Sunoco Logistics Announces Record Earnings for Second Quarter 2014

  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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