UGI : Consolidated Financial Statements for the year ended September 30, 2023

UGI ENERGY SERVICES, LLC

AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

and MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

for the years ended September 30, 2023 and 2022

UGI ENERGY SERVICES, LLC AND SUBSIDIARIES

TABLE OF CONTENTS

	Pages
Glossary of Terms and Abbreviations	3
Report of Independent Auditors	6
Financial Statements:
Consolidated Balance Sheets as of September 30, 2023 and 2022	8
Consolidated Statements of Comprehensive Income for the years ended September 30, 2023 and 2022	9
Consolidated Statements of Cash Flows for the years ended September 30, 2023 and 2022	10
Consolidated Statements of Changes in Member's Equity for the years ended September 30, 2023 and 2022	11
Notes to Consolidated Financial Statements	12
Management's Discussion and Analysis of Financial Condition and Results of Operations (Unaudited)	30

UGI ENERGY SERVICES, LLC AND SUBSIDIARIES

GLOSSARY OF TERMS AND ABBREVIATIONS

Terms and abbreviations used in this document are defined below:

UGI Energy Services and Related Entities

AmeriGas - AmeriGas Propane, L.P., an indirect wholly owned subsidiary of UGI

Aurum Renewables - Aurum Renewables LLC

Company - UGI Energy Services, LLC and its consolidated subsidiaries collectively

Energy Services - UGI Energy Services, LLC, a wholly owned subsidiary of Enterprises, or collectively, UGI Energy Services, LLC and its consolidated subsidiaries

Enterprises - UGI Enterprises, LLC, a wholly owned subsidiary of UGI

ESFC - Energy Services Funding Corporation, a wholly owned subsidiary of Energy Services

MBL Bioenergy - MBL Bioenergy, LLC, a joint venture partnership with the sole purpose of developing RNG projects in South Dakota.

Pennant - Pennant Midstream, LLC, an indirect wholly owned subsidiary of Energy Services

PennEast - PennEast Pipeline Company, LLC, formed to construct an approximate 120 mile natural gas pipeline from Luzerne County Pennsylvania to the Trenton-Woodbury interconnection in New Jersey. In September 2021 the partners of PennEast announced that further development of the pipeline project had ceased.

Pine Run - Pine Run Gathering, LLC

Stonehenge - Stonehenge Appalachia, LLC, a midstream natural gas gathering business

UGI - UGI Corporation

UGI Dakota, LLC - A wholly owned subsidiary of Energy Services that holds a 99.99% membership interest in MBL Bioenergy

UGI Moraine East - UGI Moraine East Gathering LLC, a wholly owned subsidiary comprising the assets acquired in the Stonehenge Acquisition

UGI PennEast, LLC - A wholly owned subsidiary of Energy Services that holds a 20% membership interest in PennEast UGI Pine Run, LLC - A wholly owned subsidiary of Energy Services that holds a 49% membership interest in Pine Run UGI Utilities - UGI Utilities, Inc., a wholly owned subsidiary of UGI comprising PA Gas Utility and Electric Utility UGID - UGI Development Company, a wholly owned subsidiary of Energy Services

Other Terms and Abbreviations

AFUDC - Allowance for Funds Used During Construction

AOCI - Accumulated Other Comprehensive Income (Loss)

ARO - Asset Retirement Obligation

ASC - Accounting Standards Codification

ASC 606 - ASC 606, "Revenue from Contracts with Customers"

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UGI ENERGY SERVICES, LLC AND SUBSIDIARIES

ASC 820 - ASC 820, "Fair Value Measurement"

ASC 980 - ASC 980, "Regulated Operations"

ASU - Accounting Standards Update

CMG - Columbia Midstream Group, LLC

Energy Services Amended Term Loan Credit Agreement - The first amendment to the Energy Services Term Loan Credit Agreement, entered into on February 23, 2023, comprising an $800 million variable-rate term loan with a final maturity of February 2030

Energy Services Credit Agreement - A five-year unsecured revolving credit agreement, as amended, entered into by Energy Services on March 6, 2020, providing for borrowings up to $260 million, including a letter of credit subfacility of up to $50 million, scheduled to expire in March 2025.

Energy Services Term Loan Credit Agreement - A seven-year $700 million variable rate senior secured term loan agreement entered into on August 13, 2019, by Energy Services which was amended on February 23, 2023 and referred to thereafter as the

Energy Services Amended Term Loan Credit Agreement

FERC - Federal Energy Regulatory Commission

Fiscal 2021 - The fiscal year ended September 30, 2021

Fiscal 2022 - The fiscal year ended September 30, 2022

Fiscal 2023 - The fiscal year ending September 30, 2023

Fiscal 2024 - The fiscal year ending September 30, 2024

Fiscal 2025 - The fiscal year ending September 30, 2025

Fiscal 2026 - The fiscal year ending September 30, 2026

Fiscal 2027 - The fiscal year ending September 30, 2027

Fiscal 2028 - The fiscal year ending September 30, 2028

GAAP - U.S. generally accepted accounting principles

ICE - Intercontinental Exchange

LNG - Liquefied natural gas

MBL Bioenergy - MBL Bioenergy, LLC

NOL - Net operating loss

NPNS - Normal purchase and normal sale

NYMEX - New York Mercantile Exchange

Pennant Acquisition - Energy Services' Fiscal 2022 acquisition of the remaining 53% equity interest in Pennant

PennEnergy - PennEnergy Resources, LLC

PJM - PJM Interconnection, LLC

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UGI ENERGY SERVICES, LLC AND SUBSIDIARIES

Receivables Facility - A receivables purchase facility of Energy Services with an issuer of receivables-backed commercial paper

ROU - Right-of-use

RNG - Renewable natural gas

SCAA - Storage Contract Administrative Agreement

Stonehenge Acquisition - Acquisition of Stonehenge Appalachia, LLC, which closed January 27, 2022 Term SOFR - Secured Overnight Financing Rate

U.S. - United States of America

USD - U.S. Dollar

VIE - Variable Interest Entity

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Ernst & Young LLP	Tel: [phone]
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Suite 700	ey.com
2005 Market Street
Philadelphia, PA 19103

Report of Independent Auditors

To the Member and Management of UGI Energy Services, LLC

Opinion

We have audited the consolidated financial statements of UGI Energy Services, LLC and Subsidiaries (the Company), which comprise the consolidated balance sheets as of September 30, 2023 and 2022, and the related consolidated statements of comprehensive income, cash flows and changes in member's equity for the years then ended, and the related notes (collectively referred to as the "financial statements").

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2023 and 2022, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Basis for Opinion

We conducted our audits in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Responsibilities of Management for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year after the date that the financial statements are available to be issued.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free of material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve

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collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements.

In performing an audit in accordance with GAAS, we:

• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. Accordingly, no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for a reasonable period of time.

We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit.

December 15, 2023

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UGI ENERGY SERVICES, LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Millions of dollars)

		September 30,
		2023			2022
ASSETS
Current assets:
Cash and cash equivalents	$	28	$	62
Restricted cash		42			43
Accounts receivable (less allowances for doubtful accounts of $2 and $2, respectively)		116			243
Accounts receivable - related parties		20			27
Inventories		25			59
Derivative instruments		6			61
Prepaid expenses and other current assets		59			61
Total current assets		296			556
Property, plant and equipment:
Gross property, plant and equipment		2,401			2,311
Accumulated depreciation		(432)			(377)
Net property, plant and equipment		1,969			1,934
Goodwill		337			337
Intangible assets, net		236			250
Derivative instruments		6			49
Investments in equity method investees		264			110
Other assets		43			45
Total assets	$	3,151	$	3,281
LIABILITIES AND MEMBER'S EQUITY
Current liabilities:
Current maturities of long-term debt	$	12	$	10
Short-term borrowings		103			-
Accounts payable		84			211
Accounts payable - related parties		15			12
Derivative instruments		17			29
Other current liabilities		29			51
Total current liabilities		260			313
Long-term debt		808			700
Deferred income taxes		275			301
Derivative instruments		23			16
Other noncurrent liabilities		40			14
Total liabilities		1,406			1,344
Member's equity		1,745			1,937
Total liabilities and member's equity	$	3,151	$	3,281

See accompanying notes to consolidated financial statements.

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UGI ENERGY SERVICES, LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Millions of dollars)

		Year Ended
		September 30,
		2023			2022
Revenues	$	1,853	$	2,322
Costs and expenses:
Cost of sales (excluding depreciation and amortization shown below)		1,596			1,897
Operating and administrative expenses		132			129
Depreciation and amortization		86			79
Other operating income, net		(17)			(4)
		1,797			2,101
Operating income		56			221
Income (loss) from equity method investees		6			(12)
Interest expense		(45)			(41)
Income before income taxes		17			168
Income tax benefit (expense)		13			(24)
Net income	$	30	$	144
Other comprehensive income:
Net gains on derivative instruments (net of tax of $(4) and $(13), respectively)		9			32
Reclassifications of net (gains) losses on derivative instruments (net of tax of $7 and $(1),		(16)			4
respectively)
Other comprehensive (loss) income		(7)			36
Comprehensive income	$	23	$	180

See accompanying notes to consolidated financial statements.

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UGI ENERGY SERVICES, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Millions of dollars)
		Year Ended
		September 30,
		2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	30	$	144
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		86			79
Deferred income tax benefit, net		(22)			(4)
Changes in unrealized gains and losses on derivative instruments		230			14
(Income) loss from equity method investees		(6)			12
Distributions received from equity method investees		-			19
Settlement of interest rate swap, net of amortization		19			-
Other, net		7			9
Net change in:
Accounts receivable		120			(145)
Inventories		34			(23)
Accounts payable		(134)			84
Derivative instruments collateral (paid) received		(134)			8
Other current assets		2			(10)
Other current liabilities		(22)			10
Net cash provided by operating activities		210			197
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property, plant and equipment		(126)			(38)
Acquisitions of assets, net of cash acquired		-			(242)
Investments in equity method investments		(119)			(34)
Other, net		-			11
Net cash used by investing activities		(245)			(303)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions		(215)			-
Increase in short-term borrowings		57			-
Receivables Facility net borrowings		46			-
Issuances of debt, net of discount and issuance costs		792			-
Repayments of debt		(680)			(7)
Net cash used by financing activities		-			(7)
Cash, cash equivalents and restricted cash decrease	$	(35)	$	(113)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
End of year	$	70	$	105
Beginning of year		105			218
Cash, cash equivalents and restricted cash decrease	$	(35)	$	(113)
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Interest	$	21	$	40
Income taxes	$	1	$	20

See accompanying notes to consolidated financial statements.

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