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Spectra Energy Corp Reports Operating Results (10-Q)

November 08, 2010 | About:

10qk

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Spectra Energy Corp (SE) filed Quarterly Report for the period ended 2010-09-30.

Spectra Energy Corp has a market cap of $16.01 billion; its shares were traded at around $24.7 with a P/E ratio of 17.15 and P/S ratio of 3.52. The dividend yield of Spectra Energy Corp stocks is 4.05%.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, Paul Tudor Jones of The Tudor Group, Bruce Kovner of Caxton Associates, Mario Gabelli of GAMCO Investors, Richard Aster Jr of Meridian Fund, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC, Chris Davis of Davis Selected Advisers, Dodge & Cox.

Highlight of Business Operations:

For the three months ended September 30, 2010 and 2009, we reported net income from controlling interests of $197 million and $191 million, respectively. For the nine months ended September 30, 2010 and 2009, we reported net income from controlling interests of $729 million and $629 million, respectively. The increases for the three and nine-month periods primarily reflect the positive impact of NGL prices on earnings from Field Services, a stronger Canadian dollar and expansion projects at U.S. Transmission and Western Canada Transmission & Processing. NGL prices are correlated to higher crude oil prices, which averaged $78 per barrel for the nine months ended September 30, 2010 versus $57 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 nine months of 2010, we had $887 million of capital and investment expenditures excluding the $492 million acquisition of the Bobcat assets and development project discussed below. Excluding the acquisition of Bobcat, we currently project approximately $1.4 billion of capital and investment expenditures for the full year, including expansion capital of approximately $0.8 billion. This represents a $200 million reduction of our original estimate of total expenditures for 2010, primarily as a result of the timing of cash capital outlays and cost savings in Western Canada Transmission & Processing and U.S. Transmission projects. There have been no significant planned project deferrals or cancellations.

As of September 30, 2010, we have access to approximately $1.5 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 through the remainder of 2010 and into 2011. Financing activities over the next six months will also include the refinancing of debt maturities of approximately $460 million. We may also access the capital markets for other long-term financing, as needed.

In August 2010, we acquired the Bobcat assets and development project for a cash purchase price of $540 million, of which approximately $38 million was withheld at closing as contingent purchase price consideration. We expect to invest an additional $400 million to $450 million to fully develop the facility by the end of 2015. See Note 2 of Notes to Condensed Consolidated Financial Statements for further discussion.

Other Income and Expenses. Other income and expenses for the three and nine months ended September 30, 2010 increased by $33 million, or 46%, and $12 million, or 4%, respectively, compared to the same periods in 2009. The increases were attributable to higher equity earnings from Field Services primarily due to increased commodity prices, substantially offset by a $135 million gain recognized in 2009 associated with partnership units previously issued by DCP Partners.

Other Income and Expenses. The $19 million increase was primarily a result of an $11 million charge in 2009 due to the discontinuance of rate regulated accounting treatment by Southeast Supply Header, LLC (SESH) and a $7 million increase due to higher allowance for funds used during construction-equity (AFUDC-equity) in 2010 as a result of increased capital spending.

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