Sunoco Logistics Announces Record Earnings for Second Quarter 2014 Business Wire PHILADELPHIA -- August 6, 2014 Sunoco Logistics Partners L.P. (NYSE: SXL) (the "Partnership") today announced record results for the second quarter 2014. Adjusted EBITDA for the three months ended June 30, 2014 was $280 million, a $36 million increase compared to the second quarter 2013. Net income attributable to partners for the second quarter 2014 was $156 million ($0.53 per limited partner unit diluted), compared with $143 million ($0.54 per limited partner unit diluted) for the second quarter 2013. Highlights include: *Distributable cash flow of $223 million for the second quarter 2014 *Ninth consecutive quarterly distribution increase of at least 5 percent; twenty-two percent distribution increase to $1.46 (annualized) compared to the second quarter 2013 *Distribution coverage ratio of 1.65x for the six months ended June 30, 2014 *Ended the quarter with a Debt-to-Adjusted EBITDA ratio of 3.2x calculated in accordance with our credit agreement *Secured long-term financing on growth projects totaling $1.1 billion *Completed a two-for-one split of our common units on June 12, 2014 "The second quarter was an outstanding quarter as we set new records in quarterly EBITDA and DCF," said Michael J. Hennigan, president and chief executive officer. "Our crude oil pipeline segment led the way as our crude expansion projects continue to grow this business and our terminals segment had a record quarter anchored by the strong performance of ourproducts and NGL margin business." Speaking on the announced Permian Longview and Louisiana Extension open season Hennigan said, "We continue to remain bullish on the Permian Basin’s growth. Crude oil production is estimated to increase by approximately 200,000 barrels per day per year according to industry and consultant estimates. This project would enable us to provide takeaway capacity for approximately 100,000 additional barrels per day out of the basin at Midland and be transported to the Longview area as well as destinations in Louisiana utilizing a combination of our proprietary crude oil system as well as third-party pipelines." On the Partnership’s 2014 organic capital program, Hennigan noted, "We now expect our 2014 organic growth to be approximately $2 billion. This increase from our previous guidance reflects additional non-major projects that we have developed to expand our existing asset platform in addition to capital spend timing updates on our previously announced projects. This growth in capital expenditures is a direct reflection of our goal to grow long-term ratable cash flow with our blue-bar driven projects." To fund the 2014 organic growth program, the Partnership has raised over $1.1 billion in long-term financing through June. Hennigan said, "We ended the second quarter with a Debt-to-Adjusted EBITDA ratio of 3.2x. We will look to fund our base 2014 organic capital program in a manner that maximizes our distributable cash flow while maintaining our investment grade credit ratings. We’ve launched our'At the Market' or ATM equity program and that is performing well, selling over $100 million to date. Also, we issued $1 billion in Senior Notes at a weighted average interest rate of just under 5 percent." DETAILS OF SECOND QUARTER SEGMENT ADJUSTED EBITDA Three Months Ended June 30, 2014 2013 Variance (in millions) Crude Oil Pipelines $ 104 $ 88 $ 16 Crude Oil Acquisition and Marketing 53 70 (17 ) Terminal Facilities 97 70 27 Refined Products Pipelines 26 16 10 Adjusted earnings before interest, taxes, depreciation and amortization expense $ 280 $ 244 $ 36 ("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 $16 million due primarily to higher throughput volumes largely attributable to expansion projects placed in service in 2013 to support the demand for transportation of West Texas crude oil. Timing of maintenance activities and pipeline integrity costs also contributed to the increase. These positive impacts were partially offset by higher utility and contract service costs. Crude Oil Acquisition and Marketing Adjusted EBITDA for the Crude Oil Acquisition and Marketing segment decreased $17 million to $53 million. The decrease in Adjusted EBITDA was primarily attributable to lower crude oil margins driven by 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 of our crude oil trucking fleet. Terminal Facilities Adjusted EBITDA for the Terminal Facilities segment increased $27 million due primarily to higher volumes and increased margins from our refined products acquisition and marketing activities and improved contributions from our bulk marine terminals. These improvements were partially offset by volume reductions at our refined products terminals. Refined Products Pipelines Adjusted EBITDA for the Refined Products Pipelines segment increased $10 million to $26 million 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, and higher contributions from joint-venture interests. These improvements were partially offset by lower overall pipeline volumes. FINANCING UPDATE Net interest expense was $21 million for the three months ended June 30, 2014 compared to $17 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 increased $2 million compared to the prior year period due primarily to the April 2014 issuance of $300 million of 4.25 percent Senior Notes and $700 million of 5.30 percent Senior Notes due April 2024 and April 2044, respectively, and higher borrowings under our revolving credit facility. These increases were largely offset by higher capitalized interest associated with our expansion capital program. During the second quarter 2014, we issued 2.2 million common units under our ATM program for net proceeds of $102 million. The program permits us to issue up to $250 million of common units directly to the public, which allows us to raise capital in a timely and efficient manner to finance our growth capital program, while supporting our investment grade credit ratings. UNIT SPLIT On June 12, 2014, we completed a two-for-one split of our common units. The unit split resulted in the issuance of one additional common unit for every one common unit owned. All unit and per unit information included in this release is presented on a post-split basis. CAPITAL EXPENDITURES Six Months Ended June 30, 2014 2013 (in millions) Expansion capital expenditures $ 1,092 $ 310 Maintenance capital expenditures 31 22 Acquisitions 80 60 Investment in joint venture interests 58 — Total $ 1,261 $ 392 Our expansion capital spending for the six months ended June 30, 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 our bulk marine terminals. We expect total expansion capital spending, excluding major acquisitions and investment in joint venture interests, to be approximately $2 billion in 2014. Maintenance capital spending is expected to be approximately $70 million in 2014. We expect these expenditures to be funded from cash provided by operations, with proceeds from debt and equity offerings and, to the extent necessary, from borrowings under our credit facilities. INVESTOR CALL We will host a conference call regarding second quarter results on Thursday, August 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 1-800-835-8067. International callers should dial 1-203-369-3354. 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 and 10-Q 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 June 30, 2014 2013 Variance (in millions, except units and per unit amounts) Income Statement: Sales and other operating $ 4,821 $ 4,311 $ 510 revenue Cost of products sold 4,517 4,023 494 Operating expenses 23 25 (2 ) Selling, general and 27 34 (7 ) administrative expenses Depreciation and 74 64 10 amortization expense Total costs and expenses 4,641 4,146 495 Operating Income 180 165 15 Interest cost and debt (37 ) (23 ) (14 ) expense, net Capitalized interest 16 6 10 Other income 7 7 — Income Before Provision for 166 155 11 Income Taxes Provision for income taxes (8 ) (9 ) 1 Net Income 158 146 12 Less: Net Income attributable to (2 ) (3 ) 1 noncontrolling interests Net Income Attributable to $ 156 $ 143 $ 13 Partners Calculation of Limited Partners' interest: Net Income attributable to $ 156 $ 143 $ 13 Partners Less: General Partner's (44 ) (30 ) (14 ) interest Limited Partners' interest $ 112 $ 113 $ (1 ) in Net Income Net Income per Limited Partner unit: ^(1) Basic $ 0.54 $ 0.54 Diluted $ 0.53 $ 0.54 Weighted Average Limited Partners' units outstanding: ^(1) Basic 208.4 207.6 Diluted 209.6 208.6 ^(1) Amounts reflect the second quarter 2014 two-for-one unit split. Sunoco Logistics Partners L.P. Financial Highlights (unaudited) Six Months Ended June 30, 2014 2013 Variance (in millions, except units and per unit amounts) Income Statement: Sales and other operating $ 9,298 $ 7,823 $ 1,475 revenue Cost of products sold 8,727 7,247 1,480 Operating expenses 57 51 6 Selling, general and 64 67 (3 ) administrative expenses Depreciation and 143 128 15 amortization expense Total costs and expenses 8,991 7,493 1,498 Operating Income 307 330 (23 ) Interest cost and debt (63 ) (47 ) (16 ) expense, net Capitalized interest 26 11 15 Other income 11 9 2 Income Before Provision for 281 303 (22 ) Income Taxes Provision for income taxes (13 ) (15 ) 2 Net Income 268 288 (20 ) Less: Net Income attributable to (5 ) (5 ) — noncontrolling interests Net Income Attributable to $ 263 $ 283 $ (20 ) Partners Calculation of Limited Partners' interest: Net Income attributable to $ 263 $ 283 $ (20 ) Partners Less: General Partner's (82 ) (57 ) (25 ) interest Limited Partners' interest $ 181 $ 226 $ (45 ) in Net Income Net Income per Limited Partner unit: ^(1) Basic $ 0.87 $ 1.09 Diluted $ 0.86 $ 1.08 Weighted Average Limited Partners' units outstanding: ^(1) Basic 208.2 207.6 Diluted 209.3 208.4 ^(1) Amounts reflect the second quarter 2014 two-for-one unit split. Sunoco Logistics Partners L.P. Financial Highlights (unaudited) June 30, 2014 December 31, 2013 (in millions) Balance Sheet Data: Cash and cash equivalents $ 116 $ 39 Advances to affiliated companies ^(1) $ — $ 239 Revolving credit facilities $ 285 $ 235 Senior Notes 2,975 2,150 Unamortized fair value adjustments ^(2) 112 120 Unamortized bond discount (4 ) (2 ) Total Debt $ 3,368 $ 2,503 Sunoco Logistics Partners L.P. equity $ 6,362 $ 6,204 Noncontrolling interests 122 121 Total Equity $ 6,484 $ 6,325 Represented cash held by an affiliate in connection with the Partnership's participation in a centralized cash management program. ^(1) In the fourth quarter 2013, the Partnership established separate cash accounts and began to transition to processing its own cash receipts and disbursements. The Partnership has completed the transition and ceased participation in the cash management program. 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 Six Months Ended June 30, June 30, 2014 2013 2014 2013 (in millions) (in millions) Sales and other operating revenue Crude Oil Pipelines $ 138 $ 122 $ 269 $ 217 Crude Oil Acquisition and 4,432 4,047 8,526 7,306 Marketing Terminal Facilities 283 176 570 359 Refined Products Pipelines 40 32 81 62 Intersegment eliminations (72 ) (66 ) (148 ) (121 ) Total sales and other $ 4,821 $ 4,311 $ 9,298 $ 7,823 operating revenue Three Months Ended Six Months Ended June 30, June 30, 2014 2013 2014 2013 (in millions) (in millions) Adjusted EBITDA Crude Oil Pipelines $ 104 $ 88 $ 197 $ 149 Crude Oil Acquisition and 53 70 65 182 Marketing Terminal Facilities 97 70 183 124 Refined Products Pipelines 26 16 43 25 Total Adjusted EBITDA $ 280 $ 244 $ 488 $ 480 Three Months Ended Six Months Ended June 30, June 30, 2014 2013 2014 2013 Operating Highlights Crude Oil Pipelines: Pipeline throughput (thousands of barrels per 2,130 1,890 2,086 1,737 day ("bpd")) Pipeline revenue per barrel 71.2 70.8 71.4 69.1 (cents) Crude Oil Acquisition and Marketing: Crude oil purchases 854 796 847 773 (thousands of bpd) Gross profit per barrel 74.8 101.8 48.3 135.6 purchased (cents) ^(1) Average crude oil price (per $ 102.98 $ 94.23 $ 100.81 $ 94.28 barrel) Terminal Facilities: Terminal throughput (thousands of bpd): Refined products terminals 420 454 416 434 Nederland terminal 1,216 932 1,269 891 Refinery terminals 345 444 286 385 Refined Products Pipelines: ^(2) Pipeline throughput 551 599 536 560 (thousands of bpd) Pipeline revenue per barrel 79.4 59.1 83.7 60.8 (cents) 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 Six Months Ended June 30, June 30, 2014 2013 2014 2013 (in millions) (in millions) Net Income $ 158 $ 146 $ 268 $ 288 Interest expense, net 21 17 37 36 Depreciation and amortization expense 74 64 143 128 Provision for income taxes 8 9 13 15 Non-cash compensation expense 3 2 8 6 Unrealized (gains) losses on 8 (1 ) 7 (4 ) commodity risk management activities Amortization of excess joint venture 1 1 1 1 investment Proportionate share of unconsolidated affiliates’ interest, depreciation 7 6 11 10 and provision for income taxes Adjusted EBITDA ^(1) 280 244 488 480 Interest expense, net (21 ) (17 ) (37 ) (36 ) Provision for income taxes (8 ) (9 ) (13 ) (15 ) Amortization of fair value (4 ) (6 ) (8 ) (12 ) adjustments on long-term debt Distributions versus Adjusted EBITDA (10 ) (8 ) (16 ) (11 ) of unconsolidated affiliates Maintenance capital expenditures (13 ) (18 ) (31 ) (22 ) Distributable cash flow attributable (4 ) (5 ) (8 ) (8 ) to noncontrolling interests Contributions attributable to 3 3 6 3 acquisition from affiliate Distributable Cash Flow ^(1) $ 223 $ 184 $ 381 $ 379 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 Peter Gvazdauskas (investors), 215-977-6322
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