Sunoco Logistics Announces Unit Split and Earnings for First Quarter 2014

  Sunoco Logistics Announces Unit Split and Earnings for First Quarter 2014

Business Wire

PHILADELPHIA -- May 6, 2014

Sunoco Logistics Partners L.P. (NYSE: SXL) (the "Partnership") today announced
its results for the first quarter ended March 31, 2014. Adjusted EBITDA for
the three months ended March 31, 2014 was $208 million, compared to $236
million for the three months ended March 31, 2013. Net income attributable to
partners for the first quarter 2014 was $107 million ($0.66 per limited
partner unit diluted), compared with $140 million ($1.09 per limited partner
unit diluted) for the first quarter 2013. Highlights include:

  *Distributable cash flow of $158 million for the first quarter 2014
  *Eighth consecutive distribution increase of at least 5 percent; twenty-one
    percent distribution increase to $2.78 (annualized) compared to the first
    quarter 2013
  *Ended the quarter with a Debt to Adjusted EBITDA ratio of 3.0x calculated
    in accordance with our credit agreement
  *Established an at-the-market equity offering program up to $250 million
  *Acquired additional ownership interests in Explorer Pipeline for $42
    million
  *Successfully completed $1.0 billion in debt financing in April to finance
    our expansion capital program

"New assets continue to generate increasing fee-based, long-term cash flow to
help offset the margin decline which we expected in our crude marketing
business," said Michael J. Hennigan, president and chief executive officer.
"Our first quarter results demonstrate this as we saw year-over-year growth in
three of our four segments. Our Permian Express 1 and Longview Access projects
bolstered our Crude Pipeline earnings. We continue to see growth in our
Terminal Facilities, particularly with the expanded oil flows through
Nederland and with our growing butane blending business. In addition, with the
startup of our Mariner West project, our Refined Products Pipelines earnings
have increased as we begin to convert under-performing gasoline and distillate
pipeline assets to higher demand natural gas liquid service."

On the Partnership’s 2014 organic capital program, Hennigan noted, "We now
expect our 2014 organic growth to be approximately $1.7 billion, almost twice
as much as our record 2013 organic program of $965 million. This increase from
our previous guidance reflects the inclusion of our successful Permian Express
2 open season as well as some capital spend timing updates on our previously
announced projects."

Sunoco Logistics also announced today a two-for-one split of the Partnership’s
common units. The unit split will be effective on June 12, 2014 through a
distribution of one additional common unit for every one unit owned as of the
record date, which will be June 5, 2014.

Speaking on the announced two-for-one unit split Hennigan said, "With the
continued success in our growth program, and in order to make our units more
liquid and accessible to a broader retail investor base, we are pleased to
announce another unit split. This two-for-one unit split reflects our
continued confidence in our strategy and our commitment to growing our cash
flow over the near and long term."

                                                
DETAILS OF FIRST QUARTER SEGMENT ADJUSTED EBITDA
                                                  
                                                  Three Months Ended March 31,
                                                  2014      2013    Variance
                                                  (in millions)
Crude Oil Pipelines                               $  93      $  61    $ 32
Crude Oil Acquisition and Marketing                  12         112     (100 )
Terminal Facilities                                  86         54      32
Refined Products Pipelines                          17        9      8    
Adjusted earnings before interest, taxes,
depreciation and amortization expense             $  208     $  236   $ (28  )
("Adjusted EBITDA") ^(1)
                                                                      

       For a detailed definition of the components included within Adjusted
^(1)  EBITDA, see the Non-GAAP Financial Measures table for a reconciliation
       to the applicable generally accepted accounting principles ("GAAP")
       metric.
       

Crude Oil Pipelines

Adjusted EBITDA for the Crude Oil Pipelines segment increased $32 million due
primarily to higher throughput volumes largely attributable to expansion
projects supporting the demand for West Texas crude oil which began operating
in 2013. Higher pipeline tariffs and the timing of maintenance and pipeline
integrity costs also contributed to the increase. These improvements were
partially offset by lower pipeline operating gains, increased utility expenses
associated with higher throughput volumes and increased environmental
remediation costs.

Crude Oil Acquisition and Marketing

Adjusted EBITDA for the Crude Oil Acquisition and Marketing segment was $12
million compared to $112 million in the prior year period. The decrease was
primarily associated with lower crude oil margins driven by significantly
contracted crude differentials compared to the prior year period. This impact
was partially offset by increased crude oil volumes resulting from higher
market demand and the expansion in our crude oil trucking fleet.

Terminal Facilities

Adjusted EBITDA for the Terminal Facilities segment increased $32 million due
primarily to higher volumes and increased margins from our refined products
acquisition and marketing activities and improved contributions from the
Nederland terminal attributable to higher throughput volumes. These
improvements were partially offset by lower results from the refined products
terminals and the Marcus Hook facility.

Refined Products Pipelines

Adjusted EBITDA for the Refined Products Pipelines segment increased $8
million to $17 million for the first quarter 2014 compared to the prior year
period. The increase was due primarily to operating results from the Mariner
West project, which commenced operations in the fourth quarter 2013. This
improvement was partially offset by higher operating expenses which included
increased utility and maintenance costs.

FINANCING UPDATE

Net interest expense was $16 million for the three months ended March 31, 2014
compared to $19 million for the prior year period. These amounts included
amortization of $4 and $6 million, respectively, on the fair value adjustments
recorded on our long-term debt. Excluding these non-cash items, net interest
expense decreased $5 million to $20 million compared to the prior year period
due primarily to higher capitalized interest associated with our expansion
capital program.

In the first quarter 2014, we filed a registration statement and established
an at-the-market equity offering program. The program allows us to issue up to
$250 million of common units directly to the public and raise capital in a
timely and efficient manner to finance our growth capital program, while
supporting our investment grade credit ratings. We have not yet issued equity
under the program.

In April 2014, we issued $300 million of 4.25 percent Senior Notes and $700
million of 5.30 percent Senior Notes, due April 2024 and April 2044,
respectively. The net proceeds were used to pay down outstanding borrowings
under our $1.50 billion credit facility and for general partnership purposes.

                                      
CAPITAL EXPENDITURES
                                        
                                        Three Months Ended March 31,
                                        2014            2013
                                        (in millions)
Expansion capital expenditures          $    465         $    136
Maintenance capital expenditures             18               4
Investment in joint venture interests       42              —
Total                                   $    525         $    140
                                                              

Our expansion capital spending for the three months ended March 31, 2014
included projects to: invest in the previously announced Mariner and Allegheny
Access projects; invest in our crude oil infrastructure by increasing our
pipeline capabilities through previously announced expansion capital projects
in Texas and Oklahoma; expand the service capabilities of our refined products
acquisition and marketing business; and upgrade the service capabilities at
the Nederland and Eagle Point terminals. We expect total expansion capital
spending, excluding major acquisitions, to be approximately $1.7 billion in
2014. Maintenance capital spending is expected to be approximately $70 million
in 2014. These expenditures will be funded from cash provided by operations,
proceeds from debt and equity offerings, and proceeds from borrowings under
our $1.50 billion credit facility.

INVESTOR CALL

We will host a conference call regarding first quarter results on Wednesday,
May 7, 2014 at 8:30 am ET (7:30 am CT). Those wishing to listen can access the
call by dialing (USA toll free) 1-800-369-2171; International (USA toll)
1-517-308-9315 and request "Sunoco Logistics Partners Earnings Call,
Conference Code: Sunoco Logistics." This event may also be accessed by a
webcast, which will be available at www.sunocologistics.com. A number of
presentation slides will accompany the audio portion of the call and will be
available to be viewed and printed shortly before the call begins. Audio
replays of the conference call will be available for two weeks after the
conference call beginning approximately one hour following the completion of
the call. To access the replay, dial 1-800-839-1156. International callers
should dial 1-402-998-0972.

ABOUT SUNOCO LOGISTICS

Sunoco Logistics Partners L.P. (NYSE: SXL), headquartered in Philadelphia, is
a master limited partnership that owns and operates a logistics business
consisting of a geographically diverse portfolio of complementary crude oil,
refined products, and natural gas liquids pipeline, terminalling and
acquisition and marketing assets which are used to facilitate the purchase and
sale of crude oil, refined products, and natural gas liquids. SXL’s general
partner is a consolidated subsidiary of Energy Transfer Partners, L.P. (NYSE:
ETP). For more information, visit the Sunoco Logistics Partners L.P. web site
at www.sunocologistics.com.

This release is intended to be a qualified notice under Treasury Regulation
Section 1.1446-4(b). Brokers and nominees should treat one hundred percent
(100%) of distributions by Sunoco Logistics Partners L.P. to non-U.S.
investors as being attributable to income that is effectively connected with a
United States trade or business. Accordingly, distributions by Sunoco
Logistics Partners L.P. to non-U.S. investors are subject to federal income
tax withholding at the highest applicable effective tax rate.

Portions of this document constitute forward-looking statements as defined by
federal law. Although Sunoco Logistics Partners L.P. believes that the
assumptions underlying these statements are reasonable, investors are
cautioned that such forward-looking statements are inherently uncertain and
necessarily involve risks that may affect the Partnership’s business prospects
and performance causing actual results to differ from those discussed in the
foregoing release. Such risks and uncertainties include, by way of example and
not of limitation: whether or not the transactions described in the foregoing
news release will be cash flow accretive; increased competition; changes in
demand for crude oil, refined products and natural gas liquids that we store
and distribute; changes in operating conditions and costs; changes in the
level of environmental remediation spending; potential equipment malfunction;
potential labor issues; the legislative or regulatory environment; plant
construction/repair delays; nonperformance by major customers or suppliers;
and political and economic conditions, including the impact of potential
terrorist acts and international hostilities. These and other applicable risks
and uncertainties have been described more fully in the Partnership’s Annual
Report on Form 10-K filed with the Securities and Exchange Commission on
February 27, 2014, and in the Partnership’s subsequent Form 8-K filings. The
Partnership undertakes no obligation to update any forward-looking statements
in this release, whether as a result of new information or future events.

                            
Sunoco Logistics Partners L.P.
Financial Highlights
(unaudited)
                              
                              Three Months Ended March 31,
                              2014               2013           Variance
                              (in millions, except units and per unit amounts)
Income Statement:
Sales and other operating     $   4,477           $  3,512        $  965
revenue
                                                                  
Cost of products sold             4,210              3,224           986
Operating expenses                34                 26              8
Selling, general and              37                 33              4
administrative expenses
Depreciation and                 69               64            5      
amortization expense
Total costs and expenses          4,350              3,347           1,003
Operating Income                  127                165             (38    )
Interest cost and debt            (26     )          (24    )        (2     )
expense, net
Capitalized interest              10                 5               5
Other income                     4                2             2      
Income Before Provision for       115                148             (33    )
Income Taxes
Provision for income taxes       (5      )         (6     )       1      
Net Income                        110                142             (32    )
Less: Net Income
attributable to                  (3      )         (2     )       (1     )
noncontrolling interests
Net Income Attributable to    $   107            $  140         $  (33    )
Partners
                                                                  
Calculation of Limited
Partners' interest:
Net Income attributable to    $   107             $  140          $  (33    )
Partners
Less: General Partner's          (38     )         (27    )       (11    )
interest
Limited Partners' interest    $   69             $  113         $  (44    )
in Net Income
                                                                  
Net Income per Limited
Partner unit:
Basic                         $   0.66           $  1.09   
                                                                  
Diluted                       $   0.66           $  1.09   
                                                                  
Weighted Average Limited
Partners' units
outstanding:
Basic                            104.0            103.8  
                                                                  
Diluted                          104.5            104.1  
                                                                  

                                                        
Sunoco Logistics Partners L.P.
Financial Highlights
(unaudited)
                                                           
                                          March 31, 2014   December 31, 2013
                                          (in millions)
Balance Sheet Data:
Cash and cash equivalents                 $   140         $    39       
                                                           
Advances to affiliated companies          $   14          $    239      
                                                           
Revolving credit facilities ^(1)          $   985          $    235
Senior Notes                                  1,975             2,150
Unamortized fair value adjustments ^(2)       116               120
Unamortized bond discount                    (3      )        (2       )
Total Debt                                $   3,073       $    2,503    
                                                           
Sunoco Logistics Partners L.P. equity     $   6,207        $    6,204
Noncontrolling interests                     122             121      
Total Equity                              $   6,329       $    6,325    
                                                           

       In April 2014, we repaid the outstanding balance under our $1.50
^(1)  billion credit facility using proceeds from the April 2014 senior notes
       offering.
       In connection with the application of push-down accounting, our senior
^(2)   notes were adjusted to fair value upon the closing of the acquisition
       of our general partner by Energy Transfer Partners, L.P. on October 5,
       2012.
       

                                                       
Sunoco Logistics Partners L.P.
Financial and Operating Statistics
(unaudited)
                                                         
                                                         Three Months Ended
                                                         March 31,
                                                         2014       2013
                                                         (in millions)
Sales and other operating revenue
Crude Oil Pipelines                                      $ 131       $ 95
Crude Oil Acquisition and Marketing                        4,094       3,259
Terminal Facilities                                        287         183
Refined Products Pipelines                                 41          30
Intersegment eliminations                                 (76   )    (55   )
Total sales and other operating revenue                  $ 4,477    $ 3,512 
                                                                     
                                                         Three Months Ended
                                                         March 31,
                                                         2014        2013
                                                         (in millions)
Adjusted EBITDA
Crude Oil Pipelines                                      $ 93        $ 61
Crude Oil Acquisition and Marketing                        12          112
Terminal Facilities                                        86          54
Refined Products Pipelines                                17        9     
Total Adjusted EBITDA                                    $ 208      $ 236   
                                                                     
                                                         Three Months Ended
                                                         March 31,
                                                         2014        2013
Operating Highlights
                                                                     
Crude Oil Pipelines:
Pipeline throughput (thousands of barrels per day          2,041       1,582
("bpd"))
Pipeline revenue per barrel (cents)                        71.6        67.0
                                                                     
Crude Oil Acquisition and Marketing:
Crude oil purchases (thousands of bpd)                     840         750
Gross profit per barrel purchased (cents) ^(1)             21.1        172.0
Average crude oil price (per barrel)                     $ 98.61     $ 94.34
                                                                     
Terminal Facilities:
Terminal throughput (thousands of bpd):
Refined products terminals                                 413         414
Nederland terminal                                         1,322       850
Refinery terminals                                         226         325
                                                                     
Refined Products Pipelines: ^(2)
Pipeline throughput (thousands of bpd)                     521         522
Pipeline revenue per barrel (cents)                        88.3        62.9
                                                                     

     
Sunoco Logistics Partners L.P.
Financial and Operating Statistics Notes
(unaudited)
       
       Represents total segment sales and other operating revenue less cost of
^(1)   products sold and operating expenses divided by total crude oil
       purchases.
^(2)   Excludes amounts attributable to equity interests which are not
       consolidated.
       

                                                          
Sunoco Logistics Partners L.P.
Non-GAAP Financial Measures
(unaudited)
                                                            
                                                            Three Months Ended
                                                            March 31,
                                                            2014      2013
                                                            (in millions)
Net Income                                                  $  110     $ 142
Interest expense, net                                          16        19
Depreciation and amortization expense                          69        64
Provision for income taxes                                     5         6
Non-cash compensation expense                                  5         4
Unrealized gains on commodity risk management activities       (1  )     (3  )
Proportionate share of unconsolidated affiliates’             4       4   
interest, depreciation and provision for income taxes
Adjusted EBITDA ^(1)                                           208       236
Interest expense, net                                          (16 )     (19 )
Provision for income taxes                                     (5  )     (6  )
Amortization of fair value adjustments on long-term debt       (4  )     (6  )
Distributions versus Adjusted EBITDA of unconsolidated         (6  )     (3  )
affiliates
Maintenance capital expenditures                               (18 )     (4  )
Distributable cash flow attributable to noncontrolling         (4  )     (3  )
interests
Contributions attributable to acquisition from affiliate      3       —   
Distributable Cash Flow ^(1)                                $  158    $ 195 
                                                                             

       Our management believes that Adjusted EBITDA and distributable cash
       flow information enhances an investor’s understanding of a business’s
       ability to generate cash for payment of distributions and other
^(1)  purposes. Adjusted EBITDA and distributable cash flow do not represent
       and should not be considered an alternative to net income or cash flows
       from operating activities as determined under United States GAAP and
       may not be comparable to other similarly titled measures of other
       businesses.
       

Contact:

Sunoco Logistics Partners L.P.
Jeffrey Shields (media), 215-977-6056
or
Peter Gvazdauskas (investors), 215-977-6322
 
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