Energy Transfer Equity Reports Third Quarter Results

Energy Transfer Equity, L.P. (NYSE:ETE) today reported financial results for the quarter ended September 30, 2012.

Distributable Cash Flow, as adjusted, for Energy Transfer Equity, L.P. ("ETE" or the "Partnership") was $189.2 million for the three months ended September 30, 2012, an increase of $62.9 million over the three months ended September 30, 2011. ETE's net income attributable to partners was $35.2 million for the three months ended September 30, 2012 as compared to $69.1 million for the three months ended September 30, 2011.

Distributable Cash Flow, as adjusted, for ETE was $476.1 million for the nine months ended September 30, 2012, an increase of $100.0 million over the nine months ended September 30, 2011. ETE's net income attributable to partners was $255.1 million for the nine months ended September 30, 2012 as compared to $224.0 million for the nine months ended September 30, 2011.

As of and during the three and nine months ended September 30, 2012, ETE's financial position and operating results were impacted by the following transactions:

• Southern Union Acquisition. On March 26, 2012, ETE completed the acquisition of Southern Union Company (“Southern Union”) for $5.4 billion of cash and ETE Common Units. As such, Southern Union was consolidated in ETE's financial statements as of March 26, 2012 and its cash flows were included in ETE's Distributable Cash Flow from March 26, 2012 to September 30, 2012. The cash portion of the Southern Union acquisition purchase price was $3.0 billion, which was funded with proceeds from a $2.0 billion senior secured term loan and with proceeds from the dropdown transaction discussed below.
• Merger and Finance-related Expenses. In connection with the Southern Union acquisition the following expenses were incurred by ETE during the three and nine months ended September 30, 2012:
  • $62.2 million in fees recognized during the first quarter of 2012 related to a bridge loan facility that ETE entered into to initially fund the cash consideration of the Southern Union merger;
  • $38.2 million in merger-related costs that were accounted for in selling, general and administrative expenses during the nine months ended September 30, 2012, respectively; and,
  • $56.8 million of net merger-related expenses incurred directly by Southern Union that were consolidated into ETE's operating results during the nine months ended September 30, 2012.
• Citrus Dropdown. Concurrent with the Southern Union acquisition, ETE completed the dropdown of Southern Union's 50% interest in Citrus Corp. (“Citrus”) to Energy Transfer Partners, L.P. (“ETP”) in exchange for approximately $1.9 billion in cash and $105 million of ETP common units. The cash proceeds from ETP were used in part to fund a portion of the Southern Union acquisition and to repay existing indebtedness at Southern Union. Citrus was reflected as an equity method investment on ETE's consolidated financial statements from the date of acquisition. In connection with this transaction, ETE also relinquished its rights to $220 million of the incentive distributions from ETP that it would otherwise be entitled to receive over 16 consecutive quarters.
• Propane Contribution. On January 12, 2012, ETP completed the contribution of its retail propane operations to AmeriGas Partners, L.P. (“AmeriGas”) in exchange for approximately $2.7 billion, consisting of cash and AmeriGas common units, which resulted in the recognition of a $1.1 billion gain on deconsolidation in ETE's consolidated financial statements during the nine months ended September 30, 2012, and ETE's consolidated financial statements now reflect ETP's equity method investment in AmeriGas.
• Tender Offer. ETP used the cash proceeds from the propane contribution discussed above to repay borrowings under its existing revolving credit facility and to extinguish approximately $750 million in senior notes outstanding through a tender offer. As a result of the tender offer, a loss on extinguishment of debt of $115 million was recorded during the nine months ended September 30, 2012 and recognized in ETE's consolidated statement of operations.

The Partnership has scheduled a conference call for 8:30 a.m. Central Time, Thursday, November 8, 2012 to discuss its third quarter 2012 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 the Partnership's website for a limited time.

The Partnership’s principal sources of cash flow historically have derived from (i) distributions related to its direct and indirect investments in the limited and general partner interests in ETP and Regency Energy Partners LP (“Regency”), including 100% of ETP's and Regency's incentive distribution rights, approximately 50.2 million of ETP's common units and approximately 26.3 million of Regency's common units and (ii) cash flow generated from its wholly owned subsidiary, Southern Union, which was acquired on March 26, 2012. Subsequent to October 5, 2012, the Partnership's cash flows will derive from its investment in ETP and Regency and its 60% interest in Holdco. The Partnership's primary cash requirements are for general and administrative expenses, debt service requirements and distributions to its partners and holders of its Preferred Units.

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