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Spectra Energy Reports Fourth Quarter and Year-End 2015 Results

HOUSTON, Feb. 3, 2016 /PRNewswire/ --

Year-End Highlights:

  • 2015 distributable cash flow of $1.3 billion, with dividend coverage ratio of 1.3x, exceeding the 2015 forecast of 1.2x
  • Brought OPEN and 2015 Dawn-Parkway projects into service in fourth quarter
  • Added almost $2 billion to execution backlog during 2015
  • Announced annual dividend increase of 14 cents per share for 2016
Spectra Energy Corp logo.

Spectra Energy Corp (NYSE: SE) today reported fourth quarter and year-end 2015 financial results. For the quarter, ongoing earnings before interest, taxes, depreciation, and amortization (EBITDA) were $672 million, compared with $810 million in the prior-year quarter. For the year, ongoing EBITDA was $2.75 billion, compared with $3.15 billion in the prior year.

Ongoing distributable cash flow (DCF) for the quarter was $201 million, compared with $316 million in the same quarter last year. For the year, ongoing DCF was $1.29 billion, compared with $1.46 billion in 2014.

Fourth quarter 2015 ongoing net income from controlling interests was $189 million, or $0.28 diluted earnings per share (EPS), compared with $316 million, or $0.47 diluted EPS, during the prior-year quarter. Reported net income from controlling interests for the quarter was $(263) million, or $(0.39) diluted EPS, compared with $316 million, or $0.47 diluted EPS, in 2014. Fourth quarter 2015 results include special items of $452 million, or $0.67 diluted EPS, driven largely by non-cash goodwill and asset impairments totaling $445 million.

Ongoing net income from controlling interests was $775 million in 2015, or $1.15 diluted EPS, compared with $1.09 billion, or $1.62 diluted EPS, during the prior year. Reported net income from controlling interests was $196 million in 2015, or $0.29 diluted EPS, compared with $1.08 billion, or $1.61 diluted EPS, in 2014. Full year 2015 results include special items of $579 million, or $0.86 diluted EPS, driven largely by non-cash goodwill and asset impairments totaling $561 million.

Tables detailing the fourth quarter and full-year special items are shown later in this release.

CEO COMMENT  

"Our 2015 results illustrate the resiliency of our business model. Even in a year with dramatically lower commodity prices and a lower Canadian dollar than we had projected, we managed to beat our DCF expectations by 7 percent and ended the year with a higher than expected dividend coverage ratio of 1.3 times," said Greg Ebel, chief executive officer, Spectra Energy. "We continued to build on our solid natural gas transmission portfolio, which generates 90 percent of its revenue from long-term, fixed-fee contracts with high credit-quality customers and little volume risk. As a result of this stability, we are positioned to continue providing reliable and growing dividends for our investors, as demonstrated by the 14-cent per share increase for 2016 that we recently announced.

"Looking forward, we continue to have more than $8 billion of contractually secured projects in our execution backlog, 75 percent of which are supported by demand-pull customers such as local utilities. The growing demand for our assets, as well as the decisive actions we took in 2015 to strengthen our business, have prepared us well for 2016 and beyond."

SEGMENT RESULTS

Spectra Energy Partners

Spectra Energy Partners reported fourth quarter 2015 EBITDA of $484 million, compared with $444 million in fourth quarter 2014. These results reflect increased earnings from expansion projects in the natural gas transmission business. The increase was partially offset by lower equity earnings from Sand Hills and Southern Hills natural gas liquids (NGL) pipelines, which Spectra Energy Partners owned for approximately one month of the quarter.

Year-end 2015 ongoing EBITDA for Spectra Energy Partners was $1.91 billion, compared with $1.67 billion in 2014. The 2015 period excludes a special item of $9 million related to a non-cash impairment of the Ozark Gas Gathering asset.

Distribution

Distribution reported fourth quarter 2015 EBITDA of $113 million, compared with $132 million in fourth quarter 2014. The decrease was mainly due to the effect of a lower Canadian dollar.

Year-end 2015 EBITDA for Distribution was $473 million, compared with $552 million in 2014.

Western Canada Transmission & Processing

Western Canada Transmission & Processing fourth quarter 2015 ongoing EBITDA was $123 million, compared with $250 million in fourth quarter 2014. The 2015 period excludes special items of $7 million for employee and overhead reductions and $7 million for a non-cash asset impairment. The segment's ongoing results reflect the effect of a lower Canadian dollar and lower earnings at Empress, largely due to the net effect of the unrealized mark-to-market value associated with the risk management program.

Year-end 2015 ongoing EBITDA for Western Canada Transmission & Processing was $516 million, compared with $754 million in 2014. The 2015 period excludes special items totaling $25 million, which were primarily associated with employee and overhead reductions. 

Field Services

Spectra Energy reported ongoing EBITDA from Field Services of $(36) million in fourth quarter 2015, compared with $(18) million in fourth quarter 2014. The 2015 period excludes special items of $172 million, primarily from non-cash asset impairments as a result of the continuing low commodity price environment. The decrease in ongoing EBITDA was primarily attributable to lower commodity prices, partially offset by asset growth, improved operating efficiencies, and other initiatives, as well as the increase in ownership of the Sand Hills and Southern Hills NGL pipelines for approximately two months of the quarter. 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 fourth quarters of 2015 and 2014, respectively, NGL prices averaged $0.42 per gallon versus $0.68 per gallon, NYMEX natural gas averaged $2.27 per million British thermal units (MMBtu) versus $4.00 per MMBtu, and crude oil averaged approximately $42 per barrel versus $73 per barrel. 

On a full-year basis for 2015 and 2014, respectively, NGL prices averaged $0.45 per gallon versus $0.89 per gallon, NYMEX natural gas averaged $2.66 per MMBtu versus $4.41 per MMBtu, and crude oil averaged approximately $49 per barrel versus $93 per barrel.  

Year-end 2015 ongoing EBITDA for Field Services was $(106) million, compared with $229 million in 2014. The 2015 period excludes special items of $355 million, primarily due to non-cash goodwill and asset impairments. The 2014 period excludes special items of $12 million, primarily due to a non-cash goodwill impairment. 

Other

"Other" reported ongoing net expenses of $12 million and a net benefit of $2 million in the fourth quarters of 2015 and 2014, respectively, reflecting higher corporate costs, including employee benefits costs. Full-year 2015 ongoing net expenses for "Other" were $51 million, compared with $58 million in 2014. Both the 2015 quarter and year-end periods exclude a special item of $333 million related to non-cash goodwill impairments associated with the Westcoast acquisition in 2002.

"Other" primarily consists of corporate expenses, including benefits, and captive insurance.

ADDITIONAL FINANCIAL INFORMATION

Interest Expense

Interest expense was $156 million in fourth quarter 2015, compared with $158 million in fourth quarter 2014, reflecting a lower Canadian dollar and lower average rates, partially offset by higher average long-term debt balances.

Income Taxes

Excluding a $62 million tax benefit related to asset impairments in the current quarter, income tax expense was $59 million in fourth quarter 2015, compared with $77 million in fourth quarter 2014. The decrease in tax expense was mainly due to lower earnings and a lower effective state tax rate. 

Excluding the tax impact of special items, the effective tax rate was 20 percent in fourth quarter 2015, compared with 17 percent in fourth quarter 2014.

Foreign Currency

Net income from controlling interests for the quarter was lower by $6 million due to the lower Canadian dollar.

Liquidity and Capital Expenditures

Total debt outstanding at Spectra Energy as of December 31, 2015, was $14.7 billion. Total Spectra Energy liquidity at the end of the quarter was $2.8 billion, including $1.7 billion of available liquidity at Spectra Energy Partners. Total capital and investment spending for the quarter was $1.06 billion, excluding contributions from noncontrolling interests. The spending consisted of $848 million of growth capital expenditures and $216 million of maintenance capital expenditures.

For the year, total capital and investment spending was $2.97 billion, excluding contributions from noncontrolling interests, and was mainly comprised of approximately $2.28 billion of growth capital expenditures and $691 million of maintenance capital expenditures.

Effects of Fourth Quarter 2015 Special Items 

($MM)

EBITDA

Net Income(1)

EPS

Cash

Ongoing

$    672

$    189

$   0.28


Adjustments related to Special Items





Goodwill impairments (2)

$ (333)

$ (333)

$ (0.49)

$     0

DCP special items

(172)

(110)

(0.16)

0

Other special items

(14)

(9)

(0.02)

(7)

               Total Special Items

$ (519)

$ (452)

$ (0.67)

$    (7)

Reported

$   153

$ (263)

$ (0.39)


(1) Represents net income from controlling interests

(2) Recorded in Other at SE





Effects of Year-to-Date 2015 Special Items 

($MM)

EBITDA

Net Income(1)

EPS

Cash

Ongoing

$2,746

$    775

$   1.15


Adjustments related to Special Items





Goodwill impairments (2)

$ (333)

$ (333)

$ (0.49)

$     0

DCP special items

(355)

(224)

(0.33)

0

Other special items

(34)

(22)

(0.04)

(18)

               Total Special Items

$ (722)

$ (579)

$ (0.86)

$    (18)

Reported

$   2,024

$ 196

$ 0.29


(1) Represents net income from controlling interests

(2) Recorded in Other at SE





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 2015, the company had:

  • $10.1 billion – in service and delivering solid cash flows
  • $8.2 billion – in execution
  • $20+ billion – in development

Spectra Energy Partners

Spectra Energy Partners has advanced numerous projects across the system. The company filed Federal Energy Regulatory Commission (FERC) certificate applications in the quarter for the Atlantic Bridge, Access South, Adair Southwest, and Lebanon Extension projects.

The NEXUS project, which is supported by local distribution companies (LDCs) as well as Marcellus and Utica producers, also filed its application with FERC, and reached another regulatory milestone in the quarter with the receipt of Ontario Energy Board (OEB) approval for the Canadian utility shippers. The joint venture with DTE will allow customers to move up to 1.5 billion cubic feet per day (Bcf/d) through Ohio and Michigan markets to the Dawn Hub, which is the second largest physically traded gas hub in North America and is owned and operated by Union Gas. NEXUS has secured additional connections with four natural gas distribution companies in Ohio, including the two largest in the state, two natural gas-fired power plants, and three industrial parks, demonstrating the value of the project path connecting to the largest natural gas supply source in North America. These connections could add incremental load across northern Ohio of up to 1.4 Bcf/d. NEXUS is on target for a November 2017 in-service date.

The AIM project, supported by New England LDCs, has made significant construction progress and is well on the way to its planned in-service date in the second half of 2016. A number of other projects are on track to meet their respective in-service dates, including the Sabal Trail, Ozark, Salem Lateral, Gulf Markets, Loudon Expansion, TEAL, and PennEast projects.

In the liquids business, the Express Enhancement project is supported by long-term contracts and is on schedule for completion by the end of 2016. The strong response to this system optimization project demonstrates that the Express pipeline's incumbent position is a substantial advantage in responding quickly to market demand. 

Access Northeast is focused on the New England electric power market and saving consumers money while improving the reliability of the region's energy system. This solution maximizes existing infrastructure corridors, by utilizing the Algonquin and Maritimes & Northeast pipelines, which directly connect to more than 60 percent of the ISO-New England power plants. In addition, the four new natural gas-fired electric generation plants that have cleared the 2017 and 2018 ISO-NE forward capacity auctions will be located on the Algonquin pipeline, further demonstrating the company's very strong position in New England.

Access Northeast will carry natural gas from the least expensive supply areas, via multiple optional paths, directly to the majority of the power plants in New England. It will cost-effectively deliver supply when power generators need it, with new tariff services to handle the peak hour, quick start, and seasonal needs.

Access Northeast submitted its FERC pre-file application during the quarter and has recently executed electric distribution contracts in Massachusetts equaling more than 40 percent of the 0.9 Bcf/d capacity designed for generators. Progress is being made in other states, and Access Northeast anticipates state approvals for contracts later this year. The project continues to advance toward a late 2018 initial in-service date.

Distribution

Union Gas' storage and transmission system continues to grow and increase in importance to Eastern Canada and the Northeast U.S.

The 2015 Dawn-Parkway expansion project was placed into service on time and under budget during the quarter. Future growth opportunities also solidified with OEB approvals for the 2016 and 2017 Dawn-Parkway expansions, along with the Burlington-Oakville transmission reinforcement project. These expansion projects are now in execution and on schedule for their respective in-service dates.

Western Canada Transmission & Processing

Western Canada originated two new supply-push projects in 2015, totaling about 290 million cubic feet per day in capacity: High Pine and Wyndwood. These projects are underpinned by long-term contracts with Montney producers holding substantial land bases and seeking markets at Station 2 in British Columbia, AECO in Alberta, as well as export markets via multiple paths. High Pine is on schedule to go into service in 2016, while Wyndwood, which was placed into execution in the fourth quarter, has an expected in-service date of 2018. Both projects will drive growth on the company's BC Pipeline, which provides producer access to downstream markets.

The Jackfish Lake project is proceeding on schedule to be in service in 2017. The RAM project will increase reliability and maintainability on our fully contracted 1.5 Bcf/d T-South system, is proceeding on schedule, and will come on-line in stages, with full in-service in 2018. Upon completion, RAM will allow significantly higher summer load factors than previous years, to meet increased demands for low-cost British Columbia production in the Pacific Northwest.

High Pine, Jackfish Lake and RAM were all filed with the National Energy Board (NEB) during the quarter.

Additional Information

Additional information about fourth quarter 2015 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, February 3, 2016, at 8 a.m. CT. The webcast will be available via the Investors sections of the Spectra Energy and Spectra Energy Partners websites. 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 89326071 or "Spectra Energy / Spectra Energy Partners Earnings Call."

A replay of the call will be available until 5 p.m. CT on Tuesday, May 3, 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 Investors sections of the Spectra Energy and Spectra Energy Partners websites.

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 reported net income from controlling interests and reported 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 measure used by us to evaluate segment performance is segment EBITDA. We consider segment EBITDA, which is the GAAP measure used to report segment results, to be a good indicator of each segment's operating performance from its continuing operations as it represents the results of our segments' operations before depreciation and amortization without regard to financing methods or capital structures. Our segment 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 reported segment EBITDA and reported 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 reported segment EBITDA and reported Other EBITDA.

We have also presented 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 reported 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 2014 Form 10-K, filed on February 27, 2015, 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

December 2015

(Unaudited)

(In millions, except per-share amounts and where noted)

These results include the impact of special items












Quarters Ended
December 31,


Years Ended
December 31,



2015


2014


2015


2014

COMMON STOCK DATA









Earnings (Loss) Per Share, Diluted


$

(0.39)



$

0.47



$

0.29



$

1.61


Dividends Per Share


$

0.370



$

0.370



$

1.480



$

1.375


Weighted-Average Shares Outstanding, Diluted


673



672



672



672











INCOME









Operating Revenues


$

1,316



$

1,600



$

5,234



$

5,903


Total Reportable Segment EBITDA


498



808



2,408



3,192


Net Income (Loss) - Controlling Interests


(263)



316



196



1,082











EBITDA BY BUSINESS SEGMENT









Spectra Energy Partners


$

484



$

444



$

1,905



$

1,669


Distribution


113



132



473



552


Western Canada Transmission & Processing


109



250



491



754


Field Services


(208)



(18)



(461)



217


Total Reportable Segment EBITDA


498



808



2,408



3,192


Other EBITDA


(345)



2



(384)



(58)


Total Reportable Segment and Other EBITDA

$

153



$

810



$

2,024



$

3,134











DISTRIBUTABLE CASH FLOW









Distributable Cash Flow


$

194



$

316



$

1,274



$

1,460


Coverage Ratio






1.3x



1.6x


CAPITAL AND INVESTMENT EXPENDITURES









Spectra Energy Partners (a)






$

2,007



$

1,241


Distribution






544



427


Western Canada Transmission & Processing






360



473


Other (b)






61



146


     Total Capital and Investment Expenditures (a,b)




$

2,972



$

2,287











Expansion and Investment (a,b)






$

2,281



$

1,547


Maintenance and Other






691



740


     Total Capital and Investment Expenditures (a,b)




$

2,972



$

2,287


























December 31,







2015


2014

CAPITALIZATION









Common Equity - Controlling Interests






26.6

%


32.2

%

Noncontrolling Interests and Preferred Stock






13.6

%


9.9

%

Total Debt






59.8

%


57.9

%










Total Debt






$

14,656



$

14,637


Book Value Per Share (c)






$

9.73



$

12.16


Actual Shares Outstanding






671



671




















(a) Excludes contributions received from noncontrolling interests of $216 million in 2015 and $53 million in 2014. 2014 period includes an investment in SESH of $94 million, used by SESH to retire debt.

(b) 2014 period includes an investment in SESH of $95 million, used by SESH to retire debt.

(c) Represents controlling interests.









 

 




Spectra Energy Corp
Quarterly Highlights
December 2015
(Unaudited)

(In millions, except where noted)
These results include the impact of special items




Quarters Ended
December 31,


Years Ended
December 31,



2015


2014


2015


2014

SPECTRA ENERGY PARTNERS









 Operating Revenues


$

634



$

599



$

2,455



$

2,269


 Operating Expenses









     Operating, Maintenance and Other


222



213



828



781


 Other Income and Expenses


72



58



278



181


 EBITDA


$

484



$

444



$

1,905



$

1,669


 Express Pipeline Revenue Receipts, MBbl/d (a)


239



240



239



223


 Platte PADD II Deliveries, MBbl/d


140



168



162



170











DISTRIBUTION









 Operating Revenues


$

366



$

505



$

1,527



$

1,843


 Operating Expenses









     Natural Gas Purchased


152



261



691



879


     Operating, Maintenance and Other


101



112



363



411


 Other Income and Expenses








(1)


 EBITDA


$

113



$

132



$

473



$

552


 Number of Customers, Thousands






1,437



1,420


 Heating Degree Days, Fahrenheit


2,017



2,527



7,387



8,111


 Pipeline Throughput, TBtu (b)


165



177



759



713


 Canadian Dollar Exchange Rate, Average


1.34



1.14



1.28



1.10











WESTERN CANADA TRANSMISSION & PROCESSING

















 Operating Revenues


$

323



$

519



$

1,285



$

1,902


 Operating Expenses









     Natural Gas and Petroleum Products Purchased


69



114



193



466


     Operating, Maintenance and Other


149



159



611



687


 Other Income and Expenses


4



4



10



5


 EBITDA


$

109



$

250



$

491



$

754


 Pipeline Throughput, TBtu


234



249



923



934


 Volumes Processed, TBtu


165



190



658



721


 Canadian Dollar Exchange Rate, Average


1.34



1.14



1.28



1.10











FIELD SERVICES









 Equity in Earnings (Loss) of DCP Midstream, LLC


$

(208)



$

(18)



$

(461)



$

217


 Cash Distributions to Spectra Energy


$



$

58



$



$

237


 Natural Gas Gathered and Processed/Transported, TBtu/day (d)


7.1



7.4



7.1



7.3


 Natural Gas Liquids Production, MBbl/d (c)


409



447



410



454


 Average Natural Gas Price Per MMBtu (d)


$

2.27



$

4.00



$

2.66



$

4.41


 Average Natural Gas Liquids Price Per Gallon (e)


$

0.42



$

0.68



$

0.45



$

0.89


 Average Crude Oil Price Per Barrel (f)


$

42.20



$

73.33



$

48.80



$

93.06




















(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)

These results include the impact of special items






























Quarters Ended 
December 31,


Years Ended 
December 31,






2015


2014


2015


2014













Operating Revenues



$

1,316



$

1,600



$

5,234



$

5,903


Operating Expenses



1,219



1,035



3,801



3,979














Operating Income



97



565



1,433



1,924














Other Income and Expenses



(132)



44



(176)



420


Interest Expense



156



158



636



679


Earnings (Loss) Before Income Taxes


(191)



451



621



1,665


Income Tax Expense (Benefit)



(3)



77



161



382


Net Income (Loss)



(188)



374



460



1,283


Net Income - Noncontrolling Interests



75



58



264



201


Net Income (Loss) - Controlling Interests



$

(263)



$

316



$

196



$

1,082


 


Spectra Energy Corp

Condensed Consolidated Balance Sheets

(Unaudited)

(In millions)






















December 31,


December 31,






2015


2014 (a)









ASSETS












Current Assets



$

1,648



$

2,332


Investments and Other Assets



7,056



8,007


Net Property, Plant and Equipment



22,918



22,307


Regulatory Assets and Deferred Debits



1,301



1,352










Total Assets



$

32,923



$

33,998







LIABILITIES AND EQUITY












Current Liabilities



$

3,392



$

3,809


Long-term Debt



12,892



12,727


Deferred Credits and Other Liabilities



6,768



6,806


Preferred Stock of Subsidiaries



339



258


Equity



9,532



10,398












Total Liabilities and Equity



$

32,923



$

33,998










(a)

The debt issuance costs of $42 million previously reported in Regulatory Assets and Deferred Credits at December 31, 2014 was retrospectively reclassified as a reduction to Long-term Debt at that date, as a result of the adoption of a new accounting standard.


 

 


Spectra Energy Corp

Distributable Cash Flow

(Unaudited)

(In millions)












Quarters Ended

 December 31,


Years Ended

December 31,



2015


2014


2015


2014










Net Income (Loss)


$

(188)



$

374



$

460



$

1,283


Add:









Interest expense


156



158



636



679


Income tax expense (benefit)


(3)



77



161



382


Depreciation and amortization


190



196



764



796


Foreign currency loss (gain)


(1)



5



6



(3)


Less:









Third party interest income


1





3



3


EBITDA


153



810



2,024



3,134











Add:









Earnings from equity investments


4



(24)



(76)



(370)


Non-cash impairments at DCP


169





366



9


Distributions from equity investments (a)


26



107



209



416


Empress non-cash items


18



(60)



42



(60)


Non-cash goodwill impairments associated
        with the Westcoast acquisition in 2002


333





333




Other non-cash asset impairments (b)


7





16




Other


(5)



(28)



25



(19)


Less:









Interest expense


156



158



636



679


Equity AFUDC


38



20



111



53


Net cash paid (refund) for income taxes


49



(16)



29



(8)


Distributions to noncontrolling interests


58



47



198



175


Maintenance capital expenditures


210



280



691



751


Total Distributable Cash Flow


$

194



$

316



$

1,274



$

1,460











(a) Excludes $403 million and $230 million in distributions from equity investments for the years ended December 31, 2015 and 2014, respectively.

(b) Includes non-cash asset impairments at SEP and at WCTP.

 


Spectra Energy Corp

Reported to Ongoing Earnings Reconciliation

December 2015 Quarter-to-Date

(Unaudited)

(In millions, except per-share amounts)















Reported Earnings


Special Items


Ongoing Earnings


SEGMENT EARNINGS BEFORE INTEREST, TAXES, AND
DEPRECIATION AND AMORTIZATION




























Spectra Energy Partners


$

484



$



$

484













Distribution


113





113













Western Canada Transmission & Processing


109



14


A

123













Field Services


(208)



172


B

(36)













Total Reportable Segment EBITDA


498



186



684













Other


(345)



333


C

(12)













Total Reportable Segment and Other EBITDA


$

153



$

519



$

672













EARNINGS


















Total Reportable Segment EBITDA and Other EBITDA


$

153



$

519



$

672



Depreciation and Amortization


(190)





(190)



Interest Expense


(156)



1


D

(155)



Interest Income and Other


2





2



Income Tax (Expense) Benefit


3



(68)



(65)



Total Net Income


(188)



452



264













Total Net Income - Noncontrolling Interests


(75)





(75)













Total Net Income - Controlling Interests


$

(263)



$

452



$

189













EARNINGS (LOSS) PER SHARE, BASIC


$

(0.39)



$

0.67



$

0.28













EARNINGS (LOSS) PER SHARE, DILUTED


$

(0.39)



$

0.67



$

0.28





















A - Overhead reduction costs and non-cash asset impairment.








B - Overhead reduction costs, non-cash asset impairments and write-offs.

C - Non-cash goodwill impairments associated with the Westcoast acquisition in 2002.

D - Net write-off of regulatory assets and liabilities at Ozark Gas Transmission due to discontinuance of regulatory accounting.











Weighted Average Shares (reported and ongoing) - in millions





























Basic

671




















Diluted

673









 

 

 



Spectra Energy Corp



Reported to Ongoing Earnings Reconciliation



December 2015 Year-to-date



(Unaudited)



(In millions, except per-share amounts)


















Reported Earnings


Special Items


Ongoing Earnings



SEGMENT EARNINGS BEFORE INTEREST, TAXES, AND
DEPRECIATION AND AMORTIZATION




























Spectra Energy Partners


$

1,905



$

9


A

$

1,914















Distribution


473





473















Western Canada Transmission & Processing


491



25


B

516















Field Services


(461)



355


C

(106)















Total Reportable Segment EBITDA


2,408



389



2,797















Other


(384)



333


D

(51)















Total Reportable Segment and Other EBITDA


$

2,024



$

722



$

2,746















EARNINGS




















Total Reportable Segment EBITDA and Other EBITDA


$

2,024



$

722



$

2,746




Depreciation and Amortization


(764)





(764)




Interest Expense


(636)



1


E

(635)




Interest Income and Other


(3)





(3)




Income Tax Expense


(161)



(143)



(304)




Total Net Income


460



580



1,040















Total Net Income - Noncontrolling Interests


(264)



(1)



(265)















Total Net Income - Controlling Interests


$

196



$

579



$

775















EARNINGS PER SHARE, BASIC


$

0.29



$

0.86



$

1.15















EARNINGS PER SHARE, DILUTED


$

0.29



$

0.86



$

1.15


























A - Non-cash impairment at Ozark Gas Gathering.


B - Overhead reduction costs and non-cash asset impairment.






C - Overhead reduction costs, net gain on asset sales, and non-cash goodwill and asset impairments and write-offs.


D - Non-cash goodwill impairments associated with the Westcoast acquisition in 2002.


E - Net write-off of regulatory assets and liabilities at Ozark Gas Transmission due to discontinuance of regulatory accounting.













Weighted Average Shares (reported and ongoing) - in millions
































Basic

671






















Diluted

672









 


Spectra Energy Corp

Reported to Ongoing Earnings Reconciliation

December 2014 Quarter-to-date

(Unaudited)

(In millions, except per-share amounts)











Reported/

Ongoing Earnings


SEGMENT EARNINGS BEFORE INTEREST, TAXES, AND
DEPRECIATION AND AMORTIZATION













Spectra Energy Partners


$

444









Distribution


132









Western Canada Transmission & Processing


250









Field Services


(18)









Total Reportable Segment EBITDA


808









Other


2









Total Reportable Segment and Other EBITDA


$

810









EARNINGS










Total Reportable Segment EBITDA and Other EBITDA


$

810



Depreciation and Amortization


(196)



Interest Expense


(158)



Interest Income and Other


(5)



Income Tax Expense


(77)



Total Net Income


374









Total Net Income - Noncontrolling Interests


(58)









Total Net Income - Controlling Interests


$

316









EARNINGS PER SHARE, BASIC


$

0.47









EARNINGS PER SHARE, DILUTED


$

0.47













Weighted Average Shares (reported and ongoing) - in millions











Basic

671












Diluted

672





 


 

Spectra Energy Corp

Reported to Ongoing Earnings Reconciliation

December 2014 Year-to-date

(Unaudited)

(In millions, except per-share amounts)














Reported Earnings


Special Items


Ongoing Earnings

SEGMENT EARNINGS BEFORE INTEREST, TAXES, AND DEPRECIATION AND AMORTIZATION






















Spectra Energy Partners


$

1,669



$



$

1,669











Distribution


552





552











Western Canada Transmission & Processing


754





754











Field Services


217



12


A

229











Total Reportable Segment EBITDA


3,192



12



3,204











Other


(58)





(58)











Total Reportable Segment and Other EBITDA


$

3,134



$

12



$

3,146











EARNINGS
















Total Reportable Segment EBITDA and Other EBITDA


$

3,134



$

12



$

3,146


Depreciation and Amortization


(796)





(796)


Interest Expense


(679)





(679)


Interest Income and Other


6





6


Income Tax Expense


(382)



(4)



(386)


Total Net Income


1,283



8



1,291











Total Net Income - Noncontrolling Interests


(201)





(201)











Total Net Income - Controlling Interests


$

1,082



$

8



$

1,090











EARNINGS PER SHARE, BASIC


$

1.61



$

0.01



$

1.62











EARNINGS PER SHARE, DILUTED


$

1.61



$

0.01



$

1.62











A - Loss on sales 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)





























Quarter Ended
December 31, 2015


Quarter Ended
December 31, 2014



Reported


Special Items


Ongoing


Reported


Special Items


Ongoing

Net Income (Loss)


$

(188)



$

452



$

264



$

374



$



$

374


Add:













Interest expense


156





156



158





158


Income tax expense (benefit)


(3)



67



64



77





77


Depreciation and amortization


190





190



196





196


Foreign currency loss (gain)


(1)





(1)



5





5


Less:













Third Party Interest Income


1





1








EBITDA


153



519



672



810





810















Add:













Earnings from equity investments


4



(3)



1



(24)





(24)


Non-cash impairments at DCP


169



(169)










Distributions from equity investments


26





26



107





107


Empress non-cash items


18





18



(60)





(60)


Non-cash goodwill impairments associated
        with the Westcoast acquisition in 2002


333



(333)










Other non-cash asset impairments


7



(7)










Other


(5)





(5)



(28)





(28)


Less:













Interest expense


156





156



158





158


Equity AFUDC


38





38



20





20


Net cash paid (refund) for income taxes


49





49



(16)





(16)


Distributions to non-controlling interests


58





58



47





47


Maintenance capital expenditures


210





210



280





280


Total Distributable Cash Flow


$

194



$

7



$

201



$

316



$



$

316


 


Spectra Energy Corp

Reported to Ongoing Distributable Cash Flow Reconciliation

(Unaudited)

(In millions, except where noted)





























Year Ended 
December 31, 2015


Year Ended
December 31, 2014



Reported


Special Items


Ongoing


Reported


Special Items


Ongoing

Net Income


$

460



$

579



$

1,039



$

1,283



$

8



$

1,291


Add:













Interest expense


636





636



679





679


Income tax expense


161



143



304



382



4



386


Depreciation and amortization


764





764



796





796


Foreign currency loss (gain)


6





6



(3)





(3)


Less:













Third Party Interest Income


3





3



3





3


EBITDA


2,024



722



2,746



3,134



12



3,146















Add:













Earnings from equity investments


(76)



11



(65)



(370)



(3)



(373)


Non-cash impairments at DCP


366



(366)





9



(9)




Distributions from equity investments


209





209



416





416


Empress non-cash items


42





42



(60)





(60)


Non-cash goodwill impairments associated 
     with the Westcoast acquisition in 2002


333



(333)










Other non-cash asset impairments


16



(16)










Other


25





25



(19)





(19)


Less:













Interest expense


636





636



679





679


Equity AFUDC


111





111



53





53


Net cash paid (refund) for income taxes


29





29



(8)





(8)


Distributions to non-controlling interests


198





198



175





175


Maintenance capital expenditures


691





691



751





751


Total Distributable Cash Flow


$

1,274



$

18



$

1,292



$

1,460



$



$

1,460















Dividends declared


$

1,017









$

924








Coverage - DCF / Dividend


1.3x







1.6x






 

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/spectra-energy-reports-fourth-quarter-and-year-end-2015-results-300214330.html

SOURCE Spectra Energy Corp


Source: PR Newswire (February 3, 2016 - 6:30 AM EST)

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