Results of Operations - Three Months Ended September 30, 2009 and 2008

                         Sunoco Logistics Partners L.P.

                              Operating Highlights

                 Three Months Ended September 30, 2009 and 2008



                                                                 Three Months Ended
                                                                   September 30,
                                                                 2009          2008
Refined Products Pipeline System:(1)(2)(3)
Total shipments (barrel miles per day)(4)                     56,848,807    43,769,684
Revenue per barrel mile (cents)                                    0.612         0.638
Terminal Facilities:
Terminal throughput (bpd):
Refined product terminals(3)(5)                                  465,206       437,018
Nederland terminal                                               559,874       545,105
Refinery terminals(6)                                            609,020       646,478
Crude Oil Pipeline System:(1)(2)(7)
Crude oil pipeline throughput (bpd)                              610,856       649,274
Crude oil purchases at wellhead (bpd)                            176,643       176,739
Gross margin per barrel of pipeline throughput (cents) (8)          46.4          57.2

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

(2) Effective January 1, 2009 the Partnership realigned its operating segments. Prior period amounts have been recast to reflect the current operating segments.

(3) Includes results of the Partnership's purchase of the MagTex refined products pipeline and terminals system from the acquisition date.

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

(5) Includes results of the Partnership's purchase of the Romulus, MI refined products terminal from the acquisition date.

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

(7) Includes results of the Partnership's purchase of the Excel pipeline from the acquisition date.

(8) 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 $48.5 million for the third quarter 2009 as compared with $50.3 million for the third quarter 2008, a decrease of $1.9 million. Operating income for the third quarter 2009 increased $2.0 million from the prior year's third quarter due to the increased terminal storage fees and throughput and the results of the MagTex refined products pipeline and terminal acquisition, partially offset by lower lease acquisition results.

Net interest expense increased $3.9 million to $11.4 million for the third quarter 2009 due primarily to higher borrowings associated with the $185.4 million MagTex acquisition, organic growth initiatives, and increased contango inventory positions.

Analysis of Segment Operating Income

On January 1, 2009 the Partnership realigned its reporting segments. Prior to this date, the reporting segments were designated by geographic region. The Partnership has determined it more meaningful to functionally align its reporting segments. As such, the updated reporting segments as of January 1, 2009 are Refined Products Pipeline System, Terminal Facilities, and Crude Oil Pipeline System. The primary difference in the new reporting is the consolidation of an eastern area crude oil pipeline with the western area crude oil pipelines. For comparative purposes all prior year amounts have been recast to reflect the new segment reporting and these changes do not impact consolidated net income.

Refined Products Pipeline System

Operating income for the Refined Products Pipeline System increased $3.8 million to $13.3 million for the third quarter ended September 30, 2009 compared to the prior year's third quarter. Sales and other operating revenue increased by $6.3 million to $32.0 million due primarily to results from the Partnership's acquisition of the MagTex refined products pipeline and terminals system and increased pipeline fees. Other income increased $1.6 million due primarily to increased income associated with the Partnership's joint venture interests. Operating expenses increased $3.3 million to $14.4 million for the third quarter 2009 due primarily to the MagTex acquisition and a reduction in refined product operating gains. Depreciation and amortization expense increased for the three months ended September 30, 2009 primarily due to the MagTex acquisition.

Terminal Facilities

Operating income for the Terminal Facilities segment increased by $7.0 million to $20.7 million for the third quarter ended September 30, 2009 compared to the prior year's third quarter. Sales and other operating revenue increased by $5.6 million to $46.2 million due primarily to increased throughput, higher fees and additional tankage at the Nederland terminal facility. Results from the MagTex refined products terminals further contributed to the increase in revenues. Cost of goods sold and operating expenses decreased by $2.2 million to $15.7 million for the third quarter of 2009 due to absence of charges associated with hurricane damages recognized in 2008, which was partially offset by costs associated with the MagTex acquisition. Depreciation and amortization expense increased to $5.2 million for the third quarter of 2009 due to increased tankage at the Nederland facility and the MagTex acquisition.

Crude Oil Pipeline System

Operating income for the Crude Oil Pipeline system decreased $8.8 million to $26.0 million for the third quarter of 2009 compared to the prior year's third quarter due to lower lease acquisition results and reduced operating gains. Lower lease acquisition income resulted from minimal income during the quarter from the contango market structure due to timing of inventory accounting. However, contango inventory positions put in place during the quarter will result in $10.0 million of additional income which is expected to be recognized over the next two quarters. Other income increased $0.9 million compared to the prior year's quarter due primarily to increased equity income associated with the Partnership's joint venture interests.

Lower crude oil prices were a key driver of the overall decrease 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 decreased to $68.29 per barrel for the third quarter of 2009 from $118.13 per barrel for the third quarter of 2008.

Results of Operations - Nine Months Ended September 30, 2009 and 2008

                         Sunoco Logistics Partners L.P.

                              Operating Highlights

                 Nine Months Ended September 30, 2009 and 2008



                                                                 Nine Months Ended
                                                                   September 30,
                                                                 2009          2008
Refined Products Pipeline System:(1)(2)(3)
Total shipments (barrel miles per day)(4)                     58,145,900    44,128,921
Revenue per barrel mile (cents)                                    0.596         0.609
Terminal Facilities:
Terminal throughput (bpd):
Refined product terminals(3)(5)                                  462,969       428,146
Nederland terminal                                               619,297       541,517
Refinery terminals(5)                                            597,191       647,891
Crude Oil Pipeline System:(1)(2)(7)
Crude oil pipeline throughput (bpd)                              648,183       672,877
Crude oil purchases at wellhead (bpd)                            183,047       175,209
Gross margin per barrel of pipeline throughput (cents) (8)          77.5          52.2

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

(2) Effective January 1, 2009 the Partnership realigned its operating segments. Prior period amounts have been recast to reflect the current operating segments.

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

(5) Includes results of the Partnership's purchase of the Romulus, MI refined products terminal from the acquisition date.

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

(7) Includes results of the Partnership's purchase of the Excel pipeline from the acquisition date.

(8) 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 $196.0 million for the nine month period ended September 30, 2009 as compared with $139.2 million for the comparable period in 2008. The increase was the result of a $66.2 million increase in operating income driven by significantly higher lease acquisition results, contribution from the MagTex acquisition and increased crude oil pipeline and storage revenues.

Net interest expense increased $9.4 million to $32.6 million for the first nine months of 2009 due primarily to higher borrowings associated with the $185.4 million MagTex acquisition, organic growth initiatives, and increased contango inventory positions.

Analysis of Segment Operating Income

On January 1, 2009 the Partnership realigned its reporting segments. Prior to this date, the reporting segments were designated by geographic region. The Partnership has determined it more meaningful to functionally align its reporting segments. As such, the updated reporting segments as of January 1, 2009 are Refined Products Pipeline System, Terminal Facilities, and Crude Oil Pipeline System. The primary difference in the new reporting is the consolidation of an eastern area crude oil pipeline with the western area crude oil pipelines. For comparative purposes all prior year amounts have been recast to reflect the new segment reporting and these changes do not impact consolidated net income.

Refined Products Pipeline System

Operating income for the Refined Products Pipeline System increased $9.7 million to $34.4 million for the nine months ended September 30, 2009 compared to the prior year period. Sales and other operating revenue increased by $21.1 million to $94.6 million due primarily to results from the MagTex acquisition described above, along with increased pipeline fees. Other income increased $2.7 million compared to the prior year period as a result of an increase in equity income associated with the Partnership's joint venture interests. Operating expenses increased by $10.1 million to $43.7 million due primarily to the MagTex acquisition, a reduction in refined products operating gains and increased environmental remediation expenses. Depreciation and amortization expense increased $2.9 million during the first nine months of 2009 due primarily to the MagTex acquisition.

Terminal Facilities

Operating income for the Terminal Facilities segment increased by $20.3 million to $63.1 million for the nine months ended September 30, 2009 compared to the prior year period. Sales and other operating revenue increased by $20.1 million to $139.4 million due primarily to increased terminal fees, additional tankage at the Nederland terminal facility, along with the MagTex acquisition. Other income increased $0.6 million from the first nine months of 2009 as a result of an insurance recovery associated with the Partnership's refinery terminals. Cost of goods sold and operating expenses increased by $2.9 million to $48.4 million for the period ended September 30, 2009 due primarily to the MagTex acquisition partially offset by reduced expenses associated with hurricane damages noted above. Depreciation and amortization expense increased to $14.5 million for the first nine months of 2009 due to the MagTex acquisition and increased tankage at the Nederland facility. During 2008, a $5.7 million non-cash impairment charge was recognized related to the Partnership's decision to discontinue efforts to expand LPG storage capacity at its Inkster, Michigan facility.

Crude Oil Pipeline System

Operating income for the Crude Oil Pipeline system increased $36.2 million to $131.1 million for the first nine months of 2009 compared to the prior year period due primarily to significantly higher lease acquisition earnings primarily as a result of the contango market structure and increased pipeline fees, which were partially offset by a reduction in pipeline operating gains. Other income decreased $1.8 million compared to the prior year's quarter due primarily to decreased equity income associated with the Partnership's joint venture interests and an insurance gain recognized in 2008.

Lower crude oil prices were a key driver of the overall decrease in total revenue, cost of products sold and operating expenses from the prior year period. The average price of West Texas Intermediate crude oil at Cushing, Oklahoma decreased to $57.13 per barrel for the first nine months of 2009 from $113.38 per barrel for the first nine months of 2008.

Liquidity and Capital Resources

Liquidity

Cash generated from operations and borrowings under the $400 million Credit Facility and the $62.5 million Credit Facility are the Partnership's primary sources of liquidity. At September 30, 2009, the Partnership had available borrowing capacity under the credit facilities of $167.5 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 $290.7 million at September 30, 2009. The Partnership periodically supplements its cash flows from operations with proceeds from debt and equity financing activities.

In February 2009, Sunoco Logistics Partners Operations L.P. (the "Operating Partnership") issued $175 million of 8.75 percent Senior Notes, due February 15, 2014 ("2014 Senior Notes"). The 2014 Senior Notes are redeemable, at a make-whole premium, and are not subject to sinking fund provisions. The 2014 Senior Notes contain various covenants limiting the Operating Partnership's ability to incur certain liens, engage in sale/leaseback transactions, or merge, consolidate or sell substantially all of its assets. The net proceeds from the 2014 Senior Notes were used to repay outstanding borrowings under the $400 million Credit Facility, which were associated with the MagTex acquisition.

In April and May 2009, the Partnership completed a public offering of 2.25 million common units. Net proceeds of $109.5 million were used to reduce outstanding borrowings under the Partnership's $400 million revolving credit facility and for general partnership purposes. In connection with these offerings, the general partner contributed $2.3 million to the Partnership to maintain its 2.0 percent general partner interest.

Capital Resources

$400 Million Credit Facility

The Operating 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, 2008, there was $323.4 million outstanding under the credit facility. During the first nine months of 2009, the Partnership had a net repayment of $64.7 million resulting in an outstanding balance of $258.7 million at September 30, 2009.

The $400 million 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 $400 million 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, f) or enter into a merger or sale of assets, including the sale or transfer of interests in the Operating Partnership's subsidiaries. The $400 million Credit Facility also limits the Operating Partnership, on a rolling four-quarter basis, to 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 September 30, 2009. The Partnership's ratio of total debt to EBITDA was 2.4 to 1 at September 30, 2009.

$62.5 Million Credit Facility

On March 13, 2009, the Operating Partnership entered into a $62.5 million revolving credit facility ("$62.5 million Credit Facility") with a syndicate of 2 participating financial institutions. The $62.5 million Credit Facility is available to fund the Operating Partnership's working capital requirements, to finance future acquisitions and for general partnership purposes. The $62.5 million Credit Facility matures in September 2011 and may be repaid at any time. It bears interest at the Operating Partnership's option, at either (i) LIBOR plus an applicable margin or (ii) the higher of (a) the federal funds rate plus 0.50 percent plus an applicable margin, (b) Toronto Dominion's prime rate plus an applicable margin or (c) LIBOR plus 1.0 percent plus an applicable margin. The $62.5 million Credit Facility contains various covenants similar to the $400 million credit facility and also requires the Operating Partnership to maintain, on a rolling four-quarter basis, a maximum total debt to EBITDA ratio of 4.0 to 1, which can generally be increased to 4.5 to 1 during an acquisition period. The Operating Partnership is in compliance with this requirement as of September 30, 2009. As of September 30, 2009, the Partnership had outstanding borrowings of $31.3 million under the $62.5 million credit facility. As noted above, the Partnership's ratio of total debt to EBITDA was 2.4 to 1 at September 30, 2009.

Cash Flows and Capital Expenditures

Net cash provided by operating activities for the nine months ended September 30, 2009 was $37.6 million compared with $196.9 million of net cash provided by operating activities for the first nine months of 2008. The net cash provided by operating activities in 2009 related to net income of $196.0 million and non-cash charges of depreciation and amortization of $35.3 million offset by a $186.8 million increase in working capital. The increase in working capital was the result of increases in accounts receivable and contango inventory positions partially offset by an increase in accounts payable. Net cash provided by operating activities for the first nine months of 2008 was primarily the result of net income of $139.2 million, depreciation and amortization of $29.5 million, the $5.7 million impairment charge, and a $23.8 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 used in investing activities for the nine months of 2009 was $158.8 million compared with $99.5 million for the first nine months of 2008. Net cash provided by financing activities for the first nine months of 2009 was $121.2 million compared with $97.4 million net cash used in financing activities for the first nine months of 2008. Net cash provided by financing activities for the first nine months of 2009 resulted from $173.3 million issuance of senior notes and $109.5 million public offering completed in April and May of 2009. The net proceeds from these sources were partially offset by $126.5 million in distributions paid to limited partners and the general partner and $33.4 million net repayment of the Partnership's credit facilities. Net cash provided by financing activities was utilized to finance operating and investing activities, including contango inventory positions. Net cash used in financing activities for the first nine months of 2008 resulted from $100.1 million in distributions paid to limited partners and the general partner and an increase in advances to affiliates of $8.8 million offset by $10.0 million of net borrowings from the Partnership's credit facilities.

Under a treasury services agreement with Sunoco, the Partnership participates in Sunoco's centralized cash management program. Advances to affiliates in the Partnership's condensed consolidated balance sheets at September 30, 2009 and December 31, 2008 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):

                                         Nine Months Ended
                                           September 30,
                                          2009        2008
                         Maintenance   $   15,326   $ 15,655
                         Expansion        143,477     73,389

                                       $  158,803   $ 89,044

Management continues to expect maintenance capital expenditures to be approximately $32.0 million for the year ended December 31, 2009, excluding reimbursements from Sunoco in accordance with the terms of certain agreements. Maintenance capital expenditures for both periods presented include recurring expenditures such as pipeline integrity costs, pipeline relocations, repair and upgrade of field instrumentation, including measurement devices, repair and replacement of tank floors and roofs, upgrades of cathodic protection systems, crude trucks and related equipment, and the upgrade of pump stations.

Expansion capital expenditures for the nine months ended September 30, 2009 were $143.5 million compared to $73.4 million for the first nine months of 2008. Expansion capital expenditures for 2009 include the acquisitions of a refined products terminal in Romulus, MI and Excel Pipeline LLC, the owner of a crude oil pipeline which services Gary Williams' Wynnewood, OK refinery. Expansion capital for 2009 also includes construction in progress, pursuant to the Partnership's agreement with Motiva Enterprises LLC to construct three crude oil storage tanks at its Nederland Terminal with a combined capacity of 1.8 million shell barrels and a crude oil pipeline from Nederland to Motiva's Port Arthur, Texas refinery. Expansion capital also includes refined products terminal optimization and construction of two additional crude oil storage tanks at Nederland. These two crude oil storage tanks will have a total capacity of approximately 1.2 million shell barrels. Management expects to invest approximately $175.0 million to $200.0 million in expansion capital projects in 2009.

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 its credit facilities, other borrowings and the issuance of additional common units.