Spectra Energy Corp Reports Operating Results (10-Q)
Spectra Energy Corp has a market cap of $14.21 billion; its shares were traded at around $21.93 with a P/E ratio of 15.34 and P/S ratio of 3.12. The dividend yield of Spectra Energy Corp stocks is 4.56%.SE is in the portfolios of James Barrow of Barrow, Hanley, Mewhinney & Strauss, Brian Rogers of T Rowe Price Equity Income Fund, John Buckingham of Al Frank Asset Management, Inc., Pioneer Investments, Bruce Kovner of Caxton Associates, Richard Aster Jr of Meridian Fund, Steven Cohen of SAC Capital Advisors, Dodge & Cox, Jeremy Grantham of GMO LLC, Chris Davis of Davis Selected Advisers.
Highlight of Business Operations: For the three months ended June 30, 2010 and 2009, we reported net income from controlling interests of $174 million and $140 million, respectively. For the six months ended June 30, 2010 and 2009, we reported net income from controlling interests of $532 million and $438 million, respectively. The increases for the three and six-month periods primarily reflect the positive impact of NGL prices on earnings from Field Services, a stronger Canadian dollar, expansion projects placed in service in 2009 at U.S. Transmission and Western Canada Transmission & Processing and lower income tax rates. NGL prices are correlated to higher crude oil prices, which averaged $78 per barrel for the six months ended June 30, 2010 versus $51 per barrel during the same period in 2009. These increases
in earnings were partially offset by the recognition of a $135 million deferred gain ($85 million after-tax) in the first quarter of 2009 associated with partnership units previously issued by DCP Partners.
In the first six months of 2010, we had $500 million of capital and investment expenditures. Excluding the acquisition of the Bobcat Gas Storage assets and development project discussed below, we continue to project approximately $1.6 billion of capital and investment expenditures for the full year, including expansion capital of approximately $1.0 billion. All expansion projects remain on track for scheduled in-service dates.
As of June 30, 2010, we have access to approximately $1.9 billion available under our credit facilities and expect to continue to utilize commercial paper and revolving lines of credit, as needed, to fund liquidity needs throughout 2010. Other financing activities in the second half of 2010 include debt issuances of 500 million Canadian dollars (approximately $476 million) in July 2010 and the refinancing of debt maturities of approximately $450 million. We may also access the capital markets for other long-term financing, as needed.
On July 15, 2010, we entered into a definitive agreement to purchase the Bobcat Gas Storage assets and development project from Haddington Energy Partners III LP and GE Energy Financial Services for $540 million in cash. In addition to the purchase price, we expect to invest an additional $400 to $450 million to fully develop the facility by the end of 2015. The transaction is expected to close before year-end 2010. See Note 20 of Notes to Condensed Consolidated Financial Statements for further discussion.
Income Tax Expense from Continuing Operations. Income tax expense from continuing operations for the three and six months ended June 30, 2010 increased by $9 million and decreased by $33 million, respectively, compared to the same periods in 2009. The increase for the three months is primarily due to higher earnings from continuing operations. The decrease for the six months includes benefits of $24 million related to favorable tax audit settlements in the first quarter of 2010.
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