DESCRIPTION OF BUSINESS:

Business Operations

Southern Union Company (“we”, “us”, the “Company” and “Southern Union”) owns and operates assets in the regulated and unregulated natural gas industry and is primarily engaged in the transportation, storage and distribution of natural gas in the United States. The Company operates in three reportable segments as follows:


•	Transportation and Storage — The Transportation and Storage segment is primarily engaged in the interstate transportation and storage of natural gas, and also provides LNG terminalling and regasification services. Its operations extend from the Gulf Coast region throughout the Midwest and Great Lakes region.


•	Gathering and Processing — On April 30, 2013, the Company contributed SUGS and its parent company to Regency. See Note 2.

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Distribution — The Distribution segment is primarily engaged in the local distribution of natural gas in Missouri and Massachusetts. Through Southern Union’s regulated utility operations, Missouri Gas Energy and New England Gas Company, the Company serves natural gas end-user customers in Missouri and Massachusetts, respectively. As discussed in Note 2, Southern Union and The Laclede Group, Inc. have entered into definitive purchase and sale agreements pursuant to which Laclede Missouri has agreed to acquire the assets of Southern Union’s Missouri Gas Energy division, and Laclede Massachusetts has agreed to acquire the assets of Southern Union’s New England Gas Company division for approximately $1.04 billion, subject to customary closing adjustments. In February 2013, The Laclede Group, Inc. entered into an agreement with APUC that will allow a subsidiary of APUC to assume the rights of The Laclede Group, Inc. to purchase the assets of New England Gas Company, subject to certain approvals. The transactions contemplated by the purchase and sale agreements are expected to close during the third and fourth quarters of 2013.

See Note 2 for information related to the Company’s disposal and other related transactions.

Holdco Transaction

On April 30, 2013, ETP acquired ETE’s 60% interest in Holdco, the entity formed by ETP and ETE in 2012 to own the equity interests in Southern Union and Sunoco. As a result of this transaction, ETP now owns 100% of Holdco. ETP controlled Holdco prior to this transaction; therefore, the transaction did not constitute a change of control.

Preparation of Interim Financial Statements

The accompanying condensed consolidated balance sheet as of December 31, 2012, which has been derived from audited financial statements, and the unaudited interim condensed consolidated financial statements and notes thereto of the Company as of June 30, 2013 and for the three and six month periods ended June 30, 2013 and 2012, have been prepared in accordance with GAAP for interim condensed consolidated financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. However, management believes that the disclosures made are adequate to make the information not misleading. The results of operations for interim periods are not necessarily indicative of the results to be expected for a full year due to the seasonal nature of the Company’s operations.

The accompanying unaudited interim condensed consolidated financial statements reflect adjustments that are, in the opinion of management, necessary for a fair statement of results for the interim period. The unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto of Southern Union Company presented in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the SEC on March 1, 2013.