spectra energy 2Q_2007_SpectraEnergyEarnings

286 views

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
286
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
2
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

spectra energy 2Q_2007_SpectraEnergyEarnings

  1. 1. Second Quarter 2007 Earnings Review Fred Fowler August 6, 2007 President and CEO Greg Ebel CFO
  2. 2. Safe Harbor Statement Some of the statements in this document concerning future company performance will be forward-looking within the meanings of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements, and you should refer to the additional information contained in Spectra Energy’s Form 10-K and other filings made with the SEC concerning factors that could cause those results to be different than contemplated in today's discussion. Reg G Disclosure In addition, today’s discussion includes certain non-GAAP financial measures as defined under SEC Regulation G. A reconciliation of those measures to the most directly comparable GAAP measures is available on Spectra Energy’s Investor Relations website at www.spectraenergy.com. 2
  3. 3. Spectra Energy’s Second Quarter • Ongoing EPS consistent with expectations • Solid results at Distribution and US Transmission; plant turnarounds at Western Canada and weather challenges at Field Services affected earnings • $650 million of expansion projects in-service by end of 2007 • Closed Spectra Energy Partners IPO on July 2nd – SE received $345 million • Optimistic we will achieve 2007 financial goals Committed to delivering results to shareholders with solid, steady growth and an attractive dividend to provide a total return of 8-10% in a relatively low risk environment 3
  4. 4. Earnings Summary 2Q07 2Q06 Reported Net Income $ 196 $ 320 Special Items 7 7 Discontinued Operations (11) (63) Ongoing Net Income $ 192 $ 264 Reported Diluted EPS $ 0.31 n/a Ongoing Diluted EPS $ 0.30 n/a • Special items: • 2Q07 – separation costs • 2Q06 – separation costs and costs to achieve Duke Energy/Cinergy merger • Discontinued operations: • 2Q07 - Sonatrach settlement proceeds, net of tax • 2Q06 - businesses retained by Duke Energy but reported as a part of Spectra Energy Capital for 2006 4
  5. 5. U.S. Transmission Reported & Ongoing Segment EBIT ($ millions) 2Q07 2Q06 Reported Segment EBIT $ 223 $ 230 Special Items --- --- Ongoing Segment EBIT $ 223 $ 230 • 2Q07 ongoing segment results were lower by $7 million compared with 2Q06 primarily a result of: • lower gas processing volumes from pipeline operations • increased earnings from M&NE and expansion projects • higher direct operating costs • Significant advancements made on growth projects 5
  6. 6. Distribution Reported & Ongoing Segment EBIT ($ millions) 2Q07 2Q06 Reported Segment EBIT $ 54 $ 39 Special Items --- --- Ongoing Segment EBIT $ 54 $ 39 • 2Q07 ongoing segment results were up 38% compared with 2Q06 primarily driven by: • increased usage in core markets • higher distribution rates in 2007 • increased storage revenues reflecting strong storage values • Phase I of Dawn-Trafalgar commissioned at end of 2006 and is contributing to earnings 6
  7. 7. Western Canada Transmission & Processing Reported & Ongoing Segment EBIT ($ millions) 2Q07 2Q06 Reported Segment EBIT $ 48 $ 89 Special Items --- --- Ongoing Segment EBIT $ 48 $ 89 • 2Q07 ongoing segment results were lower by $41 million compared with 2006 due to: • lower processing revenues and higher O&M primarily a result of planned turnarounds at Empress and Pine River processing plants • reduced producer activity in the Fort Nelson area • Empress average frac spread for 2Q07 was approximately $5.85 compared to $6.05 in 2Q06 7
  8. 8. Field Services Reported & Ongoing Segment EBIT ($ millions) 2Q07 2Q06 Reported Segment EBIT $ 123 $ 148 Special Items 3 -- Ongoing Segment EBIT $ 126 $ 148 • 2Q07 ongoing EBIT was lower by $22 million compared with 2Q06 due primarily to: • severe weather related issues • higher O&M and G&A • partially offset by favorable commodity prices • Special items relate to Spectra Energy’s 50% share of stand-alone costs in 2Q07 • 2Q07 crude oil prices averaged about $65/barrel -- the strip price for the remainder of 2007 is in the mid $70’s • 2Q07 dividend and tax distributions from DCP Midstream were $111 million 8
  9. 9. Other Reported & Ongoing EBIT ($ millions) 2Q07 2Q06 Other Reported EBIT (Loss) $ (26) $ (35) Special Items 7 11 Other Ongoing EBIT (Loss) $ (19) $ (24) • “Other” primarily includes corporate governance costs and captive insurance • Special items: • 2Q07 relates to separation costs • 2Q06 relates to separation costs and costs to achieve the Duke Energy/Cinergy merger 9
  10. 10. Ongoing Segment and Other EBITDA Ongoing Segment and Other EBITDA ($ millions) 2Q07 2Q06 U.S. Transmission $ 285 $ 291 Distribution 94 76 Western Canada Transmission & Processing 82 122 Field Services 182 209 Other (18) (21) $ 625 $ 677 Total Ongoing Segment and Other EBITDA • U.S. Transmission Ongoing EBITDA also includes Spectra Energy’s 50% share of Gulfstream’s Interest and DD&A • 2Q07 - $10 • 2Q06 - $11 • Field Services Ongoing EBITDA represents Spectra Energy’s Ongoing Equity Earnings of DCP Midstream plus half of DCP Midstream’s Interest, Taxes and DD&A • 2Q07 - $56 • 2Q06 - $61 10
  11. 11. Additional Items • Interest expense for 2Q07 was $156 million compared with $148 million for 2Q06 • Spectra Energy’s effective tax rate for the 2Q07 was 32% compared with 22% last year • Debt to Total Capital at June 30, 2007 is 58%; net Debt to Total Capital is approximately 56.5% • In May, closed on U.S. credit facility of $1.5 billion to replace $950 million facility • Total credit facility capacity at June 30, 2007 of $2.1 billion; available capacity of $1.3 billion 11
  12. 12. Well-Positioned Well-Positioned for Growth 2007-2009 ~$3 Billion of Expansion Opportunities 2007-2009 Gas Gathering Pipelines Processing Plant Expansion M&NE Phase IV Dawn Storage St. Clair Power (CanaportTM) Deliverability Dawn Area Cape Cod Storage Dawn-Trafalgar Phase II, III NE Gateway AGT East/West Time II Islander East Lebanon Ramapo Connector TEMAX/Lebanon Rockaway Beach East Steckman Ridge Accident Glade Spring Egan Expansion Moss Bluff Copiah Storage Expansion SE Supply Header Gulfstream Phase III & IV 12
  13. 13. Well-Positioned for Growth Northeast Gateway • 16 mile, 24” offshore pipeline in Massachusetts Bay to connect Excelerate’s Deepwater LNG port to Algonquin’s Hubline Pipeline • 25 year firm contract with Excelerate Energy for entire 800 mmcf/day • Construction began in May • Pipe lay is complete; plowing/jetting in progress • Estimated capital expenditures: $240 million • In-service December ‘07 13
  14. 14. Well-Positioned for Growth M&N Phase IV Expansion • Compression and pipe expansion to connect Maritimes & Northeast to Canaport™ LNG Terminal Quebec MNP Phase IV Expansion • Canaport™ is a LNG receiving - 5 New Compressor Stations Prince and regas terminal developed by New - 2 Station Upgrades Edward Brunswick - 2 Miles 30-inch Loop Repsol YPF & Irving Oil located Quebec Island City Fredericton in Saint John, New Brunswick Maine Moncton • 25 year firm contract with Repsol Point Tupper for 730,000 mmcf/day on Bangor PNGTS VT Saint Goldboro Maritimes’ US system John Halifax • FERC and key government Nova Maritimes & Northeast Pipeline Scotia Westbrook Repsol- approvals complete Existing Compressor Stations Portland Irving New Compressor Stations Canaport™ NH • 80% of project materials & Brunswick Pipeline (Emera) LNG equipment procured or Corridor Resources Boston Supply Lateral (Corridor) committed Algonquin MA • Expected in-service date Tennessee November 2008 • Est. capital expenditures: $320 million (100%) 14
  15. 15. Well-Positioned for Growth Time II • 4 miles of new pipeline looping, 28 miles of replacement pipeline installation, construction of a new compressor station, additional compression at an existing station • 150 mmcf/d of new transportation service from Lebanon, OH to New Jersey • FERC certificate authorization issued on June 8, 2007; construction began June 15, 2007 • 15 year and 10 year firm contracts underpin this expansion • In-service dates: Phase I 2H07; Phase II 2H08 • Est. capital expenditures: Phase I $120 million / Phase II $90 million 15
  16. 16. Well-Positioned for Growth Southeast Supply Header • 270 miles of pipe from Perryville Hub in NE La. to Mobile, Al • Provides alternative to offshore supply • 95% of capacity is subscribed under firm, long-term agreements • Pipe is currently being delivered • Prime contractors retained • Expect FERC certification later this year • Est. capital expenditures: $400 million • In-service in summer ‘08 16
  17. 17. Value Proposition • A premier pure-play midstream natural gas company in North America • Attractive industry dynamics • Positioned in fastest growing markets • Diverse supply base • Seasoned management team • Strong balance sheet and stable cash flows • Financial flexibility • Solid steady growth and attractive dividend yield 17

×