Southern Union Announces 1Q Results; Reaffirms 2009 Guidance

* First Quarter Adjusted EPS of $.59; Reported EPS of $.36

HOUSTON--(Business Wire)--
Southern Union Company (NYSE: SUG) today reported net earnings available for
common stockholders for the quarter ended March 31, 2009 of $44.1 million ($.36
per share) compared with $78.6 million ($.64 per share) in the prior year.

Adjusted net earnings available for common stockholders for the current quarter
were $73.1 million ($.59 per share). Adjusted net earnings for the quarter
exclude a $10.1 million ($.08 per share) charge to increase the provision for
repair and abandonment costs as a result of damage to the company`s Sea Robin
pipeline system caused by Hurricane Ike and a $9.7 million ($.08 per share)
mark-to-market unrealized loss on open economic hedges of 2009 processing
spreads. Adjusted net earnings include a $9.2 million ($.07 per share)
mark-to-market gain on economic hedges, which was recognized in a prior
accounting period but excluded from the prior period`s adjusted earnings.
Adjusted items are shown on an after-tax basis. By calculating adjusted net
earnings available for common stockholders, the company believes it presents its
earnings in a manner more consistent with the presentation used by the
investment community in its evaluation of the company`s earnings. A
reconciliation of net earnings to adjusted net earnings for the quarter is set
forth in the following table.

Three months ended March 31,
($000s, except per share amounts) 2009 2008
Net earnings available for common stockholders $ 44,086 $ 78,567
After-tax adjustments:
Increase to provision for repair and abandonment $ 10,091 $ -
costs
MTM loss on open economic hedges $ 9,723 $ -
MTM gain recorded in prior accounting period $ 9,172 $ -
Adjusted net earnings available for common $ 73,072 $ 78,567
stockholders
Reported net earnings per share available for common $ 0.36 $ 0.64
stockholders
Adjusted net earnings per share available for common $ 0.59 $ 0.64
stockholders

The company further estimates that Hurricane Ike negatively impacted the quarter
by an additional $2.1 million ($.02 per share) on an after-tax basis, a result
of a $3.4 million reduction in transportation revenue compared to the prior year
due to reduced volumes flowing after Hurricane Ike.

For the three months ended March 31, 2009, net operating revenues, calculated as
revenue less cost of gas and other energy and revenue-related taxes, decreased
$37.0 million or 11.4% to $286.6 million from $323.6 million in the prior year.
Adjusted net operating revenues, which includes the adjustments for
mark-to-market accounting, was $316.8 million during the quarter, or a decrease
of $6.8 million. A reconciliation of operating revenue to net operating revenue
and adjusted net operating revenue is available at the end of this press
release. The decrease in net operating revenue was primarily related to lower
realized commodity prices at the company`s gathering and processing segment.

The company uses earnings before interest and taxes ("EBIT"), or adjusted EBIT,
as appropriate, as its primary measures of evaluating financial performance.
EBIT and adjusted EBIT are non-GAAP measures and should be used in conjunction
with net earnings and other financial measures such as operating income or net
cash flows provided by operating activities. For the three months ended March
31, 2009, Southern Union reported adjusted EBIT of $160.5 million compared with
adjusted EBIT of $170.6 million in the prior period. The decrease was primarily
related to lower realized commodity prices at the company`s gathering and
processing segment. By calculating adjusted EBIT, the company believes it
presents its financial performance in a manner more consistent with the
presentation used by the investment community in its evaluation of the company`s
financial performance. A reconciliation of EBIT to adjusted EBIT and EBIT to net
earnings is available at the end of this press release.

Management`s Perspective

Commenting on the quarter, George L. Lindemann, chairman and CEO, said, "Given
the overall commodity price environment of the first quarter, we were pleased
with the operational and financial results of the company. Our stable, fee-based
businesses continue to drive results in line with our expectations and as such
we are pleased to reaffirm our 2009 earnings guidance."

President and COO Eric D. Herschmann added, "We are happy with the continued
progress that we are making on our organic growth projects. Trunkline LNG`s
Infrastructure Enhancement Project remains on track for an early third quarter
in service date. Additionally, the recent senior note offering at our Florida
Gas Transmission affiliate, which will help support the Phase VIII expansion
project, was very well received by the market."

Key Factors Impacting First Quarter 2009 Performance Relative to Prior Year

* Southern Union`s transportation and storage segment posted adjusted EBIT of
$109.3 million, compared with $114.1 million in the prior year. Adjusted EBIT
for the quarter excludes a $16.1 million charge to increase the provision for
repair and abandonment costs as a result of damage to the company`s Sea Robin
pipeline system caused by Hurricane Ike. The $4.8 million decrease was primarily
attributable to a $4.3 million decrease in adjusted EBIT at Panhandle Energy,
which includes Panhandle Eastern Pipeline Company, LP and its subsidiaries.
Panhandle Energy saw higher operating revenues of $5.2 million, offset by higher
operating expenses of $6.1 million and higher depreciation and amortization
expense of $2.8 million. The increase in operating revenues was largely due to a
$5 million increase in parking revenue, a $2.2 million increase in reservation
revenue, primarily a result of the Trunkline Field Zone Expansion project,
offset by a $3.4 million decrease in transportation commodity revenue as a
result of lower volumes flowing on the company`s Sea Robin system following
Hurricane Ike. The operating expense increase includes $2 million of contract
storage costs resulting from an increase in leased storage capacity, a $1.3
million charge to record a lower of cost or market adjustment for system gas and
a $1.2 million increase in LNG power costs recovered through a reimbursement
mechanism.
* The gathering and processing segment reported adjusted EBIT of $18.7 million
compared with $28.6 million in the prior year. Adjusted EBIT for the quarter
excludes $15.5 million of mark-to-market unrealized losses on open economic
hedges of 2009 processing spreads and includes $14.6 million of mark-to-market
gains recognized in a prior accounting period, but excluded from the prior
period`s adjusted earnings. Gross margin decreased by $12.1 million, after
accounting for the mark-to-market adjustments, primarily due to lower realized
natural gas and natural gas liquids prices. Operating expenses decreased by $3.3
million, primarily due to a $1.1 million decrease in maintenance and contract
service costs as a result of the company`s 2009 cost reduction initiative, a
$500,000 decrease in chemical and lubricant costs and a $400,000 decrease in
utility costs. Depreciation expense increased by $1 million during the period
due to an increase in property, plant and equipment.
* EBIT for the company`s distribution segment increased $3.2 million to $31.6
million for the quarter. Increased EBIT for the segment was largely due to a
$3.5 million insurance settlement received during the quarter.

2009 Earnings Guidance

Southern Union reaffirms its 2009 net earnings of $1.45 to $1.60 per share (GAAP
basis) and adjusted net earnings of $1.75 to $1.90 per share. Adjusted net
earnings attribute the impact of previously accrued mark-to-market unrealized
gains on economic hedges of 2009 processing spreads to 2009 adjusted net
earnings. Adjusted net earnings also exclude the increase to the provision for
repair and abandonment costs as a result of damage to the company`s Sea Robin
pipeline system caused by Hurricane Ike.

Quarterly Report on Form 10-Q

Southern Union will provide additional information about its first quarter 2009
results in its quarterly report on Form 10-Q expected to be filed today with the
Securities and Exchange Commission. Once made, this filing may be accessed
through the Investors section of the company`s web site at www.sug.com.

Investor Call & Webcast

Southern Union will host a live investor call and webcast today at 9:00 a.m.
Eastern time to discuss results, recent events and outlook. To access the call,
dial 866-700-6979 (international callers dial 617-213-8836) and enter the
passcode 99150075. A replay of the call will be available for one week after the
event by dialing 888-286-8010 (international callers dial 617-801-6888) and
entering passcode 16283492. The webcast may be accessed online through the
Investor`s section of the company`s web site at www.sug.com.

About Southern Union Company

Southern Union Company, headquartered in Houston, is one of the nation`s leading
diversified natural gas companies, engaged primarily in the transportation,
storage, gathering, processing and distribution of natural gas. The company owns
and operates one of the nation`s largest natural gas pipeline systems with
approximately 20,000 miles of gathering and transportation pipelines and North
America`s largest liquefied natural gas import terminal, along with serving more
than half a million natural gas end-user customers in Missouri and
Massachusetts. For further information, visit www.sug.com.

Forward-Looking Information

This news release includes forward-looking statements. Although Southern Union
believes that its expectations are based on reasonable assumptions, it can give
no assurance that such assumptions will materialize. Important factors that
could cause actual results to differ materially from those in the
forward-looking statements herein are enumerated in Southern Union`s Forms 10-K
and 10-Q as filed with the Securities and Exchange Commission. The Company
assumes no obligation to publicly update or revise any forward-looking
statements made herein or any other forward-looking statements made by the
Company, whether as a result of new information, future events, or otherwise.

Select Financial Information

The following table sets forth unaudited financial information for the company for the three months ended March 31, 2009
and 2008.

Three months ended March 31,
2009 2008
(In thousands, except per share amounts)

Operating revenues $ 683,863 $ 952,698

Operating expenses:
Cost of gas and other energy 380,062 610,169
Operating, maintenance and general 128,677 108,910
Depreciation and amortization 52,470 48,623
Revenue-related taxes 17,206 18,950
Taxes, other than on income and revenues 13,741 12,491
Total operating expenses 592,156 799,143
Operating income 91,707 153,555

Other income (expenses):
Interest expense (48,370 ) (50,701 )
Earnings from unconsolidated investments 16,573 16,729
Other, net 5,962 338
Total other income (expenses), net (25,835 ) (33,634 )

Earnings before income taxes 65,872 119,921

Federal and state income tax expense 19,615 37,013

Net earnings 46,257 82,908

Preferred stock dividends (2,171 ) (4,341 )

Net earnings available for common stockholders $ 44,086 $ 78,567

Net earnings available for common stockholders per share:
Basic $ 0.36 $ 0.65
Diluted $ 0.36 $ 0.64

Dividends declared on common stock per share $ 0.15 $ 0.15

Weighted average shares outstanding:
Basic 124,045 121,803
Diluted 124,075 122,139

Select Financial Information Continued

The following table sets forth certain selected financial information for the company for the periods presented.

March 31, December 31,
2009 2008
(In thousands of dollars)
Total assets $ 7,817,558 $ 7,997,907
Long Term Debt 3,157,069 3,257,434
Short term debt and notes payable 464,165 462,082
Preferred stock 115,000 115,000
Common equity 2,283,878 2,252,952
Total capitalization 6,020,112 6,087,468

Three months ended March 31,
2009 2008
Cash flow information: (In thousands of dollars)
Cash flow provided by operating activities $ 236,730 $ 239,554
Changes in working capital 121,341 74,823
Net cash flow provided by operating activities before changes in
working capital
115,389 164,731
Net cash flow used in investing activities (118,565 ) (215,598 )
Net cash flow provided by financing activities (116,954 ) 3,043
Change in cash and cash equivalents $ 1,211 $ 26,999

Select Non-GAAP Financial Information

The following table sets forth certain selected financial information for the company`s segments for the periods
presented.

Three Months Ended March 31,
Segment Data 2009 2008
(In thousands)
Revenues from external customers:
Transportation and Storage $ 192,295 $ 187,051
Gathering and Processing 168,305 415,662
Distribution 322,024 348,635
Total segment operating revenues 682,624 951,348
Corporate and other 1,239 1,350
$ 683,863 $ 952,698

Depreciation and amortization:
Transportation and Storage $ 27,863 $ 25,061
Gathering and Processing 16,413 15,470
Distribution 7,671 7,572
Total segment depreciation and amortization 51,947 48,103
Corporate and other 523 520
$ 52,470 $ 48,623

EBIT:
Transportation and Storage segment $ 93,222 $ 114,100
Gathering and Processing segment (11,433 ) 28,556
Distribution segment 31,638 28,482
Corporate and other 815 (516 )
Total EBIT 114,242 170,622
Interest expense 48,370 50,701
Earnings before income taxes 65,872 119,921
Federal and state income tax expense 19,615 37,013
Net Earnings 46,257 82,908
Preferred stock dividends 2,171 4,341
Net earnings available for common stockholders $ 44,086 $ 78,567

The Company evaluates segment performance based on several factors, of which the primary financial measure is earnings
before interest and taxes (EBIT). EBIT allows management and investors to more effectively evaluate the performance of
all of the Company`s consolidated subsidiaries and unconsolidated investments. The Company defines EBIT as net earnings
available for common shareholders, adjusted for: (i) items that do not impact earnings, such as extraordinary items,
discontinued operations and the impact of changes in accounting principles; (ii) income taxes; (iii) interest; (iv)
dividends on preferred stock; and (v) loss on extinguishment of preferred stock.

Select Non-GAAP Financial Information

The following tables set forth a reconciliation of EBIT to adjusted EBIT (a non
-GAAP measure) for the company and select business segments for the three months
ended March 31, 2009 and 2008.

Three months ended March 31,
2009 2008
(In thousands of dollars)
Southern Union Company:
Reported EBIT $ 114,242 $ 170,622
Adjustments:
Increase to provision for repair and abandonment 16,106 -
costs
Mark-to-market losses on open economic hedges 15,518 -
Mark-to-market gains recognized in prior periods 14,639 -
Adjusted EBIT $ 160,505 $ 170,622

Gathering & processing segment:
Reported EBIT $ (11,433 ) $ 28,556
Adjustments:
Mark-to-market losses on open economic hedges 15,518 -
Mark-to-market gains recognized in prior periods 14,639 -
Adjusted EBIT $ 18,724 $ 28,556

Transportation & storage segment:
Reported EBIT $ 93,222 $ 114,100
Adjustments:
Increase to provision for repair and abandonment 16,106 -
costs
Adjusted EBIT $ 109,328 $ 114,100

Select Financial Information Non-GAAP

The following tables set forth a reconciliation of operating revenues to net operating revenues and adjusted net
operating revenues for the company for the three months ended March 31, 2009 and 2008.

Three Months Ended March 31,
2009 2008
(In thousands of dollars)
Operating revenues $ 683,863 $ 952,698
Cost of gas and other energy (380,062 ) (610,169 )
Revenue-related taxes (17,206 ) (18,950 )
Net operating revenues 286,595 323,579
Adjustments:
Mark-to-market losses on open economic hedges 15,518 -
Mark-to-market gains recognized in prior periods 14,639
Adjusted net operating revenues $ 316,752 $ 323,579

Southern Union Company
Vice President - Investor Relations
John F. Walsh, 212-659-3208
www.sug.com

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