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Energy Transfer Partners Reports Fourth Quarter and Annual Results

  Energy Transfer Partners Reports Fourth Quarter and Annual Results  Business Wire  DALLAS -- February 19, 2014  Energy Transfer Partners, L.P. (NYSE: ETP) today reported its financial results for the quarter and year ended December31, 2013.  Adjusted EBITDA for Energy Transfer Partners, L.P. (“ETP”) for the three months ended December31, 2013 totaled $986 million, an increase of $38 million over the same period last year. Distributable Cash Flow attributable to the partners of ETP for the three months ended December31, 2013 totaled $530 million, an increase of $284 million over the same period last year. Loss from continuing operations for the three months ended December31, 2013 was $462 million, a decrease of $796 million compared to the same period last year, including the impact of a non-cash goodwill impairment, as discussed below.  The increases in Adjusted EBITDA and Distributable Cash Flow were primarily due to recent strategic transactions and organic growth. ETP has placed more than $1.20 billion in growth projects into service over the last twelve months that are now generating strong and consistent earnings and cash flow.  The decrease in income from continuing operations between periods was primarily due to the recognition of a goodwill impairment of $689 million during the fourth quarter of 2013 related to Trunkline LNG Company, LLC (“Trunkline LNG”).  ETP’s key accomplishments during or subsequent to the quarter include the following:    *In October, ETP and Energy Transfer Equity, L.P. (“ETE”) exchanged 50.2     million ETP Common Units, owned by ETE, for new Class H Units issued by     ETP that track 50.05% of the underlying economics of the general partner     interest and incentive distribution rights of Sunoco Logistics Partners     L.P. (“Sunoco Logistics”).   *In November, ETP and Regency Energy Partners LP (“Regency”) announced that     Lone Star NGL LLC (“Lone Star”), a joint venture between ETP and Regency,     has placed in service a second natural gas liquids fractionator at its     facility in Mont Belvieu, Texas, bringing Lone Star’s total fractionation     capacity at Mont Belvieu to 200,000 barrels per day.   *In November, ETP amended its credit facility to extend the maturity until     October 2017.   *In December, Trunkline LNG Export, LLC, an entity owned jointly by ETP and     ETE, filed Draft Resource Report No. 13 with the Federal Energy Regulatory     Commission for the Lake Charles LNG export project. The report, which     details engineering and design aspects of the LNG project, is a major     milestone toward the formal application for authorization of the LNG     project.   *In January, ETP’s Board of Directors approved a second consecutive     increase in its quarterly distribution to $0.92 per unit ($3.68     annualized) on ETP Common Units for the quarter ended December 31, 2013,     representing an increase of $0.06 per Common Unit on an annualized basis     compared to the quarter ended September 30, 2013 and an increase of $0.105     per Common Unit on an annualized basis compared to the quarter ended     December 31, 2012.  In addition, earlier today, ETE and ETP completed the previously announced transfer to ETE of Trunkline LNG, the entity that owns a LNG regasification facility in Lake Charles, Louisiana, from ETP in exchange for the redemption by ETP of 18.71 million ETP Common Units held by ETE. This transaction was effective as of January 1, 2014.  An analysis of ETP’s segment results and other supplementary data is provided after the financial tables shown below. ETP has scheduled a conference call for 8:30 a.m. Central Time, Thursday, February 20, 2014 to discuss the fourth 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 ETP’s web site for a limited time.  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 owns and operates approximately 35,000 miles of natural gas and natural gas liquids pipelines. ETP owns 100% of Panhandle Eastern Pipe Line Company, LP (the successor of 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. web site 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), approximately 30.8 million ETP common units, and approximately 50.2 million ETP Class H Units, which track 50% of the underlying economics of the general partner interest and the IDRs of Sunoco Logistics Partners L.P. (NYSE: SXL). ETE also 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 56,000 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.  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.  Forward-Looking Statements  This press release may include certain statements concerning expectations for the future that are forward-looking statements as defined by federal law. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management’s control. An extensive list of factors that can affect future results are discussed in the Partnerships’ Annual Reports on Form 10-K and other documents filed from time to time with the Securities and Exchange Commission. The Partnerships undertake no obligation to update or revise any forward-looking statement to reflect new information or events.  The information contained in this press release is available on our web site at www.energytransfer.com.                                                         ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In millions) (unaudited)                                                                                                                    December 31,                                                          2013       2012 ASSETS                                                                        CURRENT ASSETS                                           $ 6,239      $ 5,404                                                                        PROPERTY, PLANT AND EQUIPMENT, net                         25,947       25,773                                                                        NON-CURRENT ASSETS HELD FOR SALE                           —            985 ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED              4,436        3,502 AFFILIATES NON-CURRENT PRICE RISK MANAGEMENT ASSETS                   17           42 GOODWILL                                                   4,729        5,606 INTANGIBLE ASSETS, net                                     1,568        1,561 OTHER NON-CURRENT ASSETS, net                             766         357 Total assets                                             $ 43,702     $ 43,230                                                                                                                                               LIABILITIES AND EQUITY                                                                        CURRENT LIABILITIES                                      $ 6,067      $ 5,548                                                                        NON-CURRENT LIABILITIES HELD FOR SALE                      —            142 LONG-TERM DEBT, less current maturities                    16,451       15,442 LONG-TERM NOTES PAYABLE — RELATED PARTY                    —            166 NON-CURRENT PRICE RISK MANAGEMENT LIABILITIES              54           129 DEFERRED INCOME TAXES                                      3,762        3,476 OTHER NON-CURRENT LIABILITIES                              1,080        995                                                                        COMMITMENTS AND CONTINGENCIES                                                                        EQUITY: Total partners’ capital                                    11,540       9,201 Noncontrolling interest                                   4,748       8,131 Total equity                                              16,288      17,332 Total liabilities and equity                             $ 43,702     $ 43,230                                                                                                                           ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per unit data) (unaudited)                                                                            Three Months Ended              Years Ended December 31,                      December 31,                      2013         2012             2013         2012 REVENUES             $ 12,032       $ 10,981         $ 46,339       $ 15,702 COSTS AND EXPENSES: Cost of products       10,727         9,660            41,204         12,266 sold Operating              376            419              1,388          951 expenses Depreciation and       268            237              1,032          656 amortization Selling, general and                    123            202              485            435 administrative Goodwill              689          —              689          —       impairment Total costs and       12,183       10,518         44,798       14,308  expenses OPERATING INCOME       (151   )       463              1,541          1,394 (LOSS) OTHER INCOME (EXPENSE): Interest expense, net of        (217   )       (186   )         (849   )       (665   ) interest capitalized Equity in earnings of            35             78               172            142 unconsolidated affiliates Gain on deconsolidation        —              —                —              1,057 of Propane Business Gain on sale of AmeriGas common        —              —                87             — units Loss on extinguishment         —              —                —              (115   ) of debt Gains (losses) on interest rate       (2     )       5                44             (4     ) derivatives Non-operating environmental          (168   )       —                (168   )       — remediation Other, net            (1     )      1              5            11      INCOME (LOSS) FROM CONTINUING OPERATIONS             (504   )       361              832            1,820 BEFORE INCOME TAX EXPENSE Income tax expense (benefit) from        (42    )      27             97           63      continuing operations INCOME (LOSS) FROM CONTINUING        (462   )       334              735            1,757 OPERATIONS Income (loss) from                  (11    )      27             33           (109   ) discontinued operations NET INCOME             (473   )       361              768            1,648 (LOSS) LESS: NET INCOME ATTRIBUTABLE TO       68           54             312          79      NONCONTROLLING INTEREST NET INCOME (LOSS)                 (541   )       307              456            1,569 ATTRIBUTABLE TO PARTNERS GENERAL PARTNER’S              77             119              506            461 INTEREST IN NET INCOME CLASS H UNITHOLDER’S          48           —              48           —       INTEREST IN NET INCOME LIMITED PARTNERS’            $ (666   )     $ 188           $ (98    )     $ 1,108   INTEREST IN NET INCOME (LOSS) INCOME (LOSS) FROM CONTINUING OPERATIONS PER LIMITED PARTNER UNIT: Basic                $ (1.87  )     $ 0.56          $ (0.23  )     $ 4.93    Diluted              $ (1.87  )     $ 0.56          $ (0.23  )     $ 4.91    NET INCOME (LOSS) PER LIMITED PARTNER UNIT: Basic                $ (1.90  )     $ 0.62          $ (0.18  )     $ 4.43    Diluted              $ (1.90  )     $ 0.62          $ (0.18  )     $ 4.42    WEIGHTED AVERAGE NUMBER OF UNITS OUTSTANDING: Basic                 345.1        296.3          343.4        248.3   Diluted               345.1        297.0          343.4        249.0                                                                                                                                   SUPPLEMENTAL INFORMATION (Tabular dollar amounts in millions) (unaudited)                                                                             Three Months Ended               Years Ended December 31,                      December 31,                      2013            2012           2013        2012 Reconciliation of net income (loss) to Adjusted EBITDA and Distributable Cash Flow (a): Net income           $  (473  )        $ 361          $ 768         $ 1,648 (loss) Interest expense, net of         217              186            849           665 interest capitalized Gain on deconsolidation         —                —              —             (1,057 ) of Propane Business Gain on sale of AmeriGas common         —                —              (87   )       — units Goodwill                689              —              689           — impairment Income tax expense (benefit) from          (42   )          27             97            63 continuing operations Depreciation and        268              237            1,032         656 amortization Non-cash compensation            11               11             47            42 expense (Gains) losses on interest rate        2                (5   )         (44   )       4 derivatives Unrealized (gains) losses on commodity            (6    )          (51  )         (51   )       9 risk management activities Write-down of assets included in income (loss)        —                (13  )         —             132 from discontinued operations LIFO valuation          19               75             (3    )       75 adjustment Loss on extinguishment          —                —              —             115 of debt Non-operating environmental           168              —              168           — remediation Equity in earnings of             (35   )          (78  )         (172  )       (142   ) unconsolidated affiliates Adjusted EBITDA related to              155              178            629           480 unconsolidated affiliates Other, net             13             20           31          54      Adjusted EBITDA         986              948            3,953         2,744 (consolidated) Adjusted EBITDA related to              (155  )          (178 )         (629  )       (480   ) unconsolidated affiliates Distributions from                    123              72             464           262 unconsolidated affiliates Interest expense, net of         (217  )          (186 )         (849  )       (665   ) interest capitalized Amortization included in             (17   )          (26  )         (80   )       (35    ) interest expense Income tax (expense) benefit from            42               (27  )         (97   )       (63    ) continuing operations Maintenance capital                 (109  )          (143 )         (343  )       (313   ) expenditures Other, net             —              2            4           3       Distributable Cash Flow               653              462            2,423         1,453 (consolidated) Distributable Cash Flow attributable to         (155  )          (165 )         (655  )       (165   ) Sunoco Logistics (100%) Distributions from Sunoco             57               41             204           41 Logistics to ETP (b) Distributions to ETE in respect          —                (75  )         (50   )       (75    ) of Holdco (c) Distributions to Regency in             (25   )         (17  )        (87   )      (63    ) respect of Lone Star (d) Distributable Cash Flow attributable to      $  530           $ 246         $ 1,835      $ 1,191   the partners of ETP                                                                      Distributions to the partners of ETP (e): Limited Partners: Common units         $  265            $ 224          $ 1,005       $ 783 held by public Common units            45               45             268           180 held by ETE Class H Units held by ETE             54               —              105           — Holdings General Partner interests held          5                5              20            20 by ETE Incentive Distribution            173              148            701           529 Rights (“IDR”) held by ETE IDR relinquishments related to             (57   )         (31  )        (199  )      (90    ) previous transactions Total distributions to        485              391            1,900         1,422 be paid to the partners of ETP Distributions credited to            —              —            (68   )      —       Holdco transactions (f) Net distributions to     $  485           $ 391         $ 1,832      $ 1,422   the partners of ETP Distribution coverage ratio         1.09  x         0.63 x        1.00  x      0.84   x (g)                                                                                (a) 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 ETP’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.  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  ETP 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 ETP’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  ETP 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.  On a consolidated basis, Distributable Cash Flow includes 100% of the Distributable Cash Flow of ETP’s consolidated subsidiaries. However, to the extent that noncontrolling interests exist among ETP’s subsidiaries, the Distributable Cash Flow generated by ETP’s subsidiaries may not be available to be distributed to the partners of ETP. In order to reflect the cash flows available for distributions to the partners of ETP, ETP has reported Distributable Cash Flow attributable to the partners of ETP, which is calculated by adjusting Distributable Cash Flow (consolidated), as follows:    *For subsidiaries with publicly traded equity interests, Distributable Cash     Flow (consolidated) includes 100% of Distributable Cash Flow attributable     to such subsidiary, and Distributable Cash Flow attributable to the     partners of ETP includes distributions to be received by the parent     company with respect to the periods presented. Currently, Sunoco Logistics     is the only such subsidiary.   *For consolidated joint ventures or similar entities, where the     noncontrolling interest is not publicly traded, Distributable Cash Flow     (consolidated) includes 100% of Distributable Cash Flow attributable to     such subsidiary, but Distributable Cash Flow attributable to the partners     of ETP is net of distributions to be paid by the subsidiary to the     noncontrolling interests. Currently, Lone Star is such a subsidiary, as it     is 30% owned by Regency, which is an unconsolidated affiliate. Prior to     April 30, 2013, Holdco was also such a subsidiary, as ETE held a     noncontrolling interest in Holdco.  The Partnership has presented Distributable Cash Flow in previous communications; however, the Partnership changed its calculation of this non-GAAP measure in the quarter ended December 31, 2013. Previously, the Partnership’s calculation of Distributable Cash Flow reflected the impact of amortization included in interest expense. Such amortization includes amortization of deferred financing costs, premiums or discounts on the issuance of long-term debt, and fair value adjustments on long-term debt assumed in acquisitions. Beginning with the quarter ended December 31, 2013, the Partnership’s calculation of Distributable Cash Flow excludes the impact of such amortization. Management believes that this revised calculation is more useful to and more accurately reflects the cash flows of the Partnership that are available for payment of distributions.  (b) For the three months ended December31, 2013, cash distributions paid from Sunoco Logistics to ETP consist of cash distributions paid on February 14, 2014 in respect of the quarter ended December31, 2013. For the three months ended December31, 2012, cash distributions paid from Sunoco Logistics to ETP consist of cash distributions paid on February14, 2013 in respect of the quarter ended December31, 2012.  For the year ended December31, 2013, cash distributions paid from Sunoco Logistics to ETP consist of cash distributions paid on May15, 2013 in respect of the quarter ended March31, 2013, cash distributions paid on August 14, 2013 in respect of the quarter ended June30, 2013, cash distributions paid on November 14, 2013 in respect to the quarter ended September30, 2013, and cash distributions paid on February 14, 2014 in respect of the quarter ended December31, 2013. For the year ended December31, 2012, cash distributions paid from Sunoco Logistics to ETP consist of cash distributions paid on February14, 2013 in respect of the quarter ended December31, 2012.  (c) For the year ended December31, 2013, cash distributions to ETE in respect of Holdco consist of cash distributions paid in April 2013 in respect to the quarter ended March31, 2013.  For the three months and year ended December31, 2012, cash distributions to ETE in respect of Holdco consist of cash distributions paid on February 14, 2013 in respect of the quarter ended December 31, 2012.  (d) Cash distributions to Regency in respect of Lone Star consist of cash distributions paid on a monthly basis, one month in arrears. These amounts are in respect of the periods then ended, including payments made in arrears subsequent to period end.  (e) For the three months ended December31, 2013, cash distributions paid to the partners of ETP consist of cash distributions paid on February 14, 2014 in respect of the quarter ended December31, 2013. For the three months ended December 31, 2012, cash distributions paid to the partners of ETP consist of cash distributions paid on February 14, 2013 in respect of the quarter ended December 31, 2012.  For the year ended December31, 2013, cash distributions paid to the partners of ETP consist of cash distributions paid on May15, 2013 in respect of the quarter ended March31, 2013, cash distributions paid on August 14, 2013 in respect of the quarter ended June30, 2013, cash distributions paid on November 14, 2013 in respect of the quarter ended September30, 2013, and cash distributions paid on February 14, 2014 in respect of the quarter ended December31, 2013. For the year ended December31, 2012, cash distributions paid to the partners of 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, cash distributions paid on November 14, 2012 in respect of the quarter ended September 30, 2012, and cash distributions paid on February 14, 2013 in respect of the quarter ended December 31, 2012.  (f) For the year ended December31, 2013, net distributions to the partners of ETP excluded distributions paid in respect of the quarter ended March31, 2013 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 received cash distributions on May15, 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.  (g) Distribution coverage ratio is calculated as Distributable Cash Flow attributable to the partners of ETP divided by net distributions to the partners of ETP.                 SUMMARY ANALYSIS OF QUARTERLY RESULTS BY SEGMENT                      (Tabular dollar amounts in millions)                                  (unaudited)  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 cost of products sold to     calculate 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. This expense is not included in Segment Adjusted EBITDA     and therefore is 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                                             December 31,                                           2013       2012      Change Segment Adjusted EBITDA: Midstream                                 $  129       $ 109     $ 20 NGL transportation and services              94          54        40 Interstate transportation and storage        301         312       (11 ) Intrastate transportation and storage        112         131       (19 ) Investment in Sunoco Logistics               210         219       (9  ) Retail marketing                             91          109       (18 ) All other                                   49         14       35                                             $  986       $ 948     $ 38                                                                            Midstream                              Three Months Ended                                              December 31,                               2013            2012              Change Gathered volumes (MMBtu/d): ETP legacy assets               2,493,038         2,473,878         19,160 Southern Union gathering        —                 533,548           (533,548 ) and processing NGLs produced (Bbls/d): ETP legacy assets               119,878           87,389            32,489 Southern Union gathering        —                 42,346            (42,346  ) and processing Equity NGLs produced (Bbls/d): ETP legacy assets               11,036            13,538            (2,502   ) Southern Union gathering        —                 6,724             (6,724   ) and processing Revenues                      $ 563             $ 543             $ 20 Cost of products sold          400             367             33        Gross margin                    163               176               (13      ) Unrealized gains on commodity risk management       (2        )       —                 (2       ) activities Operating expenses, excluding non-cash              (33       )       (49       )       16 compensation expense Selling, general and administrative expenses,        (2        )       (12       )       10 excluding non-cash compensation expense Adjusted EBITDA related to unconsolidated               —                 (6        )       6 affiliates Other                          3               —               3         Segment Adjusted EBITDA       $ 129            $ 109            $ 20                                                                                       Excluding the $10 million negative impact related to the deconsolidation of Southern Union’s gathering and processing operations, midstream’s Segment Adjusted EBITDA increased $30 million as a result of increased cash flows from assets recently placed in service and an increase in production (primarily in the Eagle Ford Shale) due to continued favorable market conditions.  Segment Adjusted EBITDA for the midstream segment reflected a decrease in gross margin as follows:                                                Three Months Ended                                                   December 31,                                                 2013       2012      Change Gathering and processing fee-based revenues     $  122       $ 101     $ 21 Non fee-based contracts and processing             37          73        (36 ) Other                                             4          2        2    Total gross margin                              $  163       $ 176     $ (13 )                                                                                The assets recently placed in service and increased production, as discussed above, had a favorable impact of $29 million on fee-based revenues, which was offset by $8 million related to the deconsolidation of Southern Union’s gathering and processing operations on April 30, 2013. Non fee-based gross margin decreased primarily due to the deconsolidation of Southern Union’s gathering and processing operations.  NGL Transportation and Services                                   Three Months Ended                                               December 31,                                    2013          2012            Change NGL transportation volumes           360,480         187,821         172,659 (Bbls/d) NGL fractionation volumes            125,275         18,424          106,851 (Bbls/d) Revenues                           $ 776           $ 154           $ 622 Cost of products sold               643           76            567      Gross margin                         133             78              55 Operating expenses, excluding        (38     )       (18     )       (20     ) non-cash compensation expense Selling, general and administrative expenses,             (2      )       (4      )       2 excluding non-cash compensation expense Adjusted EBITDA related to          1             (2      )      3        unconsolidated affiliates Segment Adjusted EBITDA            $ 94           $ 54           $ 40                                                                                      Segment Adjusted EBITDA for the NGL transportation and services segment increased primarily due to higher gross margin, as discussed below, partially offset by higher operating expenses primarily due to additional expenses from assets recently placed in service.  Segment Adjusted EBITDA for the NGL transportation and services segment reflected an increase in gross margin as follows:                                        Three Months Ended                                           December 31,                                         2013        2012     Change Transportation margin                   $  52         $ 28     $  24 Processing and fractionation margin        40           18        22 Storage margin                             38           32        6 Other margin                              3           —        3 Total gross margin                      $  133        $ 78     $  55                                                                     Transportation margin increased as a result of higher volumes transported primarily due to the completion of the Gateway pipeline resulting in increased margin of $18 million on our Lone Star pipeline system for the three months ended December 31, 2013. 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 higher volumes from the startup of Lone Star’s fractionators in Mont Belvieu, Texas in December 2012 and October 2013, respectively.  Interstate Transportation and Storage                              Three Months Ended                                              December 31,                               2013            2012              Change Natural gas transported         6,405,185         6,962,646         (557,461 ) (MMBtu/d) Natural gas sold                19,244            17,020            2,224 (MMBtu/d) Revenues                      $ 317             $ 334             $ (17      ) Operating expenses, excluding non-cash compensation,                   (91       )       (77       )       (14      ) amortization and accretion expenses Selling, general and administrative expenses, excluding non-cash              (14       )       (30       )       16 compensation, amortization and accretion expenses Adjusted EBITDA related to unconsolidated              89              85              4         affiliates Segment Adjusted EBITDA       $ 301            $ 312            $ (11      )                                                                    Distributions from            $ 83              $ 42              $ 41 unconsolidated affiliates                                                                                Segment Adjusted EBITDA for the interstate transportation and storage segment decreased primarily due to a $17 million decrease in revenues as a result of overall lower capacity sold and lower rates. Additionally, an increase of $14 million in operating expenses, due in part to the timing of maintenance activities, was offset by a $16 million decrease in selling, general and administrative expenses. Selling, general and administrative expenses were lower primarily due to the impact of certain cost reduction initiatives in 2013.  Intrastate Transportation and Storage                              Three Months Ended                                              December 31,                               2013            2012              Change Natural gas transported         8,991,586         9,426,807         (435,221 ) (MMBtu/d) Revenues                      $ 592             $ 659             $ (67      ) Cost of products sold          415             445             (30      ) Gross margin                    177               214               (37      ) Unrealized gains on commodity risk management       (9        )       (35       )       26 activities Operating expenses, excluding non-cash              (51       )       (47       )       (4       ) compensation expense Selling, general and administrative expenses,        (5        )       (4        )       (1       ) excluding non-cash compensation expense Adjusted EBITDA related to unconsolidated              —               3               (3       ) affiliates Segment Adjusted EBITDA       $ 112            $ 131            $ (19      )                                                                                Segment Adjusted EBITDA for the intrastate transportation and storage segment decreased primarily due to a decrease in transportation fees due to lower transportation volumes from the cessation of certain long-term contracts, and to a lesser extent, due to the renewal of long-term contracts at lower rates.  Investment in Sunoco Logistics                                         Three Months Ended                                                 December 31,                                          2013        2012          Change Revenue                                  $ 4,288       $ 3,189       $ 1,099 Cost of products sold                     4,040       2,885      1,155  Gross margin                               248           304           (56   ) Unrealized (gains) losses on               11            (15   )       26 commodity risk management activities Operating expenses, excluding              (30   )       (48   )       18 non-cash compensation expense Selling, general and administrative expenses, excluding non-cash               (20   )       (32   )       12 compensation expense Adjusted EBITDA related to                 10            10            — unconsolidated affiliates Other                                     (9    )      —           (9    ) Segment Adjusted EBITDA                  $ 210        $ 219        $ (9    )                                                                       Distributions from unconsolidated        $ 4           $ 6           $ (2    ) affiliates                                                                                Segment Adjusted EBITDA for the investment in Sunoco Logistics segment decreased due to lower crude oil margins in Sunoco Logistics’ crude oil acquisition and marketing operations of $56 million driven by contracted crude differentials compared to the prior year, partially offset by increased crude oil volumes of $8 million as a result of the expansion of Sunoco Logistics’ crude oil trucking fleet and higher market demand. This net decrease was partially offset by an increase in Sunoco Logistics’ crude oil pipeline operations of $30 million primarily due to higher throughput volumes largely attributable to expansion projects coming online in 2013 and strong demand for West Texas crude as well as an increase in Sunoco Logistics’ terminal facilities operations of $10 million primarily due to improved contributions from the Nederland and Eagle Point terminals.  Retail Marketing                                    Three Months Ended                                                December 31,                                     2013          2012            Change Total retail gasoline outlets,        5,112           4,988           124 end of period Total company-operated outlets,       513             437             76 end of period Gasoline and diesel throughput per company-operated site             193,901         198,000         (4,099 ) (gallons/month) Revenue                             $ 5,201         $ 5,926         $ (725   ) Cost of products sold                4,961         5,757         (796   ) Gross margin                          240             169             71 Unrealized gains on commodity         (2      )       —               (2     ) risk management activities Operating expenses, excluding         (128    )       (119    )       (9     ) non-cash compensation expense Selling, general and administrative expenses,              (38     )       (17     )       (21    ) excluding non-cash compensation expense LIFO valuation adjustments            19              75              (56    ) Adjusted EBITDA related to           —             1             (1     ) unconsolidated affiliates Segment Adjusted EBITDA             $ 91           $ 109          $ (18    )                                                                                Segment Adjusted EBITDA for the retail marketing segment decreased primarily due to lower retail gasoline margins, offset by a $10 million positive impact from the MACS acquisition in October 2013. In the prior period, retail gasoline margins were unusually high as the cost of wholesale gasoline declined sharply in line with the crude market decline.  All Other                                               Three Months Ended                                                   December 31,                                                2013      2012        Change Revenue                                        $ 725       $ 485       $ 240 Cost of products sold                           692       481       211  Gross margin                                     33          4           29 Unrealized gains on commodity risk               (4  )       (1  )       (3  ) management activities Operating expenses, excluding non-cash           (9  )       (15 )       6 compensation expense Selling, general and administrative expenses, excluding non-cash compensation        (35 )       (91 )       56 expense Adjusted EBITDA related to discontinued          1           33          (32 ) operations Adjusted EBITDA related to unconsolidated        57          87          (30 ) affiliates Other                                            7           —           7 Elimination                                     (1  )      (3  )      2    Segment Adjusted EBITDA                        $ 49       $ 14       $ 35                                                                           Distributions from unconsolidated              $ 34        $ 24        $ 10 affiliates                                                                                Amounts reflected above primarily include:    *our investment in AmeriGas;   *our natural gas compression operations;   *an approximate 33% non-operating interest in PES, a refining joint     venture;   *our investment in Regency related to the Regency common and Class F units     received by Southern Union in exchange of its interest in Southern Union     Gathering Company, LLC to Regency on April 30, 2013; and   *our natural gas marketing operations.  Adjusted EBITDA related 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, PES and Regency. Additional information related to unconsolidated affiliates is provided below in “Supplemental Information on Unconsolidated Affiliates.”  Segment Adjusted EBITDA for all other increased primarily due to favorable results from our natural gas marketing operations and due to merger-related expenses incurred in 2012.  The increase in distributions from unconsolidated affiliates was primarily due to cash distributions from our ownership in Regency of $15million during the fourth quarter of 2013 slightly offset by a decrease in cash distributions from our ownership in AmeriGas of $5million as a result of selling a portion of these interests in July 2013.                 SUPPLEMENTAL INFORMATION ON CAPITAL EXPENDITURES                         (Tabular amounts in millions)                                  (unaudited)  The following is a summary of capital expenditures (net of contributions in aid of construction costs) during the year ended December31, 2013:                                          Growth    Maintenance   Total Midstream^(1)                             $ 516       $    49         $ 565 NGL transportation and services^(2)         426            17           443 Interstate transportation and storage       55             97           152 Intrastate transportation and storage       18             29           47 Investment in Sunoco Logistics              965            53           1,018 Retail marketing                            113            63           176 All other (including eliminations)         19            35          54 Total capital expenditures                $ 2,112     $    343        $ 2,455                                                                           ^(1) Amounts reflected above for the midstream segment include growth and maintenance capital expenditures of $95 million and $10 million, respectively, incurred by Southern Union’s gathering and processing operations prior to deconsolidation on April30, 2013.  ^(2) We received $147million in capital contributions from Regency related to their 30% share of Lone Star.  We currently expect capital expenditures for the full year 2014 to be within the following ranges:                                     Growth                 Maintenance                                      Low       High          Low     High Midstream                            $ 275       $ 300         $ 10      $ 15 NGL transportation and                 300         330           20        25 services^(1) Interstate transportation and          20          30            115       135 storage Intrastate transportation and          30          40            25        30 storage Investment in Sunoco Logistics         1,250       1,350         65        75 Retail marketing                       125         155           50        60 All other (including                  60         80           10       15 eliminations) Total capital expenditures           $ 2,060     $ 2,285       $ 295     $ 355                                                                              ^(1) We expect to receive capital contributions from Regency related to their 30% share of Lone Star of between $75 million and $100 million.                                                                     SUPPLEMENTAL INFORMATION ON UNCONSOLIDATED AFFILIATES (In millions) (unaudited)                                                                                                                         Three Months Ended                                                 December 31,                                                 2013       2012      Change Equity in earnings (losses) of unconsolidated affiliates: AmeriGas                                        $  26        $ 25      $ 1 Citrus                                             21          16        5 FEP                                                14          14        — Regency                                            (2  )       —         (2  ) Other                                             (24 )      23       (47 ) Total equity in earnings of unconsolidated      $  35       $ 78      $ (43 ) affiliates Proportionate share of interest, depreciation, amortization, non-cash compensation expense, loss on debt extinguishment and taxes: AmeriGas                                        $  27        $ 35      $ (8  ) Citrus                                             49          50        (1  ) FEP                                                4           6         (2  ) Regency                                            26          —         26 Other                                             14        9        5    Total proportionate share of interest, depreciation, amortization, non-cash            $  120      $ 100     $ 20   compensation expense, loss on debt extinguishment and taxes Adjusted EBITDA related to unconsolidated affiliates: AmeriGas                                        $  53        $ 60      $ (7  ) Citrus                                             70          66        4 FEP                                                18          20        (2  ) Regency                                            24          —         24 Other                                             (10 )      32       (42 ) Total Adjusted EBITDA related to                $  155      $ 178     $ (23 ) unconsolidated affiliates Distributions received from unconsolidated affiliates: AmeriGas                                        $  19        $ 24      $ (5  ) Citrus                                             65          25        40 FEP                                                18          17        1 Regency                                            15          —         15 Other                                             6         6        —    Total distributions received from               $  123      $ 72      $ 51   unconsolidated affiliates  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