Southern Union Reports Record Earnings from Its Operations; Investor Call & Webcast Scheduled for Today at 2 P.M. ET

Business Wire, March 14, 2006

HOUSTON -- Southern Union Company (NYSE:SUG) today reported record net earnings available for common shareholders of $178.3 million ($1.58 per diluted share) on operating revenues of $2.02 billion, excluding a $175 million non-cash charge taken in December 2005 for the impairment of goodwill related to its distribution assets being sold.

Year Ended December 31,
                                  --------------------------------
                                    2004        2005       2005
                                  Comparable   Without      As
    ($000's, except per share)      Period    Impairment  Reported
    --------------------------------------------------------------
    Operating Revenues              1,855.7     2,019.4   2,019.4
    Net Earnings                       76.7       178.3       3.3
    E.P.S.                            $0.89       $1.58     $0.03
    --------------------------------------------------------------

For the year ended December 31, 2004, the Company's net earnings were $76.7 million ($.89 per diluted share), on operating revenues of $1.86 billion.

For the quarter ended December 31, 2005, the Company reported net earnings available for common shareholders of $63.9 million ($.57 per diluted share) on operating revenues of $691.7 million, again excluding the impact of the non-cash impairment to goodwill. During the prior year period, net income was $17.6 million ($.19 per diluted share), on operating revenues of $559.8 million.

The non-cash charge to goodwill relates to the Company's planned sales of its Pennsylvania and Rhode Island natural gas distribution businesses announced earlier this year. Including the charge, net earnings available to common shareholders was $3.3 million ($.03 per diluted share) for 2005 and a net loss of $111.1 million ($1.00 per share) for the quarter ended December 31, 2005. Contracts to sell the Pennsylvania and Rhode Island assets were entered into in early 2006. The fact that the Company gained knowledge about the valuation of these businesses prior to issuing the 2005 financials led it to conclude that an impairment in 2005 was appropriate. In 2006, Southern Union expects to reclassify the two LDCs under contract for sale as Held for Sale and present the results of their operations as Discontinued Operations. Upon completion of the sales, the Company's remaining goodwill balance related to its distribution assets will be reduced to approximately $90 million.

The increase in net earnings, excluding the goodwill impairment, was driven by both of the Company's operating segments, transportation and storage of natural gas and natural gas distribution. Southern Union's transportation segment recorded earnings before interest and taxes ("EBIT") of $281.3 million for the year ended December 31, 2005, compared with $198.4 million for the same period in 2004, in spite of $10.0 million of hurricane related impacts on 2005. This improvement was primarily due to the inclusion for the full year in 2005 of the Company's equity investment in CCE Holdings, LLC ("CCE Holdings") which was made during the fourth quarter of 2004. Additionally, the Company's wholly owned transportation and storage assets, operating as Panhandle Energy, generated $17.2 million of additional EBIT in 2005 as compared to the prior year due to increased reservation revenues and portions of its liquefied natural gas ("LNG") terminal expansions coming online, combined with lower operating expenses. Excluding the goodwill impairment charge, the Company's distribution segment recorded EBIT of $131.1 million for 2005 as compared to $106.2 million in 2004. This improvement was primarily due to improved net operating revenue as well as a reduction in operating expenses and property taxes.

George L. Lindemann, Chairman of the Board, stated, "Our record 2005 results demonstrate the great strides we have made at Southern Union in executing on our transformation into a leading natural gas infrastructure company. While we are disappointed that the goodwill impairment charge might mask an otherwise excellent year, we are confident that our continued expansion in the natural gas services industry, including our acquisition of Sid Richardson Energy Services, will drive further growth in 2006 and beyond for our shareholders. We expect that the addition of the Sid Richardson business to Southern Union and related sales of our Pennsylvania and Rhode Island operations will not only be accretive to earnings but will generate more cash and higher returns."

Key Factors Impacting 2005 Performance Relative to Prior Year

--In December 2005, the Company recorded a non-cash impairment charge to goodwill of $175 million ($1.55 per share) related to the pending sale of its Pennsylvania and Rhode Island distribution properties.

--During 2005, CCE Holdings contributed $70.4 million of earnings from unconsolidated investments compared to $4.6 million in the prior year. Through CCE Holdings, a joint venture in which Southern Union acquired a 50% interest in November 2004, Southern Union operates the CrossCountry Energy pipelines which include the Transwestern Pipeline Company and the Florida Gas Transmission pipeline systems.