Analyst Meetings New York April 19-20, 2006 www.sug.com Safe - PowerPoint PPT Presentation

Analyst Meetings New York April 19-20, 2006 www.sug.com

Safe Harbor This present at ion and ot her Company report s and st at ement s issued or made from t ime t o t ime cont ain cert ain “ forward-looking st at ement s” concerning proj ect ed financial performance, expect ed plans or fut ure operat ions. Sout hern Union Company caut ions t hat act ual result s and development s may differ mat erially from such proj ect ions or expect at ions. Invest ors should be aware of import ant fact ors t hat could cause act ual result s t o differ mat erially from t he forward-looking proj ect ions or expect at ions. These fact ors include, but are not limit ed t o: cost of gas; gas sales volumes; gas t hroughput volumes and available sources of nat ural gas; discount ing of t ransport at ion rat es due t o compet it ion; cust omer growt h; abnormal weat her condit ions in Sout hern Union’ s service areas; impact of relat ions wit h labor unions of bargaining-unit employees; t he receipt of t imely and adequat e rat e relief and t he impact of fut ure rat e cases or regulat ory rulings; t he out come of pending and fut ure lit igat ion; t he speed and degree t o which compet it ion is int roduced t o Sout hern Union’ s nat ural gas dist ribut ion businesses; new legislat ion and government regulat ions and proceedings involving or impact ing Sout hern Union; unant icipat ed environment al liabilit ies; abilit y t o compl y wit h or t o challenge successfully exist ing or new environment al regulat ions; changes in business st rat egy and t he success of new business vent ures, including t he risks t hat t he business acquired and any ot her business or invest ment t hat Sout hern Union has acquired or may acquire may not be successfully int egrat ed wit h t he business of Sout hern Union; exposure t o cust omer concent rat ion wit h a significant port ion of revenues realized from a relat ively small number of cust omers and any credit risks associat ed wit h t he financial posit ion of t hose cust omers; fact ors affect ing operat ions – such as maint enance or repairs, environment al incident s or gas pipeline syst em const raint s; Sout hern Union’ s or any of it s subsidiaries’ debt securit y rat ings; t he economic climat e and growt h in t he energy indust ry and service t errit ories and compet it ive condit ions of energy market s in general; inflat ionary t rends; changes in gas or ot her energy market commodit y prices and int erest rat es; current market condit ions causing more cust omer cont ract s t o be of short er durat ion, which may increase revenue volat ilit y; t he possibilit y of war or t errorist at t acks; t he nat ure and impact of any ext raordinary t ransact ions, such as any acquisit ion or divest it ure of a business unit or any asset . Cont act : Sout hern Union Company Jack Walsh, 800-321-7423 j ack.walsh@ sug.com 2 0406-006

Management Team Julie Edwards S enior Vice President & CFO Craig S trehl President – S U Gas S ervices Mitch Roper S enior Vice President – S U Gas S ervices Jack Walsh Direct or of Invest or Relat ions 3 0406-006

SUG Highlights • Equity listed on the New York S tock Exchange (NYS E:S UG) • Equity market capitalization almost $2.8 billion – Approximat ely $80 million in 1990 • Enterprise value over $5.6 billion – Approximat ely $219 million in 1990 • Total assets over $5.8 billion – Approximat ely $346 million in 1990 • Annual cash dividend of $.40 per share – Yield approximat ely 1.6% • Investment grade credit ratings – recently affirmed – BBB – S tandard & Poor's – Baa3 – Moody’ s Investor S ervices – BBB – Fitch Ratings 4 0406-006

Southern Union’s Transformation

Southern Union Milestones Metro Mobile Metro Mobile Acquisition of Acquisition of Acquisition of Acquisition of Announced sale of Announced sale of Sale of Texas Sale of Texas acquires Southern acquires Southern Pennsylvania Pennsylvania CrossCountry CrossCountry PA operations PA operations operations operations Union Gas Union Gas operations operations Energy Energy 1990 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Acquisition of Acquisition of Acquisition of Acquisition of Acquisition of Acquisition of Acquisition of Sid Acquisition of Sid Announced sale of Announced sale of Missouri Missouri New England New England Panhandle Panhandle Richardson Richardson RI operations RI operations operations operations operations operations operations operations Actively manage portfolio of assets to increase shareholder value 6 0406-006

SUG - A Growth Story $30 $30 $25 $25 CAGR = 14.7% $20 $20 $15 $15 $10 $10 $5 $5 $0 $0 0 3 5 0 0 1 1 2 2 3 3 4 4 5 5 6 6 6 7 7 8 8 8 9 9 0 0 1 1 2 2 3 3 4 4 4 5 5 6 0 1 1 2 2 3 4 4 5 5 6 7 7 8 9 9 0 0 1 2 2 3 3 4 5 6 9 9 9 9 0 1 0 0 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 9 0 0 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - b g - b - g - b - g - b g - b - g - b - g - b - g - b - g - - b - g - b - g - b - g - - b - - b - g - b - g - b - g - b g - b - b g b g b g b g b g b g b g b g b g b g b g b g g - b g b g b g b g b e u e u e u e u e u e u e u e u e u e u e u e u e u e u e u e u e e u e u e u e u e u e u e u e u e u e u e u e u e u e u e u e u e F F F F F F F F F F F F F F F F F F A A F A A F A A F A A F A A F A A F A A F A A F A A F A A F A A F A A F A A F A A F A A F A A F 7 0406-006

Value Creation Strategy • Efficient ly manage exist ing asset s • Use free cash flow to fund growth and optimize capitalization • Cont inue t o int egrat e business unit s • Evaluat e market opport unit ies � S id Richardson Energy S ervices 8 0406-006

Southern Union Gas Services

The Sid Rich Acquisition • On March 1, 2006, SUG closed t he acquisit ion of Sid Richardson Energy Services Co. and relat ed companies • Purchase price of $1.6 billion • SUG closed using int erim financing, which will be replaced wit h proceeds from asset sales and appropriat e permanent financing wit hin t he calendar year • Sid Richardson renamed Southern Union Gas Services 10 0406-006

SU Gas Services Overview • Leading provider of gas gathering and processing services in the S E New Mexico and West Texas areas of the Permian Basin • High quality asset base anchored by fully integrated pipeline system • S trategically located throughout 16 counties surrounding one of Texas’ most prolific producing regions 11 0406-006

Overview (continued) • Gas control group ensures optimal value is realized for residual gas and NGL product ion • At t ract ive downst ream market s include: – Residue gas: (1) California, Mid-con, Texas – NGLs: (2) Mont Belvieu • Led by long-st anding, experienced management team ___________________________ 1. Maj or connections include ATMOS Pipeline, El Paso Natural Gas Co, Energy Transfer Fuel LP, Enterprise Texas Pipeline, Transwestern Pipeline. 2. Maj or connections include Chapparal, Louis Dreyfus, and Chevron pipelines. 12 0406-006

System Map and Asset Detail Pipelines SU Gas Services SU Gas Services – Area of Operations Area of Operations Tot al Miles 4,750 Producer Delivery Point s 1,754 596 Bbtu/ d (1) Current Throughput Field Compression HP 104,840/ 54,250 Gas Processing Plants Active Plants (2) 4 (3) Processing Capacit y 470/ 410 MMcfd 388 MMcf/ d (1) Processing Throughput Field Compression HP 127,520/ 82,000 Treating Plants Active Plants 6 Treating Capacity 765/ 590 MMcfd Treat ing Throughput 426 MMcf/ d (1) Compression HP (4) 7,200/ 2,200 __________________________ 1. As of March 1, 2006. 2. Each of the 4 active processing plants also contain treating plants. 3. Active plants are expandable to 485 MMcf/ d. 4. Represents compression HP at the Grey Ranch and Mi Vida treating plants. 13 0406-006

Key Competitors • Duke Energy Field S ervices • Enterprise Field S ervices • Regency Gas Services • Dynegy Midstream S ervices • Western Gas Resources 14 0406-006

Fully Integrated Midstream System • Integrated system with a high pressure pipeline network allows flexibility to transfer volumes between plants – Creates the opportunity to fully realize capacities throughout the system regardless of where production activity occurs – By transferring the volumes to different plants there is the ability to take advantage of pricing point differentials throughout the system – Allows the blending of rich and lean gas from various parts of the system to effectively bypass processing • This unique capability enables S UGS to realize arbitrages within its own system 15 0406-006