- Reported net income (controlling interests) of $191 million,
$0.30 earnings per share (EPS), versus prior year quarter's $296
million, $0.48 EPS - 2009 capital expansion program substantially
complete, delivering returns on capital of more than 12 percent -
exceeding the top end of targeted range - On track to achieve 2009
$1.15 ongoing EPS target HOUSTON, Nov. 5 /PRNewswire-FirstCall/ --
Spectra Energy Corp (NYSE:SE) today reported 2009 third quarter net
income from controlling interests of $191 million, or $0.30 EPS,
compared with $296 million, or $0.48 diluted EPS, in the prior year
quarter. Ongoing net income was $190 million, or $0.30 EPS, versus
$302 million, or $0.49 EPS, during the same period last year.
(Logo: http://www.newscom.com/cgi-bin/prnh/20061030/CLM051LOGO )
"Spectra Energy had a solid quarter. We saw good performance from
our fee-based businesses, which helped to offset the effects of
much lower commodity prices, and continued executing extremely well
on our capital expansion plan. Our 2009 expansion projects are
being completed on time and on budget and we are realizing returns
on these projects that exceed the high end of our expectations,"
said Greg Ebel, president and chief executive officer, Spectra
Energy Corp. "We are on track to meet the financial goals we have
set for the year, including our 2009 EPS target of $1.15 and, given
our 2010 expansion projects, we are well positioned to experience
good earnings growth," said Ebel. SEGMENT RESULTS U.S. Transmission
U.S. Transmission reported third quarter 2009 earnings before
interest and taxes (EBIT) of $239 million, compared with $213
million in third quarter 2008. The 2008 period included a $4
million charge for the final resolution of a customer bankruptcy
settlement. Ongoing EBIT for third quarter 2009 was $239 million
and, excluding the above special item, compares with $217 million
in the prior year quarter. The segment benefited from business
expansion projects and capitalization of previously expensed
project development costs. These earnings were partially offset by
lower gas processing revenues as a result of lower prices and
volumes, and a non-cash regulatory accounting adjustment related to
Southeast Supply Header. Distribution Distribution reported third
quarter 2009 EBIT of $48 million, compared with $44 million in
third quarter 2008. Excluding the effect of the weaker Canadian
dollar, earnings were $6 million higher this quarter. The segment
continued to benefit from higher storage and transportation
revenues during the period. Western Canada Transmission &
Processing Western Canada Transmission & Processing reported
third quarter 2009 EBIT of $84 million, compared with $113 million
during third quarter 2008. Excluding the effect of the weaker
Canadian dollar, earnings were $24 million lower than in 2008.
Improved revenues in the fee-based gathering and processing
business, due primarily to stronger activity in the Fort Nelson and
Grizzly Valley regions, were more than offset by lower Empress
earnings, primarily as a result of lower frac spreads. Frac spreads
at Empress averaged $6.75 for the quarter, compared with $10.86 in
third quarter 2008. Field Services Field Services reported third
quarter 2009 EBIT of $45 million, compared with $239 million in
third quarter 2008. The decrease in earnings was primarily driven
by lower commodity prices. During third quarter 2009, crude oil
averaged approximately $68 per barrel, compared with approximately
$118 per barrel in the prior year quarter and the NGL to crude
relationship averaged 42 percent versus 51 percent in third quarter
2008. Additionally, NYMEX natural gas averaged $3.39 per million
British thermal unit (MMBtu), compared with $10.24 per MMBtu during
the same period in 2008. Third quarter results were also affected
by higher interest expense and lower non-cash mark-to-market gains
on hedges used to protect distributable cash flow at DCP
Midstream's master limited partnership. The decrease in earnings
was partially offset by lower operating costs as a result of
continued cost reduction initiatives. For the quarter, DCP
Midstream paid distributions of $31 million to Spectra Energy. DCP
Midstream expects to have paid to Spectra Energy distributions
totaling approximately $100 million by the end of the year. Other
"Other" reported net costs of $10 million in third quarter 2009,
compared with net costs of $9 million in third quarter 2008.
Interest Expense Interest expense was $160 million for third
quarter 2009, compared with $163 million for third quarter 2008.
Income Taxes Third quarter 2009 income tax expense from continuing
operations was $54 million, compared with $145 million reported in
third quarter 2008. The decrease was primarily a result of lower
earnings in 2009, as well as a lower effective tax rate. The
effective tax rate was 20 percent in third quarter 2009, compared
with 32 percent in third quarter 2008. The lower effective tax rate
in third quarter 2009 is primarily the result of a higher
proportion of earnings coming from Canadian sources that are taxed
at lower rates, and favorable tax settlements. Special Items
Affecting Spectra Energy's EPS for the Quarters Include: (in
millions, except per-share amounts)
--------------------------------------- Net Income - Controlling
Pre-tax Interests EPS Amount Tax Effect Impact Impact -------
---------- ------------ ------ Third Quarter 2009 $- $- $- $- == ==
== == Third Quarter 2008 Customer Bankruptcy Settlement $(4) $1
$(3) $- --- -- --- -- Total Special Items $(4) $1 $(3) $- === ==
=== == Reconciliation of Reported to Ongoing Net Income (in
millions) ------------ Quarters Ended September 30, 2009 2008 ----
---- Net Income - Controlling Interests as Reported $191 $296
Adjustments to Reported Net Income - Controlling Interests: Special
Items - 3 Discontinued Operations (1) 3 --- - Ongoing Net Income
$190 $302 ==== ==== Reconciliation of Reported to Ongoing Diluted
EPS ------------------------------------------------- Quarters
Ended September 30, 2009 2008 ---- ---- Diluted EPS as Reported
$0.30 $0.48 Discontinued Operations - 0.01 - ---- Diluted EPS,
Ongoing $0.30 $0.49 ===== ===== Additional Information Additional
information about third quarter 2009 earnings can be obtained on
the Spectra Energy Web site: http://www.spectraenergy.com/. The
Analyst call is scheduled for 9 a.m. CT today, November 5, to
discuss Spectra Energy's third quarter results. The webcast can be
accessed on the Investors Section of Spectra Energy's Web site and
the conference call can be accessed by dialing (888) 252-3715 in
the United States or Canada, or (706) 634-8942 for International.
The conference code is "34956220" or "Spectra Energy Quarterly
Earnings Call." Please call five to ten minutes prior to the
scheduled start time. A replay of the call will be available until
7:00 p.m. CT, February 12, 2010, by dialing (800) 642-1687 with
conference ID 34956220. The international replay number is (706)
645-9291, with above conference ID. A replay and transcript also
will be available by accessing the Investors Section of the
company's Web site. Non-GAAP Financial Measures We use ongoing net
income and ongoing diluted EPS, which are non-GAAP financial
measures as they represent net income (controlling interests) and
diluted EPS, adjusted for special items and discontinued
operations, as measures to evaluate operations of the company.
Special items represent certain charges and credits which we
believe will not be recurring on a regular basis, and discontinued
operations do not represent our ongoing core business. We believe
that the presentation of ongoing net income and ongoing diluted EPS
provide useful information to investors, as it allows them to more
accurately compare our ongoing performance across periods. Ongoing
diluted EPS is also used as a basis for employee incentive bonuses.
The primary performance measure used by us to evaluate segment
performance is segment EBIT from continuing operations, which at
the segment level represents all profits from continuing operations
(both operating and non-operating) before deducting interest and
taxes, and is net of non-controlling interests related to those
profits. We consider segment EBIT from continuing operations, which
is the GAAP measure used to report segment results, to be a good
indicator of each segment's operating performance as it represents
the results of our ownership interests in operations without regard
to financing methods or capital structures. We also use ongoing
segment and Other EBIT as a measure of performance. Ongoing segment
and Other EBIT is a non-GAAP financial measure as it represents
reported segment and Other EBIT adjusted for special items. We
believe that the presentation of ongoing segment and Other EBIT
provide useful information to investors, as it allows them to more
accurately compare a segment's or Other's ongoing performance
across periods. The most directly comparable GAAP measure for
ongoing segment or Other EBIT is reported segment or Other EBIT,
which represents EBIT from continuing operations, including any
special items. Forward-Looking Statements This release includes
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements represent our
intentions, plans, expectations, assumptions and beliefs about
future events. One can typically identify forward-looking
statements by the use of forward-looking words such as: may, will,
could, project, believe, expect, estimate, continue, potential,
plan, forecast and other similar words. Such statements are subject
to risks, uncertainties and other factors, many of which are
outside our control and could cause actual results to differ
materially from the results expressed or implied by those
forward-looking statements. Those factors include: the
implementation of state, federal and foreign legislative and
regulatory initiatives that affect cost and investment recovery,
have an effect on rate structure, and affect the speed at and
degree to which competition enters the natural gas industries; the
outcome of litigation and regulatory investigations, proceedings or
inquiries; the effect of weather and other natural phenomena,
including the economic, operational and other effects of hurricanes
and storms; the timing and extent of changes in commodity prices,
interest rates and foreign currency exchange rates; our ability to
obtain financing on favorable terms, which can be affected by
various factors, including our credit ratings and general economic
conditions; the levels of supply and demand for natural gas in our
areas of operation; the results of financing efforts, including the
ability to obtain financing on favorable terms, which can be
affected by various factors, including credit ratings and general
market and economic conditions; increases in the cost of goods and
services required to complete capital projects; declines in the
market prices of equity and debt securities and resulting funding
requirements for defined benefit pension plans; the effects of
accounting pronouncements issued periodically by accounting
standard-setting bodies; the extent of success in connecting
natural gas supplies to gathering, processing and transmission
systems and in connecting to expanding gas markets; our ability to
identify opportunities for our business units and the timing and
success of efforts to develop pipeline, storage, gathering,
processing and other infrastructure projects; and our ability to
successfully complete and integrate future acquisitions. These
factors, as well as additional factors that could affect our
forward-looking statements, are described under the headings "Risk
Factors" and "Forward-Looking Statements" in our 2008 Form 10-K,
filed on February 27, 2009, and in our other filings made with the
Securities and Exchange Commission (SEC), which are available via
the SEC's Web site at http://www.sec.gov/. In light of these risks,
uncertainties and assumptions, the events described in the
forward-looking statements might not occur or might occur to a
different extent or at a different time than we have described. We
undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise. Spectra Energy Corp (NYSE:SE), a
FORTUNE 500 company, is one of North America's premier natural gas
infrastructure companies serving three key links in the natural gas
value chain: gathering and processing, transmission and storage,
and distribution. For nearly a century, Spectra Energy and its
predecessor companies have developed critically important pipelines
and related infrastructure connecting natural gas supply sources to
premium markets. Based in Houston, Texas, the company operates in
the United States and Canada approximately 19,100 miles of
transmission pipeline, more than 285 billion cubic feet of storage,
as well as natural gas gathering and processing, natural gas
liquids operations and local distribution assets. The company also
has a 50 percent ownership in DCP Midstream, one of the largest
natural gas gatherers and processors in the United States. Spectra
Energy was recently ranked by FORTUNE as the world's "most admired"
pipeline company. For more information, visit
http://www.spectraenergy.com/. Spectra Energy Corp Quarterly
Highlights September 2009 (Unaudited) (In millions, except
per-share amounts and where noted) Three Months Ended Nine Months
Ended September 30, September 30, ------------- ------------- 2009
2008 2009 2008 ------------ ---- ---- ---- ---- COMMON STOCK DATA
Earnings Per Share From Continuing Operations Basic $0.30 $0.49
$0.98 $1.54 Diluted $0.30 $0.48 $0.98 $1.53 Earnings Per Share
Basic $0.30 $0.48 $0.98 $1.53 Diluted $0.30 $0.48 $0.98 $1.52
Dividends Per Share $0.25 $0.25 $0.75 $0.71 Weighted-Average Shares
Outstanding Basic 646 615 640 626 Diluted 647 617 641 629 ------
INCOME Operating Revenues $933 $1,080 $3,254 $3,813 Total
Reportable Segment EBIT 416 609 1,372 1,926 Income from
Discontinued Operations, Net of Tax 1 (2) 3 (1) Net Income -
Controlling Interests 191 296 629 958 ----------------- EBIT BY
BUSINESS SEGMENT U.S. Transmission $239 $213 $690 $683 Distribution
48 44 240 263 Western Canada Transmission & Processing 84 113
223 333 Field Services 45 239 219 647 -- --- --- --- Total
Reportable Segment EBIT 416 609 1,372 1,926 Other EBIT (10) (9)
(46) (57) --- -- --- --- Total Reportable Segment and Other EBIT
$406 $600 $1,326 $1,869 ==== ==== ====== ====== ----------------
CAPITAL AND INVESTMENT EXPENDITURES (a) U.S. Transmission $635
$1,098 Distribution 171 274 Western Canada Transmission &
Processing 236 139 Other 21 24 -- -- Total Capital and Investment
Expenditures $1,063 $1,535 ====== ====== Sept. 30, Dec. 31, 2009
2008 -------------- ---- ---- CAPITALIZATION Common Equity -
Controlling Interests 39% 34% Noncontrolling Interests and
Preferred Stock 4% 4% Total Debt 57% 62% ----------- -------
------- Total Debt $10,204 $10,047 Book Value Per Share (b) $10.72
$9.07 Actual Shares Outstanding 647 611 (a) Includes loans to
affiliates for capital expansion projects. (b) Represents
controlling interests. Spectra Energy Corp Quarterly Highlights
September 2009 (Unaudited) (In millions, except where noted) Three
Months Nine Months Ended Ended September 30, September 30,
------------- ------------- 2009 2008 2009 2008 -----------------
---- ---- ---- ---- U.S. TRANSMISSION Operating Revenues $427 $402
$1,246 $1,205 Operating Expenses Operating, Maintenance and Other
126 156 390 433 Depreciation and Amortization 61 58 182 174 Gains
on Sales of Other Assets and Other, net 1 - 11 32 Other Income and
Expenses 19 39 60 94 Noncontrolling Interests 21 14 55 41 -- -- --
-- EBIT $239 $213 $690 $683 ---- ---- ---- ---- Proportional
Throughput, TBtu (a) 607 479 1,894 1,596 ------------ DISTRIBUTION
Operating Revenues $244 $280 $1,236 $1,433 Operating Expenses
Natural Gas Purchased 62 97 617 747 Operating, Maintenance and
Other 89 93 252 284 Depreciation and Amortization 44 45 126 138
Other Income and Expenses (1) (1) (1) (1) EBIT $48 $44 $240 $263
--- --- ---- ---- Number of Customers, thousands 1,315 1,300
Heating Degree Days, Fahrenheit 348 264 4,964 4,815 Pipeline
Throughput, TBtu 133 153 589 631 ---------------------------
WESTERN CANADA TRANSMISSION & PROCESSING Operating Revenues
$260 $397 $770 $1,174 Operating Expenses Natural Gas and Petroleum
Products Purchased 38 136 143 384 Operating, Maintenance and Other
103 110 299 342 Depreciation and Amortization 38 37 105 114 Other
Income and Expenses 3 (1) - - Noncontrolling Interests - - - 1 - -
- - EBIT $84 $113 $223 $333 --- ---- ---- ---- Pipeline Throughput,
TBtu 148 150 446 454 Volumes Processed, TBtu 163 183 494 526
Empress Inlet Volumes, TBtu 169 218 578 644 -------------- FIELD
SERVICES Equity in Earnings of DCP Midstream, LLC $45 $239 $219
$647 EBIT $45 $239 $219 $647 --- ---- ---- ---- Natural Gas
Gathered and Processed/Transported, TBtu/day (b) 7.0 6.6 7.0 7.1
Natural Gas Liquids Production, MBbl/d (b,c) 371 340 354 365
Average Natural Gas Price Per MMBtu (d) $3.39 $10.24 $3.93 $9.73
Average Natural Gas Liquids Price Per Gallon $0.69 $1.44 $0.63
$1.42 ----- OTHER Operating Revenues $12 $11 $36 $32 Operating
Expenses 30 19 90 85 Other Income and Expenses 8 (1) 8 (4) EBIT
$(10) $(9) $(46) $(57) ---- --- ---- ---- (a) Trillion British
thermal units (b) Includes 100% of DCP Midstream volumes (c)
Thousand barrels per day (d) Million British thermal units. Average
price based on NYMEX Henry Hub Spectra Energy Corp Condensed
Consolidated Statements of Operations (Unaudited) (In millions)
Three Months Nine Months Ended Ended September 30, September 30,
------------ ------------- 2009 2008 2009 2008 ---- ---- ---- ----
Operating Revenues $933 $1,080 $3,254 $3,813 Operating Expenses 581
740 2,170 2,669 Gains on Sales of Other Assets and Other, net 1 -
11 32 - --- -- ----- ----- Operating Income 353 340 1,095 1,176 ---
--- ----- ----- Other Income and Expenses 72 282 302 755 Interest
Expense 160 163 456 470 --- --- --- --- Earnings From Continuing
Operations Before Income Taxes 265 459 941 1,461 Income Tax Expense
From Continuing Operations 54 145 260 453 -- --- --- --- Income
From Continuing Operations 211 314 681 1,008 Income (Loss) From
Discontinued Operations, net of tax 1 (2) 3 (1) -- -- -- -- Net
Income 212 312 684 1,007 Net Income - Noncontrolling Interests 21
16 55 49 -- -- -- -- Net Income - Controlling Interests $191 $296
$629 $958 ==== ==== ==== ==== Spectra Energy Corp Condensed
Consolidated Balance Sheets (Unaudited) (In millions) September 30,
December 31, 2009 2008 ---- ---- ASSETS Current Assets $1,527
$1,450 Investments and Other Assets 6,306 5,950 Net Property, Plant
and Equipment 15,109 13,639 Regulatory Assets and Deferred Debits
996 885 --- --- Total Assets $23,938 $21,924 ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities $2,257
$3,044 Long-term Debt 9,347 8,290 Deferred Credits and Other
Liabilities 4,629 4,355 Preferred Stock of Subsidiaries 225 225
Stockholders' Equity 7,480 6,010 ----- ----- Total Liabilities and
Stockholders' Equity $23,938 $21,924 ======= ======= Spectra Energy
Corp Condensed Consolidated Statements of Cash Flows (Unaudited)
(In millions) Nine Months Ended September 30, ------------- 2009
2008 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net income $684
$1,007 Adjustments to reconcile net income to net cash provided by
operating activities 583 389 --- --- Net cash provided by operating
activities 1,267 1,396 ----- ----- CASH FLOWS FROM INVESTING
ACTIVITIES Net cash used in investing activities (732) (1,564) ----
------ CASH FLOWS FROM FINANCING ACTIVITIES Net cash provided by
(used in) financing activities (289) 354 ---- --- Effect of
exchange rate changes on cash (10) 1 --- -- Net increase in cash
and cash equivalents 236 187 Cash and cash equivalents at beginning
of period 214 94 --- -- Cash and cash equivalents at end of period
$450 $281 ==== ==== Spectra Energy Corp Reported to Ongoing
Earnings Reconciliation September 2009 Quarter-to-date (In
millions, except per-share amounts) Discon- tinued Total Reported
Special Opera- Adjust- Ongoing Earnings Items tions ments Earnings
-------- ------ ------ ------ -------- SEGMENT EARNINGS BEFORE
INTEREST AND TAXES FROM CONTINUING OPERATIONS U.S. Transmission
$239 $- $- $- $239 Distribution 48 - - - 48 Western Canada
Transmission & Processing 84 - - - 84 Field Services 45 - - -
45 --- --- --- --- --- Total Reportable Segment EBIT 416 - - - 416
Other (10) - - - (10) --- --- --- --- --- Total Reportable Segment
and Other EBIT $406 $- $- $- $406 === === === === === EARNINGS
Total Reportable Segment EBIT and Other EBIT $406 $- $- $- $406
Interest Expense (160) - - - (160) Interest Income and Other 19 - -
- 19 Income Taxes from Continuing Operations (54) - - - (54)
Discontinued Operations, Net of Tax 1 - (1) A (1) - --- --- --- ---
--- Total Earnings $212 $- $(1) $(1) $211 Total Earnings -
Noncontrolling Interests (21) - - - (21) --- --- --- --- --- Total
Earnings - Controlling Interests $191 $- $(1) $(1) $190 === === ===
=== === EARNINGS PER SHARE, BASIC $0.30 $- $- $- $0.30 === === ===
=== === EARNINGS PER SHARE, DILUTED $0.30 $- $- $- $0.30 === ===
=== === === A - Net results from Nevis and Brazeau River gathering
and processing facilities in Western Canada. Weighted Average
Shares (reported and ongoing) - in millions Basic 646 Diluted 647
Spectra Energy Corp Reported to Ongoing Earnings Reconciliation
September 2008 Quarter-to-date (In millions, except per-share
amounts) Discon- tinued Total Reported Special Opera- Adjust-
Ongoing Earnings Items tions ments Earnings -------- ------ ------
------ -------- SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM
CONTINUING OPERATIONS U.S. Transmission $213 $4 A $- $4 $217
Distribution 44 - - - 44 Western Canada Transmission &
Processing 113 - - - 113 Field Services 239 - - - 239 --- --- ---
--- --- Total Reportable Segment EBIT 609 4 - 4 613 Other (9) - - -
(9) --- --- --- --- --- Total Reportable Segment and Other EBIT
$600 $4 $- $4 $604 === === === === === EARNINGS Total Reportable
Segment EBIT and Other EBIT $600 $4 $- $4 $604 Interest Expense
(163) - - - (163) Interest Income and Other 22 - - - 22 Income
Taxes from Continuing Operations (145) (1) - (1) (146) Discontinued
Operations, Net of Tax (2) - 2 B 2 - --- --- --- --- --- Total
Earnings $312 $3 $2 $5 $317 Total Earnings - Noncontrolling
Interests (16) - 1 $1 (15) --- --- --- --- --- Total Earnings -
Controlling Interests $296 $3 $3 $6 $302 === === === === ===
EARNINGS PER SHARE, BASIC $0.48 $- 0.01 $0.01 $0.49 === === === ===
=== EARNINGS PER SHARE, DILUTED $0.48 $- 0.01 $0.01 $0.49 === ===
=== === === A - Bankruptcy settlement of a customer's
transportation contract. B - Net results from Nevis and Brazeau
River gathering and processing facilities in Western Canada.
Weighted Average Shares (reported and ongoing) - in millions Basic
615 Diluted 617
http://www.newscom.com/cgi-bin/prnh/20061030/CLM051LOGODATASOURCE:
Spectra Energy Corp CONTACT: Media: Wendy Olson, +1-713-627-4072,
+1-713-627-4747 (24-hour media line); Analysts: John Arensdorf,
+1-713-627-4600, both of Spectra Energy Corp Web Site:
http://www.spectraenergy.com/
Copyright