Premier natural gas company,
Spectra Energy Corp.
) reported third-quarter 2013 earnings per share from continuing
operations of 42 cents, beating the Zacks Consensus Estimate of
35 cents. The results increased 55.6% from the year-ago earnings
of 27 cents. The upside came from all segments excluding
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The company's operating revenues of $1,144.0 million rose 6.7%
from the year-earlier level of $1,072.0 million. However, this
failed to reach our projection of $1,296.0 million.
U.S. Transmission: The segment posted quarterly earnings before
interest and taxes (EBIT) of $250.0 million, reflecting an upside
of 5.0% from the year-ago quarter. This was attributable to the
expansion of Texas Eastern and partially mitigated by lower
Distribution: The segment reported a year-over-year 38.2%
decrease in its EBIT to $34.0 million from the prior-year level
of $55.0 million. The decrease was mainly due to lower storage
and transportation revenues.
Western Canada Transmission & Processing: The segment
witnessed an EBIT of $90.0 million, up 8.4% from the year-earlier
level. The upside came from lower production costs and higher
propane sale prices.
Field Services: The segment's EBIT of $137.0 million rose 121%
from the year-ago level of $62.0 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.
Price of NGLs averaged 78 cents per gallon (up nearly 8.3% year
over year), while crude oil averaged approximately $106 per
barrel (up 15.2% year over year). Natural gas was sold at $3.58
per million British thermal units (MMBtu) versus $2.81 per MMBtu
in the third quarter of 2012.
As of Sep 30, 2013, Spectra Energy had long-term debt of
approximately $16,821 million with a debt-to-capitalization ratio
of 62% (versus 55% 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. On Nov 1, 2013, the company completed the drop-down of
the remainder of its U.S. Storage and Transmission assets to its
Spectra Energy Partners, LP
). The transaction transforms Spectra Energy Partners into one of
the largest fee-based MLPs in North America with an enterprise
value of almost $20 billion.
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
Spectra Energy holds a Zacks Rank #2, which is equivalent to a
Buy rating for a period of one to three months. There are other
stocks in the oil and gas sector -
SM Energy Company
TransAtlantic Petroleum Ltd.
) - which hold a Zacks Rank #1 (Strong Buy) and are also
expected to provide above-average returns to investors.