Results of Operations - Three Months Ended June 30, 2008 and 2007

                         Sunoco Logistics Partners L.P.

                              Operating Highlights

                   Three Months Ended June 30, 2008 and 2007



                                                              Three Months Ended
                                                                   June 30,
                                                               2008         2007
Eastern Pipeline System:(1)
Total shipments (barrel miles per day)(2)                   61,028,163   63,253,888
Revenue per barrel mile (cents)                                  0.521        0.485
Terminal Facilities:
Terminal throughput (bpd):
Refined product terminals(3)                                   428,704      440,152
Nederland terminal                                             526,350      529,462
Refinery terminals(4)                                          622,011      715,462
Western Pipeline System:(1)
Crude oil pipeline throughput (bpd)                            547,489      535,715
Crude oil purchases at wellhead (bpd)                          177,317      180,390
Gross margin per barrel of pipeline throughput (cents)(5)         54.1         20.2

(1) Excludes amounts attributable to equity ownership interests in corporate joint ventures.

(2) Represents total average daily pipeline throughput multiplied by the number of miles of pipeline through which each barrel has been shipped.

(3) Includes results from the Partnership's purchase of a 50% undivided interest in a refined products terminal in Syracuse, New York in June 2007.

(4) Consists of the Partnership's Fort Mifflin Terminal Complex, the Marcus Hook Tank Farm and the Eagle Point Dock.

(5) Represents total segment sales minus cost of products sold and operating expenses and depreciation and amortization divided by crude oil pipeline throughput.

Analysis of Consolidated Net Income

Net income was $51.3 million for the second quarter 2008 as compared with $25.3 million for the second quarter 2007, an increase of $26.0 million. The increase was the result of continued margin improvement across all segments, stronger asset utilization in the Western Pipeline system and additional tankage placed into service at the Nederland terminal during 2007 and 2008. These increases were partially offset by lower volumes in our Eastern Pipeline and Terminal systems.

Net interest expense decreased $1.4 million to $8.1 million for the second quarter 2008 from $9.5 million for the prior year's quarter primarily due to lower interest rates related to the Partnership's revolving Credit Facility.

Analysis of Segment Operating Income

Eastern Pipeline System

Operating income for the Eastern Pipeline System increased $3.8 million to $14.6 million for the second quarter 2008 from $10.8 million for the second quarter 2007. Sales and other operating revenue increased by $1.0 million to $29.0 million due primarily to higher fees across the Partnership's refined product and crude oil pipelines, partially offset by decreased volumes. Other income decreased $0.8 million compared to the prior year's quarter due primarily to a decrease in equity income associated with the Partnership's joint venture interests. Cost of goods sold and operating expenses decreased by $3.6 million to $10.0 million compared to the prior year's quarter due primarily to the impact of increased crude oil and refined product prices on operating gains and a decreased level of environmental charges. These decreases were partially offset by increased utility costs throughout the system.

The Terminal Facilities business segment had operating income of $17.9 million for the second quarter 2008, as compared to $15.5 million for the prior year's second quarter. Sales and other operating revenue increased by $4.0 million to $39.3 million due primarily to the addition of tankage at the Nederland terminal, increased terminal fees, sales of product overages which were favorably impacted by the increased price of crude oil and increased product additive revenues. Other income increased $0.8 million from the prior year's second quarter as a result of the final insurance recovery for hurricane damage sustained during 2005 at the Partnership's Nederland terminal. Cost of goods sold and operating expenses increased by $1.1 million to $13.9 million for the second quarter of 2008 due primarily to increased product additive costs, higher utility costs and timing of maintenance activity. Selling, general and administrative expenses increased by $1.1 million to $4.2 million for the second quarter of 2008. During 2007, expenses were reduced by $0.9 million in connection with an insurance recovery.

Western Pipeline System

Operating income for the Western Pipeline System increased $18.5 million to $26.9 million for the second quarter of 2008 compared to the prior year's quarter due primarily to improved asset utilization resulting from the creation of a bi-directional pipeline connection to the Partnership's Nederland terminal, increased pipeline volumes and fees and higher lease acquisition margins. Additionally, the Partnership benefited in the second quarter of 2008 from third party contracts, to purchase and sell crude oil inventory, that were entered into in conjunction with a contract to exchange crude oil inventory with the Department of Energy ("DOE"). In accordance with accounting standards, these third party contracts were deemed to be derivatives, which required a mark to market adjustment to be recorded in income during the second quarter of 2008. The accounting for the third party contracts, along with the exchange contract with the DOE, resulted in $3.2 million in income being recognized during the second quarter 2008. These contracts will be settled during the third quarter of 2008. Other income increased $1.1 million compared to the prior year's quarter due primarily to a gain recognized on the insurance recovery discussed earlier.

Higher crude oil prices were a key driver of the overall increase in total revenue, cost of products sold and operating expenses from the prior year's quarter. The average price of West Texas Intermediate crude oil at Cushing, Oklahoma increased to $124.00 per barrel for the second quarter of 2008 from $65.02 per barrel for the second quarter of 2007.

Results of Operations - Six Months Ended June 30, 2008 and 2007

                         Sunoco Logistics Partners L.P.

                              Operating Highlights

                    Six Months Ended June 30, 2008 and 2007



                                                               Six Months Ended
                                                                   June 30,
                                                               2008         2007
Eastern Pipeline System:(1)
Total shipments (barrel miles per day)(2)                   60,705,947   63,372,001
Revenue per barrel mile (cents)                                  0.524        0.479
Terminal Facilities:
Terminal throughput (bpd):
Refined product terminals(3)                                   423,662      427,923
Nederland terminal                                             539,702      536,840
Refinery terminals(4)                                          648,604      664,768
Western Pipeline System:(1)
Crude oil pipeline throughput (bpd)                            548,957      534,816
Crude oil purchases at wellhead (bpd)                          174,381      182,757
Gross margin per barrel of pipeline throughput (cents)(5)         52.3         22.5

(1) Excludes amounts attributable to equity ownership interests in corporate joint ventures.

(2) Represents total average daily pipeline throughput multiplied by the number of miles of pipeline through which each barrel has been shipped.

(3) Includes results from the Partnership's purchase of a 50% undivided interest in a refined products terminal in Syracuse, New York.

(5) Represents total segment sales and other operating revenue minus cost of products sold and operating expenses and depreciation and amortization divided by crude oil pipeline throughput.

Analysis of Consolidated Net Income

Net income was $88.8 million for the six month period ended June 2008 as compared with $47.6 million for the comparable period in 2007. The increase was driven primarily by higher operating income resulting from higher margins and fees across all segments, improved asset utilization within the Western Pipeline system and additional tankage placed into service at the Nederland terminal during 2007 and 2008. These improvements to operating income were partially offset by lower volumes in the Eastern Pipeline system and Terminal Facilities along with a $5.7 million non-cash impairment charge related to a cancelled project. A decrease in interest expense further contributed to the $41.2 million increase in net income.

Net interest expense decreased $2.4 million to $15.8 million for the first six months of 2008 from $18.1 million for the first six months of 2007 due to decreased borrowings and lower interest rates related to the Partnership's revolving Credit Facility.

Analysis of Segment Operating Income

Eastern Pipeline System

Operating income for the Eastern Pipeline System increased $4.8 million to $25.3 million for the first six months of 2008 from $20.5 million for the first six months of 2007. Sales and other operating revenue increased from $54.9 million for the prior year's period to $57.8 million for the six months ended June 2008 due mainly to higher fees across the Partnership's refined product and crude oil pipelines, partially offset by decreased volumes. Other income decreased by $2.1 million to $4.2 million for the first six months of 2008 from $6.3 million for the prior year period due primarily to a decrease in equity income associated with the Partnership's joint venture interests. Operating expenses decreased by $3.6 million to $22.0 million due primarily to the impact of increased crude oil and refined product prices on operating gains and a decreased level of environmental charges. This decrease was partially offset by increased utility costs throughout the system.

Terminal Facilities

The Terminal Facilities segment had operating income of $29.1 million for the six months ended June 2008, as compared to $27.8 million for the first six months of 2007. Operating income was reduced during the first six months of 2008 due to a $5.7 million non-cash impairment charge related to the Partnership's decision to discontinue efforts to expand LPG storage capacity at its Inkster, Michigan facility. Sales and other operating revenue increased $10.5 million to $78.7 million in the first half of 2008 due primarily to the addition of new tankage at the Nederland terminal, higher fees at the Partnership's Nederland and refined products terminals, the sale of product overages which were favorably impacted by the increased price of crude oil and increased product additive revenues. The increases were partially offset by decreased volumes in the Partnership's refinery and refined product terminals. Other income increased $0.8 million from the first six months of 2008 as a result of the insurance recovery discussed above. Cost of goods sold and operating expenses increased by $2.3 million to $27.6 million for the six months ended June 2008 due primarily to increased utility costs and timing of maintenance activity. Selling, general and administrative expenses increased by $1.5 million to $9.1 million for the six months ended June 30, 2008. During 2007, expenses were reduced by $0.9 million in connection with an insurance recovery.

Western Pipeline System

Operating income for the Western Pipeline System increased $32.8 million to $50.2 million for the first six months of 2008 from $17.4 million for the first six months of 2007. The increase was due primarily to improved asset utilization resulting from creation of a bi-directional pipeline connection to the Partnership's Nederland terminal, increased pipeline volumes and fees and higher lease acquisition margins. Additionally, the Partnership benefited in the first six months of 2008 from third party contracts, to purchase and sell crude oil inventory, that were entered into in conjunction with a contract to exchange crude oil inventory with the Department of Energy ("DOE"). In accordance with accounting standards, these third party contracts were deemed to be derivatives, which required a mark to market adjustment to be recorded in income during the second quarter of 2008. The accounting for the third party contracts, along with the exchange contract with the DOE, resulted in $5.1 million in income being recognized for the first six months of 2008. These contracts will be settled during the third quarter of 2008. Other income also contributed to the increased profitability due to increased equity income associated with the Partnership's joint venture interests and the gain on an insurance recovery discussed above.

Liquidity and Capital Resources

Liquidity

Cash generated from operations and borrowings under the credit facilities are the Partnership's primary sources of liquidity. At June 30, 2008, the Partnership had available borrowing capacity under the credit facilities of $410.0 million. The Partnership's working capital position reflects crude oil inventories based on historical costs under the LIFO method of accounting. If the inventories had been valued at their current replacement cost, the Partnership would have had working capital of $181.2 million at June 30, 2008.

On April 28, 2008, Sunoco Pipeline L.P., a subsidiary of the Partnership, entered into a definitive agreement to acquire a refined products pipeline system and certain other real and personal property interests and assets from Mobil Pipe Line Company. In addition to the pipeline system, Sunoco Partners Marketing & Terminals L.P., a subsidiary of the Partnership, entered into definitive agreements with Exxon Mobil Corporation, Mobil Pipe Line Company and ExxonMobil Oil Corporation, to acquire six refined products terminal facilities. Subject to necessary regulatory filings and approvals and the satisfaction of certain closing conditions, the transactions, with a combined purchase price of approximately $200.0 million, are expected to be completed in the third quarter of 2008. These acquisitions are expected to be funded through a combination of cash on hand and the Partnership's revolving credit facilities and other borrowings. For further information on these transactions see "Item 1. Notes to Condensed Consolidated Financial Statements (unaudited)-Note 2."

Capital Resources

The Partnership periodically supplements its cash flows from operations with proceeds from debt and equity financing activities.

$400 Million Credit Facility

Sunoco Logistics Partners Operations L.P. (the "Operating Partnership"), a wholly-owned entity of the Partnership, has a five-year $400 million Credit Facility, which is available to fund the Operating Partnership's working capital requirements, to finance future acquisitions, to finance future capital projects and for general partnership purposes. The Credit Facility matures in November 2012. At December 31, 2007, there was $91.0 million outstanding under the credit facility. During the first six months of 2008, the Partnership had net repayments of $1.0 million resulting in an outstanding balance of $90.0 million at June 30, 2008.

The Credit Facility bears interest at the Operating Partnership's option, at either (i) LIBOR plus an applicable margin, (ii) the higher of the federal funds rate plus 0.50 percent or the Citibank prime rate (each plus the applicable margin) or (iii) the federal funds rate plus an applicable margin.

The Credit Facility contains various covenants limiting the Operating Partnership's ability to a) incur indebtedness, b) grant certain liens, c) make certain loans, acquisitions and investments, d) make any material change to the nature of its business, e) acquire another company, or f) enter into a merger or sale of assets, including the sale or transfer of interests in the Operating Partnership's subsidiaries. The Credit Facility also requires the Operating Partnership to maintain, on a rolling four-quarter basis, a maximum total debt to EBITDA ratio of 4.75 to 1, which can generally be increased to 5.25 to 1 during an acquisition period. The Operating Partnership is in compliance with this requirement as of June 30, 2008. The Partnership's ratio of total debt to EBITDA was 2.5 to 1 at June 30, 2008.

$100 Million Credit Facility

In anticipation of the pending MagTex Acquisition, the Operating Partnership entered into a $100 million 364 day revolving credit facility ("$100 million Credit Facility") on May 28, 2008. This $100 million Credit Facility is available to fund the same activities as the Credit Facility described above. If the MagTex Acquisition is terminated, this new revolver will be terminated. The $100 million Credit Facility matures in May 2009 and can be prepaid at any time. Interest on outstanding borrowings is calculated, at the Operating Partnership's option, using either (i) LIBOR plus and applicable margin or (ii) the higher of
(a) the federal funds rates plus 0.50 percent plus an applicable margin, and
(b) the Citibank prime rate plus an applicable margin. The $100 million Credit Facility contains the same covenant requirements as the Credit Facility described above. As of June 30, 2008 there were no borrowings outstanding under the $100 million Credit Facility.

The Partnership entered into two standby letters of credit totaling $130.4 million. The letters of credit, which were effective January 1, 2008, are required in connection with certain crude oil exchange contracts in which the Partnership is a party. During the quarter, the Partnership met certain performance requirements defined within these contracts which reduced the letters of credit to $88.0 million. The letters of credit, which will expire in September 2008, are subject to commitment fees, which are not material.

Cash Flows and Capital Expenditures

Net cash provided by operating activities for the six months ended June 30, 2008 was $134.2 million compared with $53.4 million of net cash provided by operating activities for the first six months of 2007. Net cash provided by operating activities for the first six months of 2008 was primarily the result of net income of $88.8 million, depreciation and amortization of $19.5 million, the $5.7 million impairment charge, and an $18.7 million decrease in working capital. The decrease in working capital was the result of an increase in both accounts payable and accounts receivable activity driven primarily by commodity prices. Net cash provided by operating activities for the first six months of 2007 was primarily the result of net income of $47.5 million and depreciation and amortization of $18.3 million, partially offset by a $22.9 million increase in working capital. The increase in working capital was primarily attributable to an increase in revenues along with an increase in inventory volumes associated with contango inventory positions.

Net cash used in investing activities for the first six months of 2008 was $63.0 million compared with $63.8 million for the first six months of 2007.

Net cash used in financing activities for the first six months of 2008 was $71.2 million compared with $10.1 million net cash provided by financing activities for the first six months of 2007. Net cash used in financing activities for the first six months of 2008 resulted from $64.7 million in distributions paid to limited partners and the general partner and an increase in advances to affiliates of $6.2 million. Net cash provided by financing activities for the first six months of 2007 was the result of $71.9 million increase in net borrowings under the Partnership's Credit Facility to fund the Partnership's organic growth capital program, contango inventory positions, and to purchase a 50% undivided interest in a refined products terminal located in Syracuse, New York. This increase was partially offset by $57.3 million in distributions paid to limited partners and the general partner and $3.9 million in net advances to affiliates.

Under a treasury services agreement with Sunoco, the Partnership participates in Sunoco's centralized cash management program. Advances from affiliates in the Partnership's condensed consolidated balance sheets at June 30, 2008 represent amounts due to Sunoco under this agreement. Advances to affiliates at December 31, 2007 represent amounts due from Sunoco under this agreement.

Capital Requirements

The pipeline, terminalling, and crude oil transport operations are capital intensive, requiring significant investment to maintain, upgrade or enhance existing operations and to meet environmental and operational regulations. The capital requirements have consisted, and are expected to continue to consist, primarily of:

• Maintenance capital expenditures, such as those required to maintain equipment reliability, tankage and pipeline integrity and safety, and to address environmental regulations; and

• Expansion capital expenditures to acquire assets to grow the business and to expand existing and construct new facilities, such as projects that increase storage or throughput volume.

The following table summarizes maintenance and expansion capital expenditures, including net cash paid for acquisitions, for the periods presented (in thousands of dollars):

                                          Six Months Ended
                                              June 30,
                                          2008        2007
                          Maintenance   $   7,771   $  7,541
                          Expansion        44,724     56,274

                                        $  52,495   $ 63,815

Expansion capital expenditures for the six months ended June 30, 2008 were $44.7 million compared to $56.3 million for the first six months of 2007. The decrease is attributable to the $13.4 million acquisition of a 50 percent interest in the Syracuse, New York refined products terminal in 2007. Expansion capital for 2008 includes construction in progress, in connection with the Partnership's agreement with Motiva Enterprises LLC, of three crude oil storage tanks at its Nederland Terminal and a crude oil pipeline from Nederland to Motiva's Port Arthur, Texas refinery. Expansion capital also includes construction of five additional crude oil storage tanks at Nederland, of which two began construction during the second quarter of 2008. These five crude oil storage tanks will have a combined shell capacity of approximately 3.0 million barrels.

The Partnership expects to fund capital expenditures, including pending and future acquisitions, from both cash provided by operations and, to the extent necessary, from the proceeds of borrowings under the Credit Facility, other borrowings and the issuance of additional common units.