our volumes, revenues and cash available for distribution. If third party pipelines and other facilities interconnected to our natural gas pipelines and processing facilities become partially or fully unavailable to transport natural gas and NGLs, our revenues could be adversely affected. We depend on our Chico plant in north Texas and our Gillis plant in southwest Louisiana for a substantial portion of our revenues and if those revenues were reduced, there would be a material adverse effect on our results of operations and ability to make distributions to unitholders. To a similar but lesser degree, we are dependent on other gathering and processing systems, such as Mertzon, and Sterling. If future acquisitions do not perform as expected, out future financial performance may be negatively impacted. We are exposed to the credit risk of Targa and any material nonperformance by Targa could reduce our ability to make distributions to our unitholders. Our general partner is an obligor under, and subject to a pledge related to, Targa s credit facility; in the event Targa is unable to meet its obligations under that facility, or is declared bankrupt, Targa s lenders may gain control of our general partner or, in the case of bankruptcy, our partnership may be dissolved. Our industry is highly competitive, and increased competitive pressure could adversely affect our business and operating results. We typically do not obtain independent evaluations of natural gas reserves dedicated to our gathering pipeline systems; therefore, volumes of natural gas on our systems in the future could be less than we anticipate. A reduction in demand for NGL products by the petrochemical, refining or heating industries could materially adversely affect our business, results of operations and financial condition. We do not own most of the land on which our pipelines and facilities are located, which could disrupt our operations. Weather may limit our ability to operate our business and could adversely affect our operating results. Our business involves many hazards and operational risks, some of which may not be fully covered by insurance. If a significant accident or event occurs that is not fully insured, our operations and financial results could be adversely affected. Our debt levels may limit our flexibility in obtaining additional financing and in pursuing other business opportunities. Increases in interest rates could adversely affect our business. Restrictions in our amended credit facility may interrupt distributions to us from our subsidiaries, which may limit our ability to make distributions to you, satisfy our obligations and capitalize on business opportunities. Our acquisition strategy requires access to new capital. Tightened capital markets or increased competition for investment opportunities could impair our ability to grow through acquisitions. We may incur significant costs and liabilities in the future resulting from a failure to comply with new or existing environmental regulations or an accidental release of hazardous substances or hydrocarbons into the environment. A change in the jurisdictional characterization of some of our assets by federal, state or local regulatory agencies or a change in policy by those agencies may result in increased regulation of our assets, which may cause our revenues to decline and operating expenses to increase. Should we fail to comply with all applicable FERC administered statutes, rules, regulations and orders, we could be subject to substantial penalties and fines. Unexpected volume changes due to production variability or to gathering, plant, or pipeline system disruptions may increase our exposure to commodity price movements. We may incur significant costs and liabilities resulting from pipeline integrity programs and related repairs. Our construction of new assets may not result in revenue increases and is subject to regulatory, environmental, political, legal and economic risks, which could adversely affect our results of operations and financial condition. If we do not make acquisitions on economically acceptable terms, or efficiently and effectively integrate the acquired assets with our asset base, our future growth will be limited. We do not have any officers or employees and rely solely on officers of our general partner and employees of Targa. If our general partner fails to maintain an effective system of internal controls, then 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. The amount of cash we have available for distribution to holders of our common units and subordinated units depends primarily on our cash flow and not solely on profitability. Consequently, even if we are profitable, we may not be able to make cash distributions to holders of our common units and subordinated units. Terrorist attacks, and the threat of terrorist attacks, have resulted in increased costs to our business. Continued hostilities in the Middle East or other sustained military campaigns may adversely impact our results of operations. Risks Inherent in an Investment in Us Cash distributions are not guaranteed and may fluctuate with our performance and the establishment of financial reserves. Targa controls our general partner, which has sole responsibility for conducting our business and managing our operations. Targa has conflicts of interest with us and may favor its own interests to your detriment. The credit and business risk profile of our general partner and its owners could adversely affect our credit ratings and profile. Our partnership agreement limits our general partner s fiduciary duties to holders of our units and restricts the remedies available to unitholders for actions taken by our general partner that might otherwise constitute breaches of fiduciary duty. Targa is not limited in its ability to compete with us, which could limit our ability to acquire additional assets or businesses. Cost reimbursements due our general partner and its affiliates for services provided, which will be determined by our general partner, will be substantial and will reduce our cash available for distribution to you. Holders of our common units have limited voting rights and are not entitled to elect our general partner or its directors. Removal of our general partner without its consent will dilute and adversely affect our common unitholders. We may issue additional units without your approval, which would dilute your existing ownership interests. Affiliates of our general partner may sell common units in the public markets, which sales could have an adverse impact on the trading price of the common units. Our general partner may elect to cause us to issue Class B units to it in connection with a resetting of the target distribution levels related to our general partner s incentive distribution rights without the approval of the conflicts committee of our general partner or holders of our common units. This ability may result in lower distributions to holders of our common units in certain situations. Increases in interest rates could adversely impact our unit price and our ability to issue additional equity to make acquisitions, for expansion capital expenditures or for other purposes. Our partnership agreement restricts the voting rights of unitholders owning 20% or more of our common units. Control of our general partner may be transferred to a third party without unitholder consent. Our general partner has a limited call right that may require you to sell your units at an undesirable time or price. Your liability may not be limited if a court finds that unitholder action constitutes control of our business. Unitholders may have liability to repay distributions that were wrongfully distributed to them. Tax Risks to Common Unitholders Our tax treatment depends on our status as a partnership for federal income tax purposes, as well as our not being subject to a material amount of entity-level taxation by individual states. If the Internal Revenue Service, or IRS, were to treat us as a corporation or if we were to become subject to a material amount of entity-level taxation for state tax purposes, then our cash available for distribution to you would be substantially reduced. We prorate our items of income, gain, loss and deduction between transferors and transferees of our units each month based upon the ownership of our units on the first day of each month, instead of on the basis of the date a particular unit is transferred. The IRS may challenge this treatment, which could change the allocation of items of income, gain, loss and deduction among our unitholders. If the IRS contests the federal income tax positions we take, the market for our common units may be adversely affected, and the cost of any contest will reduce our cash available for distribution to you. You may be required to pay taxes on your share of our income even if you do not receive any cash distributions from us. Tax gain or loss on disposition of our common units could be more or less than expected. Tax-exempt entities and non-United States persons face unique tax issues from owning our common units that may result in adverse tax consequences to them. We treat each purchaser of our common units as having the same tax benefits without regard to the actual common units purchased. The IRS may challenge this treatment, which could adversely affect the value of the common units. 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 have adopted certain valuation methodologies that may result in a shift of income, gain, loss and deduction between the general partner and the unitholders. The IRS may challenge this treatment, which could adversely affect the value of our common units. The sale or exchange of 50% 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.

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1379661--3/31/2008--Targa_Resources_Partners_LP