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Energy Transfer Equity Reports First Quarter Results



  Energy Transfer Equity Reports First Quarter Results

Business Wire

DALLAS -- May 8, 2013

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

Distributable Cash Flow, as adjusted, for the three months ended March 31,
2013 was $178 million as compared to $131 million for the three months ended
March 31, 2012, an increase of $47 million. ETE’s net income attributable to
partners was $90 million for the three months ended March 31, 2013, as
compared to $166 million for the three months ended March 31, 2012 which was
impacted by a $1.06 billion gain as a result of the contribution of ETP’s
Propane Business in January 2012.

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

  * On April 30, 2013, ETE contributed its interest in ETP Holdco Corporation
    (“Holdco”) to Energy Transfer Partners, L.P. (“ETP”).
  * On April 30, 2013, Southern Union Company (“Southern Union”) contributed
    to Regency Energy Partners LP (“Regency”) all of the issued and
    outstanding membership interest in Southern Union Gathering Company, LLC,
    and its subsidiaries.
  * On May 6, 2013, the Partnership's subsidiaries, Sunoco Logistics Partners
    L.P. 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.
  * On April 1, 2013, ETE redeemed of all of its outstanding Series A
    Convertible Preferred Units from Regency GP Acquirer L.P. for cash
    consideration of $340 million, including a redemption premium of $40
    million, plus accrued interest.

The Partnership has scheduled a conference call for 8:30 a.m. Central Time,
Thursday, May 9, 2013 to discuss its 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.

The Partnership’s principal sources of cash flow historically have derived
from distributions related to its direct and indirect investments in the
limited and general partner interests in ETP and 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. Subsequent to October 5, 2012, the Partnership’s cash flows also
derived from its 60% interest in Holdco. On April 30, 2013, the Partnership
contributed its 60% interest in Holdco to ETP in exchange for cash and
additional ETP common units. The Partnership’s primary cash requirements are
for general and administrative expenses, debt service requirements and
distributions to its partners.

Use of Non-GAAP Financial Measures

This press release and accompanying schedules include the non-generally
accepted accounting principle (“non-GAAP”) financial measures of Distributable
Cash Flow. The accompanying schedules provide a reconciliation of these
non-GAAP financial measures to their 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. The Partnership’s definition of Distributable Cash Flow also
includes distributable cash flow related to Southern Union for the period from
March 26, 2012 (Southern Union acquisition date) until Southern Union was
contributed to Holdco on October 5, 2012, subsequent to which Distributable
Cash Flow reflects dividends expected to be received from Holdco. 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 months ended March 31,
2013 and 2012 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), dividends
expected to be received from Holdco (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 months ended March 31, 2013 in connection with
the Partnership’s merger and acquisition activities, Distributable Cash Flow,
as adjusted, for the three months ended March 31, 2013 and 2012 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 months ended March 31, 2013 and 2012 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 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 oil 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
which owns and operates 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 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 owns 100% of ETP Holdco Corporation, which 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 owns a 30% interest
in Lone Star NGL LLC, a joint venture that owns and operates natural gas
liquids storage, fractionation, and transportation assets. 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 crude oil &
refined product pipeline, terminalling, and acquisition & 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.

 
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in millions)
(unaudited)
                                                            
                                            March 31, 2013   December 31, 2012
ASSETS
                                                              
CURRENT ASSETS                              $   6,627        $      5,597
                                                              
PROPERTY, PLANT AND EQUIPMENT, net              28,640              28,284
                                                              
NON-CURRENT ASSETS HELD FOR SALE                992                 985
ADVANCES TO AND INVESTMENTS IN                  4,708               4,737
UNCONSOLIDATED AFFILIATES
NON-CURRENT PRICE RISK MANAGEMENT ASSETS        36                  43
GOODWILL                                        6,414               6,434
INTANGIBLES ASSETS, net                         2,266               2,291
OTHER NON-CURRENT ASSETS, net                   457                 533
Total assets                                $   50,140       $      48,904
                                                              
                                                              
LIABILITIES AND EQUITY
                                                              
CURRENT LIABILITIES                         $   6,127        $      5,845
                                                              
NON-CURRENT LIABILITIES HELD FOR SALE           142                 142
LONG-TERM DEBT, less current maturities         22,343              21,440
DEFERRED INCOME TAXES                           3,625               3,566
NON-CURRENT PRICE RISK MANAGEMENT               170                 162
LIABILITIES
SERIES A CONVERTIBLE PREFERRED UNITS            340                 331
OTHER NON-CURRENT LIABILITIES                   938                 995
                                                              
COMMITMENTS AND CONTINGENCIES
                                                              
PREFERRED UNITS OF SUBSIDIARY                   73                  73
                                                              
EQUITY:
Total partners’ capital                         2,035               2,113
Noncontrolling interest                         14,347              14,237
Total equity                                    16,382              16,350
Total liabilities and equity                $   50,140       $      48,904

                                            
ENERGY TRANSFER EQUITY, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in millions, except per unit data)
(unaudited)
                                              
                                             Three Months Ended March 31,
                                               2013              2012         
REVENUES                                     $ 11,179          $ 1,670
COSTS AND EXPENSES:
Cost of products sold                          9,807             1,015
Operating expenses                             349               170
Depreciation and amortization                  312               154
Selling, general and administrative            180               147          
Total costs and expenses                       10,648            1,486        
OPERATING INCOME                               531               184
OTHER INCOME (EXPENSE):
Interest expense, net of interest              (310        )     (213        )
capitalized
Bridge loan related fees                       —                 (62         )
Equity in earnings of unconsolidated           90                75
affiliates
Gain on deconsolidation of Propane             —                 1,056
Business
Loss on extinguishment of debt                 —                 (115        )
Gains on interest rate derivatives             6                 27
Other, net                                     (19         )     12           
INCOME FROM CONTINUING OPERATIONS BEFORE       298               964
INCOME TAX EXPENSE
Income tax expense (benefit) from              (2          )     2            
continuing operations
INCOME FROM CONTINUING OPERATIONS              300               962
Income (loss) from discontinued operations     22                (1          )
NET INCOME                                     322               961
LESS: NET INCOME ATTRIBUTABLE TO               232               795          
NONCONTROLLING INTEREST
NET INCOME ATTRIBUTABLE TO PARTNERS            90                166
GENERAL PARTNER’S INTEREST IN NET INCOME       —                 1            
LIMITED PARTNERS’ INTEREST IN NET INCOME     $ 90              $ 165          
INCOME FROM CONTINUING OPERATIONS PER
LIMITED PARTNER UNIT:
Basic                                        $ 0.27            $ 0.73         
Diluted                                      $ 0.27            $ 0.73         
NET INCOME PER LIMITED PARTNER UNIT:
Basic                                        $ 0.32            $ 0.73         
Diluted                                      $ 0.32            $ 0.73         
WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING:
Basic                                          279,959,091       226,730,477  
Diluted                                        279,959,091       226,730,477  

                                                 
ENERGY TRANSFER EQUITY, L.P.
DISTRIBUTABLE CASH FLOW
(Tabular amounts in millions)
(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 March 31,
                                                      2013            2012   
Cash distributions from ETP associated with:
^(1)
General partner interest                          $   5            $  5
Incentive distribution rights                         156             100
Limited partner interest                              45              47     
Total                                                 206             152
IDR relinquishments                                   (31    )        —      
Total cash distributions from ETP                     175             152
Cash distributions from Regency associated
with: ^ (2)
General partner interest                              1               1
Incentive distribution rights                         2               2
Limited partner interest                              12              12     
Total cash distributions from Regency                 15              15
                                                                    
Cash distributions from Holdco                        50              —      
Total cash distributions from ETP, Regency and        240             167
Holdco
Distributable cash flow attributable to
Southern Union (including acquisition-related         —               (46   )
expenses) from March 26, 2012 through March 31,
2012 ^ (3)
Deduct expenses of the Parent Company on a
stand-alone basis:
Selling, general and administrative expenses,         (6     )        (31   )
excluding non-cash compensation expense
Interest expense, net of amortization of
financing costs, interest income, and realized        (58    )        (42   )
gains and losses on interest rate swaps
Bridge financing costs                                —               (62   )
Distributable Cash Flow (Deficit)                     176             (14   )
Acquisition-related expenses ^(4)                     2               145    
Distributable Cash Flow, as adjusted              $   178          $  131    
                                                                    
Cash distributions to be paid to the partners
of ETE:
Distributions to be paid to limited partners      $   181          $  175
Distributions to be paid to general partner           —               —      
Total cash distributions to be paid to the        $   181          $  175    
partners of ETE ^(5)
                                                                    
Reconciliation of Non-GAAP “Distributable Cash
Flow” and “Distributable Cash Flow, as
adjusted” to GAAP “Net income”:
Net income attributable to partners               $   90           $  166
Equity in income related to investments in ETP,       (168   )        (345  )
Regency and Holdco
Total cash distributions from ETP, Regency and        240             167
Holdco
Amortization included in interest expense             5               1
(excluding ETP and Regency)
Fair value adjustment of ETE Preferred Units          9               4
Other non-cash (excluding ETP, Regency and            —               (7    )
Holdco)
Distributable Cash Flow (Deficit)                     176             (14   )
Acquisition-related expenses ^(4)                     2               145    
Distributable Cash Flow, as adjusted              $   178          $  131    

^(1) For the three months ended March 31, 2013, cash distributions expected to
be received from ETP consist of cash distributions in respect of the quarter
ended March 31, 2013 payable on May 15, 2013 to holders of record on May 6,
2013 and also take into consideration a reduction in incentive distributions
of $31 million. For the three months ended March 31, 2012, cash distributions
received from 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 by
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 acquired 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 pursuant to the
contribution agreement.

^(2) For the three months ended March 31, 2013, cash distributions expected to
be received from Regency consist of cash distributions in respect of the
quarter ended March 31, 2013 payable on May 15, 2013 to holders of record on
May 6, 2013. For the three months ended March 31, 2012, cash distributions
received from Regency consist of cash distributions paid on May 14, 2012 in
respect of the quarter ended March 31, 2012.

^(3) Distributable cash flow attributable to Southern Union was calculated as
follows:

                                                       Period from Acquisition
                                                       (March 26, 2012) to
                                                       March 31, 2012
Net loss                                               $       (39      )
Depreciation and amortization                                  5
Deferred income taxes                                          (12      )
Distributable cash flow (deficit) attributable to              (46      )
Southern Union
Acquisition-related expenses recognized by Southern            53        
Union
Distributable cash flow, as adjusted, attributable     $       7         
to Southern Union

Distributable cash flow attributable to Southern Union reflected above
includes change in control payments of $68 million, offset by benefit plan
curtailment gains of $ 15 million. The net amount of $53 million was added
back to calculate ETE’s Distributable Cash Flow, as adjusted.

^(4) Transaction costs for the three months ended March 31, 2012 related to
ETE’s acquisition of Southern Union consisted of $62 million bridge financing
costs, $30 million of selling, general and administrative expenses incurred by
ETE and $53 million of merger-related expenses that were incurred directly by
Southern Union.

^(5) For the three months ended March 31, 2013, cash distributions expected to
be paid by ETE consist of cash distributions in respect of the quarter ended
March 31, 2013 payable on May 17, 2013 to holders of record on May 6, 2013.
For the three months ended March 31, 2012, cash distributions paid by ETE
consist of cash distributions paid on May 18, 2012 in respect of the quarter
ended March 31, 2012.

                                 
SUPPLEMENTAL INFORMATION
RESULTS OF OPERATIONS FOR HOLDCO
(Dollars in millions)
(unaudited)
 
The following is a summary of Holdco’s Adjusted EBITDA and Distributable Cash
Flow:
                                   
                                  Three Months Ended March 31, 2013
                                  Southern Union   Sunoco    Other     Total
Reconciliation of net income to
Adjusted EBITDA and
Distributable Cash Flow:
Net income (loss)                 $    36          $ 49      $ (20 )   $ 65
Interest expense, net of               33            8         36        77
interest capitalized
Income tax expense (benefit)           10            4         (14 )     —
Depreciation and amortization          59            28        —         87
Equity in earnings of                  (1    )       (29 )     (2  )     (32 )
unconsolidated affiliates (a)
Adjusted EBITDA attributable to        1             30        2         33
unconsolidated affiliates
LIFO valuation reserve                 —             (38 )     —         (38 )
Other, net                             20            (2  )     —         18   
Adjusted EBITDA                        158           50        2         210
Adjusted EBITDA attributable to        (1    )       (30 )     (2  )     (33 )
unconsolidated affiliates
Distributions from                     2             111       3         116
unconsolidated affiliates (a)
Interest expense, net of               (33   )       (8  )     (36 )     (77 )
interest capitalized
Income tax (expense) benefit           (10   )       (4  )     14        —
Maintenance capital                    (14   )       (12 )     —         (26 )
expenditures
Interest Income                        —             1         —         1    
Distributable Cash Flow           $    102         $ 108     $ (19 )   $ 191  
(Deficit)

(a) Amounts include earnings and distributions related to Holdco’s investment
in ETP Class E Units and Sunoco’s investment in ETP Class F Units. Amounts
related to the ETP Class E Units and ETP Class F Units are eliminated in ETE’s
consolidated financial information.

The following is a summary of the impact from Holdco that was included in
ETE’s Adjusted EBITDA by segment (after elimination of the intercompany
amounts described in the footnotes above):

                                                            Three Months Ended
                                                            March 31,
                                                                  2013     
Interstate transportation and storage                       $     125
Midstream                                                         (6      )
Retail marketing                                                  37
All other                                                         1        
Total Adjusted EBITDA related to Holdco included in               157
segments
Amounts related to ETP Class E and Class F Units                  53       
Holdco Adjusted EBITDA                                      $     210      

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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