Adjusted net earnings available for common stockholders for the current quarter were $43.8 million ($.35 per share), compared with $53.3 million ($.43 per share) in the prior year. Adjusted net earnings for the quarter exclude a $3.5 million ($.03 per share) mark-to-market unrealized loss on open economic hedges of 2009 processing spreads. Adjusted net earnings for the quarter include a $9.1 million ($.07 per share) mark-to-market gain on economic hedges that was recognized in 2008 but excluded from 2008's adjusted earnings. Adjusted items are shown on an after-tax basis. A reconciliation of net earnings to adjusted net earnings for the quarter is set forth in the following table.

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.

                                                                                                    Select Non-GAAP Financial Information                               Three months ended June 30,   ($000s, except per share amounts)                                   2009        2008              Net earnings available for common stockholders                      $  31,110   $  37,479         After-tax adjustments:                                                                            MTM loss on open economic hedges                                    $  3,512    $  13,796         MTM gain recorded in prior accounting period                        $  9,147    $  -              Loss on extinguishment of preferred stock                           $  -        $  1,995          Adjusted net earnings available for common stockholders             $  43,769   $  53,270         Reported net earnings per share available for common stockholders   $  0.25     $  0.30           Adjusted net earnings per share available for common stockholders   $  0.35     $  0.43                                                                                                              -------------------------------------------------------------------------------  

The company further estimates that Hurricane Ike negatively impacted the quarter by an additional $1.6 million ($.01 per share) on an after-tax basis, a result of a $2.6 million reduction in transportation revenue compared with the prior year due to continued reduced volumes flowing after Hurricane Ike.

For the six month period ended June 30, 2009, the company reported net earnings available for common stockholders of $75.2 million ($.61 per share), compared with $116.0 million ($.94 per share) in the prior year.

Adjusted net earnings available for common stockholders for the six months ended June 30, 2009 were $116.8 million ($.94 per share), compared with $131.8 million ($1.07 per share) in the prior year. Adjusted net earnings for the six month period exclude a $13.2 million ($.11 per share) mark-to-market unrealized loss on open economic hedges of 2009 processing spreads and 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. Adjusted net earnings for the six month period include an $18.3 million ($.15 per share) mark-to-market gain on economic hedges that was recognized in 2008 but excluded from 2008's adjusted earnings. Adjusted items are shown on an after-tax basis. A reconciliation of net earnings to adjusted net earnings for the quarter is set forth in the following table.

                                                                                                  Select Non-GAAP Financial Information                               Six months ended June 30,   ($000s, except per share amounts)                                   2009         2008           Net earnings available for common stockholders                      $  75,196    $  116,046     After-tax adjustments:                                                                          MTM loss on open economic hedges                                    $  13,236    $  13,796      MTM gain recorded in prior accounting period                        $  18,319    $  -           Increase to provision for repair and abandonment costs              $  10,091    $  -           Loss on extinguishment of preferred stock                           $  -         $  1,995       Adjusted net earnings available for common stockholders             $  116,842   $  131,837     Reported net earnings per share available for common stockholders   $  0.61      $  0.94        Adjusted net earnings per share available for common stockholders   $  0.94      $  1.07                                                                                                         -------------------------------------------------------------------------------  

The company further estimates that Hurricane Ike negatively impacted the six month period ended June 30, 2009 by an additional $3.6 million ($.03 per share) on an after-tax basis, a result of a $6.0 million reduction in transportation revenue on Sea Robin compared with the prior year due to continued reduced volumes flowing after Hurricane Ike.

For the three months ended June 30, 2009, net operating revenues, calculated as revenue less cost of gas and other energy and revenue-related taxes, decreased $11.7 million to $256.3 million from $268.0 million in the prior year. Adjusted net operating revenue, which includes the adjustments for mark-to-market accounting, was $276.5 million during the quarter, or a decrease of $13.8 million. The decrease in net operating revenue was primarily related to lower realized commodity prices at the company's gathering and processing segment. A reconciliation of operating revenue to net operating revenue and adjusted net operating revenue is available at the end of this press release.

For the three months ended June 30, 2009, Southern Union reported adjusted EBIT of $115.7 million, compared with adjusted EBIT of $134.3 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.

The company uses adjusted net earnings, adjusted net operating revenues, earnings before interest and taxes ("EBIT"), or adjusted EBIT, as appropriate, as its primary measures of evaluating financial performance. These measures 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.

Management's Perspective

Commenting on the quarter, George L. Lindemann, chairman and CEO, said, "We were pleased with the overall performance of our business segments during the second quarter. We are also pleased that we will be placing the Trunkline LNG Infrastructure Enhancement Project into service over the next several weeks. This project will further enhance our business risk profile and add to the stability of our fee based revenues and cash flows. We are also happy that we will be extending all of the contracts at our LNG facility through 2029 with a strong, investment grade counterparty."

President and COO Eric D. Herschmann added, "We are happy to have entered into additional hedges for both 2009 and 2010. For the period July 1 through December 31, 2009, we are now hedged on 35,000 MMBtu/d of natural gas liquids equivalents at an average price of $14.27 per MMBtu. This represents approximately 80% of our projected equity natural gas liquids production in 2009. We have also hedged an additional 5,000 MMBtu/d of natural gas at $3.90 per MMBtu. For 2010, we have hedged 25,000 MMBtu/d of natural gas at $5.42 per MMBtu. We will continue to monitor the markets for 2010 and will enter into additional hedges when opportunities present themselves."

Key Factors Impacting Second Quarter 2009 Performance Relative to Prior Year

Southern Union's transportation and storage segment posted EBIT of $97.9 million, compared with $98.5 million in the prior year. The $600,000 decrease was primarily attributable to a $1.0 million decrease in EBIT at Panhandle Energy, which includes Panhandle Eastern Pipeline Company, LP and its subsidiaries, offset by a $400,000 increase in equity earnings from the company's unconsolidated investment in Citrus Corp., parent of Florida Gas Transmission Company, LLC. Panhandle Energy saw higher operating revenues of $4.3 million offset by higher operating expenses of $1.5 million and higher depreciation and amortization expense of $2.8 million. The increase in operating revenues was largely due to a $5.4 million increase in transportation reservation revenue, primarily a result of higher average rates realized on Panhandle Eastern Pipe Line and contributions from various expansion projects, and a $2.5 million increase in LNG terminalling revenue offset by a $3.4 million decrease in transportation usage revenues primarily due to reduced volumes flowing after Hurricane Ike. The operating expense increase includes a $2.8 million increase in fuel tracker costs primarily due to an over recovery credit in 2008, a $1.2 million increase in LNG electric power expense, and a $1.3 million increase in third-party transportation expense due to additional capacity contracted, offset by a $3.2 million decrease in outside service costs primarily related to the timing of pipeline integrity testing.