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

-- 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 beforeinterest and taxes from continuing operations ("EBIT") of $87.2million for the quarter ended June 30, 2006, as compared with $52.0million in the prior year. Net earnings from continuing operations forthe period were $16.3 million ($.10 per diluted share) on operatingrevenues of $552.4 million, compared with net earnings from continuingoperations of $17.6 million ($.12 per diluted share) on operatingrevenues of $195.2 million in 2005. For the same period, net earningsavailable for common shareholders were $9.4 million ($.08 per dilutedshare) in 2006, compared with $11.3 million ($.10 per diluted share)in 2005. Earnings from continuing operations as reported is reflectiveof the full impact of the $1.6 billion bridge loan utilized by theCompany to initially fund its purchase of Sid Richardson EnergyServices on March 1, 2006. Southern Union expects $1.1 billion of thefacility to be repaid upon closing of its announced LDC sales.Excluding the bridge loan interest and related debt cost amortizationassociated with the $1.1 billion expected repayment, net earnings fromcontinuing operations would increase by $13.0 million ($.11 perdiluted 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. Netearnings from continuing operations were $89.7 million ($.70 perdiluted share) on operating revenues of $1.1 billion, compared withnet earnings from continuing operations of $74.0 million ($.59 perdiluted share) on operating revenues of $647.3 million for thecomparable 2005 period. For the same periods, net earnings availablefor 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 amortizationassociated with the $1.1 billion expected repayment, net earnings fromcontinuing operations for the six month period would increase by $17.2million ($.15 per diluted share) to $107.0 million ($.85 per dilutedshare).

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'splanned sales of its Pennsylvania and Rhode Island natural gasdistribution businesses announced earlier this year. Contracts to sellthe Pennsylvania and Rhode Island assets were entered into in early2006. The sales are expected to close during the third quarter of2006.

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

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

Key Factors Impacting Second Quarter 2006 Performance Relative to
Prior Year

-- Southern Union's transportation and storage segment posted
EBIT of $76.0 million, compared with $61.6 million in the
prior year. The increase was primarily driven by improved
results at Trunkline LNG and Panhandle, partially offset by a
decrease in the Company's equity earnings from CCE Holdings,
LLC.

-- The gathering and processing segment reported EBIT of $17.9
million for the quarter. Operating cash flow for the segment,
which is calculated as earnings before interest and taxes,
plus depreciation expense, plus any cash settlement related to
the Company's put options, less any other non-cash items, was
$54.4 million for the quarter. The Company did not own the
midstream assets in the prior comparable quarter.

-- EBIT for the Company's ongoing distribution segment
(predominantly Missouri Gas Energy) decreased $920,000 to a
seasonal loss of $6.4 million. The decrease was primarily due
to an eight percent reduction in consumption volumes resulting
from warmer than normal weather in the Company's service
territories. Heating degree days were down 22% year over year.

-- Interest expense increased $33.1 million to $63.0 million for
the quarter, compared to a year ago. The Company's $1.6
billion bridge loan used to acquire Sid Richardson Energy
Services on March 1, 2006 accounted for approximately $22.5
million of the increase. Debt amortization cost related to the
bridge loan accounted for another $3.9 million in the quarter.
The Company plans to repay approximately $1.1 billion of the
bridge loan upon settlement of the LDC sales. The remainder of
the increase was due to higher average balances and higher
average interest rates.

2006 Earnings Guidance Update

Southern Union affirms its prior 2006 earnings guidance in therange of $1.70 to $1.90 per share, excluding projected one-timecharges associated with the sale of the PG Energy division and theRhode Island operations of New England Gas Company. The 2006 outlookincludes estimated earnings contributions from Southern Union GasServices for ten months in 2006. The estimated 2006 results alsoassume that the announced sales of the PA and RI distributionbusinesses are completed on or prior to September 30, 2006.

Quarterly Report on Form 10-Q

Southern Union will provide additional information about itssecond quarter 2006 results in its quarterly report on Form 10-Qexpected to be filed today with the Securities and ExchangeCommission. Once made, this filing may be accessed through theInvestors section of the Company's web site at www.sug.com.

Investor Call & Webcast

Southern Union will host a live investor call and webcast today at2:00 p.m. Eastern time to discuss quarterly results, recent events andoutlook. To access the call, dial 800-299-7635 (international callersdial 617-786-2901) and enter the passcode 51342495. A replay of thecall will be available for one week after the event by dialing888-286-8010 (international callers dial 607-801-6888) and enteringpasscode 50138577.

The investor call is being webcast by CCBN and may be accessedthrough Southern Union's web site at www.sug.com or through CCBN'sindividual investor center at www.companyboardroom.com. Institutionalinvestors may access the call via CCBN's password-protected eventmanagement site - StreetEvents - at www.streetevents.com.

About Southern Union Company

Southern Union Company, headquartered in Houston, is one of thenation's leading diversified natural gas companies, engaged primarilyin the transportation, storage, gathering, processing and distributionof natural gas. The company owns and operates the nation's secondlargest natural gas pipeline system with more than 22,000 miles ofgathering and transportation pipelines and North America's largestliquefied natural gas import terminal.

Through Panhandle Energy, Southern Union's interstate pipelineinterests operate approximately 18,000 miles of interstate pipelinesthat transport natural gas from the San Juan, Anadarko and PermianBasins, the Rockies, the Gulf of Mexico, South Texas and the Panhandleregions of Texas and Oklahoma to major markets in the Southeast, West,Midwest and Great Lakes region.

Southern Union Gas Services, with approximately 4,800 miles ofpipelines, is engaged in the gathering, transmission, treating,processing and redelivery of natural gas and natural gas liquids inTexas and New Mexico.

Through its local distribution companies, Missouri Gas Energy, PGEnergy and New England Gas Company, Southern Union also servesapproximately 1 million natural gas end-user customers in Missouri,Pennsylvania, Rhode Island and Massachusetts.

For further information, visit www.sug.com.

Forward-Looking Information

This news release includes forward-looking statements. AlthoughSouthern Union believes that its expectations are based on reasonableassumptions, it can give no assurance that such assumptions willmaterialize. Important factors that could cause actual results todiffer materially from those in the forward-looking statements hereinare enumerated in Southern Union's Forms 10-K and 10-Q as filed withthe Securities and Exchange Commission. The Company assumes noobligation to publicly update or revise any forward-looking statementsmade herein or any other forward-looking statements made by theCompany, whether as a result of new information, future events, orotherwise.

Select Financial Information

The following table sets forth certain select unaudited financial
information for the Company for the three and six months ended June
30, 2006 and 2005.


Three months ended Six months ended
June 30, June 30,
2006 2005 2006 2005
------------ ------------ ------------ ------------
(In thousands of dollars, except shares and per
share amounts)

Operating revenues $ 552,355 $ 195,236 $ 1,099,521 $ 647,336

Operating
expenses:
Cost of gas and
other energy 330,297 46,198 636,899 276,430
Revenue-related
taxes 4,156 3,998 20,373 21,282
Operating,
maintenance
and general 98,357 80,412 177,135 149,246
Depreciation
and
amortization 38,657 23,591 69,521 46,635
Taxes, other
than on income
and revenues 11,096 8,913 22,954 19,764
------------ ------------ ------------ ------------
Total
operating
expenses 482,563 163,112 926,882 513,357
------------ ------------ ------------ ------------
Operating
income 69,792 32,124 172,639 133,979

Other income
(expenses):
Interest (62,978) (29,894) (105,199) (63,483)
Earnings from
unconsolidated
investments 15,833 20,232 27,399 35,574
Other, net 1,550 (346) 38,643 (5,436)
------------ ------------ ------------ ------------
Total other
income
(expenses),
net (45,595) (10,008) (39,157) (33,345)
------------ ------------ ------------ ------------

Earnings from
continuing
operations before
income taxes 24,197 22,116 133,482 100,634

Federal and state
income taxes 7,876 4,474 43,742 26,598
------------ ------------ ------------ ------------

Net earnings from
continuing
operations 16,321 17,642 89,740 74,036

Discontinued
operations:
Earnings from
discontinued
operations
before income
taxes (4,460) (2,510) 33,549 51,018
Federal and
state income
taxes benefit (1,873) (543) 11,607 17,183
------------ ------------ ------------ ------------
Net earnings from
discontinued
operations (2,587) (1,967) 21,942 33,835

Net earnings 13,734 15,675 111,682 107,871

Preferred stock
dividends (4,341) (4,340) (8,682) (8,681)
------------ ------------ ------------ ------------

Net earnings
available for
common
stockholders $ 9,393 $ 11,335 $ 103,000 $ 99,190
============ ============ ============ ============

Net earnings
available for
common
stockholders from
continuing
operations per
share:
Basic $ 0.11 $ 0.12 $ 0.72 $ 0.61
------------ ------------ ------------ ------------
Diluted $ 0.10 $ 0.12 $ 0.70 $ 0.59
------------ ------------ ------------ ------------

Net earnings
available for
common
stockholders per
share:
Basic $ 0.08 $ 0.10 $ 0.92 $ 0.92
------------ ------------ ------------ ------------
Diluted $ 0.08 $ 0.10 $ 0.90 $ 0.89
------------ ------------ ------------ ------------

Weighted average
shares
outstanding:
Basic 111,944,643 110,787,049 111,807,253 107,546,799
------------ ------------ ------------ ------------
Diluted 114,981,373 114,325,703 114,993,178 111,139,659
------------ ------------ ------------ ------------


Cash flow provided
by operating
activities 143,200 75,600 300,100 307,500
Changes in working
capital 91,700 43,900 135,000 114,100
Net cash flow
provided by
operating
activities before
changes in
working capital 51,500 31,700 165,100 193,400
Net cash flow used
in investing
activities (75,111) (85,617) (1,669,748) (137,712)
Net cash flow
provided by (used
in) financing
activities (50,443) (36,860) 1,389,943 (199,214)



Select Financial Information Continued

The following table sets forth certain select unaudited financial
information for the Company's segments and a reconciliation of EBIT to
net earnings for the three months ended March 31, 2006 and 2005.


Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -------------------------
Segment Data 2006 2005 2006 2005
------------------ ------------ ------------ ------------ ------------
(In thousands) (In thousands)
Revenues from
external
customers:
Transportation
and Storage $ 134,109 $ 110,421 $ 278,752 $ 245,821
Gathering and
Processing 329,094 - 432,325 -
Distribution 88,292 83,770 386,521 399,682
------------ ------------ ------------ ------------
Total
segment
operating
revenues 551,495 194,191 1,097,598 645,503
Corporate and
other 860 1,045 1,923 1,833
------------ ------------ ------------ ------------
$ 552,355 $ 195,236 $ 1,099,521 $ 647,336
============ ============ ============ ============

Depreciation and
amortization:
Transportation
and Storage $ 16,985 $ 15,025 $ 34,459 $ 30,392
Gathering and
Processing 13,400 - 18,952 -
Distribution 7,792 8,002 15,375 15,133
------------ ------------ ------------ ------------
Total segment
depreciation
and
amortization 38,177 23,027 68,786 45,525
Corporate and
other 480 564 735 1,110
------------ ------------ ------------ ------------
$ 38,657 $ 23,591 $ 69,521 $ 46,635
============ ============ ============ ============

Earnings (loss)
from
unconsolidated
investments:
Transportation
and Storage $ 15,823 $ 20,268 $ 27,387 $ 35,653
Corporate and
other 10 (36) 12 (79)
------------ ------------ ------------ ------------
$ 15,833 $ 20,232 $ 27,399 $ 35,574
============ ============ ============ ============

Other income
(expense), net:
Transportation
and Storage $ 1,522 $ 978 $ 3,294 $ 1,315
Gathering and
Processing 775 - 1,184 -
Distribution (927) (1,185) (2,135) (1,506)
------------ ------------ ------------ ------------
Total
segment
other
income
(expense),
net 1,370 (207) 2,343 (191)
Corporate and
other 180 (139) 36,300 (5,245)
------------ ------------ ------------ ------------
$ 1,550 $ (346) $ 38,643 $ (5,436)
============ ============ ============ ============

Segment
performance:
Transportation
and Storage
EBIT $ 76,011 $ 61,641 $ 162,812 $ 139,877
Gathering and
Processing
EBIT 17,917 - 25,030 -
Distribution
EBIT (6,376) (5,456) 23,613 29,799
------------ ------------ ------------ ------------
Total
segment
EBIT 87,552 56,185 211,455 169,676
Corporate and
other (377) (4,175) 27,226 (5,559)
Interest 62,978 29,894 105,199 63,483
Federal and
state income
taxes 7,876 4,474 43,742 26,598
------------ ------------ ------------ ------------
Net earnings
from
continuing
operations 16,321 17,642 89,740 74,036
Net
earnings(loss)
from
discontinued
operations (2,587) (1,967) 21,942 33,835
------------ ------------ ------------ ------------
Net earnings 13,734 15,675 111,682 107,871
Preferred stock
dividends 4,341 4,340 8,682 8,681
------------ ------------ ------------ ------------
Net earnings
available for
common
stockholders $ 9,393 $ 11,335 $ 103,000 $ 99,190
============ ============ ============ ============



The Company evaluates segment performance based on several factors, of
which the primary financial measure is earnings before interest and
taxes (EBIT). EBIT allows management and investors to more effectively
evaluate the performance of all of the Company's consolidated
subsidiaries and unconsolidated investments. The Company defines EBIT
as net earnings (loss) available for common shareholders, adjusted
for: (i) items that do not impact earnings (loss) from continuing
operations, such as extraordinary items, discontinued operations and
the impact of accounting changes; (ii) income taxes; (iii) interest;
and (iv) dividends on preferred stock. EBIT is a non-GAAP financial
measure and may not be comparable to measures used by other companies.
Additionally, EBIT should be considered in conjunction with net
earnings and other performance measures such as operating income or
operating cash flow.

Select Financial Information Continued

The following table sets forth certain select unaudited financial
information for the Company as of June 30, 2006 and December 31, 2005.


June 30, December 31,
2006 2005
------------ ------------
(In thousands of dollars)
Total assets $ 7,372,877 $ 5,836,819
Long Term Debt 1,522,694 2,049,141
Short term debt and notes payable 2,427,164 546,648
Preferred stock 230,000 230,000
Common equity 1,719,179 1,624,069
Total capitalization 5,899,037 4,449,858