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Energy Transfer Partners Reports First Quarter Results



  Energy Transfer Partners Reports First Quarter Results

Business Wire

DALLAS -- May 8, 2013

Energy Transfer Partners, L.P. (NYSE: ETP) today reported its financial
results for the quarter ended March 31, 2013.

Adjusted EBITDA for Energy Transfer Partners, L.P. (“ETP” or the
“Partnership”) for the three months ended March 31, 2013 totaled $956 million,
an increase of $462 million compared to the same period last year.
Distributable Cash Flow for the three months ended March 31, 2013 totaled $622
million, an increase of $351 million compared to the same period last year.
Income from continuing operations for the three months ended March 31, 2013
was $402 million, a decrease of $687 million compared to the same period last
year that was primarily due to the recognition of a $1.06 billion gain as a
result of the contribution of ETP’s Propane Business in January 2012. The
increases in Adjusted EBITDA and Distributable Cash Flow were primarily due to
strategic acquisitions in 2012, including Sunoco, Inc. (“Sunoco”) and
ownership interests in Citrus Corp (“Citrus”), Sunoco Logistics Partners L.P.
(“Sunoco Logistics”), and ETP Holdco Corporation (“Holdco”).

The Partnership’s key accomplishments to date in 2013 include the following:

  * During the first quarter of 2013, Phase I of the Jackson Plant was
    completed.
  * On April 30, 2013, the Partnership acquired from Energy Transfer Equity,
    L.P. (“ETE”) its interest in Holdco for approximately 49.5 million newly
    issued ETP common units and $1.4 billion in cash, less $68 million of
    estimated closing adjustments.
  * On April 30, 2013, Southern Union Company (“Southern Union”) contributed
    its interest in Southern Union Gathering Company, LLC to Regency Energy
    Partners LP (“Regency”), a subsidiary of ETE, in exchange for cash and
    Regency common units.
  * On May 6, 2013, the Partnership's subsidiaries, Sunoco Logistics and Lone
    Star NGL LLC, announced that long-term, fee-based agreements have been
    executed with an anchor tenant to move forward with a liquefied petroleum
    gas (LPG) export/import project.

An analysis of the Partnership’s segment results and other supplementary data
is provided after the financial tables shown below. The Partnership has
scheduled a conference call for 8:30 a.m. Central Time, Thursday, May 9, 2013
to discuss the first quarter 2013 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.

Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures
used by industry analysts, investors, lenders, and rating agencies to assess
the financial performance and the operating results of the Partnership’s
fundamental business activities and should not be considered in isolation or
as a substitute for net income, income from operations, cash flows from
operating activities, or other GAAP measures. A table reconciling Adjusted
EBITDA and Distributable Cash Flow with appropriate GAAP financial measures is
included in the summarized financial information included in this release.
Beginning with the quarter ended December 31, 2012 and applied retroactively
to all periods presented, the Partnership has revised its calculation of
Adjusted EBITDA and Distributable Cash Flow. (See notes under “Supplemental
Information” for further information.)

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 47,000 miles of gathering and transportation
pipelines, treating and processing assets, and storage facilities. ETP owns
100% of ETP Holdco Corporation, which owns Southern Union Company and Sunoco,
Inc., and a 70% interest in Lone Star NGL LLC, a joint venture that owns and
operates natural gas liquids storage, fractionation and transportation assets.
ETP also owns the general partner, 100% of the incentive distribution rights,
and approximately 33.5 million common units 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’s general partner is owned by ETE. For more information,
visit the Energy Transfer Partners, L.P. website at www.energytransfer.com.

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 99.7 million
ETP common units; and owns the general partner and 100% of the IDRs of Regency
Energy Partners LP (NYSE: RGP) and approximately 26.3 million RGP common
units. The Energy Transfer family of companies owns more than 71,000 miles of
natural gas, natural gas liquids, refined products, and crude pipelines. For
more information, visit the Energy Transfer Equity, L.P. website at
www.energytransfer.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 crude oil
and refined product pipeline, terminalling, and acquisition and marketing
assets. SXL’s general partner is owned by Energy Transfer Partners, L.P.
(NYSE: ETP). For more information, visit the Sunoco Logistics Partners, L.P.
web site at www.sunocologistics.com.

The information contained in this press release is available on our website at
www.energytransfer.com.

 
 
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
(unaudited)
 
                                                    March 31,     December 31,
                                                    2013          2012
ASSETS
                                                                   
CURRENT ASSETS                                      $  6,359      $   5,404
                                                                   
PROPERTY, PLANT AND EQUIPMENT, net                     26,007         25,773
                                                                   
NON-CURRENT ASSETS HELD FOR SALE                       992            985
ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED          3,489          3,502
AFFILIATES
NON-CURRENT PRICE RISK MANAGEMENT ASSETS               35             42
GOODWILL                                               5,586          5,606
INTANGIBLE ASSETS, net                                 1,544          1,561
OTHER NON-CURRENT ASSETS, net                          356            357
Total assets                                        $  44,368     $   43,230
                                                                   
LIABILITIES AND EQUITY
                                                                   
CURRENT LIABILITIES                                 $  5,783      $   5,548
                                                                   
NON-CURRENT LIABILITIES HELD FOR SALE                  142            142
LONG-TERM DEBT, less current maturities                16,135         15,442
LONG-TERM NOTES PAYABLE — RELATED PARTY                166            166
NON-CURRENT PRICE RISK MANAGEMENT LIABILITIES          124            129
DEFERRED INCOME TAXES                                  3,541          3,476
OTHER NON-CURRENT LIABILITIES                          1,008          995
                                                                   
COMMITMENTS AND CONTINGENCIES
                                                                   
EQUITY:
Total partners’ capital                                9,340          9,201
Noncontrolling interest                                8,129          8,131
Total equity                                           17,469         17,332
Total liabilities and equity                        $  44,368     $   43,230

 
 
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions, except per unit data)
(unaudited)
 
                                           Three Months Ended March 31,
                                           2013                2012^(1)
REVENUES                                   $ 10,854            $ 1,323
COSTS AND EXPENSES:
Cost of products sold                        9,594               781
Operating expenses                           304                 130
Depreciation and amortization                260                 99
Selling, general and administrative          162                 104          
Total costs and expenses                     10,320              1,114        
OPERATING INCOME                             534                 209
OTHER INCOME (EXPENSE):
Interest expense, net of interest            (211        )       (141        )
capitalized
Equity in earnings of unconsolidated         72                  55
affiliates
Gain on deconsolidation of Propane           —                   1,056
Business
Loss on extinguishment of debt               —                   (115        )
Gains on interest rate derivatives           7                   28
Other, net                                   3                   (1          )
INCOME FROM CONTINUING OPERATIONS            405                 1,091
BEFORE INCOME TAX EXPENSE
Income tax expense from continuing           3                   2            
operations
INCOME FROM CONTINUING OPERATIONS            402                 1,089
Income (loss) from discontinued              22                  (1          )
operations
NET INCOME                                   424                 1,088
LESS: NET INCOME (LOSS) ATTRIBUTABLE         102                 (27         )
TO NONCONTROLLING INTEREST
NET INCOME ATTRIBUTABLE TO PARTNERS          322                 1,115
GENERAL PARTNER’S INTEREST IN NET            128                 117          
INCOME
LIMITED PARTNERS’ INTEREST IN NET          $ 194               $ 998          
INCOME
INCOME FROM CONTINUING OPERATIONS PER
LIMITED PARTNER UNIT:
Basic                                      $ 0.60              $ 4.37         
Diluted                                    $ 0.60              $ 4.36         
NET INCOME PER LIMITED PARTNER UNIT:
Basic                                      $ 0.63              $ 4.36         
Diluted                                    $ 0.63              $ 4.35         
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING:
Basic                                        300,831,573         226,549,263  
Diluted                                      301,832,910         227,406,484  

       In accordance with generally accepted accounting principles, amounts
       previously reported for interim periods in 2012 have been revised to
       reflect the retrospective consolidation of Southern Union into ETP as a
^(1)   result of the Holdco Transaction as the transfer of Southern Union into
       Holdco met the definition of a transaction between entities under
       common control. Thus, Southern Union is retroactively consolidated
       beginning March 26, 2012, the date that ETE completed its merger with
       Southern Union.

 
 
SUPPLEMENTAL INFORMATION
(Dollars in millions)
(unaudited)
 
                                                  Three Months Ended March 31,
                                                  2013            2012 (b) (c)
Reconciliation of net income to Adjusted
EBITDA and Distributable Cash Flow (a):
Net income                                        $  424          $  1,088
Interest expense, net of interest capitalized        211             141
Gain on deconsolidation of Propane Business          —               (1,056  )
Income tax expense                                   3               2
Depreciation and amortization                        260             99
Non-cash compensation expense                        14              11
Gains on interest rate derivatives                   (7    )         (28     )
Unrealized (gains) losses on commodity risk          (19   )         86
management activities
LIFO valuation adjustment                            (38   )         —
Loss on extinguishment of debt                       —               115
Adjusted EBITDA related to unconsolidated            165             99
affiliates
Equity in earnings of unconsolidated                 (72   )         (55     )
affiliates
Other, net                                           15              (8      )
Adjusted EBITDA                                      956             494
Adjusted EBITDA related to unconsolidated            (165  )         (99     )
affiliates
Distributions from unconsolidated affiliates         95              42
Interest expense, net of interest capitalized        (211  )         (141    )
Income tax expense                                   (3    )         (2      )
Maintenance capital expenditures                     (51   )         (24     )
Other, net                                           1               1        
Distributable Cash Flow                           $  622          $  271      
                                                                   
Distributions to be paid to the partners of
ETP (d):
Limited Partners:
Common units held by ETE                          $  45           $  45
Common units held by public                          241             160
General Partner interest held by ETE                 5               5
Incentive Distribution Rights (“IDR”) held by        156             114      
ETE
                                                     447             324
IDR relinquishment related to previous               (31   )         (14     )
acquisitions
Total distributions to be paid to the                416             310
partners of ETP
                                                                   
Distributions to be paid to noncontrolling
interests:
Distributions to ETE in respect of Holdco (e)        50              —
Distributions to Regency in respect of Lone          23              11
Star (f)
Distributions to Sunoco Logistics unitholders        40              —        
(common units held by public) (g)
Total distributions to be paid to                    113             11       
noncontrolling interests
Total distributions to be paid to the             $  529          $  321      
partners of ETP and noncontrolling interests

     
      The Partnership has disclosed in this press release Adjusted EBITDA and
      Distributable Cash Flow, which are non-GAAP financial measures.
      Management believes Adjusted EBITDA and Distributable Cash Flow provide
      useful information to investors as measures of comparison with peer
(a)   companies, including companies that may have different financing and
      capital structures. The presentation of Adjusted EBITDA and
      Distributable Cash Flow also allows investors to view our performance in
      a manner similar to the methods used by management and provides
      additional insight into our operating results.
       
      There are material limitations to using measures such as Adjusted EBITDA
      and Distributable Cash Flow, including the difficulty associated with
      using either as the sole measure to compare the results of one company
      to another, and the inability to analyze certain significant items that
      directly affect a company’s net income or loss or cash flows. In
      addition, our calculations of Adjusted EBITDA and Distributable Cash
      Flow may not be consistent with similarly titled measures of other
      companies and should be viewed in conjunction with measurements that are
      computed in accordance with GAAP, such as gross margin, operating
      income, net income, and cash flow from operating activities.
       
      Definition of Adjusted EBITDA
       
      The Partnership defines Adjusted EBITDA as total partnership earnings
      before interest, taxes, depreciation, amortization and other non-cash
      items, such as non-cash compensation expense, gains and losses on
      disposals of assets, the allowance for equity funds used during
      construction, unrealized gains and losses on commodity risk management
      activities, non-cash impairment charges, loss on extinguishment of debt,
      gain on deconsolidation of our Propane Business and other non-operating
      income or expense items. Unrealized gains and losses on commodity risk
      management activities include unrealized gains and losses on commodity
      derivatives and inventory fair value adjustments (excluding lower of
      cost or market adjustments). Adjusted EBITDA reflects amounts for less
      than wholly owned subsidiaries based on 100% of the subsidiaries’
      results of operations and for unconsolidated affiliates based on the
      Partnership’s proportionate ownership.
       
      Adjusted EBITDA is used by management to determine our operating
      performance and, along with other financial and volumetric data, as
      internal measures for setting annual operating budgets, assessing
      financial performance of our numerous business locations, as a measure
      for evaluating targeted businesses for acquisition and as a measurement
      component of incentive compensation.
       
      Definition of Distributable Cash Flow
       
      The Partnership defines Distributable Cash Flow as net income, adjusted
      for certain non-cash items, less maintenance capital expenditures.
      Non-cash items include depreciation and amortization, non-cash
      compensation expense, gains and losses on disposals of assets, the
      allowance for equity funds used during construction, unrealized gains
      and losses on commodity risk management activities, non-cash impairment
      charges, loss on extinguishment of debt and gain on deconsolidation of
      our Propane Business. Unrealized gains and losses on commodity risk
      management activities includes unrealized gains and losses on commodity
      derivatives and inventory fair value adjustments (excluding lower of
      cost or market adjustments). Distributable Cash Flow reflects earnings
      from unconsolidated affiliates on a cash basis.
       
      Distributable Cash Flow is used by management to evaluate our overall
      performance. Our partnership agreement requires us to distribute all
      available cash, and Distributable Cash Flow is calculated to evaluate
      our ability to fund distributions through cash generated by our
      operations.
       
      In accordance with generally accepted accounting principles, amounts
      previously reported for interim periods in 2012 have been revised to
      reflect the retrospective consolidation of Southern Union into ETP as a
(b)   result of the Holdco Transaction as the transfer of Southern Union into
      Holdco met the definition of a transaction between entities under common
      control. Thus, Southern Union is retroactively consolidated beginning
      March 26, 2012, the date that ETE completed its merger with Southern
      Union.
       
      The Partnership has presented Adjusted EBITDA and Distributable Cash
      Flow in previous communications; however, the Partnership changed its
      definition for these non-GAAP measures in the quarter ended December 31,
      2012 to reflect less than wholly-owned subsidiaries on a fully
      consolidated basis. Previously, the Partnership presented less than
      wholly-owned subsidiaries on a proportionate basis. The Partnership
(c)   believes that with this change, Adjusted EBITDA and Distributable Cash
      Flow more accurately reflect the Partnership’s operating performance and
      therefore are more useful measures. This change has been applied
      retroactively to all periods presented. See “Non-GAAP Measures”
      available on the Partnership’s website at www.energytransfer.com for the
      reconciliation of net income to Adjusted EBITDA for recent prior periods
      reflecting the changes described above.
       
      For the three months ended March 31, 2013, cash distributions to be paid
      to the partners of ETP consist of cash distributions payable on May 15,
      2013 to holders of record on May 6, 2013 in respect of the quarter ended
(d)   March 31, 2013. For the three months ended March 31, 2012, cash
      distributions to be paid to the partners of ETP consist of cash
      distributions paid on May 15, 2012 in respect of the quarter ended March
      31, 2012.
       
      For the three months ended March 31, 2013, cash distributions to be paid
      to the partners of ETP exclude distributions to be paid on 49.5 million
      ETP common units issued to ETE as a portion of the consideration for
      ETP's acquisition of ETE's interest in Holdco on April 30, 2013. These
      newly issued ETP common units will receive cash distributions on May 15,
      2013; however, such distributions were reduced from the total cash
      portion of the consideration paid to ETE in connection with the April
      30, 2013 Holdco transaction.
       
      For the three months ended March 31, 2013, cash distributions to ETE in
(e)   respect of Holdco consist of cash distributions paid in April 2013 in
      respect of the quarter ended March 31, 2013.
       
      Cash distributions to Regency in respect of Lone Star consist of cash
(f)   distributions paid on a quarterly basis. The amounts reflected above are
      in respect of the periods then ended, including payments made in arrears
      subsequent to period end.
       
      For the three months ended March 31, 2013, cash distributions to be paid
(g)   to the partners of Sunoco Logistics consist of cash distributions
      payable on May 15, 2013 to holders of record on May 9, 2013 in respect
      of the quarter ended March 31, 2013.
       
       

               SUMMARY ANALYSIS OF QUARTERLY RESULTS BY SEGMENT
                            (Dollars in millions)
                                 (unaudited)

Subsequent to the Sunoco Merger and Holdco Transactions in October 2012, our
reportable segments changed, as follows:

  * Interstate transportation and storage segment now includes Southern
    Union’s transportation and storage operations;
  * Midstream segment now includes Southern Union’s gathering and processing
    operations;
  * Investment in Sunoco Logistics segment reflects the consolidated
    operations of Sunoco Logistics;
  * Retail marketing segment reflects the consolidated operations of Sunoco’s
    retail marketing business; and,
  * All other now includes the investments and operations identified under the
    segment table below.

Our segment results were presented based on the measure of Segment Adjusted
EBITDA. The tables below identify the components of Segment Adjusted EBITDA,
which was calculated as follows:

  * Gross margin, operating expenses, and selling, general and administrative.
    These amounts represent the amounts included in our consolidated financial
    statements that are attributable to each segment.
  * Unrealized gains or losses on commodity risk management activities. These
    are the unrealized amounts that are included in gross margin. These
    amounts are not included in Segment Adjusted EBITDA; therefore, the
    unrealized losses are added back and the unrealized gains are subtracted
    to calculate the segment measure.
  * Non-cash compensation expense. These amounts represent the total non-cash
    compensation recorded in operating expenses and selling, general and
    administrative. These amounts are not included in Segment Adjusted EBITDA
    and therefore are added back to calculate the segment measure.
  * Adjusted EBITDA related to unconsolidated affiliates. These amounts
    represent our proportionate share of the Adjusted EBITDA of our
    unconsolidated affiliates. Amounts reflected are calculated consistently
    with our definition of Adjusted EBITDA above.

                                         
                                          Three Months Ended March 31,
                                          2013             2012
Segment Adjusted EBITDA:
Intrastate transportation and storage     $    132         $    192
Interstate transportation and storage          297              80
Midstream                                      79               89
NGL transportation and services                80               50
Investment in Sunoco Logistics                 236              —
Retail marketing                               37               —
All other                                      95               83
                                          $    956         $    494

 
Intrastate Transportation and Storage
 
                                              Three Months Ended March 31,
                                                2013              2012        
Natural gas transported (MMBtu/d)               9,733,480         10,114,354
Revenues                                      $ 690             $ 482
Cost of products sold                           496               314         
Gross margin                                    194               168
Unrealized (gains) losses on commodity          (12       )       82
risk management activities
Operating expenses, excluding non-cash          (39       )       (39        )
compensation expense
Selling, general and administrative
expenses, excluding non-cash compensation       (11       )       (19        )
expense
Segment Adjusted EBITDA                       $ 132             $ 192         
                                                                 
Distributions from unconsolidated             $ —               $ 1
affiliates
                                                                              

Segment Adjusted EBITDA for the intrastate transportation and storage segment
decreased primarily due to a lower realized margin on natural gas storage
activities. Additionally, a decrease in transportation fees was offset by
increases in natural gas sales and other activities, improved retention
margins and lower selling, general and administrative expenses.

 
Interstate Transportation and Storage
 
                                               Three Months Ended March 31,
                                                 2013              2012       
Natural gas transported (MMBtu/d):
ETP legacy assets                                2,613,154         3,153,073
Southern Union transportation and storage        4,420,650         3,764,599
Natural gas sold (MMBtu/d) – ETP legacy          16,768            20,517
assets
Revenues                                       $ 324             $ 142
Operating expenses, excluding non-cash
compensation, amortization and accretion         (72       )       (32       )
expenses
Selling, general and administrative
expenses, excluding non-cash compensation,       (35       )       (53       )
amortization and accretion expenses
Adjusted EBITDA related to unconsolidated        80                23         
affiliates
Segment Adjusted EBITDA                        $ 297             $ 80         
                                                                  
Distributions from unconsolidated              $ 41              $ 18
affiliates
                                                                              

Segment Adjusted EBITDA for the interstate transportation and storage segment
increased primarily due to the consolidation of Southern Union’s
transportation and storage operations beginning March 26, 2012. Selling,
general and administrative expenses decreased because the incremental expenses
from Southern Union’s transportation and storage operations in the current
year was more than offset by Southern Union’s recognition of merger-related
expenses during the period from March 26, 2012 to March 31, 2012. Adjusted
EBITDA related to the Transwestern and Tiger pipelines also contributed
approximately $1 million to the increase. Adjusted EBITDA related to
unconsolidated affiliates increased primarily due to an increase of $58
million from Citrus, in which we acquired a 50% interest on March 26, 2012.

 
Midstream
 
                                               Three Months Ended March 31,
                                                 2013              2012       
Gathered volumes (MMBtu/d):
ETP legacy assets                                2,587,787         2,239,220
Southern Union gathering and processing          480,339           404,422
NGLs produced (Bbls/d):
ETP legacy assets                                96,775            65,627
Southern Union gathering and processing          39,681            38,723
Equity NGLs produced (Bbls/d):
ETP legacy assets                                9,499             17,630
Southern Union gathering and processing          7,206             8,744
Revenues                                       $ 951             $ 563
Cost of products sold                            794               436        
Gross margin                                     157               127
Unrealized losses on commodity risk              —                 2
management activities
Operating expenses, excluding non-cash           (49       )       (26       )
compensation expense
Selling, general and administrative
expenses, excluding non-cash compensation        (29       )       (19       )
expense
Adjusted EBITDA attributable to                  —                 5          
discontinued operations
Segment Adjusted EBITDA                        $ 79              $ 89         
 
Segment Adjusted EBITDA for the midstream segment reflected increases in gross
margin as follows:
 
                                               Three Months Ended March 31,
                                                 2013              2012       
Gathering and processing fee-based             $ 97              $ 70
revenues
Non fee-based contracts and processing           67                64
Other                                            (7        )       (7        )
Total gross margin                             $ 157             $ 127        
                                                                              

Increased production in the Eagle Ford Shale resulted in increased fee-based
revenues of $22 million. Additional volumes from the Woodford Shale also
increased gross margin from our North Texas system by $3 million. The
consolidation of Southern Union's gathering and processing operations,
beginning March 26, 2012, also increased gross margin by $5 million.

Segment Adjusted EBITDA also reflected higher operating expenses and selling,
general and administrative expenses primarily due to the consolidation of
Southern Union’s gathering and processing operations beginning March 26, 2012.

 
NGL Transportation and Services
 
                                                  Three Months Ended March 31,
                                                     2013            2012     
NGL transportation volumes (Bbls/d)                  274,030         150,881
NGL fractionation volumes (Bbls/d)                   86,703          20,006
Revenues                                          $  365           $ 167
Cost of products sold                                257             98       
Gross margin                                         108             69
Operating expenses, excluding non-cash               (19     )       (14     )
compensation expense
Selling, general and administrative expenses,        (10     )       (5      )
excluding non-cash compensation expense
Adjusted EBITDA related to unconsolidated            1               —        
affiliates
Segment Adjusted EBITDA                           $  80            $ 50       
                                                                    
Distributions from unconsolidated affiliates      $  1             $ —
                                                                              

Segment Adjusted EBITDA for the NGL transportation and services segment
reflected higher gross margin, as discussed below, offset by higher operating
expenses due to increased ad valorem taxes and other expenses related to the
start-up of Lone Star’s fractionator and higher selling, general and
administrative expenses due to increased employee-related costs and allocated
overhead expenses resulting from overall asset growth on the system.

Segment Adjusted EBITDA for the NGL transportation and services segment
reflected increases in gross margin as follows:

                                        Three Months Ended March 31,
                                        2013              2012
Storage margin                          $     32          $    32
Transportation margin                         41               13
Processing and fractionation margin           34               24
Other margin                                  1                —
Total gross margin                      $     108         $    69
                                                                

Transportation margin increased due to an increase in volumes transported out
of West Texas due to the commissioning of Lone Star’s Gateway pipeline during
the fourth quarter of 2012. A higher concentration of volumes sourced from
transportation contracts originating in West Texas and renegotiated contracts
on the East side of the legacy Lone Star pipeline system increased our average
realized rate. These volume and rate factors increases on our Lone Star
pipeline system accounted for $21 million of the increase in transportation
margin between the periods. The completion of our Justice pipeline connection
to Mont Belvieu, Texas and additional NGL production from our processing
plants accounted for the remainder of the increase in transportation margin.

Processing and fractionation margin increased due to the startup of Lone
Star’s fractionator at Mont Belvieu, Texas in December 2012, which contributed
$16 million during the three months ended March 31, 2013. The increase in
margin related to our fractionator was offset by a decrease in margin
attributable to our fractionator in Geismar, Louisiana due to a less favorable
pricing environment and contract mix.

 
Investment in Sunoco Logistics
 
                                                  Three Months Ended March 31,
                                                  2013                   2012
Revenue                                           $    3,512             $  —
Cost of products sold                                  3,226                —
Gross margin                                           286                  —
Unrealized gains on commodity risk management          (3      )            —
activities
Operating expenses, excluding non-cash                 (24     )            —
compensation expense
Selling, general and administrative expenses,          (30     )            —
excluding non-cash compensation expense
Adjusted EBITDA related to unconsolidated              7                    —
affiliates
Segment Adjusted EBITDA                           $    236               $  —
                                                                          
Distributions from unconsolidated affiliates      $    3                 $  —
                                                                             

We obtained control of Sunoco Logistics Partners L.P. on October 5, 2012 in
connection with our acquisition of Sunoco, Inc.; therefore, no comparative
results were reflected in our financial statements.

 
Retail Marketing
 
                                                  Three Months Ended March 31,
                                                  2013                  2012
Total retail gasoline outlets, end of period          4,979                 —
Total company-operated outlets, end of period         439                   —
Gasoline and diesel throughput per                    187,000               —
company-operated site (gallons/month)
Revenue                                           $   5,222             $   —
Cost of products sold                                 5,036                 —
Gross margin                                          186                   —
Operating expenses, excluding non-cash                (98       )           —
compensation expense
Selling, general and administrative expenses,         (15       )           —
excluding non-cash compensation expense
LIFO valuation adjustment                             (38       )           —
Adjusted EBITDA related to unconsolidated             2                     —
affiliates
Segment Adjusted EBITDA                           $   37                $   —
                                                                             

We acquired our retail marketing segment on October 5, 2012 in connection with
our acquisition of Sunoco, Inc.; therefore, no comparative results were
reflected in our financial statements.

 
All Other
 
                                                  Three Months Ended March 31,
                                                     2013              2012   
Revenue                                           $  150            $  129
Cost of products sold                                137               91     
Gross margin                                         13                38
Unrealized (gains) losses on commodity risk          (4    )           2
management activities
Operating expenses, excluding non-cash               (5    )           (20   )
compensation expense
Selling, general and administrative expenses,        (18   )           (13   )
excluding non-cash compensation expense
Adjusted EBITDA attributable to discontinued         40                2
operations
Adjusted EBITDA related to unconsolidated            76                75
affiliates
Elimination                                          (7    )           (1    )
Segment Adjusted EBITDA                           $  95             $  83     
                                                                     
Distributions from unconsolidated affiliates      $  50             $  23
                                                                              

Amounts reflected in our all other segment primarily include:

  * Our retail propane and other retail propane related operations prior to
    our contribution of those operations to AmeriGas in January 2012. Our
    investment in AmeriGas was reflected in the all other segment subsequent
    to that transaction;
  * Southern Union’s local distribution operations beginning March 26, 2012;
  * Our natural gas compression operations; and,
  * An approximate 30% non-operating interest in PES, a refining joint
    venture, effective upon our acquisition of Sunoco on October 5, 2012.

The decrease in gross margin and operating expenses was primarily due to our
recognition of $31 million of gross margin and $18 million of operating
expenses from our retail propane operations prior to the deconsolidation of
those operations in January 2012.

Adjusted EBITDA attributable to discontinued operations reflected the results
of Southern Union's local distribution operations. Adjusted EBITDA related to
unconsolidated affiliates reflected the results from our investments in
AmeriGas and PES. Additional information related to unconsolidated affiliates
is provided below in “Supplemental Information on Unconsolidated Affiliates.”

               SUPPLEMENTAL INFORMATION ON CAPITAL EXPENDITURES
                            (Dollars in millions)
                                 (unaudited)

The following is a summary of capital expenditures recorded during the three
months ended March 31, 2013:

                                           Growth      Maintenance     Total
ETP legacy assets:
Intrastate transportation and storage      $ 2         $   3           $ 5
Interstate transportation and storage        2             3             5
Midstream                                    113           5             118
NGL transportation and services^(1)          102           3             105  
                                             219           14            233
Holdco:
Southern Union transportation and            —             (1   )        (1  )
storage
Southern Union gathering and                 80            7             87
processing
Retail marketing                             6             10            16   
                                             86            16            102
Investment in Sunoco Logistics               136           4             140
All other (including eliminations)           (6  )         17            11   
Total capital expenditures                 $ 435       $   51          $ 486  

(1) We received capital contributions from Regency related to their 30% share
of Lone Star of $27 million.

We currently expect capital expenditures for the full year 2013 to be within
the following ranges:

                                   Growth                      Maintenance
                                   Low           High          Low       High
ETP legacy assets:
Midstream and intrastate           $ 315         $ 355         $ 75      $ 85
transportation and storage
Interstate transportation and        10            25            20        30
storage
NGL transportation and               540           600           15        25
services^(1)
                                     865           980           110       140
Holdco:
Southern Union transportation        30            40            90        100
and storage
Southern Union gathering and         80            80            5         5
processing
Retail marketing                     25            55            65        75
                                     135           175           160       180
Investment in Sunoco Logistics       635           735           60        70
All other (including                 (5    )       (5    )       15        15
eliminations)
Total capital expenditures         $ 1,630       $ 1,885       $ 345     $ 405

(1) We expect to receive capital contributions from Regency related to their
30% share of Lone Star of $100 million.

 
 
SUPPLEMENTAL INFORMATION ON UNCONSOLIDATED AFFILIATES
(Dollars in millions)
(unaudited)
 
                                                  Three Months Ended March 31,
                                                  2013                  2012
Equity in earnings of unconsolidated
affiliates:
AmeriGas                                          $   63                $  40
Citrus                                                14                   1
FEP                                                   13                   13
Other                                                 (18   )              1
Total equity in earnings of unconsolidated        $   72                $  55
affiliates
Proportionate share of interest,
depreciation, amortization, non-cash
compensation expense, loss on debt
extinguishment and taxes:
AmeriGas                                          $   34                $  35
Citrus                                                48                   3
FEP                                                   5                    6
Other                                                 6                    —
Total proportionate share of interest,
depreciation, amortization, non-cash              $   93                $  44
compensation expense, loss on debt
extinguishment and taxes
Adjusted EBITDA related to unconsolidated
affiliates:
AmeriGas                                          $   97                $  75
Citrus                                                62                   4
FEP                                                   18                   19
Other                                                 (12   )              1
Total Adjusted EBITDA attributable to             $   165               $  99
unconsolidated affiliates
Distributions received from unconsolidated
affiliates:
AmeriGas                                          $   24                $  23
Citrus                                                24                   —
FEP                                                   17                   18
Other                                                 30                   1
Total distributions received from                 $   95                $  42
unconsolidated affiliates

Contact:

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