HOUSTON, Aug. 3, 2016 /PRNewswire/ -- Spectra Energy Corp
(NYSE: SE) today reported net income of $221
million, including net income from controlling interests of
$149 million, for the second quarter
ended June 30, 2016, with diluted
earnings per share of $0.21. The
second quarter included non-recurring special items. After income
taxes of $12 million, non-recurring
special items decreased diluted earnings per share by $0.03.
Second Quarter Highlights:
- Execution backlog grows to $10
billion with $1.8 billion of
new demand-pull contracts
- Projects in execution continue to advance
- Close of ~$200 million sale of
Empress NGL business expected this week
- 2Q 2016 dividend of $0.405 per
share, compared with $0.37 per share
in 2Q 2015
- Continue to expect full-year dividend coverage of 1.2
times
For the quarter, ongoing earnings before interest, taxes,
depreciation and amortization (EBITDA) were $655 million,
compared with $652 million in the prior-year quarter.
Ongoing distributable cash flow for the quarter was $271
million, compared with $285 million in the same quarter
last year.
For the quarter, ongoing net income from controlling interests
was $169 million, or $0.24 diluted earnings per
share, compared with $156 million, or $0.23 diluted
earnings per share in second quarter 2015. Net income from
controlling interests was $149 million,
or $0.21 diluted earnings per share, compared
with $18 million, or $0.03 diluted earnings per share in second
quarter 2015.
CEO COMMENT
"Spectra Energy achieved another solid quarter thanks to the
strength of our diversified portfolio, and our earnings remain in
line with the overall expectations we set at the beginning of the
year," said Greg Ebel, chief
executive officer, Spectra Energy. "Not only are we making
significant progress advancing our projects already in execution,
but our project backlog continues to grow, reaching $10 billion this quarter. Notably, we secured the
$1.5 billion Valley Crossing Pipeline
project to serve Mexico's
developing natural gas market. Our excellent liquidity and
investment-grade balance sheet, as well as our access to multiple
financing options, continue to be significant competitive
advantages. These advantages, combined with our limited commodity
exposure, give us confidence in our ability to deliver on our
commitments to our investors."
EFFECTS OF SPECIAL ITEMS
Second Quarter
2016
|
|
|
|
|
|
|
($MM)
|
Segment
|
EBITDA
|
Income
Tax Effect
|
Net
Income(1)
|
|
DCF
|
Ongoing
|
|
$
655
|
$
(64)
|
$
169
|
|
$
271
|
Adjustments
related to Special Items
|
|
|
|
|
|
|
Costs related to
Texas Eastern pipeline incident
|
|
|
|
|
|
|
Self-insurance
reserve
|
Other
|
$
(10)
|
$
4
|
$
(6)
|
|
$
(10)
|
Inspection and repair
costs
|
SEP
|
(6)
|
2
|
(3)(2)
|
|
(6)
|
Effects of flooding
in British Columbia
|
W. Canada
|
(3)
|
1
|
(2)
|
|
(3)
|
Employee and overhead
reduction costs
|
W. Canada
|
(6)
|
2
|
(4)
|
|
(6)
|
Employee and overhead
reduction costs
|
Field
Services
|
(5)
|
2
|
(3)
|
|
-
|
Loss on asset
sale
|
Field
Services
|
(3)
|
1
|
(2)
|
|
-
|
Total Special
Items
|
|
$
(33)
|
$
12
|
$
(20)
|
|
$
(25)
|
Reported
|
|
$
622
|
$
(52)
|
$
149
|
|
$
246
|
(1) Represents net
income from controlling interests
(2) Net of
non-controlling interests of $1 million
|
Second Quarter
2015
|
|
|
|
|
|
($MM)
|
Segment
|
EBITDA
|
Income
Tax Effect
|
Net
Income(1)
|
DCF
|
Ongoing
|
|
$
652
|
$
(72)
|
$
156
|
$
285
|
Adjustments
related to Special Items
|
|
|
|
|
|
Employee and overhead
reduction costs
|
W. Canada
|
$
(11)
|
$
3
|
$
(8)
|
$
(11)
|
Goodwill
impairment
|
Field
Services
|
(194)
|
72
|
(122)
|
-
|
Loss on asset
sales
|
Field
Services
|
(12)
|
4
|
(8)
|
-
|
Total Special
Items
|
|
$
(217)
|
$
79
|
$
(138)
|
$
(11)
|
Reported
|
|
$
435
|
$
7
|
$
18
|
$
274
|
(1) Represents net
income from controlling interests
|
SEGMENT RESULTS
Spectra Energy Partners
Ongoing EBITDA from Spectra Energy Partners was $477 million in second quarter 2016, compared
with $478 million in second quarter
2015. Second quarter 2016 results exclude a special item of
$6 million in expense. These results
reflect increased earnings from expansion projects and the absence
of equity earnings from Sand Hills and Southern Hills natural gas
liquids (NGL) pipelines, which Spectra Energy Partners owned until
October 2015. Earnings from these NGL
pipeline interests are now reflected in the Field Services segment.
These results were partially offset by a positive property tax
adjustment in second quarter 2015.
Distribution
Despite a lower Canadian dollar, Distribution second quarter
2016 EBITDA was $104 million,
compared with $98 million in second
quarter 2015. This increase was mainly due to incremental earnings
from the 2015 Dawn-Parkway expansion project and higher storage
margins, as well as colder weather.
Western Canada Transmission & Processing
Ongoing EBITDA from Western Canada Transmission & Processing
was $106 million in second quarter
2016, compared with $115 million in
second quarter 2015. The 2016 and 2015 periods exclude special
items of $9 million and $11 million in expenses, respectively. In line
with our expectations, the segment's results reflect lower
gathering and processing revenues, lower earnings at Empress, and a
lower Canadian dollar, largely offset by lower plant turnaround
costs.
Field Services
Ongoing EBITDA from Field Services was $(6) million in second quarter 2016, compared
with $(27) million in second quarter
2015. The 2016 and 2015 periods exclude special items of
$8 million and $206 million in expenses, respectively. The
results for the quarter reflect higher earnings attributable to
favorable contract realignment efforts, continued cost-saving
initiatives and asset growth. These increases were partially offset
by lower commodity prices and lower-margin volume declines. As a
reminder, Spectra Energy's EBITDA from Field Services represents
the company's 50 percent share of DCP Midstream's net income plus
gains from DPM unit issuances.
During the second quarters of 2016 and 2015, respectively, NGL
prices averaged $0.46 per gallon
versus $0.48 per gallon, NYMEX
natural gas averaged $1.95 per
million British thermal units (MMBtu) versus $2.64 per MMBtu, and crude oil averaged
approximately $46 per barrel versus
$58 per barrel.
Other
Ongoing net expenses from "Other" were $26 million and $12
million in the second quarters of 2016 and 2015,
respectively. The 2016 period excludes a special item of
$10 million in expense. These results
reflect higher employee benefits costs, driven by an improvement in
the company's stock price, and an increase in business development
costs. "Other" primarily consists of corporate expenses, including
benefits and captive insurance.
Interest Expense
Interest expense was $153 million
in second quarter 2016, compared with $166
million in second quarter 2015, reflecting higher
capitalized interest.
Income Tax Expense
Income tax expense was $52 million
in second quarter 2016, compared with an income tax benefit of
$7 million in second quarter 2015,
with effective tax rates of 19 percent and negative 10 percent,
respectively. The 2015 period reflects a $72
million tax benefit reported as a special item related to a
goodwill impairment at DCP Midstream.
Foreign Currency
Net income from controlling interests for the quarter was higher
by $2 million due to a lower Canadian
dollar.
Liquidity and Capital Expenditures
Total debt outstanding at Spectra Energy as of June 30, 2016, was $14.8
billion, with available liquidity of $3.5 billion. Including contributions from
noncontrolling interests, Spectra Energy has $3.0 billion of capital expansion spending
planned in 2016, $1.8 billion of
which will be at Spectra Energy Partners.
Including contributions from noncontrolling interests of
$81 million, total capital spending
in second quarter 2016 was $860
million, comprised of $704
million of growth capital expenditures and $156 million of maintenance capital
expenditures.
In April 2016, Spectra Energy
issued 16.1 million common shares to the public for total net
proceeds of $479 million. The
proceeds were used to purchase 10.4 million common units from
Spectra Energy Partners.
EXPANSION PROJECT UPDATES
Spectra Energy continues to make progress on securing
$35 billion in new projects by the
end of the decade. At the end of second quarter 2016, the company
had:
- $10.3 billion – in service and
delivering solid cash flows
- $10 billion – in execution
- $20+ billion – in development
Spectra Energy Partners
The Ozark Conversion project went into service on time
and began flowing product in July. Spectra Energy Partners' other
projects scheduled for 2016 in-service are on track to meet their
timelines, including AIM, Loudon Expansion, Salem
Lateral, and Express Enhancement.
Pre-construction work is currently under way on Sabal
Trail, with full construction scheduled to begin in late
summer, and in-service targeted for early summer 2017.
In July, the NEXUS and TEAL projects received a
favorable FERC Draft Environmental Impact Statement (DEIS). The
FERC Final Environmental Impact Statement is expected later this
year, and the FERC Certificate is expected in first quarter 2017,
keeping the projects on track to be in service in fourth quarter
2017.
Spectra Energy Partners also received the FERC Notice of
Schedule for Access South, Adair Southwest, and the
Lebanon Extension in July, and expects to receive the FERC
Environmental Assessment soon, keeping these projects on target for
in-service in the second half of 2017.
PennEast received its DEIS in July as well, and is
expected to be in service in the second half of 2018.
Atlantic Bridge received its FERC Environmental
Assessment in May and continues to move forward toward an
in-service date in the second half of 2017.
The South Texas Expansion Project (STEP) in-service date
has shifted to fourth quarter 2018 to be in line with our expected
in-service date for the Valley Crossing Pipeline project.
We continue to make progress on Access Northeast, and
anticipate moving the project into execution later this year.
Access Northeast is uniquely designed – both physically and
contractually – to serve the needs of New England power generators,
improve reliability, and save consumers an average of $1 billion per year in energy costs.
Spectra Energy continues working with co-developers Eversource
and National Grid to advance state approvals for the customer
agreements and is participating in the various processes currently
under way:
- In Maine, the Public Utilities
Commission voted in July to endorse a contract with Access
Northeast and approved the business model allowing electric
utilities to enter into pipeline capacity contracts.
- The Massachusetts Department of Public Utilities commenced
hearings August 2 to review the
pipeline capacity contracts submitted by affiliates of Eversource
and National Grid, and is expected to deliver a decision later this
year. The department ruled last fall that it had authority to
approve such contracts.
- Connecticut's Department of
Energy and Environmental Protection issued an RFP in early June for
natural gas capacity, and is evaluating the submissions, with a
decision expected in late August.
- In Rhode Island, a long-term
pipeline capacity contract with Access Northeast was submitted to
the Public Utilities Commission in June, with a decision expected
by the end of October.
The Access Northeast solution is designed to meet the needs of
New England by maximizing the use of existing utility corridors and
the Algonquin and Maritimes & Northeast pipelines, which
directly connect to more than 60 percent of the existing ISO-New
England gas-fired electric generation capacity and more than 80
percent of the new capacity that has recently cleared the ISO-New
England forward capacity market. Access Northeast will
cost-effectively deliver affordable natural gas when power
generators need it, with new services to handle peak hours,
seasonal needs, and quick starts to support intermittent wind and
solar energy. In April, FERC issued the Notice of Intent to prepare
an Environmental Impact Statement for Access Northeast, which
continues to advance toward a late 2018 initial in-service
date.
Distribution
The 2016 and 2017
Dawn-Parkway expansions are in construction and are on
schedule for their respective in-service dates. Construction also
continues on the Burlington-Oakville expansion, which is expected to
be in service later this year.
Western Canada
The RAM project is proceeding on schedule, and will phase
in from 2016 through 2018, and the High Pine in-service date
moved to the first half of 2017 due to the National Energy Board
(NEB) review.
The Jackfish Lake
project received NEB approval in July, and is anticipated to be
placed into service in first quarter 2017, earlier than originally
expected.
Projects Moved into Execution in Second Quarter
In June, Spectra Energy was named the successful bidder in the
Nueces to Brownsville RFP process
conducted by Comisión Federal de Electricidad (CFE), the
Mexico state-owned power utility.
The Valley Crossing Pipeline project is a $1.5 billion intrastate natural gas pipeline
system in South Texas that will
help meet Mexico's growing
electric generation needs. The approximately 170-mile pipeline,
which will have a capacity of 2.6 billion cubic feet per day
(Bcf/d) and is scheduled for in-service in fourth quarter 2018, is
underpinned by a long-term, fee-based, U.S. dollar-denominated
contract with CFE. Valley Crossing will also construct and operate
a header system of more than 5 Bcf/d near the Agua Dulce Hub. This
project positions Spectra Energy to pursue other incremental
upstream regional business as Mexico reforms its energy industry.
The C$265 million Panhandle
Reinforcement project is a pipeline expansion to serve
incremental industrial market growth in southwestern Ontario. Union Gas submitted the Ontario
Energy Board application in June and expects approval in first
quarter 2017, with in-service by the end of 2017.
Spectra Energy also filed a FERC application for the Bayway
Lateral in July and expects to have this $30 million project in service in the first half
of 2018. This lateral, with capacity of 300 million cubic feet per
day, will serve a refinery and a cogeneration facility in
New Jersey.
ADDITIONAL INFORMATION
Additional information about second quarter 2016 earnings can be
obtained via the Spectra Energy
website: www.spectraenergy.com.
The analyst call, held jointly with Spectra Energy
Partners, is scheduled for today, Wednesday, August 3, 2016,
at 8 a.m. CT. The webcast will be available via
the Spectra Energy and Spectra Energy
Partners Investors pages. The conference call can be accessed
by dialing (888) 252-3715 in the U.S. or Canada, or (706)
634-8942 internationally. The conference ID is 70917862 or "Spectra
Energy / Spectra Energy Partners Earnings Call."
A replay of the call will be available until 5 p.m.
CT on Friday, September 2, 2016, by dialing (800)
585-8367 in the U.S. or Canada, or (404) 537-3406
internationally, and using the above conference ID. A replay and
transcript also will be available via the Spectra
Energy and Spectra Energy Partners Investors pages.
Non-GAAP Financial Measures
We use ongoing net income from controlling interests and ongoing
diluted EPS as measures to evaluate operations of the company.
These measures are non-GAAP financial measures as they represent
net income from controlling interests and diluted EPS, excluding
special items. Special items represent certain charges and credits
which we believe will not be recurring on a regular basis. We
believe that the presentation of ongoing net income from
controlling interests and ongoing diluted EPS provides useful
information to investors, as it allows investors to more accurately
compare our ongoing performance across periods. The most directly
comparable GAAP measures for ongoing net income from controlling
interests and ongoing diluted EPS are net income from controlling
interests and diluted EPS.
We use earnings from continuing operations before interest,
income taxes, and depreciation and amortization (EBITDA) and
ongoing EBITDA, non-GAAP financial measures, as performance
measures for Spectra Energy Corp. Ongoing EBITDA represents EBITDA,
excluding special items. We believe that the presentation of EBITDA
and ongoing EBITDA provides useful information to investors, as it
allows investors to more accurately compare Spectra Energy Corp's
performance across periods. The most directly comparable GAAP
measure for EBITDA and ongoing EBITDA for Spectra Energy Corp is
net income.
The primary performance measures used by us to evaluate segment
performance are segment EBITDA and Other EBITDA. We consider
segment EBITDA and Other EBITDA, which are the GAAP measures used
to report segment results, to be good indicators of each segment's
operating performance from its continuing operations as they
represent the results of our segments' operations before
depreciation and amortization without regard to financing methods
or capital structures. Our segment EBITDA and Other EBITDA may not
be comparable to similarly titled measures of other companies
because other companies may not calculate EBITDA in the same
manner.
We also use ongoing segment EBITDA and ongoing Other EBITDA (net
expenses) as measures of performance. Ongoing segment EBITDA and
ongoing Other EBITDA are non-GAAP financial measures, as they
represent segment EBITDA and Other EBITDA, excluding special items.
We believe that the presentation of ongoing segment EBITDA and
ongoing Other EBITDA provides useful information to investors, as
it allows investors to more accurately compare a segment's or
Other's ongoing performance across periods. The most directly
comparable GAAP measures for ongoing segment EBITDA and ongoing
Other EBITDA are segment EBITDA and Other EBITDA.
We also present Distributable Cash Flow (DCF), which is a
non-GAAP financial measure. We believe that the presentation of DCF
provides useful information to investors, as it represents the cash
generation capabilities of the company to support dividend growth.
We also use ongoing DCF, which is a non-GAAP financial measure, as
it represents DCF, excluding the cash effect of special items. The
most directly comparable GAAP measure for DCF and ongoing DCF is
net income. We also use DCF coverage, which is a non-GAAP financial
measure, as it represents DCF divided by dividends declared on
common stock. The most directly comparable GAAP measure for DCF
coverage is EPS.
The non-GAAP financial measures presented in this press release
should not be considered in isolation or as an alternative to
financial measures presented in accordance with GAAP. These
non-GAAP financial measures may not be comparable to similarly
titled measures of other companies because other companies may not
calculate these measures in the same manner.
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 are based on our beliefs and
assumptions. These forward-looking statements are identified by
terms and phrases such as: anticipate, believe, intend, estimate,
expect, continue, should, could, may, plan, project, predict, will,
potential, forecast, and similar expressions. Forward-looking
statements involve risks and uncertainties that may cause actual
results to be materially different from the results predicted.
Factors that could cause actual results to differ materially from
those indicated in any forward-looking statement include, but are
not limited to: 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 and oil
industries; outcomes of litigation and regulatory investigations,
proceedings or inquiries; 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; general
economic conditions, including the risk of a prolonged economic
slowdown or decline, or the risk of delay in a recovery, which can
affect the long-term demand for natural gas and oil and related
services; potential effects arising from terrorist attacks and any
consequential or other hostilities; changes in environmental,
safety and other laws and regulations; the development of
alternative energy resources; results and costs 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; growth in opportunities, including the timing and
success of efforts to develop U.S. and Canadian pipeline, storage,
gathering, processing and other related infrastructure projects and
the effects of competition; the performance of natural gas and oil
transmission and storage, distribution, and gathering and
processing facilities; the extent of success in connecting natural
gas and oil supplies to gathering, processing and transmission
systems and in connecting to expanding gas and oil markets; the
effects of accounting pronouncements issued periodically by
accounting standard-setting bodies; conditions of the capital
markets during the periods covered by forward-looking statements;
and the ability to successfully complete merger, acquisition or
divestiture plans; regulatory or other limitations imposed as a
result of a merger, acquisition or divestiture; and the success of
the business following a merger, acquisition or divestiture. These
factors, as well as additional factors that could affect our
forward-looking statements, are described under the headings "Risk
Factors" and "Cautionary Statement Regarding Forward-Looking
Information" in our 2015 Form 10-K, filed on February 25, 2016, and in our other filings made
with the Securities and Exchange Commission (SEC), which are
available via the SEC's website at 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. All
forward-looking statements in this release are made as of the date
hereof and 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 leading pipeline and midstream
companies. Based in Houston, Texas, the company's operations in the
United States and Canada include more than 21,000
miles of natural gas, natural gas liquids, and crude oil pipelines;
approximately 300 billion cubic feet (Bcf) of natural gas storage;
4.8 million barrels of crude oil storage; as well as natural gas
gathering, processing, and local distribution operations. Spectra
Energy is the general partner of Spectra Energy
Partners (NYSE: SEP), one of the largest pipeline master
limited partnerships in the United States and owner of
the natural gas and crude oil assets in Spectra Energy's U.S.
portfolio. Spectra Energy also has a 50 percent ownership
in DCP Midstream, the largest producer of natural gas liquids
and the largest natural gas processor in the United States. Spectra Energy has served North
American customers and communities for more than a century. For
more information, visit www.spectraenergy.com and
www.spectraenergypartners.com.
Spectra Energy
Corp
|
Quarterly
Highlights
|
June
2016
|
(Unaudited)
|
(In millions, except
per-share amounts and where noted)
|
Reported - These
results include the impact of special items
|
|
|
|
Three Months
Ended June 30,
|
|
Six Months
Ended June 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
COMMON STOCK
DATA
|
|
|
|
|
|
|
|
|
Earnings Per Share,
Diluted
|
|
$
|
0.21
|
|
|
$
|
0.03
|
|
|
$
|
0.56
|
|
|
$
|
0.42
|
|
Dividends Per
Share
|
|
$
|
0.405
|
|
|
$
|
0.370
|
|
|
$
|
0.810
|
|
|
$
|
0.740
|
|
Weighted-Average
Shares Outstanding, Diluted
|
|
701
|
|
|
672
|
|
|
688
|
|
|
672
|
|
|
|
|
|
|
|
|
|
|
INCOME
|
|
|
|
|
|
|
|
|
Operating
Revenues
|
|
$
|
1,159
|
|
|
$
|
1,192
|
|
|
$
|
2,543
|
|
|
$
|
2,815
|
|
Total Reportable
Segment EBITDA
|
|
658
|
|
|
447
|
|
|
1,427
|
|
|
1,238
|
|
Net Income -
Controlling Interests
|
|
149
|
|
|
18
|
|
|
383
|
|
|
285
|
|
|
|
|
|
|
|
|
|
|
EBITDA BY BUSINESS
SEGMENT
|
|
|
|
|
|
|
|
|
Spectra Energy
Partners
|
|
$
|
471
|
|
|
$
|
478
|
|
|
$
|
944
|
|
|
$
|
933
|
|
Distribution
|
|
104
|
|
|
98
|
|
|
274
|
|
|
290
|
|
Western Canada
Transmission & Processing
|
|
97
|
|
|
104
|
|
|
220
|
|
|
265
|
|
Field
Services
|
|
(14)
|
|
|
(233)
|
|
|
(11)
|
|
|
(250)
|
|
Total Reportable
Segment EBITDA
|
|
658
|
|
|
447
|
|
|
1,427
|
|
|
1,238
|
|
Other
EBITDA
|
|
(36)
|
|
|
(12)
|
|
|
(55)
|
|
|
(27)
|
|
Total Reportable
Segment and Other EBITDA
|
|
$
|
622
|
|
|
$
|
435
|
|
|
$
|
1,372
|
|
|
$
|
1,211
|
|
|
|
|
|
|
|
|
|
|
DISTRIBUTABLE CASH
FLOW
|
|
|
|
|
|
|
|
|
Distributable Cash
Flow
|
|
$
|
246
|
|
|
$
|
274
|
|
|
$
|
769
|
|
|
$
|
852
|
|
|
|
|
|
|
|
|
|
|
CAPITAL AND
INVESTMENT EXPENDITURES
|
|
|
|
|
|
|
|
|
Spectra Energy
Partners (a)
|
|
|
|
|
|
$
|
1,135
|
|
|
$
|
638
|
|
Distribution
|
|
|
|
|
|
341
|
|
|
207
|
|
Western Canada
Transmission & Processing
|
|
|
|
|
|
133
|
|
|
149
|
|
Other
|
|
|
|
|
|
23
|
|
|
29
|
|
Total Capital
and Investment Expenditures (a)
|
|
|
|
|
|
$
|
1,632
|
|
|
$
|
1,023
|
|
|
|
|
|
|
|
|
|
|
Expansion and
Investment (a)
|
|
|
|
|
|
$
|
1,388
|
|
|
$
|
760
|
|
Maintenance and
Other
|
|
|
|
|
|
244
|
|
|
263
|
|
Total Capital
and Investment Expenditures (a)
|
|
|
|
|
|
$
|
1,632
|
|
|
$
|
1,023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
|
|
|
|
2016
|
|
2015
|
CAPITALIZATION
|
|
|
|
|
|
|
|
|
Common Equity -
Controlling Interests
|
|
|
|
|
|
28.9
|
%
|
|
26.6
|
%
|
Noncontrolling
Interests and Preferred Stock
|
|
|
|
|
|
15.0
|
%
|
|
13.6
|
%
|
Total Debt
|
|
|
|
|
|
56.1
|
%
|
|
59.8
|
%
|
|
|
|
|
|
|
|
|
|
Total Debt
|
|
|
|
|
|
$
|
14,765
|
|
|
$
|
14,656
|
|
Book Value Per Share
(b)
|
|
|
|
|
|
$
|
10.84
|
|
|
$
|
9.73
|
|
Actual Shares
Outstanding (c)
|
|
|
|
|
|
701
|
|
|
671
|
|
|
(a) Excludes
contributions received from noncontrolling interests of $176
million in 2016 and $58 million in 2015.
|
(b) Represents
controlling interests.
|
(c) Increase in 2016
resulted from a newly initiated "At the Market" equity issuance
program in March 2016 and equity
issuance to the public in April 2016.
|
Spectra Energy
Corp
|
Quarterly
Highlights
|
June
2016
|
(Unaudited)
|
(In millions, except
where noted)
|
Reported - These
results include the impact of special items
|
|
|
|
Three Months
Ended June 30,
|
|
Six Months
Ended June 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
SPECTRA ENERGY
PARTNERS
|
|
|
|
|
|
|
|
|
Operating
Revenues
|
|
$
|
618
|
|
$
|
603
|
|
$
|
1,242
|
|
$
|
1,209
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
Operating,
Maintenance and Other
|
|
216
|
|
192
|
|
421
|
|
399
|
Other Income
and Expenses
|
|
69
|
|
67
|
|
123
|
|
123
|
EBITDA
|
|
$
|
471
|
|
$
|
478
|
|
$
|
944
|
|
$
|
933
|
Express
Pipeline Revenue Receipts, MBbl/d (a)
|
|
233
|
|
235
|
|
233
|
|
242
|
Platte PADD II
Deliveries, MBbl/d
|
|
143
|
|
172
|
|
132
|
|
170
|
|
|
|
|
|
|
|
|
|
DISTRIBUTION
|
|
|
|
|
|
|
|
|
Operating
Revenues
|
|
$
|
284
|
|
$
|
290
|
|
$
|
749
|
|
$
|
952
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
Natural Gas
Purchased
|
|
91
|
|
103
|
|
306
|
|
486
|
Operating,
Maintenance and Other
|
|
89
|
|
90
|
|
171
|
|
176
|
Other Income
and Expenses
|
|
—
|
|
1
|
|
2
|
|
—
|
EBITDA
|
|
$
|
104
|
|
$
|
98
|
|
$
|
274
|
|
$
|
290
|
Number of
Customers, Thousands
|
|
—
|
|
—
|
|
1,446
|
|
1,425
|
Heating Degree
Days, Fahrenheit
|
|
1,032
|
|
866
|
|
4,347
|
|
5,125
|
Pipeline
Throughput, TBtu (b)
|
|
155
|
|
132
|
|
385
|
|
460
|
Canadian Dollar
Exchange Rate, Average
|
|
1.29
|
|
1.23
|
|
1.33
|
|
1.23
|
|
|
|
|
|
|
|
|
|
WESTERN CANADA
TRANSMISSION & PROCESSING
|
|
|
|
|
|
|
|
|
Operating
Revenues
|
|
$
|
258
|
|
$
|
304
|
|
$
|
563
|
|
$
|
674
|
Operating
Expenses
|
|
|
|
|
|
|
|
|
Natural Gas
and Petroleum Products Purchased
|
|
15
|
|
25
|
|
63
|
|
92
|
Operating,
Maintenance and Other
|
|
148
|
|
174
|
|
285
|
|
321
|
Other Income
and Expenses
|
|
2
|
|
(1)
|
|
5
|
|
4
|
EBITDA
|
|
$
|
97
|
|
$
|
104
|
|
$
|
220
|
|
$
|
265
|
Pipeline
Throughput, TBtu
|
|
214
|
|
220
|
|
466
|
|
476
|
Volumes
Processed, TBtu
|
|
163
|
|
156
|
|
339
|
|
336
|
Canadian Dollar
Exchange Rate, Average
|
|
1.29
|
|
1.23
|
|
1.33
|
|
1.23
|
|
|
|
|
|
|
|
|
|
FIELD
SERVICES
|
|
|
|
|
|
|
|
|
Earnings (loss)
from Equity Investment in DCP Midstream, LLC
|
|
$
|
(14)
|
|
$
|
(233)
|
|
$
|
(11)
|
|
$
|
(250)
|
Natural Gas
Gathered and Processed/Transported, TBtu/day (c)
|
|
6.7
|
|
7.0
|
|
6.8
|
|
7.1
|
Natural Gas
Liquids Production, MBbl/d (c)
|
|
416
|
|
408
|
|
399
|
|
404
|
Average Natural
Gas Price Per MMBtu (d)
|
|
$
|
1.95
|
|
$
|
2.64
|
|
$
|
2.02
|
|
$
|
2.81
|
Average Natural
Gas Liquids Price Per Gallon (e)
|
|
$
|
0.46
|
|
$
|
0.48
|
|
$
|
0.41
|
|
$
|
0.48
|
Average Crude
Oil Price Per Barrel (f)
|
|
$
|
45.64
|
|
$
|
57.94
|
|
$
|
39.54
|
|
$
|
53.29
|
|
|
(a)
Thousand barrels per day.
|
(b)
Trillion British thermal units.
|
(c)
Reflects 100% of DCP Midstream volumes.
|
(d)
Million British thermal units. Average price based on NYMEX Henry
Hub.
|
(e) Does
not reflect results of commodity hedges.
|
(f)
Average price based on NYMEX calendar month.
|
Spectra Energy
Corp
|
Condensed
Consolidated Statements of Operations
|
(Unaudited)
|
(In
millions)
|
Reported - These
results include the impact of special items
|
|
|
|
|
Three Months
Ended June 30,
|
|
Six Months
Ended June 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Operating
Revenues
|
|
$
|
1,159
|
|
$
|
1,192
|
|
$
|
2,543
|
|
$
|
2,815
|
Operating
Expenses
|
|
788
|
|
786
|
|
1,678
|
|
1,868
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
371
|
|
406
|
|
865
|
|
947
|
|
|
|
|
|
|
|
|
|
Other Income and
Expenses
|
|
55
|
|
(167)
|
|
120
|
|
(123)
|
Interest
Expense
|
|
153
|
|
166
|
|
304
|
|
325
|
Earnings Before
Income Taxes
|
|
273
|
|
73
|
|
681
|
|
499
|
Income Tax
Expense
|
|
52
|
|
(7)
|
|
150
|
|
94
|
Net Income
|
|
221
|
|
80
|
|
531
|
|
405
|
Net Income -
Noncontrolling Interests
|
|
72
|
|
62
|
|
148
|
|
120
|
Net Income -
Controlling Interests
|
|
$
|
149
|
|
$
|
18
|
|
$
|
383
|
|
$
|
285
|
Spectra Energy
Corp
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
(In
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
$
|
1,637
|
|
$
|
1,648
|
Investments and Other
Assets
|
|
|
7,247
|
|
7,056
|
Net Property, Plant
and Equipment
|
|
|
24,707
|
|
22,918
|
Regulatory Assets and
Deferred Debits
|
|
|
1,456
|
|
1,301
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
|
$
|
35,047
|
|
$
|
32,923
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
$
|
2,786
|
|
$
|
3,392
|
Long-term
Debt
|
|
|
13,584
|
|
12,892
|
Deferred Credits and
Other Liabilities
|
|
|
7,115
|
|
6,768
|
Preferred Stock of
Subsidiaries
|
|
|
339
|
|
339
|
Equity
|
|
|
11,223
|
|
9,532
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
and Equity
|
|
|
$
|
35,047
|
|
$
|
32,923
|
Spectra Energy
Corp
|
Distributable Cash
Flow
|
(Unaudited)
|
(In
millions)
|
|
Reported - These
results include the impact of special items
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
$
|
221
|
|
$
|
80
|
|
$
|
531
|
|
$
|
405
|
Add:
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
153
|
|
166
|
|
304
|
|
325
|
Income tax expense
(benefit)
|
|
52
|
|
(7)
|
|
150
|
|
94
|
Depreciation and
amortization
|
|
196
|
|
193
|
|
389
|
|
386
|
Foreign currency
(gain) loss
|
|
2
|
|
4
|
|
—
|
|
3
|
Less:
|
|
|
|
|
|
|
|
|
Third party interest
income
|
|
2
|
|
1
|
|
2
|
|
2
|
EBITDA
|
|
622
|
|
435
|
|
1,372
|
|
1,211
|
|
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
|
|
(Earnings) Loss from
equity investments
|
|
(16)
|
|
(5)
|
|
(56)
|
|
(29)
|
Non-cash impairments
at DCP
|
|
—
|
|
194
|
|
7
|
|
194
|
Distributions from
equity investments
|
|
32
|
|
70
|
|
97
|
|
124
|
Empress non-cash
items
|
|
12
|
|
1
|
|
44
|
|
23
|
Non-cash impairment
at Ozark Gas Gathering
|
|
—
|
|
—
|
|
—
|
|
9
|
Other
|
|
16
|
|
17
|
|
21
|
|
22
|
Less:
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
153
|
|
166
|
|
304
|
|
325
|
Equity
AFUDC
|
|
39
|
|
24
|
|
64
|
|
40
|
Net cash paid
(refund) for income taxes
|
|
12
|
|
18
|
|
(10)
|
|
(28)
|
Distributions to
non-controlling interests
|
|
60
|
|
49
|
|
114
|
|
93
|
Maintenance capital
expenditures
|
|
156
|
|
181
|
|
244
|
|
272
|
Total
Distributable Cash Flow
|
|
$
|
246
|
|
$
|
274
|
|
$
|
769
|
|
$
|
852
|
Spectra Energy
Corp
|
Reported to
Ongoing Earnings Reconciliation
|
June 2016
Quarter-to-date
|
(Unaudited)
|
(In millions, except
per-share amounts)
|
|
|
|
|
|
Reported
Earnings
|
|
Less:
Special
Items
|
|
Ongoing
Earnings
|
SEGMENT
EARNINGS BEFORE INTEREST, TAXES, AND
DEPRECIATION AND AMORTIZATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spectra Energy
Partners
|
|
$
|
471
|
|
$
|
(6)
|
A
|
$
|
477
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
104
|
|
—
|
|
104
|
|
|
|
|
|
|
|
|
|
Western Canada
Transmission & Processing
|
|
97
|
|
(9)
|
B
|
106
|
|
|
|
|
|
|
|
|
|
Field
Services
|
|
(14)
|
|
(8)
|
C
|
(6)
|
|
|
|
|
|
|
|
|
|
Total Reportable
Segment EBITDA
|
|
658
|
|
(23)
|
|
681
|
|
|
|
|
|
|
|
|
|
Other
|
|
(36)
|
|
(10)
|
D
|
(26)
|
|
|
|
|
|
|
|
|
|
Total Reportable
Segment and Other EBITDA
|
|
$
|
622
|
|
$
|
(33)
|
|
$
|
655
|
|
|
|
|
|
|
|
|
|
EARNINGS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Reportable
Segment EBITDA and Other EBITDA
|
|
$
|
622
|
|
$
|
(33)
|
|
$
|
655
|
Depreciation and
Amortization
|
|
(196)
|
|
—
|
|
(196)
|
Interest
Expense
|
|
(153)
|
|
—
|
|
(153)
|
Income Tax Benefit
(Expense)
|
|
(52)
|
|
12
|
|
(64)
|
Total Net
Income
|
|
221
|
|
(21)
|
|
242
|
|
|
|
|
|
|
|
|
|
Total Net
Income - Noncontrolling Interests
|
|
(72)
|
|
1
|
|
(73)
|
|
|
|
|
|
|
|
|
|
Total Net
Income - Controlling Interests
|
|
$
|
149
|
|
$
|
(20)
|
|
$
|
169
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE, BASIC
|
|
$
|
0.21
|
|
$
|
(0.03)
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE, DILUTED
|
|
$
|
0.21
|
|
$
|
(0.03)
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
A - Inspection and
repair costs related to Texas Eastern pipeline incident in
Pennsylvania.
|
B - Employee and
overhead reduction costs, and the effects of flooding in British
Columbia.
|
C - Employee and
overhead reduction costs, and loss on the sale of an
asset.
|
D - Self-insurance
reserve associated with Texas Eastern pipeline incident in
Pennsylvania.
|
|
Weighted Average
Shares (reported and ongoing) - in millions
|
|
|
Basic
|
699
|
|
|
Diluted
|
701
|
|
Spectra Energy
Corp
|
Reported to
Ongoing Earnings Reconciliation
|
June 2015
Quarter-to-date
|
(Unaudited)
|
(In millions, except
per-share amounts)
|
|
|
|
|
|
Reported
Earnings
|
|
Less:
Special
Items
|
|
Ongoing
Earnings
|
SEGMENT
EARNINGS BEFORE INTEREST, TAXES, AND
DEPRECIATION AND AMORTIZATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spectra Energy
Partners
|
|
$
|
478
|
|
$
|
—
|
|
$
|
478
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
98
|
|
—
|
|
98
|
|
|
|
|
|
|
|
|
|
Western Canada
Transmission & Processing
|
|
104
|
|
(11)
|
A
|
115
|
|
|
|
|
|
|
|
|
|
Field
Services
|
|
(233)
|
|
(206)
|
B
|
(27)
|
|
|
|
|
|
|
|
|
|
Total Reportable
Segment EBITDA
|
|
447
|
|
(217)
|
|
664
|
|
|
|
|
|
|
|
|
|
Other
|
|
(12)
|
|
—
|
|
(12)
|
|
|
|
|
|
|
|
|
|
Total Reportable
Segment and Other EBITDA
|
|
$
|
435
|
|
$
|
(217)
|
|
$
|
652
|
|
|
|
|
|
|
|
|
|
EARNINGS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Reportable
Segment EBITDA and Other EBITDA
|
|
$
|
435
|
|
$
|
(217)
|
|
$
|
652
|
Depreciation and
Amortization
|
|
(193)
|
|
—
|
|
(193)
|
Interest
Expense
|
|
(166)
|
|
—
|
|
(166)
|
Interest Income and
Other
|
|
(3)
|
|
—
|
|
(3)
|
Income Tax Benefit
(Expense)
|
|
7
|
|
79
|
|
(72)
|
Total Net
Income
|
|
80
|
|
(138)
|
|
218
|
|
|
|
|
|
|
|
|
|
Total Net
Income - Noncontrolling Interests
|
|
(62)
|
|
—
|
|
(62)
|
|
|
|
|
|
|
|
|
|
Total Net
Income - Controlling Interests
|
|
$
|
18
|
|
$
|
(138)
|
|
$
|
156
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE, BASIC
|
|
$
|
0.03
|
|
$
|
(0.20)
|
|
$
|
0.23
|
|
|
|
|
|
|
|
|
|
EARNINGS PER
SHARE, DILUTED
|
|
$
|
0.03
|
|
$
|
(0.20)
|
|
$
|
0.23
|
|
|
|
|
|
|
|
|
|
A - Employee and
overhead reduction costs.
|
B - Employee and
overhead reduction costs, net losses on sale of assets and goodwill
impairment.
|
|
Weighted Average
Shares (reported and ongoing) - in millions
|
|
|
Basic
|
671
|
|
|
Diluted
|
672
|
|
Spectra Energy
Corp
|
Reported to
Ongoing Distributable Cash Flow Reconciliation
|
Unaudited
|
(In millions, except
where noted)
|
|
|
|
|
Three Months
Ended
June 30, 2016
|
|
Three Months
Ended
June 30, 2015
|
|
|
Reported
|
|
Less:
Special
Items
|
|
Ongoing
|
|
Reported
|
|
Less:
Special
Items
|
|
Ongoing
|
Net
Income
|
|
$
|
221
|
|
$
|
(21)
|
|
$
|
242
|
|
$
|
80
|
|
$
|
(138)
|
|
$
|
218
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
153
|
|
—
|
|
153
|
|
166
|
|
—
|
|
166
|
Income tax expense
(benefit)
|
|
52
|
|
(12)
|
|
64
|
|
(7)
|
|
(79)
|
|
72
|
Depreciation and
amortization
|
|
196
|
|
—
|
|
196
|
|
193
|
|
—
|
|
193
|
Foreign currency
(gain) loss
|
|
2
|
|
—
|
|
2
|
|
4
|
|
—
|
|
4
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Third party interest
income
|
|
2
|
|
—
|
|
2
|
|
1
|
|
—
|
|
1
|
EBITDA
|
|
622
|
|
(33)
|
|
655
|
|
435
|
|
(217)
|
|
652
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
(Earnings) Loss from
equity investments
|
|
(16)
|
|
8
|
|
(24)
|
|
(5)
|
|
12
|
|
(17)
|
Non-cash impairment at
DCP
|
|
—
|
|
|
|
—
|
|
194
|
|
194
|
|
—
|
Distributions from
equity investments
|
|
32
|
|
—
|
|
32
|
|
70
|
|
—
|
|
70
|
Empress non-cash
items
|
|
12
|
|
—
|
|
12
|
|
1
|
|
—
|
|
1
|
Other
|
|
16
|
|
—
|
|
16
|
|
17
|
|
—
|
|
17
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
153
|
|
—
|
|
153
|
|
166
|
|
—
|
|
166
|
Equity
AFUDC
|
|
39
|
|
—
|
|
39
|
|
24
|
|
—
|
|
24
|
Net cash paid (refund)
for income taxes
|
|
12
|
|
—
|
|
12
|
|
18
|
|
—
|
|
18
|
Distributions to
non-controlling interests
|
|
60
|
|
—
|
|
60
|
|
49
|
|
—
|
|
49
|
Maintenance capital
expenditures
|
|
156
|
|
—
|
|
156
|
|
181
|
|
—
|
|
181
|
Total
Distributable Cash Flow
|
|
$
|
246
|
|
$
|
(25)
|
|
$
|
271
|
|
$
|
274
|
|
$
|
(11)
|
|
$
|
285
|
Spectra Energy
Corp
|
|
|
Distributable Cash
Flow
|
|
|
(In
millions)
|
|
|
|
|
2016e
|
|
|
|
|
|
|
Total Reported Net
Income
|
|
$
1,150
|
Add:
|
|
|
Interest
expense
|
|
625
|
Income tax expense
(benefit)
|
|
315
|
Depreciation and
amortization
|
|
765
|
EBITDA
|
|
2,855
|
|
|
|
Add:
|
|
|
Net cash from equity
investments
|
|
85
|
Other
|
|
85
|
Less:
|
|
|
Interest
expense
|
|
625
|
Equity
AFUDC
|
|
145
|
Cash paid for income
taxes
|
|
15
|
Distributions to
non-controlling interests
|
|
255
|
Maintenance capital
expenditures
|
|
615
|
Total Consolidated
Distributable Cash Flow
|
|
$
1,370
|
|
|
|
Coverage
Ratio
|
|
1.2x
|
Logo -
http://photos.prnewswire.com/prnh/20061030/CLM051LOGO
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/spectra-energy-reports-second-quarter-2016-results-300308160.html
SOURCE Spectra Energy Corp