Energy Transfer Partners Reports First Quarter Results

  Energy Transfer Partners Reports First Quarter Results

Business Wire

DALLAS -- May 6, 2014

Energy Transfer Partners, L.P. (NYSE: ETP) today reported its financial
results for the quarter ended March31, 2014. Adjusted EBITDA for Energy
Transfer Partners, L.P. (“ETP”) for the three months ended March 31, 2014
totaled $1.21billion, an increase of $250million over the same period last
year. Distributable Cash Flow attributable to the partners of ETP for the
three months ended March 31, 2014 totaled $629million, an increase of
$253million over the same period last year. Income from continuing operations
for the three months ended March 31, 2014 was $467million, an increase of
$65million over the same period last year. Results for the first quarter of
2014 were favorably impacted by continued growth expansion of our asset
platform, an increase in customer demand and an increase in commodity prices.

For the quarter ended March31, 2014, ETP’s distribution coverage ratio was
1.36x, which represents a significant increase in distribution coverage over
recent periods. In April, ETP announced that its Board of Directors approved
an increase in its quarterly distribution to $0.935 per unit ($3.74
annualized) on ETP Common Units for the quarter ended March31, 2014,
representing an increase of $0.06 per Common Unit on an annualized basis
compared to the fourth quarter of 2013.

ETP’s other key accomplishments to date in 2014 include the following:

  *In January 2014, ETP sold 9.2 million AmeriGas Partners, L.P. (“AmeriGas”)
    common units for net proceeds of $381 million.
  *In February 2014, ETP redeemed 18.7million ETP Common Units in connection
    with the transfer to Energy Transfer Equity, L.P. (“ETE”) of Trunkline LNG
    Company, LLC (“Trunkline LNG”), the entity that owns a LNG regasification
    facility in Lake Charles, Louisiana (the “Trunkline LNG Transaction”).
  *On April 27, 2014, ETP entered into a definitive merger agreement whereby
    ETP plans to acquire Susser Holdings Corporation in a unit and cash
    transaction for total consideration valued at approximately $1.8 billion.
  *Trunkline LNG Export, LLC, an entity owned jointly by ETP and ETE, and
    Trunkline LNG filed an application with the Federal Energy Regulatory
    Commission (“FERC”), seeking authorization for the proposed new
    liquefaction facilities and modifications to Trunkline LNG’s existing
    terminal to facilitate the storage and subsequent export of LNG (the
    “Liquefaction Project”). In addition, Trunkline Gas Company, LLC, a
    subsidiary of ETP, filed a certificate application with the FERC for the
    modification and expansion of the Trunkline Gas Pipeline to accommodate
    volumes of inlet gas contracted for by BG Group in conjunction with the
    Liquefaction Project. The FERC filings represent the culmination of
    significant front-end engineering design efforts for the Liquefaction
    Project and pre-filing consultations with the FERC and other federal,
    state and local agencies that have been underway since mid-2012. Approval
    of these applications is requested from the FERC by April 1, 2015.

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, Wednesday, May7, 2014 to discuss the first
quarter 2014 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 61,000 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)
                                                                  
                                                    March 31,     December 31,
                                                    2014          2013
ASSETS
                                                                  
CURRENT ASSETS                                      $  7,069      $   6,239
                                                                  
PROPERTY, PLANT AND EQUIPMENT, net                     25,578         25,947
                                                                  
ADVANCES TO AND INVESTMENTS IN UNCONSOLIDATED          4,160          4,436
AFFILIATES
NON-CURRENT PRICE RISK MANAGEMENT ASSETS               1              17
GOODWILL                                               4,507          4,729
INTANGIBLE ASSETS, net                                 1,502          1,568
OTHER NON-CURRENT ASSETS, net                         772           766
Total assets                                        $  43,589     $   43,702
                                                                  
                                                                  
LIABILITIES AND EQUITY
                                                                  
CURRENT LIABILITIES                                 $  7,491      $   6,067
                                                                  
LONG-TERM DEBT, less current maturities                16,191         16,451
NON-CURRENT PRICE RISK MANAGEMENT LIABILITIES          39             54
DEFERRED INCOME TAXES                                  3,599          3,762
OTHER NON-CURRENT LIABILITIES                          1,053          1,080
                                                                  
COMMITMENTS AND CONTINGENCIES
                                                                  
EQUITY:
Total partners’ capital                                10,438         11,540
Noncontrolling interest                               4,778         4,748
Total equity                                          15,216        16,288
Total liabilities and equity                        $  43,589     $   43,702
                                                                      

                                               
ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per unit data)
(unaudited)
                                                  
                                                  Three Months Ended March 31,
                                                  2014            2013
REVENUES                                          $  12,232         $ 10,854
COSTS AND EXPENSES:
Cost of products sold                                10,866           9,594
Operating expenses                                   319              327
Depreciation and amortization                        266              260
Selling, general and administrative                 93             139    
Total costs and expenses                            11,544         10,320 
OPERATING INCOME                                     688              534
OTHER INCOME (EXPENSE):
Interest expense, net of interest capitalized        (219    )        (211   )
Equity in earnings of unconsolidated                 79               72
affiliates
Gain on sale of AmeriGas common units                70               —
Gains (losses) on interest rate derivatives          (2      )        7
Other, net                                          (3      )       3      
INCOME FROM CONTINUING OPERATIONS BEFORE             613              405
INCOME TAX EXPENSE
Income tax expense from continuing operations       146            3      
INCOME FROM CONTINUING OPERATIONS                    467              402
Income from discontinued operations                 24             22     
NET INCOME                                           491              424
LESS: NET INCOME ATTRIBUTABLE TO                    76             102    
NONCONTROLLING INTEREST
NET INCOME ATTRIBUTABLE TO PARTNERS                  415              322
GENERAL PARTNER’S INTEREST IN NET INCOME             113              128
CLASS H UNITHOLDER’S INTEREST IN NET INCOME         49             —      
COMMON UNITHOLDERS’ INTEREST IN NET INCOME        $  253           $ 194    
INCOME FROM CONTINUING OPERATIONS PER COMMON
UNIT:
Basic                                             $  0.69          $ 0.60   
Diluted                                           $  0.69          $ 0.60   
NET INCOME PER COMMON UNIT:
Basic                                             $  0.76          $ 0.63   
Diluted                                           $  0.76          $ 0.63   
WEIGHTED AVERAGE NUMBER OF COMMON UNITS
OUTSTANDING:
Basic                                               324.5          300.8  
Diluted                                             325.5          301.8  
                                                                             

                                               
SUPPLEMENTAL INFORMATION
(Tabular dollar amounts in millions)
(unaudited)
                                                  
                                                  Three Months Ended March 31,
                                                  2014             2013
Reconciliation of net income to Adjusted
EBITDA and Distributable Cash Flow (a):
Net income                                        $  491             $  424
Interest expense, net of interest capitalized        219                211
Gain on sale of AmeriGas common units                (70    )           —
Income tax expense from continuing operations        146                3
Depreciation and amortization                        266                260
Non-cash compensation expense                        14                 14
(Gains) losses on interest rate derivatives          2                  (7   )
Unrealized (gains) losses on commodity risk          29                 (19  )
management activities
LIFO valuation adjustment                            (14    )           (38  )
Equity in earnings of unconsolidated                 (79    )           (72  )
affiliates
Adjusted EBITDA related to unconsolidated            196                165
affiliates
Other, net                                          6                15   
Adjusted EBITDA (consolidated)                       1,206              956
Adjusted EBITDA related to unconsolidated            (196   )           (165 )
affiliates
Distributions from unconsolidated affiliates         81                 95
Interest expense, net of interest capitalized        (219   )           (211 )
Amortization included in interest expense            (16    )           (23  )
Income tax expense from continuing operations        (146   )           (3   )
Income tax expense related to the Trunkline          85                 —
LNG Transaction
Maintenance capital expenditures                     (39    )           (51  )
Other, net                                          2                1    
Distributable Cash Flow (consolidated)               758                599
Distributable Cash Flow attributable to
Sunoco Logistics Partners L.P. (“Sunoco              (158   )           (195 )
Logistics”) (100%)
Distributions from Sunoco Logistics to ETP           62                 45
Distributions to ETE in respect of ETP Holdco        —                  (50  )
Corporation (“Holdco”)
Distributions to Regency Energy Partners LP         (33    )          (23  )
(“Regency”) in respect of Lone Star (b)
Distributable Cash Flow attributable to the       $  629            $  376  
partners of ETP
                                                                             
Distributions to the partners of ETP:
Limited Partners:
Common Units held by public                       $  268             $  241
Common Units held by ETE                             29                 45
Class H Units held by ETE Common Holdings,           50                 —
LLC (“ETE Holdings”) (c)
General Partner interests held by ETE                5                  5
Incentive Distribution Rights (“IDRs”) held          168                156
by ETE
IDR relinquishment related to previous              (57    )          (31  )
transactions
Total distributions to be paid to the             $  463            $  416  
partners of ETP
Distribution coverage ratio (d)                   1.36      x        0.90    x
                                                                             

(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 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 and unrealized gains and losses on commodity risk management
activities. 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) Cash distributions to Regency in respect of Lone Star consist of cash
distributions paid in arrears on a quarterly basis. These amounts are in
respect of the periods then ended, including payments made in arrears
subsequent to period end.

(c) Distributions on the Class H Units for the three months ended March31,
2014 were calculated as follows:

General partner distributions and incentive distributions from     $ 39
Sunoco Logistics
                                                                      50.05 %
Share of Sunoco Logistics general partner and incentive                20
distributions payable to Class H Unitholder
Incremental distributions payable to Class H Unitholder               30    
Total Class H Unit distributions                                     $ 50    
                                                                             

Incremental distributions to the Class H Unitholder is based on the scheduled
amounts through the first quarter of 2017, as set forth in Amendment No. 5 to
ETP’s Amended and Restated Agreement of Limited Partnership.

(d) Distribution coverage ratio for a period is calculated as Distributable
Cash Flow attributable to the partners of ETP divided by net distributions
expected to be paid to the partners of ETP in respect of such period.

               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 and
    LIFO valuation adjustments. 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 expenses. 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.

                                    Three Months Ended March 31,  
                                      2014              2013         Change
Segment Adjusted EBITDA:
Midstream                             $   126             $   87       $ 39
NGL transportation and services           128                 80         48
Interstate transportation and             300                 297        3
storage
Intrastate transportation and             177                 132        45
storage
Investment in Sunoco Logistics            208                 236        (28 )
Retail marketing                          109                 37         72
All other                                158                87        71  
                                      $   1,206           $   956      $ 250 
                                                                             

Midstream

                            Three Months Ended March 31,     
                              2014            2013              Change
Gathered volumes
(MMBtu/d):
ETP legacy assets               2,558,851         2,334,283         224,568
Southern Union gathering        —                 480,339           (480,339 )
and processing^(1)
NGLs produced (Bbls/d):
ETP legacy assets               136,818           96,775            40,043
Southern Union gathering        —                 39,681            (39,681  )
and processing^(1)
Equity NGLs produced
(Bbls/d):
ETP legacy assets               12,106            9,744             2,362
Southern Union gathering        —                 7,206             (7,206   )
and processing^(1)
Revenues                      $ 653             $ 600             $ 53
Cost of products sold          493             437             56       
Gross margin                    160               163               (3       )
Operating expenses,
excluding non-cash              (28       )       (57       )       29
compensation expense
Selling, general and
administrative expenses,       (6        )      (19       )      13       
excluding non-cash
compensation expense
Segment Adjusted EBITDA       $ 126            $ 87             $ 39       

^(1) On April 30, 2013, Southern Union contributed its gathering and
processing operations to Regency and, as a result, Southern Union’s gathering
and processing operations were deconsolidated on April 30, 2013.

For the ETP legacy assets, the increases in gathered volumes, NGLs produced
and equity NGLs produced during the three months ended March31, 2014 compared
to the same period last year were primarily due to increased capacity from
assets recently placed in service and increased production by our customers in
the Eagle Ford Shale area. The increase in gathered volumes for ETP’s legacy
assets was partially offset by lower volumes on our Louisiana system due to
wellhead shut-ins as a result of the unseasonably cold winter.

Segment Adjusted EBITDA for midstream for the three months ended March31,
2014 was favorably impacted by increased capacity from assets recently placed
in service and increased production in the Eagle Ford Shale, which resulted in
a $34 million increase in fee-based revenues. This increase was offset by the
deconsolidation of Southern Union’s gathering and processing operations, which
also was the primary driver for the decreases in operating expenses and
selling, general and administrative expenses.

Segment Adjusted EBITDA for the midstream segment reflected a decrease in
gross margin as follows:

                                    Three Months Ended March 31,  
                                      2014            2013           Change
Gathering and processing              $   123           $  97          $ 26
fee-based revenues
Non fee-based contracts and               37               67            (30 )
processing
Other                                    —               (1   )       1   
Total gross margin                    $   160           $  163        $ (3  )
                                                                             

Midstream gross margin for the three months ended March31, 2014 compared to
the same period last year reflected increases in fee-based revenues of $34
million due to increased production in the Eagle Ford Shale propelled mainly
by an 800 MMcf/d increase in processing capacity from the same period last
year. Lower volumes on our Louisiana assets and the deconsolidation of
Southern Union’s gathering and processing operations had an unfavorable impact
of $4 million and $5 million, respectively. 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 March 31,  
                                  2014           2013            Change
NGL transportation volumes           417,831         274,030         143,801
(Bbls/d)
NGL fractionation volumes            156,898         86,703          70,195
(Bbls/d)
Revenues                          $  830           $ 365           $ 465
Cost of products sold               671           257           414     
Gross margin                         159             108             51
Unrealized losses on
commodity risk management            1               —               1
activities
Operating expenses, excluding        (28     )       (22     )       (6      )
non-cash compensation expense
Selling, general and
administrative expenses,             (5      )       (7      )       2
excluding non-cash
compensation expense
Adjusted EBITDA related to          1             1             —       
unconsolidated affiliates
Segment Adjusted EBITDA           $  128          $ 80           $ 48      
                                                                             

For the three months ended March31, 2014 compared to the same period last
year, NGL transportation volumes increased on our wholly-owned and joint
venture NGL pipelines primarily due to increased volumes originating from West
Texas being transported on our Gateway pipeline and an increase in NGL
production from the 800 MMcf/d of processing capacity added in our midstream
segment over the last twelve months. Average daily fractionated volumes
increased due to the recent commissioning of two 100,000 Bbls/d fractionators
at Mont Belvieu, Texas. These volumes include all physical and contractual
volumes where we collected a fractionation fee.

Segment Adjusted EBITDA for the NGL transportation and services segment
increased for the three months ended March31, 2014 compared to the same
period last year primarily due to higher gross margin, as discussed below,
partially offset by higher operating expenses from new assets placed in
service.

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

                                     Three Months Ended March 31,  
                                       2014             2013          Change
Transportation margin                  $    59            $   41        $  18
Processing and fractionation                49                34           15
margin
Storage margin                              40                32           8
Other margin                               11               1           10
Total gross margin                     $    159           $   108       $  51
                                                                           

Transportation margin increased as a result of higher volumes transported from
West Texas on our Gateway pipeline. This resulted in increased margin of $8
million for the three months ended March31, 2014. An increase in NGL
production, as discussed above, accounted for the remainder of the increase in
transportation margin.

Processing and fractionation margin increased primarily due to higher volumes
resulting from the startup of Lone Star’s second fractionator at Mont Belvieu,
Texas in October 2013.

Other margin increased primarily due to higher NGL prices as a result of
weather conditions for the three months ended March31, 2014.

Interstate Transportation and Storage

                             Three Months Ended March 31,     
                               2014            2013              Change
Natural gas transported          7,315,078         7,033,804         281,274
(MMBtu/d)
Natural gas sold (MMBtu/d)       15,783            16,768            (985    )
Revenues                       $ 298             $ 324             $ (26     )
Operating expenses,
excluding non-cash               (71       )       (78       )       7
compensation, amortization
and accretion expenses
Selling, general and
administrative expenses,
excluding non-cash               (14       )       (29       )       15
compensation, amortization
and accretion expenses
Adjusted EBITDA related to      87              80              7       
unconsolidated affiliates
Segment Adjusted EBITDA        $ 300            $ 297            $ 3       
                                                                   
Distributions from             $ 50              $ 41              $ 9
unconsolidated affiliates
                                                                             

Segment Adjusted EBITDA for the interstate transportation and storage segment
increased for the three months ended March31, 2014 compared to the same
period last year due to increased revenues from our pipelines offset by the
impact of the deconsolidation of Trunkline LNG. We experienced an increase in
parking and short-term firm revenues as well as an increase in usage revenues
as a result of higher customer demand driven by colder weather. These
favorable variances were offset by the deconsolidation of Trunkline LNG
effective January 1, 2014. Revenues for Trunkline LNG were $53 million for the
three months ended March31, 2013. Operating expenses decreased as a result of
lower utility costs on the Transwestern pipeline and the deconsolidation of
Trunkline LNG effective January 1, 2014. Additionally, selling, general and
administrative expenses decreased for the three months ended March31, 2014
compared to the same period last year primarily due to decreases in
employee-related costs of $7 million, professional fees of $4 million and the
deconsolidation of Trunkline LNG.

Intrastate Transportation and Storage

                            Three Months Ended March 31,     
                              2014            2013              Change
Natural gas transported         9,399,267         9,733,480         (334,213 )
(MMBtu/d)
Revenues                      $ 934             $ 684             $ 250
Cost of products sold          734             490             244      
Gross margin                    200               194               6
Unrealized (gains) losses
on commodity risk               27                (12       )       39
management activities
Operating expenses,
excluding non-cash              (42       )       (42       )       —
compensation expense
Selling, general and
administrative expenses,        (7        )       (8        )       1
excluding non-cash
compensation expense
Adjusted EBITDA related
to unconsolidated              (1        )      —               (1       )
affiliates
Segment Adjusted EBITDA       $ 177            $ 132            $ 45       
                                                                             

Segment Adjusted EBITDA for the intrastate transportation and storage segment
increased primarily due an increase in margin realized from withdrawing
natural gas from our Bammel storage facility, net of non-cash adjustments, and
an increase in retained fuel revenues due to higher average natural gas spot
prices.

Investment in Sunoco Logistics

                                    Three Months Ended March 31,  
                                      2014             2013          Change
Revenues                              $  4,477           $ 3,512       $ 965
Cost of products sold                   4,210           3,224       986 
Gross margin                             267               288           (21 )
Unrealized gains on commodity            (1     )          (3    )       2
risk management activities
Operating expenses, excluding            (32    )          (26   )       (6  )
non-cash compensation expense
Selling, general and
administrative expenses,                 (34    )          (30   )       (4  )
excluding non-cash compensation
expense
Adjusted EBITDA related to              8               7           1   
unconsolidated affiliates
Segment Adjusted EBITDA               $  208            $ 236        $ (28 )
                                                                       
Distributions from unconsolidated     $  2               $ 3           $ (1  )
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 $100 million driven by contracted
crude differentials compared to the prior year. This decrease was partially
offset by an increase in Sunoco Logistics’ crude oil pipeline operations of
$32 million primarily attributable to expansion projects supporting the demand
for West Texas crude oil. Also offsetting the decrease were higher refined
products acquisition and marketing volumes and differentials, as well as
increased throughput volumes for Sunoco Logistics’ terminal facilities
operations. Sunoco Logistics’ Mariner West natural gas liquids pipeline
project, which commenced operations in the fourth quarter of 2013, also
contributed to the offset.

Sunoco Logistics’ operating expenses increased for the three months ended
March31, 2014 compared to the same period last year primarily due to
increased utility expenses associated with higher throughput volumes and
increased environmental remediation costs.

Retail Marketing

                                 Three Months Ended March 31,  
                                   2014           2013            Change
Total retail gasoline outlets,        5,122           4,979           143
end of period
Total company-operated                529             439             90
outlets, end of period
Gasoline and diesel throughput
per company-operated site             178,448         187,000         (8,552 )
(gallons/month)
Revenues                           $  5,011         $ 5,222         $ (211   )
Cost of products sold                4,756         5,036         (280   )
Gross margin                          255             186             69
Unrealized losses on commodity        3               —               3
risk management activities
Operating expenses, excluding         (116    )       (98     )       (18    )
non-cash compensation expense
Selling, general and
administrative expenses,              (20     )       (15     )       (5     )
excluding non-cash
compensation expense
LIFO valuation adjustment             (14     )       (38     )       24
Adjusted EBITDA related to           1             2             (1     )
unconsolidated affiliates
Segment Adjusted EBITDA            $  109          $ 37           $ 72     
                                                                             

Segment Adjusted EBITDA for the retail marketing segment increased for the
three months ended March31, 2014 compared to the same period last year
primarily due to favorable supply, wholesale and trading margin of $31 million
and additional margin of $26 million as a result of the Mid-Atlantic
Convenience Stores (“MACS”) acquisition in October 2013. Additionally,
favorable New York Harbor ethanol prices resulted in increased margin of $22
million and a tight supply resulted in favorable retail distillate margin of
$11 million. The favorable impact of these variances on margin was partially
offset by an increase in operating expenses of $18million primarily driven by
the MACS acquisition in October 2013.

All Other

                                    Three Months Ended March 31,  
                                      2014            2013           Change
Revenues                              $   591           $  631         $ (40 )
Cost of products sold                    564            625         (61 )
Gross margin                              27               6             21
Unrealized gains on commodity             (1   )           (4   )        3
risk management activities
Operating expenses, excluding             (5   )           (6   )        1
non-cash compensation expense
Selling, general and
administrative expenses,                  (11  )           (19  )        8
excluding non-cash compensation
expense
Adjusted EBITDA related to                27               40            (13 )
discontinued operations
Adjusted EBITDA related to                102              76            26
unconsolidated affiliates
Other                                     19               —             19
Elimination                              —              (6   )       6   
Segment Adjusted EBITDA               $   158          $  87         $ 71  
                                                                       
Distributions from unconsolidated     $   26            $  50          $ (24 )
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 for the contribution of its
    interest in Southern Union Gathering Company, LLC to Regency on April 30,
    2013; and
  *our natural gas marketing operations.

The increase in gross margin for the three months ended March31, 2014
compared to the same period last year was primarily due to favorable results
from our commodity marketing businesses.

Selling, general and administrative expenses include corporate expenses as
well as amounts related to natural gas compression operations and natural gas
marketing operations.

Adjusted EBITDA related to discontinued operations for the three months ended
March31, 2014 related to a marketing business that was sold effective April
1, 2014. Amounts for the three months ended March 31, 2013 related to the
operations of Southern Union's local distribution operations.

Adjusted EBITDA related to unconsolidated affiliates increased for the three
months ended March31, 2014 primarily from our investment in Regency, which
was included beginning in April 2013. Additional information related to
unconsolidated affiliates is provided below in “Supplemental Information on
Unconsolidated Affiliates.”

“Other” includes certain management fees from ETE. In connection with the
Trunkline LNG Transaction, ETP agreed to continue to provide management
services for ETE through 2015 in relation to both Trunkline LNG’s
regasification facility and the development of a liquefaction project at
Trunkline LNG’s facility, for which ETE has agreed to pay incremental
management fees to ETP of $75million per year for the years ending December
31, 2014 and 2015. These fees are reflected as an offset to operating expenses
of $6 million and selling, general and administrative expenses of $13 million
in the consolidated statements of operations.

The decrease in cash distributions from unconsolidated affiliates was
primarily due to no cash distributions from our ownership in PES in the first
quarter of 2014 compared to $25 million in cash distributions in the first
quarter of 2013 and a decrease in cash distributions from our ownership in
AmeriGas of $13million as a result of selling a portion of these interests in
July 2013 and January 2014. Partially offsetting these decreases was cash
distributions from our investment in Regency of $15 million for the three
months ended March31, 2014.

               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 three months ended March 31, 2014:

                                        Growth   Maintenance   Total
Midstream                                 $  130     $   3           $ 133
NGL transportation and services^(1)          86          2             88
Interstate transportation and storage        10          (2   )        8
Intrastate transportation and storage        11          5             16
Investment in Sunoco Logistics               465         18            483
Retail marketing                             12          6             18
All other (including eliminations)          4          7           11
Total capital expenditures                $  718     $   39         $ 757

^(1) We received $27 million 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                            $ 400       $ 420         $ 10      $ 15
NGL transportation and                 290         310           20        25
services^(1)
Interstate transportation and          50          60            110       120
storage
Intrastate transportation and          150         160           20        25
storage
Investment in Sunoco Logistics         1,650       1,750         65        75
Retail marketing                       125         155           50        60
All other (including                  80         90           10       20
eliminations)
Total capital expenditures           $ 2,745     $ 2,945       $ 285     $ 340

^(1) We expect to receive capital contributions from Regency related to their
30% share of Lone Star of between $85 million and $110 million.

                                                                  
SUPPLEMENTAL INFORMATION ON UNCONSOLIDATED AFFILIATES
(In millions)
(unaudited)
                                                                       
                                      Three Months Ended March 31,
                                      2014            2013           Change
Equity in earnings (losses) of
unconsolidated affiliates:
AmeriGas                              $   34            $  63          $ (29 )
Citrus                                    18               14            4
FEP                                       14               13            1
Regency                                   (7   )           —             (7  )
PES                                       17               (22  )        39
Other                                    3              4           (1  )
Total equity in earnings of           $   79           $  72         $ 7   
unconsolidated affiliates
                                                                       
Proportionate share of interest,
depreciation, amortization,
non-cash items and taxes:
AmeriGas                              $   17            $  34          $ (17 )
Citrus                                    50               48            2
FEP                                       5                5             —
Regency                                   34               —             34
PES                                       6                1             5
Other                                    5              5           —   
Total proportionate share of
interest, depreciation,               $   117          $  93         $ 24  
amortization, non-cash items and
taxes
                                                                       
Adjusted EBITDA related to
unconsolidated affiliates:
AmeriGas                              $   51            $  97          $ (46 )
Citrus                                    68               62            6
FEP                                       19               18            1
Regency                                   27               —             27
PES                                       23               (21  )        44
Other                                    8              9           (1  )
Total Adjusted EBITDA related to      $   196          $  165        $ 31  
unconsolidated affiliates
                                                                       
Distributions received from
unconsolidated affiliates:
AmeriGas                              $   11            $  24          $ (13 )
Citrus                                    34               24            10
FEP                                       16               17            (1  )
Regency                                   15               —             15
PES                                       —                25            (25 )
Other                                    5              5           —   
Total distributions received from     $   81           $  95         $ (14 )
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
 
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