UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

For the quarterly period ended

~~March 31,~~June 30, 2005

Commission File No. 1-2921

PANHANDLE EASTERN PIPE LINE COMPANY, LP

(Exact name of registrant as specified in its charter)

Delaware	44-0382470
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)


5444 Westheimer Road	77056-5306
Houston, Texas	(Zip Code)
(Address of principal executive offices)

Registrant's telephone number, including area code:(713) 989-7000

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each Class		Name of each exchange in which registered
4.80% Senior Notes due 2008, Series B		New York Stock Exchange
6.05% Senior Notes due 2013, Series B		New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act: None

~~PANHANDL~~EPANHANDLE EASTERN PIPE LINE COMPANY, LP

FORM 10-Q

~~March 31,~~June 30, 2005

Index

~~PANHANDLE EASTERN PIPE LINE COMPANY, LP~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS~~

~~(In Thousands)~~

Three Months

Three Months

Ended March 31,

Ended March 31,

2005

2004

Operating revenue

Transportation and storage of natural gas $ 120,020 $ 121,860
LNG terminalling revenue 13,208 13,762
Other revenue 2,172 2,547
Total operating revenue 135,400 138,169

Operating expenses

Operation, maintenance and general 50,183 49,725
Depreciation and amortization 15,367 15,147
Taxes, other than on income 7,336 7,526
Total operating expenses 72,886 72,398

Operating income
62,514 65,771

Other income (expense)

Interest expense, net (11,848 ) (12,155 )
Other, net 897 714
Total other income (expense) (10,951 ) (11,441 )

Earnings before income taxes
51,563 54,330

Income taxes
20,093 21,273

Net earnings
$ 31,470 $ 33,057

~~See accompanying notes.~~

PANHANDLE EASTERNPIPE LINE COMPANY, LP

CONSOLIDATED ~~BALANCE SHEETS~~STATEMENT OF OPERATIONS

March 31, 2005

December 31, 2004

Assets

Property, plant and equipment

Plant in service $ 1,956,366 $ 1,947,524
Construction work-in-progress 235,387 203,094
2,191,753 2,150,618
Less accumulated depreciation and amortization 102,180 87,683
Net property, plant and equipment 2,089,573 2,062,935

Investment in affiliate
1,290 1,436

Current assets

Cash and cash equivalents 17,256 26,054
Accounts receivable, less allowances of $1,289 and $1,289, respectively 49,632 48,085
Accounts receivable - related parties 7,801 7,287
Gas imbalances - receivable 36,992 36,122
System gas and operating supplies 119,391 98,250
Deferred income taxes, net 10,409 10,698
Note receivable - Southern Union 93,745 90,745
Other 9,495 11,646
Total current assets 344,721 328,887

Intangibles, net 8,377 8,496
Restricted cash 1,500 1,500
Debt issuance cost 4,204 4,471
Non-current system gas 30,033 30,471
Other 3,094 1,964

Total assets
$ 2,482,792 $ 2,440,160

	Three Months			Three Months
	Ended June 30,			Ended June 30,
	2005			2004

Operating revenue
Transportation and storage of natural gas	$	94,742		$	91,904
LNG terminalling revenue		13,561			14,081
Other revenue		2,118			2,266
Total operating revenue		110,421			108,251

Operating expenses
Operation, maintenance and general		48,132			52,584
Depreciation and amortization		15,025			14,876
Taxes, other than on income		6,869			6,674
Total operating expenses		70,026			74,134


Operating income		40,395			34,117

Other income (expense)
Interest expense, net		(11,499	)		(12,024	)
Other, net		1,849			626
Total other income (expense)		(9,650	)		(11,398	)

Earnings before income taxes		30,745			22,719

Income taxes		12,075			8,575


Net earnings	$	18,670		$	14,144

See accompanying notes.

PANHANDLE EASTERN PIPE LINE COMPANY, LP

CONSOLIDATED STATEMENT OF OPERATIONS

	Six Months			Six Months
	Ended June 30,			Ended June 30,
	2005			2004

Operating revenue
Transportation and storage of natural gas	$	214,762		$	213,764
LNG terminalling revenue		26,769			27,843
Other revenue		4,290			4,813
Total operating revenue		245,821			246,420

Operating expenses
Operation, maintenance and general		98,315			102,309
Depreciation and amortization		30,392			30,023
Taxes, other than on income		14,205			14,200
Total operating expenses		142,912			146,532


Operating income		102,909			99,888

Other income (expense)
Interest expense, net		(23,347	)		(24,179	)
Other, net		2,746			1,340
Total other income (expense)		(20,601	)		(22,839	)

Earnings before income taxes		82,308			77,049

Income taxes		32,168			29,848


Net earnings	$	50,140		$	47,201

See accompanying notes.

CONSOLIDATED BALANCE SHEET

	June 30, 2005		December 31, 2004
Assets

Property, plant and equipment
Plant in service	$	1,974,845	$	1,947,524
Construction work-in-progress		263,430		203,094
		2,238,275		2,150,618
Less accumulated depreciation and amortization		114,934		87,683
Net property, plant and equipment		2,123,341		2,062,935

Investment in affiliate		1,351		1,436

Current assets
Cash and cash equivalents		611		26,054
Accounts receivable, less allowances of $1,219 and $1,289, respectively		39,622		48,085
Accounts receivable - related parties		6,873		7,287
Gas imbalances - receivable		31,914		36,122
System gas and operating supplies		113,581		98,250
Deferred income taxes, net		4,147		10,698
Note receivable - Southern Union		65,761		90,745
Other		7,178		11,646
Total current assets		269,687		328,887

Intangibles, net		8,262		8,496
Restricted cash		-		1,500
Debt issuance cost		4,263		4,471
Non-current note receivable - Southern Union		69,294		-
Non-current system gas		26,875		30,471
Other		4,300		1,964

Total assets	$	2,507,373	$	2,440,160

See accompanying notes.

PANHANDLE EASTERN PIPE LINE COMPANY, LP

CONSOLIDATED BALANCE ~~SHEETS~~SHEET

	March 31, 2005			December 31, 2004			June 30, 2005			December 31, 2004
Owners' equity
Partners' capital	$	833,876		$	802,406		$	852,546		$	802,406
Accumulated other comprehensive income		2,161			1,231			1,892			1,231
Tax sharing note receivable - Southern Union		(57,679	)		(70,971	)		(57,051	)		(70,971	)
Total owners' equity		778,358			732,666			797,387			732,666

Long-term debt		1,181,064			1,174,065			1,181,045			1,174,065
Total capitalization		1,959,422			1,906,731			1,978,432			1,906,731

Current liabilities
Current portion of long-term debt		-			12,548			-			12,548
Accounts payable		2,588			3,449			7,352			3,449
Accounts payable - overdrafts		3,111			20,103			7,538			20,103
Accounts payable - related parties		5,468			3,478			12,290			3,478
Gas imbalances - payable		117,928			102,567			101,840			102,567
Accrued taxes		12,677			10,750			13,362			10,750
Accrued interest		9,385			19,119			18,847			19,119
Other		88,831			85,239			86,137			85,239
Total current liabilities		239,988			257,253			247,366			257,253

Deferred income taxes, net		179,331			172,193			184,333			172,193
Post-retirement benefits		30,010			30,449			29,274			30,449
Other		74,041			73,534			67,968			73,534
Commitments and contingencies

Total owners' equity and liabilities	$	2,482,792		$	2,440,160		$	2,507,373		$	2,440,160

See accompanying notes.

~~PANHANDLE~~ ~~EASTERN PIPE LINE COMPANY, LP~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~(In Thousands)~~

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

~~See accompanying notes.~~

PANHANDLE EASTERN PIPE LINE COMPANY, LP

CONSOLIDATED ~~STATEMENTS~~STATEMENT OF CASH FLOWS

	Six Months			Six Months
	Ended June 30,			Ended June 30,
	2005			2004

Cash Flows From (Used In) Operating Activities
Net earnings	$	50,140		$	47,201
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation and amortization		30,392			30,023
Deferred income taxes		18,247			23,695
Debt premium and discount amortization, net		(667	)		(3,522	)
Changes in operating assets and liabilities:
Accounts receivable		8,877			13,368
Inventory		5,570			2,526
Gas imbalances - receivable		563			(29	)
Other assets		3,107			847
Payables		12,715			2,004
Accrued taxes		16,533			2,830
Interest accrued		(272	)		(1,343	)
Gas imbalances - payable		(533	)		396
Other liabilities		(13,564	)		(5,489	)
Net cash flows from operating activities		131,108			112,507

Cash Flows Used In Investing Activities
Net increase in Note receivable - Southern Union		(44,310	)		(98,535	)
Capital and investment expenditures		(96,139	)		(62,735	)
Purchase of system gas, net		(29	)		(14	)
Retirements and other		(383	)		(441	)
Net cash flows used in investing activities		(140,861	)		(161,725	)

Cash Flows From (Used In) Financing Activities
Increase (decrease) in bank overdrafts		(12,565	)		1,152
Debt issuance		255,626			200,000
Debt retirements		(258,433	)		(151,723	)
Debt issuance costs		(318	)		(1,050	)
Net cash flows from (used in) financing activities		(15,690	)		48,379

Net decrease in cash and cash equivalents		(25,443	)		(839	)

Cash and cash equivalents at beginning of period		26,054			16,810
Cash and cash equivalents at end of period	$	611		$	15,971


Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest (net of interest rate swap and amounts capitalized)	$	33,174		$	35,214
Income taxes (net of refunds)		-			1

See accompanying notes.

CONSOLIDATED STATEMENT OF OWNERS’ EQUITY AND COMPREHENSIVE INCOME

	Partners' Capital		Accumulated Other Comprehensive Income		Tax Sharing Note Receivable-Southern Union			Total		Partners' Capital		Accumulated Other Comprehensive Income		Tax Sharing Note Receivable-Southern Union			Total


Balance January 1, 2005	$	802,406	$	1,231	$	(70,971	)	$	732,666	$	802,406	$	1,231	$	(70,971	)	$	732,666


Comprehensive income:
Net earnings		31,470		-		-			31,470		50,140		-		-			50,140
Unrealized gain related to interest rate swaps, net of tax		-		930		-			930		-		661		-			661
Comprehensive income		31,470		930		-			32,400		50,140		661		-			50,801

Tax sharing receivable - Southern Union		-		-		13,292			13,292
Settlement against Tax sharing receivable - Southern Union											-		-		13,920			13,920

Balance March 31, 2005	$	833,876	$	2,161	$	(57,679	)	$	778,358
Balance June 30, 2005										$	852,546	$	1,892	$	(57,051	)	$	797,387

See accompanying notes.

PANHANDLE EASTERNPIPE LINE COMPANY, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited interim consolidated financial statements of Panhandle Eastern Pipe Line Company, LP, a Delaware limited partnership (Panhandle Eastern Pipe Line), including all of its subsidiaries (collectively,Panhandle) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the SEC) for quarterly reports on Form 10-Q. These statements do not include all of the information and note disclosures required by generally accepted accounting principles, and should be read in conjunction with Panhandle’s financial statements and notes thereto for the twelve months ended December 31, 2004, included in ~~Panhandle’s~~Panhandle Eastern Pipe Line’sForm 10-K filed with the SEC. The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and reflect adjustments (including both normal recurring as well as any non-recurring) ~~which~~that are, in the opinion of management, necessary for a fair ~~presentation~~statement of results for the interim period. Because of the seasonal nature of Panhandle’s operations, the results of operations and cash flows for any interim period are not necessarily indicative of the results that may be expected for the full year. All dollar amounts in the tables herein are stated in thousands unless otherwise indicated. Certain prior period amounts have been reclassified to conform with the current period presentation.

I Corporate Structure

Panhandle Eastern Pipe Line ~~Company, LP (~~~~Panhandle Eastern Pipe Line~~) is an indirect wholly-owned subsidiary of Southern Union Company (Southern Union Company and, together with its subsidiaries,Southern Union). Panhandle is primarily engaged in the interstate transportation and storage of natural gas and also provides liquefied natural gas (LNG) terminalling and regasification services. Panhandle is subject to the rules and regulations of the Federal Energy Regulatory Commission (theFERC). The Panhandle entities include ~~Panhandle Eastern Pipe Line, Trunkline Gas Company, LLC (~~the following:

·	Panhandle Eastern Pipe Line

·	Trunkline Gas Company, LLC (Trunkline), a direct wholly-owned subsidiary of Panhandle Eastern Pipe Line

·	Sea Robin Pipeline Company, LLC (Sea Robin), an indirect wholly-owned subsidiary of Panhandle Eastern Pipe Line

·	Trunkline LNG Company, LLC (Trunkline LNG), a direct wholly-owned subsidiary of Trunkline LNG Holdings, LLC (LNG Holdings), which is an indirect wholly-owned subsidiary of Panhandle Eastern Pipe Line; and

·	Pan Gas Storage, LLC (d.b.a.Southwest Gas Storage), a wholly-owned subsidiary of Panhandle Eastern Pipe Line.

~~Trunkline~~~~), a wholly-owned subsidiary of Panhandle Eastern Pipe Line, Sea Robin Pipeline Company, LLC (~~~~Sea Robin~~~~), an indirect wholly-owned subsidiary of Panhandle Eastern Pipe Line, Trunkline LNG Company, LLC (~~~~Trunkline LNG~~~~), which is a wholly-owned subsidiary of Trunkline LNG Holdings, LLC (~~~~LNG Holdings~~~~), an indirect wholly-owned subsidiary of Panhandle Eastern Pipe Line and Pan Gas Storage, LLC (d.b.a.~~~~Southwest Gas Storage~~~~), a wholly-owned subsidiary of Panhandle Eastern Pipe Line.~~ Collectively, ~~the~~Panhandle’s pipeline assets include more than 10,000 miles of interstate pipelines that transport natural gas from the Gulf of Mexico, South Texas and the panhandle regions of Texas and Oklahoma to major U.S. markets in the Midwest and Great Lakes region. The pipelines have a combined peak day delivery capacity of 5.4 billion cubic feet (bcf) per day and 72 bcf of owned underground storage capacity. Trunkline LNG, located on Louisiana's Gulf Coast, operates one of the largest LNG import terminals in North America, based on current send out capacity, and has 6.3 bcf of above ground LNG storage capacity.

Southern Union Panhandle, LLC, a direct wholly-owned subsidiary of Southern Union Company, serves as the general partner of Panhandle Eastern Pipe Line and owns a one percent general partner interest in Panhandle Eastern Pipe Line. Southern Union Company owns a ninety-nine percent limited partner interest in Panhandle Eastern Pipe Line.

Table of Contents

PANHANDLE EASTERN PIPE LINE COMPANY, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

II Summary of Significant Accounting Policies and Other Matters

Principles of Consolidation. The unaudited interim consolidated financial statements include the accounts of all majority-owned subsidiaries of Panhandle Eastern Pipe Line, after eliminating significant intercompany transactions and balances. Investments in businesses not controlled by Panhandle Eastern Pipe Line, but over which it may have significant influence, are accounted for using the equity method. Investments that are variable interest entities are consolidated if Panhandle Eastern Pipe Line is allocated a majority of the entity’s gains and/or losses, including fees paid by the entity. All significant intercompany accounts and transactions are eliminated in consolidation.

Asset Impairment. Panhandle applies the provisions of Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” to account for impairments on long-lived assets. Impairment losses are recognized for long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows are not sufficient to recover the assets’ carrying value. The amount of impairment is measured by comparing the fair value of the asset to its carrying amount.

~~Table of Contents~~

~~PANHANDLE EASTERN PIPE LINE COMPANY, LP~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Revenues.Panhandle’s revenues from transportation and storage of natural gas and LNG terminalling are based on capacity reservation charges and commodity usage charges. Reservation revenues are based on contracted rates and capacity reserved by the customers and are recognized monthly. Revenues from commodity usage charges are also recognized monthly, based on the volumes received from or delivered to the customer, depending on the tariff of that particular Panhandle entity, with any differences in received and delivered volumes resulting in an imbalance. Volume imbalances are generally settled in-kind with no impact on revenues, with the exception of Trunkline, which ~~cashes out~~settles imbalances via cash pursuant to its tariff, and records gains and losses on such cashout sales as a component of revenue, to the extent not owed back to customers.

System Gas and Operating Supplies. System gas and operating supplies consist of gas held for operations and materials and supplies, carried at the lower of weighted average cost or market. The gas held for operations that is not expected to be consumed in operations in the next twelve months has been reflected in non-current assets. All system gas and materials and supplies purchased are recorded at the lower of cost or market, while net gas received from and owed back to customers is valued at market.

Significant Customers and Credit Risk. Panhandle manages trade credit risks to minimize exposure to uncollectible trade receivables. Prospective and existing customers are reviewed for creditworthiness based upon pre-established standards. Customers that do not meet minimum standards are required to provide additional credit support. Panhandle utilizes the allowance method for recording its allowance for uncollectible accounts which is primarily based on the application of historical bad debt percentages applied against Panhandle’s aged accounts receivable. Increases in the allowance are recorded as a component of operation expenses. Reductions in the allowance are recorded when receivables are written off. Panhandle ~~has~~had an allowance for doubtful accounts totaling ~~$1,289,000~~$1,219,000 and $1,289,000 at ~~March 31,~~June 30, 2005 and December 31, 2004, respectively, relating to its trade receivables.

Accounting for ~~Retirement~~Postretirement Benefits. To account for ~~other~~ postretirement benefit costs other than pensions, Panhandle follows SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions”, and SFAS No. 132R, “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” as amended. For defined benefit plans, under certain circumstances, these statements require liabilities to be recorded on the balance sheet at the present value of these future obligations to employees net of any plan assets. The calculation of these liabilities and associated expenses requires the expertise of actuaries and is subject to many assumptions, including life expectancies, present value discount rates, expected long-term rate of return on plan assets, rate of compensation increase and anticipated health care costs. Any change in these assumptions can significantly change the liability and associated expenses recognized in any given year.

Panhandle does not maintain or participate in a defined benefit retirement plan for its employees, but instead provides benefits to substantially all employees under a defined contribution 401(k) plan. Under the 401(k) plan, Panhandle provides a matching contribution of 50fifty percent of the employee’s contribution to the 401(k) plan that does not exceed 4four percent of the employee’s eligible pay. ~~In addition,~~ Panhandle makes additional contributions to the 401(k) ~~plan ranging from 4 to 6 percent of~~planwith the ~~employee’s eligible pay, depending~~amount generally varying based on ~~the employee’s~~ age and years of ~~service under~~serviceunder a Retirement Power Account benefit.

Table of Contents

Panhandle provides certain postretirement health and life benefits to eligible, active employees. The accumulated postretirement benefit obligation with respect to such postretirement health and life benefits as of March 31, 2005 and December 31, 2004 was approximately $39,404,000 and $38,260,000, respectively. See~~Note VIII - Benefits~~.PANHANDLE EASTERN PIPE LINE COMPANY, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~PANHANDLE EASTERN PIPE LINE COMPANY, LP~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

PANHANDLE EASTERN PIPE LINE COMPANY, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~PANHANDLE EASTERN PIPE LINE COMPANY, LP~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

PANHANDLE EASTERN PIPE LINE COMPANY, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

III Regulatory Matters

~~PANHANDLE EASTERN PIPE LINE COMPANY, LP~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

PANHANDLE EASTERN PIPE LINE COMPANY, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

IV Related Party Transactions

Related Party Transactions

~~PANHANDLE EASTERN PIPE LINE COMPANY, LP~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

	March 31,			December 31,			June 30,			December 31,
Related Party Transactions	2005			2004			2005			2004


Note receivable - Southern Union	$	93,745		$	90,745
Note receivable - Southern Union - current							$	65,761		$	90,745
Accounts receivable		7,801			7,287			6,873			7,287
Accounts payable		(5,468	)		(3,478	)		(12,290	)		(3,478	)
Note receivable - Southern Union - non-current								69,294			-
Owners' equity - Tax sharing note receivable - Southern Union		57,679			70,971			57,051			70,971

PANHANDLE EASTERN PIPE LINE COMPANY, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

V Accounting for Derivatives and Hedging Activities

~~PANHANDLE EASTERN PIPE LINE COMPANY, LP~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Interest rate swaps are used to reduce interest rate risks and to manage interest expense. By entering into these agreements, Panhandle converts floating-rate debt into fixed-rate debt or converts fixed-rate debt to floating. Interest differentials paid or received under the swap agreements are reflected as an adjustment to interest expense. These interest rate swaps are financial derivative instruments that qualify for hedge treatment. For derivatives treated as hedges of future cash flows, the effective portion of changes in fair value is recorded in other comprehensive income until the related hedge items impact earnings. Any ineffective portion of a hedge is reported in earnings immediately. Upon termination of a cash flow hedge of the variability of cash flows to be paid, the resulting gain or loss is amortized to income through the maturity date of the original designated hedging relationship, unless it is probable that the forecasted transaction will not occur during a specified time period. For derivatives treated as a hedge of the fair value of a debt instrument, the effective portion of changes in fair value are recorded as an adjustment to the hedged debt. The ineffective portion of a fair value hedge is recognized in earnings if the short cut method of assessing effectiveness is not used. Upon termination of a fair value hedge of a debt instrument, the resulting gain or loss is amortized to income through the maturity date of the debt instrument.

On April 29, 2005, existing LNG ~~Holdings~~Holdings' bank loans due in January 2007 were repaid in full using the proceeds from a Credit Agreement entered into on April 26, 2005 (the Credit Agreement). Interest rate swaps previously designated as cash flow hedges of the LNG ~~Holdings~~Holdings' bank loans were terminated upon repayment of the loans on April 29, 2005 (seeNote VI - Debt). As a result, a gain of $3,465,000 ($2,072,000, net of tax),~~will be reflected~~ was recorded in Accumulated other comprehensive income in the Consolidated Balance Sheet and ~~will be~~is being amortized to interest expense through the maturity date of the original bank loans in ~~2007.~~2007, of which $3,153,000 ($1,885,000, net of tax) remains at June 30, 2005.

PANHANDLE EASTERN PIPE LINE COMPANY, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~PANHANDLE EASTERN PIPE LINE COMPANY, LP~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~VI Debt

			March 31,			December 31,
Long-term Debt	Year Due		2005			2004			Year Due		June 30, 2005			December 31, 2004

6.50% Senior Notes		2009	$	60,623		$	60,623			2009	$	60,623		$	60,623
8.25% Senior Notes		2010		40,500			40,500			2010		40,500			40,500
7.00% Senior Notes		2029		66,305			66,305			2029		66,305			66,305
4.80% Senior Notes		2008		300,000			300,000			2008		300,000			300,000
6.05% Senior Notes		2013		250,000			250,000			2013		250,000			250,000
2.75% Senior Notes		2007		200,000			200,000			2007		200,000			200,000
LNG Holdings bank loans (floating rate)		2007		255,626			258,433
Bank loans (floating rate)										2007		255,626			258,433
Total debt outstanding				1,173,054			1,175,861					1,173,054			1,175,861
Current portion of long-term debt				-			(12,548	)				-			(12,548	)
Interest rate swaps (2.75% Senior Notes)				(6,067	)		(3,936	)				(5,468	)		(3,936	)
Unamortized debt premium, net				14,077			14,688					13,459			14,688
Total long-term debt			$	1,181,064		$	1,174,065				$	1,181,045		$	1,174,065

Panhandle has ~~$1,181,064,000~~$1,181,045,000 of debt recorded at ~~March 31,~~June 30, 2005. Debt of ~~$925,438,000,~~$925,419,000, including net premiums of ~~$14,077,000~~$13,459,000 and interest rate swaps of ~~$6,067,000,~~$5,468,000, is at annual fixed rates ranging from 2.75 percent to 8.25 percent, with an average annual interest rate of 5.12 percent excluding debt premium, discount and issuance cost amortization. The $255,626,000 of variable rate bank loans, which were refinanced during the second quarter of 2005, had an average rate of ~~4.15~~3.87 percent and 4.01 percent per annum for the three and six month ~~period~~periods ended ~~March 31, 2005. The assets of Trunkline LNG are pledged as collateral for the variable rate loans. See~~~~Note V - Accounting for Derivatives and Hedging Activities~~ ~~for discussion of interest rate swap agreements associated with outstanding debt.~~June 30, 2005, respectively.

PANHANDLE EASTERN PIPE LINE COMPANY, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~PANHANDLE EASTERN PIPE LINE COMPANY, LP~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

VII Comprehensive Income

	Three Months			Three Months			Three Months			Three Months			Six Months			Six Months
	Ended March 31,			Ended March 31,			Ended June 30,			Ended June 30,			Ended June 30,			Ended June 30,
	2005			2004			2005			2004			2005			2004

Net earnings	$	31,470		$	33,057		$	18,670		$	14,144		$	50,140		$	47,201

Unrealized gain (loss) related to interest rate swaps,
net of taxes of $1,412 and $(593), respectively		2,160			(822	)
net of taxes of $200, $2,555, $1,612, and $1,962, respectively								311			4,221			2,471			3,399
Realized (gains) losses in net income,
net of taxes of $(786) and $(920), respectively		(1,230	)		(1,430	)
net of taxes of $(384), $(768), $1,170, and $(1,688), respectively								(580	)		(1,564	)		(1,810	)		(2,994	)

Total comprehensive income	$	32,400		$	30,805		$	18,401		$	16,801		$	50,801		$	47,606

PANHANDLE EASTERN PIPE LINE COMPANY, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Components of Net Periodic Benefit Cost

	Three Months			Three Months			Three Months			Three Months			Six Months			Six Months
	Ended March 31,			Ended March 31,			Ended June 30,			Ended June 30,			Ended June 30,			Ended June 30,
OPEB	2005			2004			2005			2004			2005			2004

Service cost	$	740		$	645		$	619		$	509		$	1,343		$	1,154
Interest cost		900			735			823			719			1,751			1,454
Expected return on plan assets		(230	)		(48	)		(266	)		(104	)		(464	)		(152	)
Amortization of prior service cost		(55	)		-			(56	)		-			(111	)		-
Amortization of transition obligation		-			-			-			-			-			-
Recognized actuarial gain		160			-			17			-			212			-
Settlement recognition		-			-			-			-			-			-

Net periodic benefit cost	$	1,515		$	1,332		$	1,137		$	1,124		$	2,731		$	2,456

PANHANDLE EASTERN PIPE LINE COMPANY, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Three Months		Three Months		Three Months		Three Months		Six Months		Six Months
	Ended March 31,		Ended March 31,		Ended June 30,		Ended June 30,		Ended June 30,		Ended June 30,
	2005		2004		2005		2004		2005		2004

Net earnings, as reported	$	31,470	$	33,057	$	18,670	$	14,144	$	50,140	$	47,201
Deduct total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related taxes		51		207		51		60		102		79
Pro forma net earnings	$	31,419	$	32,850		18,619		14,084		50,038		47,122

IX Commitments and Contingencies

PANHANDLE EASTERN PIPE LINE COMPANY, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PANHANDLE EASTERN PIPE LINE COMPANY, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PANHANDLE EASTERN PIPE LINE COMPANY, LP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~PANHANDLE EASTERN PIPE LINE COMPANY, LP~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

On September 10, 2003, Panhandle Eastern Pipe Line provided a guarantee to CB&I Constructors, Inc. for the full performance by Trunkline LNG, its subsidiary, of the engineering, procurement and construction contract between Trunkline LNG and CB&I Constructors, Inc. The contract is for the construction of the expansion of the Trunkline LNG Lake Charles facility, and covers approximately ~~$14~~$9 million of the remaining cost of the Phase I expansion through December 2005 and approximately ~~$49~~$14 million of the remaining cost of the Phase II expansion through June 2006. Under the terms of the guarantee, Panhandle Eastern Pipe Line would be required to perform should Trunkline LNG be in default of its obligation, as it relates to services already rendered. There are no amounts being carried as liabilities for Panhandle’s obligations under these guarantees.

Controlled Group Pension Liabilities. Southern Union (including certain of its divisions) sponsors a number of defined benefit pension plans for employees. Under applicable pension and tax laws, upon being acquired by Southern Union, Panhandle became a member of Southern Union’s “controlled group” with respect to those plans, and, along with Southern Union and any other members of that group, is jointly and severally liable for any failure by Southern Union (along with any other persons that may be or become a sponsor of any such plan) to fund any of these pension plans or to pay any unfunded liabilities that these plans may have if they are ever terminated. In addition, if any of the obligations of any of these pension plans is not paid when due, a lien in favor of that plan or the Pension Benefit Guaranty Corporation may be created against the assets of each member of Southern Union’s controlled group, including Panhandle and each of its subsidiaries. Based on the latest actuarial information available as of December 31, 2004, the aggregate amount of the projected benefit obligations of these pension plans was approximately $398,516,000 and the estimated fair value of all of the assets of these plans was approximately $276,836,000.

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ITEM 2. Management'sDiscussion and Analysis of Results of Operations and Financial Condition

Management’s Discussion and Analysis of Results of Operations and Financial Condition is provided as a supplement to the accompanying unaudited interim consolidated financial statements and ~~footnotes~~notes to help provide an understanding of Panhandle’s financial condition, results of operations and changes in financial condition. The following section includes an overview of Panhandle’s business as well as recent developments that Panhandle believes are important in understanding its results of operations and in anticipating future trends in those operations. Subsequent sections include an analysis of Panhandle’s results of operations on a consolidated basis and information relating to Panhandle’s liquidity and capital resources, quantitative and qualitative disclosures about market risk, an outlook perspective for Panhandle, and other matters. The information required by this Item is presented in a reduced disclosure format pursuant to General Instruction H to Form 10-Q.

Overview

Panhandle is primarily engaged in the interstate transportation and storage of natural gas and also provides LNG terminalling and regasification services. The Panhandle entities include Panhandle Eastern Pipe Line, Trunkline, Sea Robin, Trunkline LNG and Southwest Gas Storage. Collectively, the pipeline assets include more than 10,000 miles of interstate pipelines that transport natural gas from the Gulf of Mexico, South Texas and the panhandle regions of Texas and Oklahoma to major U.S. markets in the Midwest and Great Lakes region. The pipelines have a combined peak day delivery capacity of 5.4 bcf per day, 72 bcf of owned underground storage capacity and 6.3 bcf of above ground LNG storage capacity. Trunkline LNG, located on Louisiana’s Gulf Coast, operates one of the largest LNG import terminals in North America.

A majority of Panhandle’s total operating revenue comes from long-term service agreements with local distribution company customers and their affiliates. Panhandle also provides firm transportation services under contract to gas marketers, producers, other pipelines, electric power generators and a variety of end-users. In addition, Panhandle’s pipelines offer both firm and interruptible transportation to customers on a short-term or seasonal basis. Demand for gas transmission on Panhandle’s pipeline systems is seasonal, with the highest throughput and a higher portion of annual total operating revenues and net earnings occurring in the traditional winter heating season in the first and fourth calendar quarters. For the years 2000 to 2004, Panhandle’s combined throughput was 1,374 trillion British thermal units (TBtu), 1,335 TBtu, 1,259 TBtu, 1,380 TBtu and 1,284 TBtu, respectively. For the ~~three~~six month periods ended ~~March 31,~~June 30, 2005 and ~~March 31,~~June 30, 2004, Panhandle’s combined throughput was ~~350~~645 TBtu and ~~352~~655 TBtu, respectively. Beginning in March 2000, the combined throughput includes Sea Robin’s throughput.

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Results of Operations


	Three Months			Three Months						Three Months			Three Months
	Ended March 31,			Ended March 31,						Ended June 30,			Ended June 30,
	2005			2004			Change			2005			2004			Change

Operating revenue:
Reservation revenue	$	100,587		$	101,212		$	(625	)
Reservation revenue - transportation & storage										$	81,197		$	77,863		$	3,334
LNG terminalling revenue		13,208			13,762			(554	)		13,561			14,081			(520	)
Commodity revenue		19,433			20,648			(1,215	)
Commodity revenue - transportation & storage											13,545			14,041			(496	)
Other revenue		2,172			2,547			(375	)		2,118			2,266			(148	)
Total operating revenue		135,400			138,169			(2,769	)		110,421			108,251			2,170

Operating expenses:
Operation, maintenance and general		50,183			49,725			458			48,132			52,584			(4,452	)
Depreciation and amortization		15,367			15,147			220			15,025			14,876			149
Taxes, other than on income and revenues		7,336			7,526			(190	)		6,869			6,674			195
Total operating expenses		72,886			72,398			488			70,026			74,134			(4,108	)
Operating income		62,514			65,771			(3,257	)		40,395			34,117			6,278

Other income (expense):
Interest expense, net		(11,848	)		(12,155	)		307			(11,499	)		(12,024	)		525
Other, net		897			714			183			1,849			626			1,223
Total other expense, net		(10,951	)		(11,441	)		490			(9,650	)		(11,398	)		1,748

Earnings before income taxes		51,563			54,330			(2,767	)		30,745			22,719			8,026

Income taxes		20,093			21,273			(1,180	)		12,075			8,575			3,500


Net earnings	$	31,470		$	33,057		$	(1,587	)	$	18,670		$	14,144		$	4,526

Operating Revenue.For the three months ended ~~March 31,~~June 30, 2005, operating revenue ~~decreased $2,769,000~~increased $2,170,000 versus the same time period during 2004. The ~~decrease~~increase was a result of higher reservation revenue of $3,334,000 due to higher average rates, partially offset by lower LNG terminalling revenue of $520,000 due to reduced LNG volumes received and lower commodity ~~revenues~~revenue of ~~$1,215,000~~$496,000 primarily due to a reduction in commodity ~~throughput~~ volumes of ~~one percent, associated with~~two percent. Reservation average rates are dependent on certain factors including customer demand for reserved capacity, capacity sold levels for a ~~two percent decrease~~given period, and, in some cases, utilization of ~~heating degree days, as well as a lower market value for interruptible service, partially offset by higher parking revenue activity.~~capacity. Commodity revenues are dependent upon a number of variable factors, including weather, storage levels, and customer demand for firm, interruptible and parking services. In addition, reservation revenue decreased $625,000 primarily due to certain contract expirations on Trunkline during the latter part of 2004 and the replacement thereof at lower average reservation rates. LNG terminalling revenue decreased $554,000 primarily due to reduced LNG volumes received in 2005.

Operating Expenses. Operating expenses for the three months ended ~~March 31,~~June 30, 2005 ~~increased $488,000~~decreased $4,108,000 versus 2004, primarily due to ~~an increase~~a decrease in operation, maintenance and general expenses of ~~$458,000.~~$4,452,000. Such ~~increase~~decrease was primarily due to lower operational expenses of approximately $5,300,000 primarily due to the ~~recovery~~timing of ~~previously underrecovered fuel, net~~maintenance activities performed during off-peak times, more of ~~$1,103,000~~which was performed earlier in ~~2004 and higher pipeline transportation expenses~~the summer months of ~~$408,000 primarily due to a new contract, partially offset by~~2004, reduced administrative expenses of ~~$589,000~~$1,600,000 primarily associated with the workforce reduction in 2004 ~~reduced contract storage expenses of $239,000~~and increased synergies due to ~~a reduction in contracted storage capacity beginning March 2004,~~the integration of CrossCountry Energy (CrossCountry) and ~~a decrease in~~reduced power costs of ~~$200,000~~$538,000 due to ~~lower~~reduced LNG volumes received, partially offset by an increase in ~~2005.~~corporate charges of $1,359,000 and the higher net recovery of previously underrecovered fuel volumes of $1,313,000.

Interest Expense, Net. Interest expense, net, for the three months ended ~~March 31,~~June 30, 2005, versus the same time period during 2004, was reduced by ~~$307,000~~$525,000 primarily due to an increase in capitalized interest due to the LNG expansion and the refinancing of the debt that matured in March and August of 2004, partially offset by an increase in the variable interest rate of the LNG Holdings bank loans. For further discussion of Panhandle’s long-term debt, seeNote VI - Debt.

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Other, Net.Other, net, for the three months ended June 30, 2005 increased $1,223,000 versus the same time period during 2004, primarily due to higher related party interest income caused by increases in the underlying LIBOR-based rates in 2005. For further discussion of Panhandle’s related party interest income, seeNote IV - Related Party Transactions.

Income Taxes. Income taxes during the three months ended June 30, 2005, versus the same time period during 2004, increased $3,500,000 due to higher pretax income.

	Six Months			Six Months
	Ended June 30,			Ended June 30,
	2005			2004			Change

Operating revenue:
Reservation revenue - transportation & storage	$	181,784		$	179,075		$	2,709
LNG terminalling revenue		26,769			27,843			(1,074	)
Commodity revenue - transportation & storage		32,978			34,689			(1,711	)
Other revenue		4,290			4,813			(523	)
Total operating revenue		245,821			246,420			(599	)

Operating expenses:
Operation, maintenance and general		98,315			102,309			(3,994	)
Depreciation and amortization		30,392			30,023			369
Taxes, other than on income and revenues		14,205			14,200			5
Total operating expenses		142,912			146,532			(3,620	)
Operating income		102,909			99,888			3,021

Other income (expense):
Interest expense, net		(23,347	)		(24,179	)		832
Other, net		2,746			1,340			1,406
Total other expense, net		(20,601	)		(22,839	)		2,238

Earnings before income taxes		82,308			77,049			5,259

Income taxes		32,168			29,848			2,320


Net earnings	$	50,140		$	47,201		$	2,939

Operating Revenue.For the six months ended June 30, 2005, operating revenue decreased $599,000 versus the same time period during 2004. The decrease was a result of lower commodity revenue of $1,711,000 primarily due to a reduction in commodity volumes of one percent and lower LNG terminalling revenue of $1,074,000 due to a reduction in LNG volumes received. Commodity revenues are dependent upon a number of variable factors, including weather, storage levels, and customer demand for firm, interruptible and parking services. This decrease was partially offset by an increase in reservation revenue of $2,709,000 due to higher average rates. Reservation average rates are dependent on certain factors including customer demand for reserved capacity, capacity sold levels for a given period, and, in some cases, utilization of capacity.

Operating Expenses. Operating expenses for the six months ended June 30, 2005 decreased $3,620,000 versus 2004, primarily due to a decrease in operation, maintenance and general expenses of $3,994,000. Such decrease was due to a reduction in operational expenses of approximately $5,800,000 primarily due to the timing of maintenance activities performed during off-peak times, more of which was performed earlier in the summer months in 2004, reduced administrative costs of $2,200,000 primarily associated with the workforce reduction which was undertaken in 2004 due to the integration of CrossCountry and lower power costs of $737,000 due to a reduction in LNG volumes received. Such decrease was partially offset by the higher net recovery of previously underrecovered fuel volumes of $2,416,000 and increased corporate charges of $1,155,000.

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Interest Expense, Net. Interest expense, net, for the six months ended June 30, 2005, versus the same time period during 2004, was reduced by $832,000 primarily due to an increase in capitalized interest due to the LNG expansion and the refinancing of the debt that matured in March and August of 2004, partially offset by an increase in the interest rates of the variable interest rate debt and swaps. For further discussion of Panhandle’s long-term debt, seeNote VI - Debt.

Other, Net. Other, ~~income,~~ net, for the ~~three~~six months ended ~~March 31,~~June 30, 2005 increased ~~$183,000~~$1,406,000 versus the same time period during 2004, primarily due to higher related party interest income caused by increases in the underlying LIBOR-based rates in 2005. For further discussion of Panhandle’s related party interest income, seeNote IV - Related Party Transactions.

Income Taxes. Income taxes during the ~~three~~six months ended ~~March 31,~~June 30, 2005, versus the same time period during 2004, ~~decreased $1,180,000~~increased $2,320,000 due to ~~lower~~higher pretax income.

Liquidity and Capital Resources

Based on Panhandle’s current level of operations, management believes that cash flow from operations, available existing cash, and other sources, including liquid working capital and new borrowings, will be adequate to meet liquidity needs for the next several years, although no assurances can be given as to the sufficiency of cash flows or the ability to refinance existing obligations.

Operating Activities. Cash flows from operating activities for the ~~three~~six months ended ~~March 31,~~June 30, 2005 and ~~March 31,~~June 30, 2004 were ~~$51 million.~~$130 million and $113 million, respectively. Changes in operating assets and liabilities ~~used~~provided cash of ~~$15~~$32 million for the ~~three~~six months ended ~~March 31,~~June 30, 2005 and $2$15 million for the same time period during 2004. The ~~decrease~~increase in cash flows from operating activities for the ~~three~~six months ended ~~March 31,~~June 30, 2005 versus the same time period during 2004 was primarily attributable to the timing of payments and cash receipts related to Panhandle’s working capital accounts.

Investing Activities. Historically, Panhandle’s capital requirements have generally been satisfied through operating cash flow, except that Panhandle may utilize access to capital markets for extraordinary capital expenditures. Panhandle estimates remaining expenditures associated with Phase I and Phase II LNG terminal expansion and the Trunkline 36-inch diameter, 23-mile natural gas pipeline loop from the LNG terminal to be approximately ~~$81~~$54 million for the remainder of 2005 and approximately $10 million in 2006. These estimates were developed for budget planning purposes and are subject to revision.

Cash flows used in investing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2005 decreased by approximately $6$21 million versus the same time period in 2004 primarily due to a decrease in net loans made to Southern Union of approximately ~~$22~~$54 million, partially offset by an increase in capital expenditures associated with the LNG expansion projects of ~~$16~~$33 million.

Financing Activities. As of ~~March 31,~~June 30, 2005, Panhandle’s debt is rated BBB by Fitch Ratings, Inc. and Standard & Poor’s and Baa3 by Moody’s. Panhandle’s note provisions are subject to the maintenance of a fixed charge coverage ratio and a leverage ratio which restrict certain payments if not maintained, and limitations on liens. At ~~March 31,~~June 30, 2005, Panhandle was subject to a ~~$391,424,000~~$384,442,000 limitation on additional restricted payments, including dividends and loans to affiliates, based on the current most restrictive covenant, and a limitation of ~~$334,533,000~~$224,748,000 of additional secured and subsidiary level indebtedness based on a limitation on liens covenant. Panhandle is also subject to a limitation of $294,349,000 of total additional indebtedness. If Panhandle’s debt ratings were to fall below Baa3 by Moody’s and below BBB- by Standard and Poor’s, then the allowable restricted payments would be reduced to ~~$341,350,000.~~$334,368,000. At ~~March 31,~~June 30, 2005, Panhandle was in compliance with all covenants.

At ~~March 31,~~June 30, 2005, Panhandle had no scheduled debt principal payments for the remainder of 2005 and 2006 and scheduled payments of $455,626,000, $300,000,000, $60,623,000 and $356,805,000 for the years 2007 through 2009 and in total thereafter, respectively.

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LNG Holdings, as borrower, and Panhandle Eastern Pipe Line and Trunkline LNG, as guarantors, entered into a Credit Agreement dated as of April 26, 2005, with a consortium of banks for a senior term loan financing in the aggregate principal amount of $255,626,000 ~~which~~that matures on March 15, 2007. The senior term loan carries a floating interest rate tied to LIBOR or prime interest rates at Panhandle’s option, in addition to a margin which is tied to the rating of Panhandle’s unsecured senior funded debt. On April 29, 2005, the proceeds from the Credit Agreement were used to repay all outstanding indebtedness under existing LNG Holdings floating rate bank loans that were due in 2007. The senior term loan requires maintenance of a fixed charge coverage ratio and a leverage ratio which restrict certain payments if not maintained, and a limitation on liens. If the senior term loan had been in effect at March 31, 2005, Panhandle Eastern Pipe Line would have been subject to a more restrictive limitation of $223,443,000 of additional secured or subsidiary level indebtedness. ~~If the senior term loan had been in effect at March 31, 2005, Panhandle would also have been subject to a limitation of $264,458,000 of total additional indebtedness.~~

~~Table of Contents~~

On March 12, 2004, Panhandle issued $200,000,000 of 2.75 percent Senior Notes due 2007, Series A, in reliance on an exemption from the registration requirements of the Securities Act of 1933 for offers and sales of securities not involving a public offering or sale, in order to refinance Panhandle’s maturing debt. Panhandle used a portion of the net proceeds to retire $146,080,000 of 6.125 percent Senior Notes which matured on March 15, 2004, as well as for other general corporate purposes. A portion of the remaining net proceeds was also used to pay off the $52,455,000 of 7.875 percent Senior Notes which matured August 15, 2004. On June 25, 2004, Panhandle completed an exchange of the unregistered 2.75 percent Senior Notes due 2007, Series A, for substantially identical securities registered under the Securities Act of 1933.

Cash flows ~~from~~used in financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2005 ~~decreased~~increased by approximately ~~$67~~$64 million versus the same period in 2004 primarily due to net debt issuances of approximately ~~$51~~$48 million in 2004 versus approximately $3 million in net debt retirements in 2005. In addition, bank overdrafts decreased by approximately $14 million.

Outlook

Panhandle is a leading United States interstate natural gas pipeline system and also owns one of the largest operating LNG regasification terminals in North America. Panhandle’s business strategy is to optimize results through expansion and better utilization of its existing facilities and construction of new facilities. This involves providing additional transportation, storage and other value-added services to Panhandle’s customers, which include gas-fueled power plants, local distribution companies, industrial end-users, marketers and others. Panhandle conducts operations primarily in the central, gulf coast, midwest, great lakes, and southwest regions of the United States. Pipeline revenues are generally higher in the first and fourth quarters of each year primarily due to higher contract rates and the increase in customer demand levels for gas due to the colder weather during these periods.

Trunkline LNG entered into a 22-year contract with BG LNG Services beginning January 2002, for all the uncommitted capacity at the Lake Charles, Louisiana facility. Trunkline LNG announced the planned expansion of the Lake Charles facility to approximately 1.2 bcf per day of send out capacity, up from its current send out capacity of .63 bcf per day and in December 2002 the Federal Energy Regulatory Commission (theFERC) approved the expansion of the LNG regasification terminal. The expanded facility is currently expected to be in operation by the end of 2005. In September 2004, the FERC approved Trunkline LNG’s further incremental LNG expansion project. This expansion will increase the LNG terminal’s sustainable send out capacity to 1.8 bcf per day by mid-2006. BG LNG Services has contracted for all the proposed additional capacity subject to Trunkline LNG achieving certain construction milestones in the expansion of this facility.

On February 11, 2005, Trunkline received approval from the FERC to construct, own and operate a 36-inch diameter, 23-mile natural gas pipeline loop from the LNG terminal. The pipeline creates additional transport capacity in association with the Trunkline LNG expansion and also includes new and expanded delivery points with major interstate pipelines.

In August 2005, Trunkline announced preliminary plans to expand its natural gas pipeline in East Texas through construction of an approximately 45 mile, 30-inch pipeline loop into Louisiana. The expansion project, which is subject to regulatory approval, will give customers increased access to additional Texas supply and provide an additional capacity of approximately .4 bcf/day. The expansion is estimated to be in service in 2007 at an estimated cost of $80 million.

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Other Matters

Customer Concentration. Panhandle provides LNG terminalling and regasification services and a comprehensive array of transportation and storage services to approximately five hundred customers. Such customers are principally located in the midwest and southwest regions of the United States. The following is a comparison of the percent of operating revenue by customer for the ~~three~~six month periods ended ~~March 31,~~June 30, 2005 and 2004.

~~Percent of Operating Revenue for~~

~~Three Months Ended~~

							Percent of Operating Revenue for
							Six Months Ended
	March 31,			March 31,			June 30,
Customer	2005			2004			2005		2004

ProLiance		18			18		17		17
BG LNG Services		13			13		15		15
Ameren		13			9		11		9
CMS Energy subsidiaries (1)		8			10		9		10
Other Top 10 customers		16			20		15		19
Remaining customers		32			30		33		30
Total percentage		100	%		100	%	100	%	100	%

(1) Primarily Consumers Energy

Regulation. Panhandle is subject to regulation by various federal, state and local governmental agencies, including those specifically described below.

The FERC has comprehensive jurisdiction over Panhandle Eastern Pipe Line, Trunkline, Sea Robin, Trunkline LNG, and Southwest Gas Storage as natural gas companies within the meaning of the Natural Gas Act of 1938. The FERC jurisdiction relates, among other things, to the acquisition, operation and disposal of assets and facilities and to the service provided and rates charged.

The FERC has authority to regulate rates and charges for both transportation and storage of natural gas in interstate commerce. The FERC also has authority over the construction and operation of pipeline and related facilities utilized in the transportation and sale of natural gas in interstate commerce, including the extension, enlargement or abandonment of service ~~using~~of such facilities. Panhandle, Trunkline, Sea Robin, Trunkline LNG, and Southwest Gas Storage hold certificates of public convenience and necessity issued by the FERC, authorizing them to construct and operate the pipelines, facilities and properties now in operation for which such certificates are required, and to transport and store natural gas in interstate commerce.

The U.S. Secretary of Energy regulates the importation and exportation of natural gas and has delegated various aspects of this jurisdiction to the FERC and the U.S. Department of Energy's Office of Fossil Fuels.

Panhandle is ~~also~~ subject to the Natural Gas Pipeline Safety Act of 1968 and the Pipeline Safety Improvement Act of 2002, which regulate the safety of gas pipelines. Panhandle is also subject to the Hazardous Liquid Pipeline Safety Act of 1979, which regulates oil and petroleum pipelines.

In 1993, the U.S. Department of the Interior announced its intention to seek, through its Mineral Management Service (MMS), additional royalties from gas producers as a result of payments received by such producers in connection with past take-or-pay settlements and buyouts and buydowns of gas sales contracts with natural gas pipelines. Panhandle Eastern Pipe Line and Trunkline, with respect to certain producer contract settlements, may be contractually required to reimburse or, in some instances, to indemnify producers against such royalty claims. The potential liability of the producers to the government and of the pipelines to the producers involves complex issues of law and fact, which are likely to take substantial time to resolve. If required to reimburse or indemnify the producers, Panhandle Eastern Pipe Line and Trunkline may file with the FERC to recover these costs from pipeline customers. Management believes these commitments and contingencies will not have a material adverse effect on Panhandle’s business, financial condition or results of operations.

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On November 22, 2004, the FERC issued a Notice of Inquiry (NOI) in “Policy for Selective Discounting By Natural Gas Pipelines,” Docket No. RM05-2, et al. In the NOI, the FERC requested comments from the industry on whether the selective discounting policy should continue (including its policy in rate cases to allow pipelines to downward adjust volumes flowing at a discounted rate, for the purpose of determining rates), be modified, or eliminated entirely. On ~~March 2,~~May 31, 2005, ~~numerous industry comments were filed on the NOI. Because it is unclear what action~~ the FERC ~~will take, Panhandle cannot predict what effect the outcome of this proceeding will have~~upheld its current policy on ~~its business, financial condition or results of operations.~~selective discounting.

~~In November 2004,~~On June 30, 2005, the FERC issued an ~~industry-wide Proposed Accounting Release that, if enacted as written, would require~~order, subject to rehearing, on accounting for pipeline assessment costs which requires pipeline companies to expense rather than capitalize certain costs related to mandated pipeline integrity programs (under the Pipeline Safety Improvement Act of 2002). The accounting release ~~was~~determined that assessment activities associated with an integrity management program must be accounted for as maintenance and charged to expense in the period incurred. Costs associated with any remediation or rehabilitation can be capitalized. The accounting guidance is now proposed to be effective January 1, ~~2005, following a period of public comment on the release. Comments were filed on January 19, 2005, including pipeline association comments suggesting that such costs be capitalized.~~2006. Panhandle is ~~awaiting a final release and cannot, at this time, predict~~currently reviewing the ~~final outcome. Panhandle has currently budgeted in 2005 approximately $22 million~~implications of ~~pipeline integrity program costs, of which approximately $3 million of currently capitalized costs would be required to be expensed pursuant to~~ the ~~release.~~FERC accounting order.

Environmental Matters.Panhandle's gas transmission operations are subject to federal, state and local regulations regarding water quality, hazardous and solid waste management, air quality control and other environmental matters. Panhandle has previously identified environmental contamination at certain sites on its gas transmission systems and has undertaken cleanup programs at these sites. The contamination resulted from the past use of lubricants containing PCBs in compressed air systems; the past use of paints containing PCBs; and the prior use of wastewater collection facilities and other on-site disposal areas. Panhandle has developed and implemented a program to remediate such contamination in accordance with federal, state and local regulations. Air quality control regulations include rules relating to regional ozone control and hazardous air pollutants. The regional ozone control rules, known as SIP Call, are designed to control the release of NOx compounds. The rules related to hazardous air pollutants, known as MACT rules, are the result of the 1990 Clean Air Act amendments that regulate the emission of hazardous air pollutants from internal combustion engines and turbines.

PCB Assessment and Clean-up Programs -- Panhandle previously identified environmental contamination at certain sites on its systems and undertook clean-up programs at these sites. The contamination resulted from the past use of lubricants containing PCBs in compressed air systems and the prior use of wastewater collection facilities and other on-site disposal areas. Panhandle is also taking actions regarding PCBs in paints at various locations. For further information, seeNote IX - Commitments and Contingencies - Environmental Matters.

Air Quality Control -- In 1998, the EPA issued a final rule on regional ozone control that requires revised SIPs for twenty-two states, including five states in which Panhandle operates. Panhandle will have completed installation of NOx controls on fourteen engines by the end of 2005 and anticipates placing NOx controls on engines at a total of six compressor station locations. This program is expected to be completed by May 2007.

On July 26, 2005, the Illinois EPA distributed a draft of a rule to control NOx emissions from reciprocating engines and turbines state-wide by May 1, 2007. The state is requiring the controls to comply with the EPA rules regarding the NOx SIP Call, ozone non-attainment and fine particulate standards. The agency is holding a meeting on August 23, 2005 to discuss the draft rule. The agency is expected to propose the rule this fall. The rule is currently being reviewed for potential impact to Panhandle. In the event the rule is adopted as drafted, it would apply to all Panhandle Eastern Pipe Line and Trunkline stations in Illinois and significant expenditures would be required for emission controls.

In 2004, final rules were promulgated by the EPA regarding control of hazardous air pollutants. Over twenty Panhandle engines require controls. MACT controls must be installed by June 2007. In 2002, the Texas Commission on Environmental Quality enacted the Houston/Galveston SIP regulations requiring reductions in NOx emissions in an eight-county area surrounding Houston. Trunkline’s Cypress compressor station is affected and requires the installation of emission controls. New regulations also require certain grandfathered facilities to enter into the new source permit program which may require the installation of emission controls at five additional facilities. The rule affects one company facility owned and operated by Panhandle. Panhandle expects controls to be installed by March 2007. For further information, seeNote IX - Commitments and Contingencies - Environmental Matters.

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Off-Balance Sheet Arrangements and Aggregate Contractual ~~Obligations~~Obligations.. On September 10, 2003, Panhandle Eastern Pipe Line provided a guarantee to CB&I Constructors, Inc. for the full performance by Trunkline LNG, its subsidiary, of the engineering, procurement and construction contract between Trunkline LNG and CB&I Constructors, Inc. Under the terms of the guarantee, Panhandle Eastern Pipe Line would be required to perform should Trunkline LNG be in default of its payment obligations regarding services already rendered. There are no amounts being carried as liabilities for Panhandle Eastern Pipe Line’s obligations under these guarantees. SeeNote IX - Commitments and Contingencies.

~~Table of Contents~~

Contractual Commitments. Panhandle has contractual obligations with regard to future payments of operating leases, debt and natural gas storage service. The following table summarizes Panhandle’s expected contractual obligations and commitments at ~~March 31,~~June 30, 2005.

	Remainder										In Total			Remainder										In Total
	2005		2006		2007		2008		2009		Thereafter			2005		2006		2007		2008		2009		Thereafter

Operating Leases (1)	$	10,176	$	13,837	$	11,435	$	7,349	$	6,109	$	22,559		$	6,769	$	13,320	$	11,366	$	7,491	$	6,245	$	22,559

Total long term debt (2)		-		-		455,626		300,000		60,623		356,805			-		-		455,626		300,000		60,623		356,805

Interest payments on debt (3)		42,232		56,253		44,532		36,048		25,242		146,363			28,630		57,301		44,751		36,048		25,242		146,363

Firm capacity payments (4)		8,612		10,633		8,841		7,396		7,127		31,084			5,718		10,633		8,841		7,396		7,127		31,084

OPEB funding (5)		7,442		7,812		7,812		7,812		7,812		-			3,906		7,812		7,812		7,812		7,812		-

Total	$	68,462	$	88,535	$	528,246	$	358,605	$	106,913	$	556,811		$	45,023	$	89,066	$	528,396	$	358,747	$	107,049	$	556,811

(1) Lease of various assets utilized for operations
(2) Debt principal obligations (includes April 2005 LNG Holdings bank loan refinancing impact)													(2) Debt principal obligations (includes April 2005 LNG Holdings bank loan refinancing impact)
(3) Interest payments at stated rate for Senior Notes and assumed variable rate of approximately 4.0 percent for LNG Holdings bank loans													(3) Interest payments at stated rate for Senior Notes and assumed variable rate of approximately 4.0 percent for LNG Holdings bank loans
(includes April 2005 LNG Holdings bank loan refinancing impact)													(includes April 2005 LNG Holdings bank loan refinancing impact)
(4) Lease of third party storage capacity
(5) Panhandle is committed to the funding levels of $7.8 million per year until modified by future rate proceedings, the timing of which is uncertain													(5) Panhandle is committed to the funding levels of $7.8 million per year until modified by future rate proceedings, the timing of which is uncertain

~~(3) Interest payments at stated rate for Senior Notes and assumed variable rate of approximately 3.6 percent for LNG Holdings bank loans (includes April 2005~~

~~LNG Holdingsbank loan refinancing impact)~~

~~(4) Lease of third party storage capacity~~

~~(5) Panhandle is committed to the funding levels of $7.8 million per year until modified by future rate proceedings, the timing of which is uncertain~~

~~Asset Impairment~~Procedures -- Long-lived assets, including property, plant and equipment and intangibles comprise a significant amount of Panhandle’s total assets. Panhandle makes judgments and estimates about the carrying value of these assets, including amounts to be capitalized, depreciation methods and useful lives. Panhandle also reviews these assets for impairment on a periodic basis or whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The impairment test consists of a comparison of an asset’s fair value with its carrying value; if the carrying value of the asset exceeds its fair value, an impairment loss is recognized in the Consolidated Statement of Operations in an amount equal to that excess.

~~Revenues - --~~Panhandle’s revenues from transportation and storage of natural gas and LNG terminalling are based on capacity reservation charges and commodity usage charges. Reservation revenues are based on contracted rates and capacity reserved by the customers and are recognized monthly. Revenues from commodity usage charges are also recognized monthly, based on the volumes received from or delivered to the customer, depending on the tariff of that particular Panhandle entity, with any differences in received and delivered volumes resulting in an imbalance. Volume imbalances are generally settled in-kind with no impact on revenues, with the exception of Trunkline, which cashes out imbalances pursuant to its tariff, and records gains and losses on such cashout sales as a component of revenue, to the extent not owed back to customers.

~~Significant Customers and Credit Risk~~ -- Panhandle manages trade credit risks to minimize exposure to uncollectible trade receivables. Prospective and existing customers are reviewed for creditworthiness based upon pre-established standards. Customers that do not meet minimum standards are required to provide additional credit support. Panhandle utilizes the allowance method for recording its allowance for uncollectible accounts which is primarily based on the application of historical bad debt percentages applied against Panhandle’s aged accounts receivable. Increases in the allowance are recorded as a component of operation expenses. Reductions in the allowance are recorded when receivables are written off.

~~Accounting for Retirement Benefits~~ --Panhandle follows SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions”, and SFAS No. 132R, “Employers’ Disclosures about Pensions and Other Postretirement Benefits,” as amended, to account for other postretirement benefit costs. For defined benefit plans, under certain circumstances, these statements require liabilities to be recorded on the balance sheet at the present value of these future obligations to employees net of any plan assets. The calculation of these liabilities and associated expenses requires the expertise of actuaries and is subject to many assumptions, including life expectancies, present value discount rates, expected long-term rate of return on plan assets, rate of compensation increase and anticipated health care costs. Any change in these assumptions can significantly change the liability and associated expenses recognized in any given year.

~~Accounting for Derivatives and Hedging Activities~~ -- Panhandle follows SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities”, as amended, to accrue for derivative and hedging activities. Panhandle utilizes interest-rate related derivative instruments to manage its exposure on its debt instruments and does not enter into derivative instruments for any purpose other than hedging purposes. All derivatives are recognized on the balance sheet at their fair value. On the date the derivative contract is entered into, Panhandle designates the derivative as either: (i) a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge) or (ii) a hedge of a forecasted transaction or the variability of cash flows to be received or paid in conjunction with a recognized asset or liability (cash flow hedge). For derivatives treated as a hedge of the fair value of a debt instrument, the effective portion of changes in fair value are recorded as an adjustment to the hedged debt. The ineffective portion of a fair value hedge is recognized in earnings if the short cut method of assessing effectiveness is not used. Upon termination of a fair value hedge of a debt instrument, the resulting gain or loss is amortized to income through the maturity date of the debt instrument. For derivatives treated as hedges of future cash flows, the effective portion of changes in fair value is recorded in other comprehensive income until the related hedge items impact earnings. Any ineffective portion of a hedge is reported in earnings immediately. Upon termination of a cash flow hedge of the variability of cash flows to be paid, the resulting gain or loss is amortized to income through the maturity date of the original designated hedging relationship, unless it is probable that the forecasted transaction will not occur during a specified time period.

~~Accounting for Taxes --~~For federal and certain state income tax purposes, Panhandle’s subsidiaries are not treated as separate taxpayers. Instead, their income is directly taxable to Southern Union. Since its conversion to a limited partnership, Panhandle has been treated as a disregarded entity for federal income tax purposes. Pursuant to a tax sharing agreement with Southern Union, Panhandle will pay its share of taxes based on its taxable income, which will generally equal the liability which Panhandle would have incurred as a separate taxpayer. Panhandle will receive credit under an intercompany note from Southern Union for differences in tax depreciation resulting from the like-kind exchange over the taxable lifeFinancial Reporting Departments, of the ~~related assets.~~

~~Commitments~~design and ~~Contingencies~~ ~~-- Panhandle is subject~~operation of Panhandle’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on that evaluation, Panhandle’s CEO and CFO concluded that its disclosure controls and procedures were effective as of June 30, 2005 and have communicated that determination to ~~proceedings, lawsuits~~the Board of Managers and other claims related to environmental and other matters. Accounting for contingencies requires significant judgments by management regarding the estimated probabilities and ranges of exposure to potential liability. See~~Note IX - Commitments and Contingencies~~.Southern Union’s Audit Committee, which also serves as our Audit Committee.

Cautionary Statement Regarding Forward-Looking Information.

~~ITEM~~ ~~4. Controls and Procedures~~

~~Panhandle performed an evaluation under the supervision and with the participation of its management, including its Chief Executive Officer (~~~~CEO~~~~) and Chief Financial Officer (~~~~CFO~~), and with the participation of personnel from its Legal, Internal Audit and Financial Reporting Departments, of the effectiveness of the design and operation of Panhandle’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on that evaluation, Panhandle’s CEO and CFO concluded that its disclosure controls and procedures were effective as of March 31, 2005 and have communicated that determination to the Board of Managers and Southern Union’s Audit Committee, which also serves as our Audit Committee.

~~Changes in Internal Controls~~

~~PART II.OTHER INFORMATION~~

ITEM 1. LegalProceedings

~~ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds~~

10.1

Credit Agreement dated as of April 26, 2005 by and among Trunkline LNG Holdings LLC as the Borrower, Panhandle Eastern Pipe Line Company, LP as a Guarantor, Trunkline LNG Company, LLC as a Guarantor, and the Banks named therein and Bayerische Hypo- Und Vereinsbank AG, New York Branch as the Agent, the Sole Book Runner and the Sole Lead Arranger (Filed asExhibit 10.1 to Panhandle's Current Report on Form 8-K filed on May 2, 2005, and incorporated herein by reference).

31.1	Certificate by Chief Executive Officer pursuant to Rule 13a - 14(a) or 15d - 14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certificate by Chief Financial Officer pursuant to Rule 13a - 14(a) or 15d - 14(a) promulgated under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	Certificate by Chief Executive Officer pursuant to Rule 13a - 14(b) or 15d - 14(b) promulgated under the Securities Exchange Act of 1934 and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

32.2	Certificate by Chief Financial Officer pursuant to Rule 13a - 14(b) or 15d - 14(b) promulgated under the Securities Exchange Act of 1934 and Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

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~~SIGNATURE~~SIGNATURESS

Pursuant to the requirements of the Securities Exchange Act of 1934, Panhandle Eastern Pipe Line Company, LP has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	PANHANDLE EASTERN PIPE LINE COMPANY, LP


~~Date : May 10,~~ Date: August 9, 2005	By:/s/ THOMAS F. KARAM
	Thomas F. Karam
	Chief Executive Officer

PART I. FINANCIAL INFORMATION:	Page(s)

ITEM 1. Financial Statements (Unaudited):

Consolidated statement of operations- three and six months ended ~~March 31,~~June 30, 2005 and 2004.	22-3

Consolidated balance sheet- ~~March 31,~~June 30, 2005 and December 31, 2004.	~~3-4~~4-5

Consolidated statement of cash flows- ~~three~~six months ended ~~March 31,~~June 30, 2005 and 2004.	5

~~Consolidated statement of owners’ equity and comprehensive income-- three months ended March 31, 2005.~~	6

Consolidated statement of owners’ equity and comprehensive income - six months ended June 30, 2005.	7

Notes to consolidated financial statements.	~~7-20~~8-21

ITEM 2. Management's Discussion and Analysis of Results of Operations and Financial Condition.	~~21-31~~22-30

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk.	3130

ITEM 4. Controls and Procedures.	3130-31

PART II. OTHER INFORMATION:

ITEM 1. Legal Proceedings.	31

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.	3132

ITEM 3. Defaults Upon Senior Securities.	32

ITEM 4. Submission of Matters to a Vote of Security Holders.	32

ITEM 5. Other Information.	32

ITEM 6. Exhibits.	32

SIGNATURES	33

	Three Months		Three Months			Three Months		Three Months		Six Months		Six Months
	Ended March 31,		Ended March 31,		��	Ended June 30,		Ended June 30,		Ended June 30,		Ended June 30,
Related Party Transactions	2005		2004			2005		2004		2005		2004


Transportation and storage of natural gas	$	895	$	977
Transportation and storage of natural gas revenue						$	960	$	956	$	1,855	$	1,932
Operation and maintenance:
Management & royalty fees		3,386		3,222			2,759		3,019		6,145		6,241
Other expenses		3,704		4,472			4,585		4,166		8,289		8,638
Interest income, net		563		279
Other income, net							870		520		1,433		798