Duncan Energy Partners (DEP: chart, web, Y!) chairman Dan Duncan passed away in his home on Sunday night.

Duncan was no spring chicken, but in recent interviews, he really didn’t show any signs of, well…. decline.

The company indicated that it does not intend to change ownership or management of the partnerships, but it does leave the average DEP stockholder to question how the interests of the partnership going forward will be aligned with shareholders.

Ideally, you want all parties interests to be aligned.  If the CEO holds 50% of the shares and depends on the value of those shares appreciating in value, as a smaller stakes shareholder, you can feel somewhat secure that he’ll strive to create growth and value in the company to keep the value of the shares going up.  In essence, your general interests in the company are aligned.

Now that Duncan isn’t around, it will be interesting to see how interests of all parties line up.

Investing Dan Duncan, DEP

Duncan Energy Partners (DEP: chart, web, Y!) reported Q3 financials today. They reported a net income of $4.5 million for the quarter, which rounds out to $0.22 per unit, fully diluted share, missing Reuters estimates by $0.01 per share.

Gross operating margin was $19.1 million for Q307 as compared to $22.5 million for Q306. The difference can be attributed to business interruption insurance recoveries, startup expenses for 2007 (remember that DEP went public in February of this year) and the write off of conversion costs when they tried to convert a NGL storage cavern to a natural gas storage cavern, and determined the cavern would not be suitable for natural gas storage.

Consequently, if you adjust for these unusual costs incurred in 2007, the gross operating margin was ahead of that in 2006.

Distributable cash flow for the third quarter was $8.7 million.

“We are pleased to increase the cash distribution rate to our partners this quarter for the first time since our IPO in February,” said Richard H. Bachmann, president and chief executive officer of the general partner of Duncan Energy Partners. “Future increases in the quarterly cash distribution rate are expected as the distributable cash flow from our commercial businesses, whether from our existing assets or the acquisition and/or construction of new assets, warrant.” -Source

Higher than expected capital expenditures brought the overall distributable cash flow for the quarter down, part of which was due to a state requirement to have partial pipeline integrity done by the middle of December.

Bachmann went on to say that he expects the capital expenditure levels to drop going through 2008.

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