Energy Transfer 8-K/A Completion of Acquisition or Disposition of Assets

Exhibit 99.3

ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Introduction

Following are Energy Transfer Partners, L.P.’s (“ETP”) unaudited pro forma condensed consolidated balance sheet as of August 31, 2006 and unaudited pro forma condensed consolidated statement of operations for the year then ended. The unaudited pro forma condensed consolidated financial statements give pro forma effect to the following transactions:

• The issuance of approximately $800 million of ETP’s public debt under an S-3 registration statement and approximately $1.2 billion of proceeds net of estimated offering costs from the private placement issuance of approximately 26.1 million Class G limited partner units to finance the acquisition of Titan Energy Partners LP and Titan Energy GP LLC (collectively, “Titan”) in June 2006 and Transwestern Pipeline Company, LLC (Transwestern) in December 2006, as discussed below. The Class G units were issued to Energy Transfer Equity, L.P. (ETE);

• The acquisition of Titan which closed on June 1, 2006 (the “Titan acquisition”). The entire cash purchase price for the acquisition of Titan ($548.5 million net of cash acquired of approximately $24.5 million as of June 1, 2006) was initially financed with funds advanced under ETP’s revolving credit facility. These borrowings under the revolving credit facility were repaid with the proceeds from the issuance of ETP’s public debt and Class G units, as discussed below; and

• The acquisition of Transwestern in a two-step process, as discussed below in the “Transwestern Acquisition” section.

The Titan and Transwestern acquisitions were effectively financed 50% with long-term debt and 50% with limited partner equity.

Titan Acquisition in June 2006

Titan is the successor entity of Cornerstone Propane Partners, L.P. (the Predecessor) and is a marketer of propane and refined fuels in the United States serving approximately 331,000 residential, commercial, industrial and agricultural customers from approximately 145 customer service centers in 33 states as of June 1, 2006. Titan continued the business of the Predecessor Company upon emergence from bankruptcy. Titan’s core business consists principally of (a) the retail marketing and distribution of propane for residential, commercial, industrial, agricultural and other retail uses; (b) the repair and maintenance of propane heating systems and appliances; and (c) the sale of propane-related supplies, appliances and other equipment. Titan’s operations are located in the east, south, central and west coast regions of the United States.

The acquisition cost of the Titan assets reflected in the accompanying historical consolidated balance sheet of ETP as of August 31, 2006, was as follows (in 000’s):

Base purchase price as per the merger agreement	$	549,700
Plus estimated relocation and termination costs		4,000
Plus accrued compensation expense as of June 1, 2006 paid with acquired cash		23,247
Plus other liabilities assumed as of June 1, 2006		42,341
Total acquisition cost allocated to assets acquired	$	619,288

In the accompanying historical consolidated balance sheet of ETP as of August 31, 2006, the total acquisition cost of the Titan assets acquired was preliminarily allocated as follows (in 000’s):

Current assets	$	58,234
Property and equipment		202,598
Intangible and other assets		80,307
Goodwill		278,149
Total	$	619,288

Transwestern Acquisition in December 2006

On September 15, 2006, ETP announced that it had entered into agreements with GE Energy Financial Services and Southern Union Company to acquire the Transwestern Pipeline. The Transwestern Pipeline is a 2,500 mile interstate natural gas pipeline system that connects supply areas in the San Juan Basin in southern Colorado and northern New Mexico, the Anadarko Basin in the Mid-continent and the Permian Basin in west Texas to markets in the Midwest, Texas, Arizona, New Mexico and California. The Transwestern Pipeline interconnects to ETP’s existing intrastate pipelines in west Texas as well as other intrastate and interstate pipelines in west Texas. The agreements provided for a series of transactions in which ETP initially acquired on November 1, 2006, all of the member interests in CCE Holdings, LLC (“CCEH”) owned by GE Energy Financial Services and certain other investors for $1 billion. The member interests acquired represented a 50% ownership in CCEH, which was formed in 2004 to purchase CrossCountry Energy. In the second transaction, which closed on December 1, 2006, CCEH redeemed ETP’s 50% ownership in CCEH in exchange for 100% ownership of Transwestern, ETP’s assumption of $520 million of Transwestern long-term indebtedness and ETP’s receipt of acquired cash of approximately $55 million. Following this final step, Transwestern Pipeline Company, LLC became a new operating subsidiary of ETP.

The total purchase price of Transwestern included in the accompanying pro forma consolidated balance sheet as of August 31, 2006 was determined as follows (in 000’s):

Purchase price paid	$	1,000,000
Assumed obligations		576,394
Fair value adjustment of long-term debt		(6,527	)
Total acquisition cost allocated to assets	$	1,569,867

The total purchase price exceeds the net assets of Transwestern at September 30, 2006 by approximately $215.7 million. In the accompanying pro forma consolidated balance sheet as of August 31, 2006, such excess was preliminarily allocated as follows (in 000’s):

Property and equipment	$	114,512
Goodwill		(16,176	)
Contract rights		75,263
Rights of way		55,818
Other assets		(13,700	)
	$	215,717

Issuances of ETP Public Debt and Class G units

On August 9, 2006, ETP filed a Registration Statement on Form S-3 with the Securities and Exchange Commission to register up to $1.5 billion aggregate offering price of a combination of Limited Partner interests of Energy Transfer Partners, L.P. and debt securities. On October 23, 2006, ETP closed the issuance, under its $1.5 billion S-3 registration statement, of $400,000 of 6.125% Senior Notes due 2017 and $400,000 of 6.625% Senior Notes due 2036, and received net proceeds of approximately $791,000. Interest on the 2017 Senior Notes is payable semiannually on February 15 and August 15 of each year, beginning February 15, 2007, and interest on the 2036 Senior Notes is payable semiannually on April 15 and October 15 of each year, beginning April 15, 2007. The notes are unsecured senior obligations and will be fully and unconditionally guaranteed by ETP’s subsidiary operating partnerships, ETC OLP and Titan and all of their direct and indirect wholly-owned subsidiaries. The proceeds were used to reduce amounts outstanding under ETP’s revolving credit facility and pay related accrued interest.

On November 1, 2006, ETP issued approximately 26.1 million ETP Class G limited partner units to ETE for aggregate proceeds of $1.2 billion in order to fund a portion of the Transwestern acquisition and to repay a portion of the indebtedness incurred in connection with the Titan acquisition, as discussed above. The ETP Class G Units, a newly created class of ETP’s Limited Partner interests, were issued to ETE at a price of $46.00 per unit, which was based upon a market discount from the closing price of ETP’s Common Units on October 31, 2006. The ETP Class G Units were issued to ETE pursuant to a customary agreement, and registration rights have been granted to ETE.

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Pro Forma Financial Statements

The unaudited pro forma condensed consolidated financial statements are provided for informational purposes only and should be read in conjunction with the audited and unaudited financial statements of Titan previously included in a Form 8-K, the audited and unaudited financial statements of Transwestern included in this Form 8-K and the ETP Form 10-K for the year ended August 31, 2006. The unaudited pro forma condensed consolidated financial statements include the following:

• The unaudited pro forma condensed consolidated balance sheet of ETP as of August 31, 2006, which presents the pro forma effects as if the Transwestern acquisition and the debt and equity issuances described above occurred on August 31, 2006. The acquisition of Titan is already reflected in the historical consolidated balance sheet of ETP as of August 31, 2006; however, the pro forma adjustments include adjustments of the Titan purchase price allocation recorded in the quarter ended November 30, 2006 resulting from the receipt of the independent appraisal of the acquired Titan assets; and

• the unaudited pro forma condensed consolidated statement of operations of ETP for the fiscal year ended August 31, 2006, which presents the pro forma effects of the Titan and Transwestern acquisitions and related debt and equity offerings as if such transactions occurred on September 1, 2005.

The following unaudited pro forma condensed consolidated financial statements are based on certain assumptions and do not purport to be indicative of the results which actually would have been achieved if the Titan and Transwestern acquisitions and the related debt and equity issuances had been completed on the dates indicated. Moreover, they do not project ETP’s financial position or results of operations for any future date or period.

The accompanying pro forma financial statements reflect purchase price allocations which are preliminary as the purchase price allocation for the Titan and Transwestern acquisitions reflected in the pro forma statements has not been completed. ETP’s management has engaged an appraisal firm to prepare an appraisal of the Transwestern tangible and identifiable intangible assets to support the purchase price allocation. Such appraisal is expected to be completed by January 31, 2007. The purchase price allocation is affected by the amount of current assets and liabilities at the closing date (December 1, 2006), and the closing date balance sheet will not be available until approximately January 15, 2007. Management believes that the final purchase price allocation will be finalized by August 31, 2007. The purchase price allocation reflected in the accompanying pro forma financial statements is based on the best estimates available at this time and on the unaudited balance sheet of Transwestern as of September 30, 2006. Management expects to complete the Titan allocation during the second quarter of fiscal year 2007. There is no guarantee that the preliminary allocation, and consequently the pro forma financial statements, will not change. To the extent that the final allocation results in an increased allocation to goodwill, this amount would not be subject to amortization, but would be subject to an annual impairment testing and if necessary, written-down to a lower fair value should circumstances warrant. To the extent the final allocation results in a decrease to the preliminary allocation to goodwill done for the purpose of preparing these pro forma financial statements, the amount would be subject to depreciation or amortization which would result in a decrease to the estimated pro forma income reflected in the accompanying pro forma statements of operations for the respective periods.

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ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

As of August 31, 2006

(in thousands)

	Historical Energy Transfer Partners, L.P. as of August 31, 2006		Historical Transwestern Pipeline Company, LLC as of September 30, 2006		Pro Forma Adjustments (Note 2)				Pro forma
ASSETS
CURRENT ASSETS:
Cash	$	26,041	$	48,236	$	1,199,239		(a)	$	36,416
					$	(200,000	)	(a)
						24,000		(g)
						(55,000	)	(m)
						(1,000,000	)	(b)
						(6,100	)	(k)
Marketable securities		2,817		—		—				2,817
Accounts receivable		675,545		19,774		—				695,319
Accounts receivable from affiliates		897		428		—				1,325
Inventories		387,140		—		—				387,140
Deposits paid to vendors		87,806		—		—				87,806
Exchanges receivable		23,221		5,517		—				28,738
Price risk management assets		56,139		—		—				56,139
Prepaid expenses and other assets		42,198		5,869		—				48,067
Total current assets		1,301,804		79,824		(37,861	)			1,343,767
PROPERTY AND EQUIPMENT, net		3,313,649		1,069,488		114,512		(b)		4,500,474
						2,825		(l)
LONG-TERM PRICE RISK MANAGEMENT ASSETS		2,192		—		—				2,192
ADVANCES TO AND INVESTMENT IN AFFILIATES		41,344		—		—				41,344
GOODWILL		604,409		113,289		(16,176	)	(b)		698,697
						(2,825	)	(l)
REGULATORY ASSETS		—		62,007		—				62,007
INTANGIBLES AND OTHER ASSETS, net		191,615		29,542		131,081		(b)		344,638
						6,100		(k)
						(13,700	)	(b)
Total assets	$	5,455,013	$	1,354,150	$	183,956			$	6,993,119

	Historical Energy Transfer Partners, L.P. as of August 31, 2006		Historical Transwestern Pipeline Company, LLC as of September 30, 2006		Pro Forma Adjustments (Note 2)				Pro forma
LIABILITIES AND PARTNERS’ CAPITAL
CURRENT LIABILITIES:
Current portion of long-term debt	$	40,578	$	—	$	—			$	40,578
Accounts payable trade		603,140		1,526		—				604,666
Accounts payable to related parties		650		4,890		—				5,540
Exchanges payable		24,722		5,558		—				30,280
Customer advances and deposits		108,836		—		—				108,836
Accrued liabilities		201,017		34,498		—				235,515
Price risk management liabilities		36,918		—		—				36,918
Deferred income taxes		629		—		—				629
Total current liabilities		1,016,490		46,472		—				1,062,962
LONG-TERM DEBT		2,589,124		520,000		(200,000	)	(a)		2,847,597
						(55,000	)	(m)
						(6,527	)	(b)
LONG-TERM PRICE RISK MANAGEMENT LIABILITIES		1,728		—		—				1,728
DEFERRED TAXES		106,842		—		—				106,842
OTHER NON-CURRENT LIABILITIES		2,110		9,922		—				12,032
MINORITY INTERESTS		1,857		—		—				1,857
		3,718,151		576,394		(261,527	)			4,033,018
COMMITMENTS AND CONTINGENCIES
PARTNERS’ CAPITAL:
Member’s equity		—		777,756		(777,756	)	(b)		—
General Partner		82,450		—		24,000		(g)		106,450
Common Unitholders		1,647,345		—		—				1,647,345
Class G Unitholders		—		—		(761	)	(a)		1,199,239
						1,200,000		(a)
Accumulated other comprehensive income		7,067		—		—				7,067
Total partners’ capital		1,736,862		777,756		445,483				2,960,101
Total liabilities and partners’ capital	$	5,455,013	$	1,354,150	$	183,956			$	6,993,119

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ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

For the Year Ended August 31, 2006

(in thousands, except unit and per unit data)

	For the Year Ended August 31, 2006			For the Nine Months Ended March 31, 2006			For the Twelve Months Ended September 30, 2006
	Historical Energy Transfer Partners, L.P.			Historical Titan			Historical Transwestern Pipeline Company, LLC			Pro forma Adjustments (Note 2)					Pro forma
REVENUES:
Midstream, transportation and storage	$	6,877,512		$	—		$	227,771		$	—				$	7,105,283
Propane and other		981,584			334,957			—			—					1,316,541
Total revenues		7,859,096			334,957			227,771			—					8,421,824
COSTS AND EXPENSES:
Cost of products sold		6,568,316			197,203			—			—					6,765,519
Operating expenses		422,989			—			68,651			—					491,640
Depreciation and amortization		117,415			17,637			36,413			12,571		(i	)		184,036
Restructuring charges		—			2,201			—			—					2,201
Selling, general and administrative		107,505			89,385			11,257			—					208,147
Total costs and expenses		7,216,225			306,426			116,321			12,571					7,651,543
OPERATING INCOME		642,871			28,531			111,450			(12,571	)				770,281
OTHER INCOME (EXPENSE):
Interest expense		(113,857	)		(8,778	)		(31,781	)		8,778		(h	)		(178,076	)
											(43,820	)	(d	)
											(425	)	(f	)
											(558	)	(e	)
											1,740		(n	)
											10,625		(o	)
Equity in losses of affiliates		(479	)		—			—			—					(479	)
Reorganization expenses		—			(1,817	)		—			—					(1,817	)
Gain on disposal of assets		851			(2	)		—			—					849
Interest income and other		14,620			829			1,518			—					16,967
		(98,865	)		(9,768	)		(30,263	)		(23,660	)				(162,556	)
INCOME BEFORE INCOME TAX EXPENSE AND MINORITY INTEREST		544,006			18,763			81,187			(36,231	)				607,725
Income tax provision		(25,920	)		—			—			756		(c	)		(25,164	)
INCOME BEFORE MINORITY INTEREST		518,086			18,763			81,187			(35,475	)				582,561
Minority interest		(2,234	)		—			—			—					(2,234	)
Net income	$	515,852		$	18,763		$	81,187		$	(35,475	)			$	580,327
Weighted average units - basic		109,036,265									26,086,957		(j	)		135,123,222
Weighted average units - diluted		109,334,778									26,086,957		(j	)		135,421,735
Net income per unit - basic (Note 3)	$	3.16													$	2.90
Net income per unit - diluted (Note 3)	$	3.15													$	2.90

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ENERGY TRANSFER PARTNERS, L.P. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular dollar amounts in thousands, except per unit data)

1. BASIS OF PRESENTATION, ACQUISITIONS AND OTHER TRANSACTIONS

Basis of Presentation

The accompanying unaudited pro forma financial statements present (i) the unaudited pro forma condensed consolidated balance sheet of Energy Transfer Partners, L.P. and subsidiaries (“ETP”) as of August 31, 2006, giving effect to the Transwestern acquisition, purchase price allocation adjustments for the Titan acquisition and the proceeds from the issuance of debt and issuance of Class G limited partner units used to finance the Titan and Transwestern acquisitions as if these transactions occurred on August 31, 2006; and (ii) the unaudited pro forma condensed consolidated statement of operations for the year ended August 31, 2006, giving effect to the transactions described below as if they occurred on September 1, 2005. The accompanying unaudited pro forma financial statements include the historical results of operations for ETP for the year ended August 31, 2006, the unaudited historical results of operations for Titan for the nine months ended March 31, 2006 and the unaudited historical results of operations of Transwestern for the twelve months ended September 30, 2006. The historical financial statements have been adjusted for the pro forma adjustments, as discussed below. The historical results of operations of Titan for the three months ended August 31, 2006 are reflected in the historical results of operations of ETP for the year ended August 31, 2006, and the ETP historical consolidated balance sheet as of August 31, 2006 includes the accounts of Titan.

The unaudited pro forma condensed consolidated financial statements do not give any effect to any restructuring cost, potential cost savings, or other operating efficiencies that are expected to result from the Titan or Transwestern acquisitions. The unaudited pro forma consolidated financial statements are based on certain assumptions and do not purport to be indicative of the results which actually would have been achieved if the Titan and Transwestern acquisitions, the $800 million debt issuance, and the $1.2 billion Class G limited partner unit offering had been consummated on the dates indicated or which may be achieved in the future. Moreover, it does not project ETP’s financial position or results of operations for any future date or period. The purchase accounting adjustments made in connection with the development of the unaudited pro forma consolidated financial statements with respect to the Transwestern acquisition are preliminary and have been made solely for purposes of presenting such pro forma financial information. The allocation of the purchase price for the acquisitions of Titan and Transwestern has not been finalized, as discussed above.

Titan Acquisition

On April 19, 2006, ETP signed a definitive agreement with Titan Energy Partners, L.P. under which ETP acquired, on June 1, 2006, all of the propane operations of Titan Energy Partners, L.P. and Titan Energy GP, LLC for approximately $548 million, net of cash acquired of $24.5 million at June 1, 2006. ETP financed the acquisition initially with advances under its revolving credit facility. ETP subsequently repaid the revolving credit advances with proceeds received through a combination of the sale of a new public debt offering and a private placement of its Class G limited partner units, as discussed below under “Financing Transactions.”

The Titan acquisition is accounted for as a business combination using the purchase method of accounting in accordance with the provisions of Statement of Financial Accounting Standards No. 141. The total cost of the Titan acquisition was as follows (in thousands):

Base purchase price as per the merger agreement	$	549,700
Plus estimated termination and relocation costs		4,000
Plus accrued compensation obligation as of June 1, 2006		23,247
Plus other assumed Titan obligations as of June 1, 2006		42,341
Total acquisition cost allocated to assets acquired	$	619,288

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For purposes of this pro forma analysis, the purchase price of the Titan transaction has been allocated using the independent valuation obtained subsequent to August 31, 2006. For purposes of the historical consolidated balance sheet of ETP as of August 31, 2006, the purchase price was assigned primarily to depreciable fixed assets, amortizable and non-amortizable intangible assets, and non-amortizable goodwill. Management of ETP engaged an appraisal firm to perform the asset appraisal in order to develop a definitive allocation of the purchase price. As a result, the purchase price allocation reflected herein differs from the preliminary allocation. The adjusted pro forma purchase price allocation is as follows (in thousands):

Current assets	$	58,234
Property, plant and equipment, including construction in progress		205,423
Intangible assets		74,532
Goodwill		275,324
Other assets		5,775
Total assets	$	619,288

Transwestern Acquisition

On September 15, 2006, ETP announced that it had entered into agreements with GE Energy Financial Services and Southern Union Company to acquire the Transwestern Pipeline. The Transwestern Pipeline is a 2,500 mile interstate natural gas pipeline system that connects supply areas in the San Juan Basin in southern Colorado and northern New Mexico, the Anadarko Basin in the Mid-continent and the Permian Basin in west Texas to markets in the Midwest, Texas, Arizona, New Mexico and California. The Transwestern Pipeline interconnects to ETP’s existing intrastate pipelines in west Texas as well as other intrastate and interstate pipelines in west Texas.

The agreements provided for a series of transactions in which, on November 1, 2006, ETP initially acquired all of the member interests in CCE Holdings, LLC (“CCEH”) owned by GE Energy Financial Services and certain other investors for $1 billion. The member interests acquired represented a 50% ownership in CCEH, which was formed in 2004 to purchase CrossCountry Energy. In the second transaction, which closed on December 1, 2006, CCEH redeemed ETP’s 50% ownership in CCEH in exchange for 100% ownership of Transwestern, ETP’s assumption of $520 million in fixed rate long-term debt and ETP’s receipt of a $55 million distribution from the acquired cash. Following this final step, Transwestern Pipeline Company, LLC became a new operating subsidiary of ETP.

Of the assumed long-term debt, $289.5 million must be paid by February 2007. ETP intends to refinance the debt with advances under its revolving credit facility. In the allocation of purchase price, the remaining fixed rate debt not requiring prepayment is recorded at fair value, which results in a reduction of the book value of the debt of $6.5 million.

The total purchase price of Transwestern included in the accompanying pro forma consolidated balance sheet as of August 31, 2006 was determined as follows (in 000’s):

Purchase price paid	$	1,000,000
Assumed obligations		576,394
Fair value adjustment of debt		(6,527	)
Total acquisition cost allocated to assets	$	1,569,867

The total purchase price exceeds the net assets of Transwestern at September 30, 2006 by approximately $215.7 million. In the accompanying pro forma consolidated balance sheet as of August 31, 2006, such excess was preliminarily allocated as follows (in 000’s):

Property and equipment	$	114,512
Goodwill		(16,176	)
Contract rights		75,263
Rights of way		55,818
Other assets		(13,700	)
	$	215,717

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Financing Transactions

On August 9, 2006 ETP filed a Registration Statement on Form S-3 with the Securities and Exchange Commission to register up to $1.5 billion aggregate offering price of a combination of Limited Partner interests of Energy Transfer Partners, L.P. and debt securities. On October 23, 2006, ETP closed the issuance, under its $1.5 billion S-3 registration statement, of $400,000 of 6.125% Senior Notes due 2017 and $400,000 of 6.625% Senior Notes due 2036, and received net proceeds of approximately $791,000. Interest on the 2017 Senior Notes is payable semiannually on February 15 and August 15 of each year, beginning February 15, 2007, and interest on the 2036 Senior Notes is payable semiannually on April 15 and October 15 of each year, beginning April 15, 2007. The notes are unsecured senior obligations and will be fully and unconditionally guaranteed by ETP’s subsidiary operating partnerships, ETC OLP and Titan and all of their direct and indirect wholly-owned subsidiaries. The proceeds were used to reduce amounts outstanding under ETP’s revolving credit facility and pay related accrued interest.

On November 1, 2006, ETP issued approximately 26.1 million ETP Class G limited partner units to ETE for aggregate proceeds of $1.2 billion in order to fund a portion of the Transwestern acquisition and to repay the indebtedness incurred in connection with the Titan acquisition, as discussed above. The ETP Class G Units, a newly created class of ETP’s Limited Partner interests, were issued to ETE at a price of $46.00 per unit, which was based upon a market discount from the closing price of ETP’s Common Units on October 31, 2006. The ETP Class G Units were issued to ETE pursuant to a customary agreement, and registration rights have been granted to ETE.

2. Pro Forma Adjustments

(a) Reflects the estimated proceeds from issuance of Class G limited partner units to ETE, net of issuance costs of $0.8 million. The proceeds received in excess of the funds required to fund the acquisition of Transwestern ($200 million) were used to reduce borrowings under ETP’s revolving credit facility.

(b) Reflects the acquisition of Transwestern and the allocation of the excess purchase price over Transwestern’s historical net assets (a total of $215.7 million) to property, plant and equipment of $114.5 million, goodwill of $(16.2) million (including the adjustment discussed below), intangible assets of $131.1 million and a reduction of other assets of $13.7 million for debt issuance costs of Transwestern, which debt has been adjusted to fair value. This allocation is preliminary. The final allocation will be made using the independent appraisal of the tangible and intangible asset when received. Also includes an adjustment to record Transwestern debt at fair value. The Transwestern debt was at a fixed rate of approximately 5.5%. The debt was adjusted to a fair value interest rate of 5.87%. This reduces the book value of debt by $6.5 million.

(c) Reflects the adjustment for the income tax expense of Heritage Holdings, Inc. that would have been realized had the additional Titan and Transwestern income been earned by ETP, reduced by the dilutive effect of the distributions that would have been made on the adjusted units outstanding.

(d) Reflects the increased interest expense that would have resulted from borrowings to fund the Titan and Transwestern acquisitions. The public debt issuance was at an average interest rate of 6.38%. For the year ended August 31, 2006, the average additional debt financing that would have been required for the Titan and Transwestern acquisitions was approximately $687.4 million, at a fixed interest rate of 6.38%.

(e) Reflects the incremental interest that would have resulted from refinancing the Transwestern fixed-rate debt (5.46%) that must be prepaid in 2007 ($289.5 million) with borrowings from ETP’s revolving credit facility which is a variable rate. A 1/8% change in the interest rate would result in additional monthly interest expense of approximately $30,000.

(f) Reflects additional amortization expense of $425,000 related to the estimated financing costs of the debt used to fund the Titan and Transwestern acquisitions. The estimated financing costs are amortized over a 15 year period, the average maturity period of the public debt issued to fund a portion of the Titan and Transwestern acquisition costs.

(g) Reflects the contribution by ETP’s general partner, ETP GP, L.P., required in order to maintain its 2% general partner interest in ETP.

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(h) Reflects the elimination of Titan’s historical interest expense in order to reflect only the incremental interest expense related to the debt issued to finance the Titan and Transwestern acquisitions. The Titan long-term debt was canceled in connection with the acquisition. The Transwestern debt, as described in the accompanying historical financial statements for Transwestern, was assumed in connection with the Transwestern acquisition.

(i) Reflects the estimated net adjustment to depreciation and amortization expense resulting from the step-up of the net book value of property, plant and equipment and identifiable intangible assets acquired in the Titan and Transwestern acquisitions. The allocation to property and equipment in excess of Titan’s historical net book value at June 1, 2006 relates primarily to company-owned storage tanks, vehicles and other equipment, which are depreciated over their expected useful lives (estimated as 30 years for storage tanks, 5 years for vehicles and 10 years for other equipment) for the purpose of the accompanying pro forma financial statements. The allocation to intangible assets in excess of Titan’s historical cost relates primarily to customer lists and trademarks. The allocation to customer lists is amortized over the expected remaining useful life (approximately 15 years) for the purpose of the pro forma financial statements. Trademarks and goodwill are indefinite-lived assets subject to annual tests for impairment, thus no amortization has been reflected in the accompanying pro forma financial statements for the amounts allocated to those intangible assets. An increase in the allocation to property and equipment of Titan of $5 million would result in an increase to annual depreciation expense of approximately $295,000.

The step-up of the Transwestern assets was allocated as indicated above. The weighted average plant system life for depreciation lives for the allocation to property and equipment is assumed to be 39 years. The adjustment to other assets for contract rights ($75.3 million) is amortized over remaining lives of 8-15 years. The adjustment to rights of way ($55.8 million) is amortized at a rate of 1.2% per month. The amount allocated to goodwill is estimated at this date and is subject to change. Goodwill has not been amortized in accordance with accounting principles generally accepted in the United States. The final purchase price allocation may result in a modification of the Transwestern allocation reflected in the accompanying pro forma financial statements, which may be material and which would result in a change in the estimated additional depreciation and amortization. An increase or decrease in the allocation to property and equipment of Transwestern of $5 million would result in an adjustment to depreciation expense of approximately $128,000. An adjustment of contract rights of $5 million would result in an annual adjustment of $530,000 to amortization expense.

(j) Reflects the limited partner units issued to ETE as discussed above.

(k) Reflects debt issuance costs incurred.

(l) Reflects the adjustment to the Titan purchase allocation as discussed above, an increase of property and equipment, and reduction of goodwill of $2.8 million.

(m) Reflects utilization of acquired cash from Transwestern upon closing to reduce amounts outstanding under ETP’s revolving credit facility.

(n) Reflects reversal of Transwestern debt cost amortization due to adjusting such debt to fair value.

(o) Reflects reduction of interest expense that results from use of excess proceeds (see (a) above) to reduce debt outstanding during the year ended August 31, 2006.

3. Earnings per Unit Computation

Basic and diluted net income per limited partner unit for the historical and pro forma statements of operations have been presented to reflect the application of EITF 03-6. The Partnership’s net income for income statement and partners’ capital purposes is allocated to the General Partner and Limited Partners in accordance with their respective partnership percentages, after giving effect to any priority income allocations for incentive distributions, if any, to the Partnership’s General Partner, the holders of the incentive distribution rights pursuant to the Partnership Agreement, which are declared and paid following the close of each quarter. For purposes of computing basic and diluted net income per limited partner unit, in periods when the Partnership’s aggregate net income exceeds the aggregate distributions for such period, an increased amount of net income is allocated to the General Partner for the additional pro forma priority income attributable to the application of EITF 03-6. The General Partner is entitled to receive incentive distributions if the amount the Partnership distributes with respect to any quarter exceeds levels specified in the Partnership Agreement.

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	ETP Historical Year Ended August 31, 2006			Pro forma Year Ended August 31, 2006
Net income	$	515,852		$	580,327
Adjustments:
General Partner’s incentive distributions (IDRs)		(108,813	)		(134,444	)
General Partner’s equity ownership		(10,172	)		(11,463	)
Limited Partners’ interest in net income		396,867			434,420
Income allocable to class C units		(3,599	)		(3,599	)
Additional earnings allocation to General Partner		(48,781	)		(38,438	)
Net income available to limited partners	$	344,487		$	392,383
Weighted average limited partner units – basic		109,036,265			135,123,222
Limited Partners’ basic net income per unit	$	3.16		$	2.90
Weighted average limited partner units		109,036,265			135,123,222
Dilutive effect of Unit grants		298,513			298,513
Weighted average limited partner units, assuming dilutive effect of Unit grants		109,334,778			135,421,735
Limited Partners’ diluted net income per unit	$	3.15		$	2.90

4. Other Income

Included in “Interest income and other” for ETP for the year ended August 31, 2006 is approximately $7.2 million of income from the settlement of litigation. The non-recurring income is not excluded from the pro forma income as it does not result directly from the Titan or Transwestern acquisitions. However, ETP does not expect to realize similar income in the future.

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