Spectra Energy Q3 Profit Climbs, Beats View, While Revenue Misses - Update

(RTTNews) - Spectra Energy Corp. (SE), which owns and operates natural gas-related energy assets, reported Monday a climb in its third-quarter profit benefited by higher revenues. Adjusted earnings per share beat analysts' estimates, while top line missed their view.

Further, Spectra Energy said its recently completed drop-down of the remainder of its U.S. Storage and Transmission assets into Spectra Energy Partners allows for a significant dividend increase at Spectra Energy. It also allows significant increases in Spectra Energy Partners' distributions to unitholders.

Spectra Energy President and Chief Executive Officer Greg Ebel said, "Spectra Energy's results were very much in line with our expectations for the quarter and the year. With the continued successful execution of our capital expansion plans, the strong performance of our newly acquired oil and natural gas liquids pipeline businesses, and the early completion of our drop down of assets into our MLP, Spectra Energy Partners, we are delivering impressive financial results and returns for our shareholders."

For the third quarter, the company's net income from controlling interests was $263 million, or $0.39 per share, higher than last year's $179 million, or $0.27 per share. The latest quarter results included transaction costs related to the drop down of assets into Spectra Energy Partners of $20 million or $0.03 per share.

Ongoing net income for the quarter, which excluded one-time costs, was $283 million or $0.42 per share. On average, 12 analysts polled by Thomson Reuters expected the company to report earnings of $0.33 per share for the quarter. Analysts' estimates typically exclude special items.

Total reportable segment earnings before interest and tax or EBIT climbed to $540 million from prior year's $438 million. In the quarter, U.S. Transmission segment's earnings were benefited by expansions on Texas Eastern, partially offset by expected lower storage revenues. Distribution segment's results were hurt by an expected reduction in transportation revenue as a result of a 2012 regulatory decision, and expected lower storage revenues.

Earnings from Field Services segment climbed from last year with higher volumes from DCP Midstream's new processing plants going into service as well as higher commodity prices and lower operating costs.

Quarterly operating revenues increased to $1.144 billion from last year's $1.072 billion. Four analysts estimated revenues of $1.24 billion for the quarter.

Meanwhile, Spectra Energy Partners, LP (SEP), a 61 percent-owned unit of Spectra Energy, reported third-quarter reported net income from controlling interests of $59.6 million or $0.42 per unit, compared with $46.1 million or $0.40 per unit in 2012. Ongoing net income from controlling interests was $65.4 million or $0.47 per unit.Operating revenues climbed to $133.1 million from $57.2 million last year.

Regarding its dividend, Spectra Energy said the cash from its limited partnership and general partnership distributions will support its ability to raise annual dividend by 12 cents per year, effective in the first quarter of 2014, an annual increase of about 10 percent from 2013.

The company expects to continue annual dividend increases at this level through 2015. Meanwhile, Spectra Energy Partners will increase its quarterly distribution by three cents per unit, to be paid in the first quarter of 2014. Spectra Energy Partners expects to continue with a one cent per unit quarterly increase thereafter, resulting in an increase of 11 percent from 2013.

In addition, the company said it continues to execute on its $25 billion growth plan.

Spectra Energy shares closed Friday's trading at $35.40, down $0.17 or 0.48 percent.