Southern Union Reports Strong Second Quarter Results; Investor Call & Webcast Scheduled for Today at 2 P.M. ET

Business Wire, August 7, 2006

HOUSTON -- Southern Union Company (NYSE:SUG):

--EBIT of $87.2 million up 68 percent

--Increases driven by interstate pipeline and midstream segments

--Midstream segment completes hedging for 2006 and 2007

Southern Union Company (NYSE:SUG) today reported earnings before interest and taxes from continuing operations ("EBIT") of $87.2 million for the quarter ended June 30, 2006, as compared with $52.0 million in the prior year. Net earnings from continuing operations for the period were $16.3 million ($.10 per diluted share) on operating revenues of $552.4 million, compared with net earnings from continuing operations of $17.6 million ($.12 per diluted share) on operating revenues of $195.2 million in 2005. For the same period, net earnings available for common shareholders were $9.4 million ($.08 per diluted share) in 2006, compared with $11.3 million ($.10 per diluted share) in 2005. Earnings from continuing operations as reported is reflective of the full impact of the $1.6 billion bridge loan utilized by the Company to initially fund its purchase of Sid Richardson Energy Services on March 1, 2006. Southern Union expects $1.1 billion of the facility to be repaid upon closing of its announced LDC sales. Excluding the bridge loan interest and related debt cost amortization associated with the $1.1 billion expected repayment, net earnings from continuing operations would increase by $13.0 million ($.11 per diluted share) to $29.3 million ($.21 per diluted share).

For the first six months of 2006, Southern Union reported EBIT of $238.7 million as compared with $164.1 million in the prior year. Net earnings from continuing operations were $89.7 million ($.70 per diluted share) on operating revenues of $1.1 billion, compared with net earnings from continuing operations of $74.0 million ($.59 per diluted share) on operating revenues of $647.3 million for the comparable 2005 period. For the same periods, net earnings available for common shareholders were $103.0 million ($.90 per diluted share) in 2006 compared with $99.2 million ($.89 per diluted share) in 2005. Excluding the bridge loan interest and related debt cost amortization associated with the $1.1 billion expected repayment, net earnings from continuing operations for the six month period would increase by $17.2 million ($.15 per diluted share) to $107.0 million ($.85 per diluted share).

Three Months Ended  Six Months Ended
                                    June 30, 2006      June 30, 2006
----------------------------------------------------------------------
Net earnings per share from
 continuing operations                         $.10              $.70
Adjustment to reflect $1.1
 billion repayment of bridge loan              $.11              $.15
----------------------------------------------------------------------
Adjusted net earnings per share
 from continuing operations                    $.21              $.85
----------------------------------------------------------------------

Earnings from discontinued operations relate to the Company's planned sales of its Pennsylvania and Rhode Island natural gas distribution businesses announced earlier this year. Contracts to sell the Pennsylvania and Rhode Island assets were entered into in early 2006. The sales are expected to close during the third quarter of 2006.

The increase in operating results was attributable to improvement in Southern Union's transportation and storage segment and the inclusion of the midstream business acquired March 1, 2006. The transportation and storage segment recorded EBIT of $76.0 million for the quarter ended June 30, 2006, compared with $61.6 million for the same period in 2005. This improvement was derived primarily from expansions at our Trunkline LNG (liquefied natural gas) import facility and higher transportation and storage revenues. Our midstream segment, Southern Union Gas Services, recorded EBIT of $17.9 million for the quarter. The cash settlement value of the Company's natural gas put option contracts not reflected in segment EBIT was $21.8 million for the quarter. The EBIT contribution from continuing operations in our distribution segment was a seasonal loss of $6.4 million, compared with a seasonal loss of $5.5 million in the 2005 quarter.

Commenting on the quarter, George L. Lindemann, chairman, president and CEO, said, "Our results are beginning to reflect the benefits of our ongoing transformation of Southern Union into a major provider of natural gas transportation services. With the imminent completion of the sales of our Pennsylvania and Rhode Island distribution assets and the contribution of the midstream operations to our bottom line, the recent quarter is reflective of the ongoing strength of our business." Lindemann further added, "During the quarter, we completed an important expansion of our LNG facility in Lake Charles and announced the completion of a second stage expansion shortly after quarter's end. We are continuing to invest in our pipelines and have a number of high growth projects underway in our Permian Basin gathering system. Our investors should also be pleased to hear that we have completed our hedging programs for 2006 and 2007 at Southern Union Gas Services with net prices of $11.03 and $10.57 per MMBtu, respectively."