Premier natural gas company,
Spectra Energy Corp.
) reported fourth-quarter 2013 earnings per share from continuing
operations of 41 cents, beating the Zacks Consensus Estimate of
38 cents. The results increased 28.1% from the year-ago earnings
of 32 cents. The upside came from all segments.
The company's operating revenues of $1,565.0 million rose 16.2%
from the year-earlier level of $1,347.0 million and exceeded our
projection of $1,506.0 million.
Full-year 2013 earnings from continuing operations of $1.64 per
share beat the Zacks Consensus Estimate of $1.57 and increased
14.7% from the year-earlier profit level of $1.43. Total revenue
in 2013 rose 8.7% year over year to $5,518.0 million.
On Nov 1, 2013, the company completed the drop-down of the
remainder of its U.S. Storage and Transmission assets to its MLP
Spectra Energy Partners, LP.
). The transaction transformed Spectra Energy Partners into one
of the largest fee-based MLPs in North America with an enterprise
value of almost $20 billion.
Spectra Energy Partners
: The segment posted quarterly earnings before interest, taxes,
depreciation and amortization (EBITDA) of $368.0 million,
reflecting an upside of 16.5% from the year-ago quarter. This was
attributable to the dropdown of Express-Platte, the performance
of which exceeded expectations as well as increased earnings from
pipeline expansions, mainly the New Jersey to New York project
commissioned on Nov 1.
: The segment reported a year-over-year 6.1% increase in its
EBITDA to $156.0 million from $147.0 million. The increase was
mainly due to higher approved rates, colder weather and the
negative effect in the fourth quarter 2012 of the decision from
the Ontario Energy Board requiring certain transportation
revenues be refunded to customers.
Western Canada Transmission & Processing
: The segment witnessed an EBITDA of $215.0 million, up 41.4%
from the year-earlier level. The upside came from increased
earnings at the Empress NGL business, attributable to higher
propane sales prices, lower costs and improved contracting
structures compared to fourth quarter 2012.
: The segment's EBITDA of $72.0 million rose 24.1% from the
year-ago level of $58.0 million. The improvement was mainly
backed by higher volumes from new processing plants as well as
higher commodity prices and lower operating costs. These
increases were partially offset by higher interest expense.
Production and Price Realizations
The company produced NGLs of 452 thousand barrels per day
(MBbl/d), up from the year-ago quarter level of 405 MBbl/d. Price
of NGLs averaged 81 cents per gallon (up nearly 5.2% year over
year), while crude oil averaged approximately $97.48 per barrel
(up 10.6% year over year). Natural gas was sold at $3.60 per
million British thermal units (MMBtu) versus $3.40 per MMBtu in
the fourth quarter of 2012.
As of Dec 31, 2013, Spectra Energy had long-term debt of
approximately $14,717 million with a debt-to-capitalization ratio
of 58% (versus 62% in the preceding quarter).
Spectra Energy is one of North America's premier natural gas
infrastructure plays and has strong business positions in growth
markets. Spectra plans to invest about $25 billion over the next
decade on fee-based gas infrastructure growth projects. The
company plans to allocate $25 billion in growth projects through
the end of the decade.
Spectra Energy carries a Zacks Rank #3 (Hold). Better-ranked
stocks in the oil and gas sector such as Zacks Ranked #1 (Strong
NGL Energy Partners LP
Cabot Oil & Gas Corporation
) would offer above-average returns to investors.
CABOT OIL & GAS (COG): Free Stock Analysis
NGL ENERGY PART (NGL): Free Stock Analysis
SPECTRA ENERGY (SE): Free Stock Analysis
SPECTRA EGY PTR (SEP): Free Stock Analysis
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