Spectra Energy Q2 Profit Down; To Sell U.S. Storage And Transmission Assets

(RTTNews) - Spectra Energy Corp (SE) reported second quarter net income from controlling interests of $199 million or $0.30 per share, down from $215 million, or $0.33 per share in the prior year quarter. Analysts polled by Thomson Reuters expected the company to report earnings of $0.32 per share for the quarter. Analysts' estimates typically exclude special items.

Operating Revenues for the quarter rose to $1.22 billion from $1.11 billion in the prior year quarter. Four analysts had consensus revenue estimate of $1.22 billion for the quarter.

Spectra Energy announced its intention to drop down the remainder of its U.S. Storage and Transmission assets into Spectra Energy Partners, LP (SEP) its MLP. Additionally, Spectra Energy said it will drop the other half of the Express-Platte pipeline assets, as well as all of the company's interest in the Sand Hills and Southern Hills pipelines. The transaction is expected to close by year-end.

In consideration, Spectra Energy will receive 172 million LP units of Spectra Energy Partners, approximately 3.5 million GP units to retain its two percent general partner interest, and $2.2 billion in cash.

In addition, about $2.5 billion of debt associated with the assets to be dropped down will be assumed by Spectra Energy Partners.

The cash to Spectra Energy from its limited partnership distributions and general partnership distributions will support Spectra Energy's ability to raise its annual expected dividend from 8 cents per year to 12 cents per year. Spectra Energy Partners will increase its quarterly distribution, to be paid in the first quarter of 2014, by three cents per unit and continue with a one cent per unit quarterly increase thereafter.

Spectra Energy noted that upon closing of the transaction and consistent with other large integrated MLPs, Greg Ebel, president and chief executive officer of Spectra Energy, will assume additional responsibilities and serve as chairman of the board of directors, president and chief executive officer of Spectra Energy Partners. Pat Reddy will continue in his role as chief financial officers of both entities.