Southern Union EPS Up 21%; 2008 EPS Guidance Reaffirmed at $1.80 to $1.90

-- First Quarter 2008 EPS of $.64 vs. $.53 in prior year

-- Florida Gas Transmission expansion 75% contracted
HOUSTON--(Business Wire)--
Southern Union Company (NYSE:SUG) today reported net earnings
available for common stockholders for the quarter ended March 31,
2008, of $78.6 million ($.64 per fully diluted share) compared with
$74.4 million ($.62 per share) in the prior year. Excluding selected
items, the prior year's net earnings available for common stockholders
would have been $64.2 million ($.53 per share) for the quarter.

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*T
Three months ended
March 31,
($000s, except per share amounts) 2008 2007
----------------------------------------------------------------------
Operating revenues $952,698 $780,232
Operating income $153,555 $129,594
Net earnings $ 82,908 $ 78,721
Preferred stock dividends $ (4,341) $ (4,341)
Net earnings available to common stockholders $ 78,567 $ 74,380
After-tax adjustment for selected items $ - $(10,223)
Adjusted net earnings available to common
stockholders $ 78,567 $ 64,158
Adjusted net earnings per share available to
common stockholders $ 0.64 $ 0.53
----------------------------------------------------------------------
*T

Selected items in 2007 primarily include a $14.1 million pretax
nonrecurring gain related to the settlement of litigation.

Net operating revenue, calculated as revenue less cost of gas and
other energy and revenue related taxes, increased $43.5 million or
16%, to $323.6 million from $280.1 million in the prior year.

For the quarter ended March 31, 2008, Southern Union reported
earnings before interest and taxes ("EBIT") of $170.6 million compared
with adjusted EBIT (excluding the aforementioned selected items) of
$146.7 million in the prior period, representing an increase of 16%.

The increase in adjusted operating results was primarily
attributable to increased contributions from Southern Union's
gathering and processing and transportation and storage segments. The
company's gathering and processing segment, Southern Union Gas
Services, recorded EBIT of $28.6 million for the quarter compared with
$8.9 million for the same period in the prior year, an increase of
221%. The transportation and storage segment recorded EBIT of $109.4
million compared with adjusted EBIT of $101.1 million in 2007,
representing an increase of 8%.

Management's Perspective

Commenting on the first quarter, George L. Lindemann, chairman,
president and CEO, said, "We are very pleased with the quarterly
financial performance across all of our business segments. From a
year-over-year perspective, we are proud to have been able to grow
comparable earnings per share by 21%. We are also pleased to report
that we are reaffirming our annual earnings guidance in the range of
$1.80 to $1.90 per share."

Senior executive vice president Eric D. Herschmann added, "Florida
Gas Transmission continues to make significant progress on its Phase
VIII expansion. It has already signed precedent agreements with
shippers for 75% of the expansion capacity and we are confident that
additional capacity will be contracted prior to filing the FERC
certificate this fall. At our gathering and processing segment, we are
pleased to report that we have fully hedged a total of 30,000 MMBtu/d
of our 2008 equity volumes at $15.02 per MMBtu and have hedged an
additional 10,000 MMBtu/d of processing spread exposure at $7.10. We
have also been active in the market for 2009, adding several positions
to our program that will help solidify next year's earnings and cash
flow."

Key Factors Impacting First Quarter 2008 Performance Relative to
Prior Year

-- Southern Union's transportation and storage segment posted
EBIT of $109.4 million, compared with adjusted EBIT of $101.1
million in the prior year. The $8.3 million increase was
primarily attributable to an $18.0 million increase in
operating revenues at Panhandle Energy, primarily a result of
higher transportation and storage revenues, offset partially
by $4.4 million of higher operating expense and $4.4 million
of higher depreciation expense.

-- The gathering and processing segment reported EBIT of $28.6
million compared with $8.9 million in the prior year. Gross
margin increased by $25.2 million, primarily due to improved
operating efficiencies resulting in increased equity volumes,
as well as higher realized natural gas and natural gas liquids
prices, partially offset by a $5.3 million increase in
operating expenses.

-- EBIT for the company's distribution segment (predominantly
Missouri Gas Energy) decreased $3.2 million to $30.3 million.
The decrease was due primarily to an increase in operating
expenses of $3.8 million coupled with a change in the
company's residential customer class rate structure to a
straight-fixed variable rate design which has the effect of
normalizing margin throughout the year.

-- Interest expense decreased $1.5 million to $50.7 million for
the quarter. The decrease was primarily due to lower
LIBOR-based rates, higher capitalized interest costs, and
lower outstanding balances at Southern Union offset partially
by higher outstanding balances at Panhandle Energy.

2008 Earnings Guidance

Southern Union reaffirmed its 2008 net earnings guidance in the
range of $1.80 to $1.90 per fully diluted share.

Quarterly Report on Form 10-Q

Southern Union will provide additional information about its first
quarter 2008 results in its quarterly report on Form 10-Q expected to
be filed Friday, May 9, 2008 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 Friday,
May 9 at 9:00 a.m. Eastern time to discuss results, recent events and
outlook. To access the call, dial 888-713-4217 (international callers
dial 617-213-4869) and enter the passcode 96220510. 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 19378937.

Please use the following link to pre-register and view important
information about this conference call. Pre-registering is not
mandatory but is recommended as it will provide you immediate entry
into the call and will facilitate the timely start of the call.
Pre-registration takes only a few minutes and you may pre-register at
any time, including up to and after the call start time. To
pre-register, please click Pre-register (control + click on the link)
and enter the registration key PCK7CLLAX or enter the following URL
www.theconferencingservice.com/prereg/key.process and use the same
registration key.

The investor call is being webcast by CCBN and may be accessed
through Southern Union's web site at www.sug.com, through
Thomson/CCBN's individual investor center at www.companyboardroom.com,
or by visiting any of the investor sites in Thomson/CCBN's individual
investor network. Institutional investors may access the call via
Thomson/CCBN's password-protected event management site - StreetEvents
at www.streetevents.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.

Through Panhandle Energy and its 50% equity ownership of Florida
Gas Transmission, Southern Union's interstate pipeline interests
operate approximately 15,000 miles of interstate pipelines that
transport natural gas from the Anadarko and San Juan basins, the
Rockies, the Gulf of Mexico, Mobile Bay and South Texas to major
markets in the Southeast, Midwest and Great Lakes region.

Southern Union Gas Services, with approximately 4,800 miles of
pipelines, is engaged in the gathering, transmission, treating,
processing and redelivery of natural gas and natural gas liquids in
Texas and New Mexico.

Through its local distribution companies, Missouri Gas Energy and
New England Gas Company, Southern Union also serves 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 certain select unaudited financial
information for the company for the three months ended March 31, 2008
and 2007.

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Three Months Ended
March 31,
2008 2007
--------- ---------
(In thousands,
except per share
amounts)
Operating revenues $952,698 $780,232

Operating expenses:
Cost of gas and other energy 610,169 483,085
Revenue-related taxes 18,950 17,019
Operating, maintenance and general 108,910 95,195
Depreciation and amortization 48,623 43,464
Taxes, other than on income and revenues 12,491 11,875
--------- ---------
Total operating expenses 799,143 650,638
--------- ---------

Operating income 153,555 129,594

Other income (expenses):
Interest expense (50,701) (52,185)
Earnings from unconsolidated investments 16,729 30,896
Other, net 338 287
--------- ---------
Total other income (expenses), net (33,634) (21,002)
--------- ---------

Earnings before income taxes 119,921 108,592

Federal and state income tax expense 37,013 29,871
--------- ---------

Net earnings 82,908 78,721

Preferred stock dividends (4,341) (4,341)
--------- ---------

Net earnings available for common stockholders $ 78,567 $ 74,380
========= =========

Net earnings available for common stockholders per
share:
Basic $ 0.65 $ 0.62
Diluted $ 0.64 $ 0.62
Cash dividends declared on common stock per share: $ 0.15 $ 0.10

Weighted average shares outstanding:
Basic 121,803 119,790
Diluted 122,139 120,277
*T

Select Financial Information Continued

The following table sets forth certain select unaudited financial
information for the company's segments and a reconciliation of EBIT to
net earnings for the three months ended March 31, 2008 and 2007.

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*T
Three Months Ended
March 31,
Segment Data 2008 2007
------------------------------------------------- ----------- --------
(In thousands)
Revenues from external customers:
Transportation and Storage $ 187,051 $169,030
Gathering and Processing 415,662 296,055
Distribution 348,635 314,257
----------- --------
Total segment operating revenues 951,348 779,342
Corporate and other 1,350 890
----------- --------
$ 952,698 $780,232
=========== ========

Depreciation and amortization:
Transportation and Storage $ 25,061 $ 20,709
Gathering and Processing 15,470 14,587
Distribution 7,572 7,618
----------- --------
Total segment depreciation and amortization 48,103 42,914
Corporate and other 520 550
----------- --------
$ 48,623 $ 43,464
=========== ========

EBIT:
Transportation and Storage segment $ 109,381 $115,218
Gathering and Processing segment 28,556 8,882
Distribution segment 30,301 33,545
Corporate and other 2,384 3,132
----------- --------
Total EBIT 170,622 160,777
Interest expense 50,701 52,185
----------- --------
Earnings before income taxes 119,921 108,592
Federal and state income tax expense 37,013 29,871
----------- --------
Net earnings 82,908 78,721
Preferred stock dividends 4,341 4,341
----------- --------
Net earnings available for common
stockholders $ 78,567 $ 74,380
=========== ========
*T

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
accounting changes; (ii) income taxes; (iii) interest; and (iv)
dividends on preferred stock. EBIT is a non-GAAP financial measure and
may not be comparable to measures used by other companies.
Additionally, EBIT should be considered in conjunction with net
earnings and other performance measures such as operating income or
net cash flows provided by operating activities.

Select Financial Information Continued

The following table sets forth certain select, unaudited financial
information for the company as of March 31, 2008 and December 31, 2007
and for the three months ended March 31, 2008 and 2007.

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*T
March 31, December 31,
2008 2007
------------ ------------
(In thousands of dollars)
Total assets $ 7,634,524 $ 7,397,913
Long Term Debt 2,949,758 2,960,326
Short term debt and notes payable 509,552 557,680
Preferred stock 230,000 230,000
Common equity 2,105,896 1,975,806
Total capitalization 5,795,206 5,723,812

Three Months ended March
31,
2008 2007
------------ ------------
Cash flow information: (In thousands of dollars)
Cash flow provided by operating activities $ 239,554 $ 171,779
Changes in working capital 74,006 5,634
Net cash flow provided by operating
activities before changes in working
capital 165,548 166,145
Net cash flow used in investing activities (215,598) (118,100)
Net cash flow provided by (used in)
financing activities 3,043 (58,701)
------------ ------------
Change in cash and cash equivalents $ 26,999 $ (5,022)
============ ============
*T

Select Financial Information Continued

The following table sets forth a reconciliation of EBIT to
Adjusted EBIT for the company for the three months ended March 31,
2008 and 2007.

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Three months ended
March 31,
2008 2007
-------- ---------
(In thousands of
dollars)
Southern Union Company:
Reported EBIT $170,622 $160,777
Adjustments:
Litigation settlement - (14,100)
-------- ---------
Adjusted EBIT $170,622 $146,677
======== =========

Transportation & storage segment:
Reported EBIT $109,381 $115,218
Adjustments:
Litigation settlement - (14,100)
-------- ---------
Adjusted EBIT $109,381 $101,118
======== =========
*T

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

Copyright Business Wire 2008