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Energy Transfer Equity Reports Third Quarter Results



  Energy Transfer Equity Reports Third Quarter Results

Business Wire

DALLAS -- November 07, 2012

Energy Transfer Equity, L.P. (NYSE:ETE) today reported financial results for
the quarter ended September 30, 2012.

Distributable Cash Flow, as adjusted, for Energy Transfer Equity, L.P. ("ETE"
or the "Partnership") was $189.2 million for the three months ended
September 30, 2012, an increase of $62.9 million over the three months ended
September 30, 2011. ETE's net income attributable to partners was $35.2
million for the three months ended September 30, 2012 as compared to $69.1
million for the three months ended September 30, 2011.

Distributable Cash Flow, as adjusted, for ETE was $476.1 million for the nine
months ended September 30, 2012, an increase of $100.0 million over the nine
months ended September 30, 2011. ETE's net income attributable to partners was
$255.1 million for the nine months ended September 30, 2012 as compared to
$224.0 million for the nine months ended September 30, 2011.

As of and during the three and nine months ended September 30, 2012, ETE's
financial position and operating results were impacted by the following
transactions:

  * Southern Union Acquisition. On March 26, 2012, ETE completed the
    acquisition of Southern Union Company (“Southern Union”) for $5.4 billion
    of cash and ETE Common Units. As such, Southern Union was consolidated in
    ETE's financial statements as of March 26, 2012 and its cash flows were
    included in ETE's Distributable Cash Flow from March 26, 2012 to September
    30, 2012. The cash portion of the Southern Union acquisition purchase
    price was $3.0 billion, which was funded with proceeds from a $2.0 billion
    senior secured term loan and with proceeds from the dropdown transaction
    discussed below.
  * Merger and Finance-related Expenses. In connection with the Southern Union
    acquisition the following expenses were incurred by ETE during the three
    and nine months ended September 30, 2012:

       * $62.2 million in fees recognized during the first quarter of 2012
         related to a bridge loan facility that ETE entered into to initially
         fund the cash consideration of the Southern Union merger;
       * $38.2 million in merger-related costs that were accounted for in
         selling, general and administrative expenses during the nine months
         ended September 30, 2012, respectively; and,
       * $56.8 million of net merger-related expenses incurred directly by
         Southern Union that were consolidated into ETE's operating results
         during the nine months ended September 30, 2012.

  * Citrus Dropdown. Concurrent with the Southern Union acquisition, ETE
    completed the dropdown of Southern Union's 50% interest in Citrus Corp.
    (“Citrus”) to Energy Transfer Partners, L.P. (“ETP”) in exchange for
    approximately $1.9 billion in cash and $105 million of ETP common units.
    The cash proceeds from ETP were used in part to fund a portion of the
    Southern Union acquisition and to repay existing indebtedness at Southern
    Union. Citrus was reflected as an equity method investment on ETE's
    consolidated financial statements from the date of acquisition. In
    connection with this transaction, ETE also relinquished its rights to $220
    million of the incentive distributions from ETP that it would otherwise be
    entitled to receive over 16 consecutive quarters.
  * Propane Contribution. On January 12, 2012, ETP completed the contribution
    of its retail propane operations to AmeriGas Partners, L.P. (“AmeriGas”)
    in exchange for approximately $2.7 billion, consisting of cash and
    AmeriGas common units, which resulted in the recognition of a $1.1 billion
    gain on deconsolidation in ETE's consolidated financial statements during
    the nine months ended September 30, 2012, and ETE's consolidated financial
    statements now reflect ETP's equity method investment in AmeriGas.
  * Tender Offer. ETP used the cash proceeds from the propane contribution
    discussed above to repay borrowings under its existing revolving credit
    facility and to extinguish approximately $750 million in senior notes
    outstanding through a tender offer. As a result of the tender offer, a
    loss on extinguishment of debt of $115 million was recorded during the
    nine months ended September 30, 2012 and recognized in ETE's consolidated
    statement of operations.

The Partnership has scheduled a conference call for 8:30 a.m. Central Time,
Thursday, November 8, 2012 to discuss its third quarter 2012 results. The
conference call will be broadcast live via an internet web cast, which can be
accessed through www.energytransfer.com and will also be available for replay
on the Partnership's website for a limited time.

The Partnership’s principal sources of cash flow historically have derived
from (i) distributions related to its direct and indirect investments in the
limited and general partner interests in ETP and Regency Energy Partners LP
(“Regency”), including 100% of ETP's and Regency's incentive distribution
rights, approximately 50.2 million of ETP's common units and approximately
26.3 million of Regency's common units and (ii) cash flow generated from its
wholly owned subsidiary, Southern Union, which was acquired on March 26, 2012.
Subsequent to October 5, 2012, the Partnership's cash flows will derive from
its investment in ETP and Regency and its 60% interest in Holdco. The
Partnership's primary cash requirements are for general and administrative
expenses, debt service requirements and distributions to its partners and
holders of its Preferred Units.

Use of Non-GAAP Financial Measures

This press release and accompanying schedules include the non-generally
accepted accounting principle (“non-GAAP”) financial measure of Distributable
Cash Flow. The accompanying schedules provide a reconciliation of this
non-GAAP financial measure to its most directly comparable financial measure
calculated and presented in accordance with GAAP. The Partnership's
Distributable Cash Flow should not be considered as an alternative to GAAP
financial measures such as net income, cash flow from operating activities or
any other GAAP measure of liquidity or financial performance.

Distributable Cash Flow. The Partnership defines Distributable Cash Flow for a
period as cash distributions expected to be received from ETP and Regency in
respect of such period in connection with the Partnership's investments in
limited and general partner interests of ETP and Regency, net of the
Partnership's cash expenditures for general and administrative costs and
interest expense. Subsequent to the acquisition of Southern Union on March 26,
2012, the Partnership's definition of Distributable Cash Flow also includes
distributable cash flow related to Southern Union. The Partnership defines
distributable cash flow for Southern Union as net income, adjusted for certain
non-cash items, less maintenance capital expenditures. Non-cash items include
depreciation and amortization, deferred income taxes, non-cash compensation
expense, gains and losses on disposals of assets, the allowance for equity
funds used during construction, and non-cash impairment charges.

Distributable Cash Flow is a significant liquidity measure used by the
Partnership's senior management to compare net cash flows generated by the
Partnership to the distributions the Partnership expects to pay its
unitholders. Using this measure, the Partnership's management can compute the
coverage ratio of estimated cash flows for a period to planned cash
distributions for such period.

Distributable Cash Flow is also an important non-GAAP financial measure for
our limited partners since it indicates to investors whether the Partnership's
investments are generating cash flows at a level that can sustain or support
an increase in quarterly cash distribution levels. Financial measures such as
Distributable Cash Flow are quantitative standards used by the investment
community with respect to publicly traded partnerships because the value of a
partnership unit is in part measured by its yield (which in turn is based on
the amount of cash distributions a partnership can pay to a unitholder). The
GAAP measure most directly comparable to Distributable Cash Flow is net income
for ETE on a stand-alone basis (“Parent Company”). The accompanying analysis
of Distributable Cash Flow is presented for the three and nine months ended
September 30, 2012 and 2011 for comparative purposes.

Distributable Cash Flow, as adjusted. The Partnership defines Distributable
Cash Flow, as adjusted, for a period as cash distributions expected to be
received from ETP and Regency in respect of such period in connection with the
Partnership's investments in limited and general partner interests of ETP and
Regency plus the distributable cash flow related to Southern Union (as
described in the definition of Distributable Cash Flow above), net of the
Partnership's cash expenditures for general and administrative costs and
interest expense, excluding certain items, such as acquisition-related
expenses. Due to the cash expenses that were incurred during the three and
nine months ended September 30, 2012 in connection with the Partnership's
merger and acquisition activities, Distributable Cash Flow, as adjusted, for
the three and nine months ended September 30, 2012 and 2011 is a significant
liquidity measure used by the Partnership's senior management to compare net
cash flows generated by the Partnership to the distributions the Partnership
expects to pay its unitholders. Using this measure, the Partnership's
management can compute the coverage ratio of estimated cash flows for a period
to planned cash distributions for such period. The GAAP measure most directly
comparable to Distributable Cash Flow, as adjusted, is net income (loss) for
the Parent Company on a stand-alone basis. The accompanying analysis of
Distributable Cash Flow, as adjusted, is presented for the three and nine
months ended September 30, 2012 and 2011 for comparative purposes.

Energy Transfer Equity, L.P. (NYSE:ETE) is a master limited partnership, which
owns the general partner and 100% of the incentive distribution rights (IDRs)
of Energy Transfer Partners, L.P. (NYSE:ETP) and approximately 50.2 million
ETP limited partner units; and owns the general partner and 100% of the IDRs
of Regency Energy Partners LP (NYSE:RGP) and approximately 26.3 million RGP
limited partner units. ETE also owns a non-controlling interest in a
corporation (ETP Holdco Corporation) that owns Southern Union Company and
Sunoco, Inc. The ETE family of companies owns approximately 69,000 miles of
natural gas, natural gas liquids, refined products, and crude pipelines. For
more information, visit the Energy Transfer Equity, L.P. web site at
www.energytransfer.com.

Energy Transfer Partners, L.P. (NYSE:ETP) is a master limited partnership
owning and operating one of the largest and most diversified portfolios of
energy assets in the United States. ETP currently has natural gas operations
that include approximately 24,000 miles of gathering and transportation
pipelines, treating and processing assets, and storage facilities. ETP also
owns general partner interests, 100% of the incentive distribution rights, and
a 32.4% limited partnership interest in Sunoco Logistics Partners L.P.
(NYSE:SXL), which operates a geographically diverse portfolio of crude oil and
refined products pipelines, terminalling and crude oil acquisition and
marketing assets. ETP also holds a 70% interest in Lone Star NGL, a joint
venture that owns and operates natural gas liquids storage, fractionation and
transportation assets in Texas, Louisiana and Mississippi. In addition, ETP
holds controlling interest in a corporation (ETP Holdco Corporation) that owns
Southern Union Company and Sunoco, Inc. ETP’s general partner is owned by ETE.
For more information, visit the Energy Transfer Partners, L.P. website at
www.energytransfer.com.

Regency Energy Partners LP (NYSE: RGP) is a growth-oriented, midstream energy
partnership engaged in the gathering and processing, contract compression,
treating and transportation of natural gas and the transportation,
fractionation and storage of natural gas liquids. RGP also holds a 30%
interest in Lone Star NGL LLC, a joint venture that owns and operates natural
gas liquids storage, fractionation, and transportation assets in Texas,
Louisiana and Mississippi. Regency’s general partner is owned by Energy
Transfer Equity, L.P. (NYSE:ETE). For more information, visit the Regency
Energy Partners LP website at www.regencyenergy.com.

Sunoco Logistics Partners L.P. (NYSE:SXL), headquartered in Philadelphia, is a
master limited partnership that owns and operates a logistics business
consisting of a geographically diverse portfolio of complementary pipeline,
terminalling and crude oil acquisition and marketing assets. The Crude Oil
Pipelines segment consists of approximately 5,400 miles of crude oil
pipelines, located principally in Oklahoma and Texas. The Crude Oil
Acquisition and Marketing segment consists of acquisition and marketing of
crude oil and is principally conducted in the midcontinent and consists of
approximately 200 crude oil transport trucks and approximately 120 crude oil
truck unloading facilities. The Terminal Facilities segment consists of
approximately 42 million shell barrels of refined products and crude oil
terminal capacity (including approximately 22 million shell barrels of
capacity at the Nederland Terminal on the Gulf Coast of Texas and
approximately 5 million shell barrels of capacity at the Eagle Point terminal
on the banks of the Delaware River in New Jersey). The Refined Products
Pipelines segment consists of approximately 2,500 miles of refined products
pipelines located in the northeast, midwest and southwest United States, and
equity interests in four refined products pipelines. Sunoco Logistics' general
partner is owned by Energy Transfer Partners, L.P. For more information, visit
the Sunoco Logistics Partners, L.P. web site at  www.sunocologistics.com.

 
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
 
                                                                 
                                               September 30,      December 31,
                                               2012               2011
ASSETS
                                                                   
CURRENT ASSETS                                 $ 1,737,422        $ 1,455,444
                                                                   
PROPERTY, PLANT AND EQUIPMENT, net             22,237,050         14,558,562
                                                                   
NON-CURRENT ASSETS HELD FOR SALE               190,996            —
ADVANCES TO AND INVESTMENTS IN                 4,500,273          1,496,600
AFFILIATES
NON-CURRENT PRICE RISK MANAGEMENT ASSETS       43,566             26,011
GOODWILL                                       3,458,807          2,038,975
INTANGIBLES ASSETS, net                        953,924            1,072,291
OTHER NON-CURRENT ASSETS, net                  475,561            248,910
Total assets                                   $ 33,597,599       $ 20,896,793
                                                                   
                                                                   
LIABILITIES AND EQUITY
                                                                   
CURRENT LIABILITIES                            $ 2,540,273        $ 1,841,313
                                                                   
LONG-TERM DEBT, less current maturities        17,525,668         10,946,864
SERIES A CONVERTIBLE PREFERRED UNITS           327,960            322,910
DEFERRED INCOME TAXES                          1,954,144          217,244
NON-CURRENT PRICE RISK MANAGEMENT              173,838            81,415
LIABILITIES
OTHER NON-CURRENT LIABILITIES                  311,713            26,958
                                                                   
COMMITMENTS AND CONTINGENCIES
                                                                   
PREFERRED UNITS OF SUBSIDIARY                  72,549             71,144
                                                                   
EQUITY:
Total partners' capital                        2,197,909          53,484
Noncontrolling interest                        8,493,545          7,335,461
Total equity                                   10,691,454         7,388,945
Total liabilities and equity                   $ 33,597,599       $ 20,896,793
                                                                     

 
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per unit data)
(unaudited)
 
                                                     
                        Three Months Ended            Nine Months Ended
                        September 30,                 September 30,
                        2012          2011            2012            2011
REVENUES:
Natural gas             $ 789,634     $ 796,323       $ 1,928,913     $ 2,320,208
sales
NGL sales               584,475       507,616         1,704,860       1,187,616
Gathering,
transportation          635,340       479,279         1,724,756       1,335,201
and other fees
Retail propane          —             213,496         87,082          962,258
sales
Other                   161,513       87,300          364,910         219,600      
Total revenues          2,170,962     2,084,014       5,810,521       6,024,883    
COSTS AND
EXPENSES:
Cost of                 1,244,418     1,347,587       3,250,485       3,807,320
products sold
Operating               216,673       230,909         645,129         667,084
expenses
Depreciation
and                     219,458       151,429         589,080         426,216
amortization
Selling,
general and             124,380       82,564          395,584         224,957      
administrative
Total costs and         1,804,929     1,812,489       4,880,278       5,125,577    
expenses
OPERATING               366,033       271,525         930,243         899,306
INCOME
OTHER INCOME
(EXPENSE):
Interest
expense, net of         (237,802  )   (193,772  )     (732,387    )   (543,218    )
interest
capitalized
Bridge loan             —             —               (62,241     )   —
related fees
Equity in
earnings of             19,924        28,374          117,619         82,634
unconsolidated
affiliates
Gain on
deconsolidation         —             —               1,056,709       —
of Propane
Business
Losses on
extinguishments         —             —               (122,844    )   —
of debt
Losses on
non-hedged              (6,118    )   (68,497   )     (23,296     )   (65,094     )
interest rate
derivatives
Other, net              (84       )   27,902          28,628          15,752       
INCOME FROM
CONTINUING
OPERATIONS              141,953       65,532          1,192,431       389,380
BEFORE INCOME
TAX EXPENSE
Income tax              28,625        3,290           40,379          18,415       
expense
INCOME FROM
CONTINUING              113,328       62,242          1,152,052       370,965
OPERATIONS
Loss from
discontinued            (147,162  )   (1,543    )     (150,062    )   (4,522      )
operations
NET INCOME              (33,834   )   60,699          1,001,990       366,443
(LOSS)
LESS: NET
INCOME (LOSS)
ATTRIBUTABLE TO         (69,004   )   (8,384    )     746,900         142,435      
NONCONTROLLING
INTEREST
NET INCOME
ATTRIBUTABLE TO         35,170        69,083          255,090         224,008
PARTNERS
GENERAL
PARTNER’S               87            214             725             693          
INTEREST IN NET
INCOME
LIMITED
PARTNERS’               $ 35,083      $ 68,869        $ 254,365       $ 223,315    
INTEREST IN NET
INCOME
INCOME FROM
CONTINUING
OPERATIONS PER
LIMITED PARTNER
UNIT:
Basic                   $ 0.65        $ 0.32          $ 1.54          $ 1.02       
Diluted                 $ 0.65        $ 0.32          $ 1.54          $ 1.02       
NET INCOME PER
LIMITED PARTNER
UNIT:
Basic                   $ 0.13        $ 0.31          $ 0.97          $ 1.00       
Diluted                 $ 0.13        $ 0.31          $ 0.97          $ 1.00       
                                                                                   

                                                         
ENERGY TRANSFER EQUITY, L.P.
DISTRIBUTABLE CASH FLOW
(Tabular amounts in thousands)
(unaudited)
The following table presents the calculation and reconciliation of Distributable
Cash Flow and Distributable Cash Flow, as adjusted, of Energy Transfer Equity, L.P.
                                                           
                            Three Months Ended            Nine Months Ended
                            September 30,                 September 30,
                            2012          2011            2012          2011
Cash distributions
from ETP associated
with: ^(1)
General partner             $ 4,935       $ 4,898         $ 14,768      $ 14,690
interest
Incentive                   147,310       103,714         381,487       310,254
distribution rights
Limited partner             44,890        44,890          134,671       134,670    
interest
Total                       197,135       153,502         530,926       459,614
IDR relinquishment
related to Citrus           (31,250   )   —               (58,750   )   —          
Dropdown and Sunoco
Merger
Total cash
distributions from          165,885       153,502         472,176       459,614
ETP
Cash distributions
from Regency
associated with: ^
(2)
General partner             1,322         1,305           3,968         3,861
interest
Incentive                   2,083         1,681           6,231         4,133
distribution rights
Limited partner             12,083        11,951          36,248        35,460     
interest
Total cash
distributions from          15,488        14,937          46,447        43,454     
Regency
Total cash
distributions from          181,373       168,439         518,623       503,068
ETP and Regency
Distributable cash
flow attributable
to Southern Union           76,523        —               82,079        —
(including
acquisition-related
expenses) ^ (3)
Deduct expenses of
the Parent Company
on a stand-alone
basis:
Selling, general
and administrative
expenses, excluding         (6,305    )   (11,559   )     (47,571   )   (25,264   )
non-cash
compensation
expense ^(4)
Interest expense,
net of amortization
of financing costs,
interest                    (63,874   )   (40,002   )     (171,945  )   (120,240  )
income, and
realized gains and
losses on interest
rate swaps ^ (4)
Bridge financing            —             —               (62,241   )   —          
costs
Distributable Cash          187,717       116,878         318,945       357,564
Flow ^(5)
Acquisition-related         1,435         9,503           157,174       18,542     
expenses ^(4)
Distributable Cash
Flow, as adjusted           $ 189,152     $ 126,381       $ 476,119     $ 376,106  
^(5)
                                                                         
Cash distributions
to be paid to the
partners of ETE:
^(6)
Distributions to be
paid to limited             $ 174,972     $ 139,358       $ 524,916     $ 403,564
partners
Distributions to be
paid to general             433           433             1,298         1,254      
partner
Total cash
distributions to be
paid to the                 $ 175,405     $ 139,791       $ 526,214     $ 404,818  
partners of ETE
^(5)
                                                                         
Reconciliation of
Non-GAAP
“Distributable Cash
Flow” and
“Distributable Cash
Flow, as adjusted”
to GAAP “Net income
attributable to
partners":
Net income
attributable to             $ 35,170      $ 69,083        $ 255,090     $ 224,008
partners
Equity in income
related to                  (101,227  )   (102,565  )     (562,066  )   (369,833  )
investments in ETP
and Regency
Total cash
distributions from          181,373       168,439         518,623       503,068
ETP and Regency
Amortization
included in
interest expense            4,606         814             9,983         2,094
(excluding ETP and
Regency)
Fair value
adjustment of ETE           8,100         (19,190   )     5,050         (2,620    )
Preferred Units
Other non-cash
(excluding ETP and          59,695        297             92,265        847        
Regency)
Distributable Cash          187,717       116,878         318,945       357,564
Flow
Acquisition-related         1,435         9,503           157,174       18,542     
expenses ^(4)
Distributable Cash          $ 189,152     $ 126,381       $ 476,119     $ 376,106  
Flow, as adjusted
                                                                                   

       For the three months ended September 30, 2012, cash distributions
       expected to be received from ETP consist of cash distributions in
       respect of the quarter ended September 30, 2012 payable on November 14,
       2012 to holders of record on November 6, 2012 and also take into
^(1)   consideration a reduction in incentive distributions of $31.3 million
       related to recent transactions. For the three months ended September
       30, 2011, cash distributions received from ETP consist of cash
       distributions paid on November 14, 2011 in respect of the quarter ended
       September 30, 2011.
        
       For the nine months ended September 30, 2012, cash distributions
       received or expected to be received from ETP consist of cash
       distributions paid on May 15, 2012 in respect of the quarter ended
       March 31, 2012, cash distributions paid on August 14, 2012 in respect
       of the quarter ended June 30, 2012, and cash distributions in respect
       of the three months ended September 30, 2012 payable on November 14,
       2012 to holders of record on November 6, 2012 and also take into
       consideration a reduction in incentive distributions of $58.8 million
       related to recent transactions. For the nine months ended September 30,
       2011, cash distributions received from ETP consist of cash
       distributions paid on May 16, 2011 in respect of the quarter ended
       March 31, 2011, cash distributions paid on August 15, 2011 in respect
       of the quarter ended June 30, 2011, and cash distributions paid on
       November 14, 2011 in respect of the quarter ended September 30, 2011.
        
       For the three months ended September 30, 2012, cash distributions
       expected to be received from Regency consist of cash distributions in
       respect of the quarter ended September 30, 2012 payable on November 14,
^(2)   2012 to holders of record on November 6, 2012. For the three months
       ended September 30, 2011 cash distributions received from Regency
       consist of cash distributions paid on November 14, 2011 in respect of
       the quarter ended September 30, 2011.
        
       For the nine months ended September 30, 2012, cash distributions
       received or expected to be received from Regency consist of cash
       distributions paid on May 14, 2012 in respect of the quarter ended
       March 31, 2012, cash distributions paid on August 14, 2012 in respect
       of the quarter ended June 30, 2012, and cash distributions in respect
       of the three months ended September 30, 2012 payable on November 14,
       2012 to holders of record on November 6, 2012. For the nine months
       ended September 30, 2011, cash distributions received from Regency
       consist of cash distributions paid on May 13, 2011 in respect of the
       quarter ended March 31, 2011, cash distributions paid on August 12,
       2011 in respect of the quarter ended June 30, 2011, and cash
       distributions paid November 14, 2011 in respect of the quarter ended
       September 30, 2011.
        
^(3)   Distributable cash flow attributable to Southern Union was calculated
       as follows:

                                                          
                                                           Period from
                                    Three Months Ended     Acquisition
                                    September 30, 2012     (March 26, 2012) to
                                                           September 30, 2012
Net income                          $    16,986            $    (9,796     )
Amortization of finance             (12,394        )       (20,938         )
costs charged to interest
Depreciation and                    75,710                 154,909
amortization
Deferred income taxes               27,106                 25,548
Non-cash equity-based
compensation, accretion             144                    5,004
expense and amortization of
regulatory assets
Other non-cash
gains/revenues or                   7,798                  12,525
losses/expenses
Losses from unconsolidated          1,065                  381
investments
Distributions received from         2,010                  4,368
unconsolidated investments
Other, net                          69                     (122            )
Maintenance capital                 (41,971        )       (89,800         )
expenditures
Distributable cash flow
attributable to Southern            76,523                 82,079
Union
Acquisition-related
expenses recognized by              1,435                  56,815           
Southern Union
Distributable cash flow, as
adjusted, attributable to           $    77,958            $    138,894     
Southern Union

       Distributable cash flow attributable to Southern Union for the period
       from our acquisition to September 30, 2012 reflected above included
       change in control payments and legal and other outside service costs
       totaling $72.1 million offset by benefit plan curtailment gains of
       $15.3 million. The net amount of $56.8 million was included in
       merger-related expenses that were added back to calculate ETE's
       Distributable Cash Flow, as adjusted.
        
       Transaction costs for the nine months ended September 30, 2012 related
       to ETE's acquisition of Southern Union consisted of $62.2 million
^(4)   bridge financing costs, $38.2 million of selling, general and
       administrative expenses incurred by ETE and $56.8 million of
       merger-related expenses that were incurred directly by Southern Union.
        
       For the nine months ended September 30, 2012, total cash distributions
       to be paid to the partners of ETE exceeded ETE's Distributable Cash
       Flow and Distributable Cash Flow, as adjusted, primarily due to the
       timing of the Southern Union acquisition. In connection with the
       Southern Union acquisition, ETE issued 56,982,160 million ETE Common
^(5)   Units on March 26, 2012, the unitholders of which received the first
       quarter 2012 distribution of $0.625 per unit and will receive the third
       quarter 2012 distribution of $0.625 per unit, as announced July 26,
       2012. However, ETE's Distributable Cash Flow and Distributable Cash
       Flow, as adjusted, both reflect cash flows from Southern Union for the
       period from acquisition (March 26, 2012) through September 30, 2012
       rather than the full nine months.
        
       For the three months ended September 30, 2012, cash distributions
       expected to be paid by ETE consist of cash distributions in respect of
       the quarter ended September 30, 2012 payable on November 16, 2012 to
^(6)   holders of record on November 6, 2012. For the three months ended
       September 30, 2011, cash distributions paid by ETE consist of cash
       distributions paid on November 18, 2011 in respect of the quarter ended
       September 30, 2011.
        
       For the nine months ended September 30, 2012, cash distributions paid
       or expected to be paid by ETE consist of cash distributions paid on May
       18, 2012 in respect of the quarter ended March 31, 2012, cash
       distributions paid on August 17, 2012 in respect of the quarter ended
       June 30, 2012, and cash distributions in respect of the three months
       ended September 30, 2012 payable on November 16, 2012 to holders of
       record on November 6, 2012. For the nine months ended September 30,
       2011, cash distributions paid or expected to be paid by ETE consist of
       cash distributions paid on May 19, 2011 in respect of the quarter ended
       March 31, 2011, cash distributions paid on August 19, 2011 in respect
       of the quarter ended June 30, 2011 and cash distributions paid on
       November 18, 2011 in respect of the quarter ended September 30, 2011.
        

SUPPLEMENTAL INFORMATION
RESULTS OF OPERATIONS FOR SOUTHERN UNION COMPANY
(Tabular amounts in thousands)
(unaudited)

Supplemental Data

Following is a summary of Southern Union's results for the three and nine
months ended September 30, 2012 compared to the three and nine months ended
September 30, 2011. The results of Southern Union shown below include periods
prior and subsequent to ETE's consolidation of Southern Union, which began
upon the acquisition on March 26, 2012. By the application of "push-down"
accounting, the Company allocated the purchase price paid by ETE to its
assets, liabilities and equity as of the acquisition date based on preliminary
estimates. Accordingly, the successor financial statements reflect a new basis
of accounting and predecessor and successor period financial results
(separated by a heavy black line) are presented, but are not comparable. The
step-up in basis primarily impacted the depreciation, amortization, and
interest expense recognized by Southern Union in the post-acquisition periods,
which amounts were accordingly reflected in ETE's consolidated financial
statements, and will continue to be impacted by the step-up in basis going
forward.

Southern Union defines Segment Adjusted EBITDA as earnings before interest,
taxes, depreciation, amortization and other non-cash items, such as non-cash
compensation expense, unrealized gains and losses on unhedged derivative
activities, and other non-operating income or expense items. Segment Adjusted
EBITDA reflects amounts for less than wholly owned subsidiaries and
unconsolidated affiliates based on Southern Union's proportionate ownership.

Segment Adjusted EBITDA may not be comparable to measures used by other
companies and should be considered in conjunction with net earnings and other
performance measures such as operating income or net cash flows provided by
operating activities.

The following table presents Southern Union's Segment Adjusted EBITDA for each
of the reportable segments reflected in Southern Union's consolidated
financial statements, as well as a reconciliation of the total of Segment
Adjusted EBITDA for all of Southern Union's segments to Southern Union's net
earnings.

                                                                        
                     Successor         Predecessor     Successor         Predecessor
                     Three             Three           Period from
                     months            months          Acquisition       Period from   Nine months
                     ended             ended           (March 26,        January 1,    ended
                     September         September       2012) to          2012 to       September
                     30,               30,             September         March 25,     30,
                     2012              2011            30,               2012          2011
                                                       2012
Segment
Adjusted
EBITDA:
Transportation
and storage          $ 122,486         $ 199,952       $ 205,130         $ 185,706     $ 570,072
segment
Gathering and
processing           25,296            34,234          36,155            25,338        94,440
segment
Distribution         22,461            14,369          35,907            33,554        58,673
segment
Corporate and
other                (1,065    )       (1,255    )     (2,471    )       (18,845   )   (70       )
activities
Total Segment
Adjusted             169,178           247,300         274,721           225,753       723,115
EBITDA
Depreciation
and                  (75,710   )       (59,327   )     (154,909  )       (56,544   )   (177,949  )
amortization
Unrealized
gains (losses)
on nonhedged         —                 5,130           —                 —             (9,283    )
derivative
activities
Interest             (34,639   )       (54,925   )     (96,323   )       (50,407   )   (165,429  )
expense
Income tax           (28,959   )       (24,446   )     (27,883   )       (22,871   )   (68,676   )
expense
Non-cash
equity-based
compensation,
accretion
expense              (7,256    )       (2,926    )     (12,116   )       (1,350    )   (7,580    )
and
amortization
of regulatory
assets
Net gain on
curtailment of       —                 —               15,332            —             —
OPEB plans
Other, net           (755      )       191             (564      )       284           557
Earnings
(losses) from        (1,065    )       26,686          (381      )       16,160        78,435
unconsolidated
investments
Adjusted
EBITDA
attributable         (3,808    )       (79,651   )     (7,673    )       (61,108   )   (194,723  )
to
unconsolidated
investments
Net income           $ 16,986          $ 58,032        $ (9,796  )       $ 49,917      $ 178,467  
(loss)
                                                                                                  

Southern Union's Segment Adjusted EBITDA was impacted between the predecessor
and successor periods due to its contribution of its investment in Citrus to
ETP. For the three and nine months ended September 30, 2011, Southern Union's
transportation and storage Segment Adjusted EBITDA included Adjusted EBITDA
attributable to Citrus of $79.3 million and $193.3 million, respectively.

Contact:

Investor Relations:
Energy Transfer
Brent Ratliff , 214-981-0700
or
Media Relations:
Granado Communications Group
Vicki Granado, 214-599-8785
cell: 214-498-9272
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