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

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)

(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

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'sDepartment 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.

TheJackfish 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 millionPanhandle 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

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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

Media: Phil West, (713) 627-4964, (713) 627-4747 (24-hour media line), Analysts and Investors: Roni Cappadonna, (713) 627-4778

Spectra Energy Corporation published this content on 03 August 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 03 August 2016 10:45:10 UTC.

Original documenthttp://investors.spectraenergy.com/phoenix.zhtml?c=204494&p=irol-newsArticle&ID=2192257

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