Spectra Energy Partners, LP (SEP)

SEP 
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Spectra Energy Partners, LP (SEP)

Q3 2012 Results Earnings Call

November 1, 2012 11:00 AM ET

Executives

Derick Smith - Director, Investor Relations

Julie Dill - Chief Executive Officer

Laura Buss Sayavedra - Chief Financial Officer

Analysts

Paul Jacobs - Raymond James

Elvira Scotto - RBC Capital Markets

Chris Signhinolfi - UBS

Presentation

Operator

Good morning. My name is Brenda, and I will be your conference operator today. At this time, I would like to welcome everyone to the Spectra Energy Partners Third Quarter 2012 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions)

I would now like to turn the call over to Mr. Derick Smith. Sir, you may begin.

Derick Smith

Thank you, Brenda. Good morning. I’m Derick Smith, Spectra Energy Partners’ Director of Investor Relations. And I’m pleased that you could join us for a review of our third quarter 2012 earnings.

This morning, Julie Dill, our Chief Executive Officer will discuss some highlights of the quarter and recent developments. Then Laura Buss Sayavedra, our Chief Financial Officer will cover the financial results for the quarter before opening the floor to any questions you may have.

Before we begin, let me take a moment to remind you that some of the statements we make today about future company performance will include forward-looking statements within the meaning of securities laws. Actual results may materially differ from those discussed in these forward-looking statements.

You should refer to the additional information contained in our Form 10-K and other SEC filings, concerning factors that could cause these results to be different and contemplated in today’s discussion.

In addition, today’s discussion includes certain non-GAAP financial measures as defined by SEC Regulation G. Our reconciliation of those measures to the most directly comparable GAAP measures is available on our Investor Relations website at spectraenergypartners.com.

With that, I’ll turn the call over to Julie.

Julie Dill

Thank you, Derick. Good morning, everyone. I know many of you are probably in the New York, New Jersey area or along the East Coast, and just wanted to know that our thoughts and prayers have been and will continue to be with you and your family as a result of the Superstorm. I also know that some of you may actually be on cellphones sitting in your cars. So thank you very much for joining us today.

This morning, I’m pleased to report that we delivered another quarter of solid results. Thanks in large part to the composition of our portfolio, with revenues driven by capacity charges and long-term contract that have an average remaining life of 11 years.

This quarter, our cash available for distribution was about $56 million, up almost 5% over the same period last year. Our strong financial performance allowed us to announce our 20th consecutive quarterly distribution increase, bringing us to a $1.96 per limited partner unit on an annualized basis.

We’re very proud of our track record here as it demonstrates our continued commitment to delivering dependable distributions and value for our investors. And we believe we’re offering more value for our investors with the acquisition we announced last week, an ownership interest of 38.76% in the U.S. portion of the Maritimes & Northeast asset.

The purchase from our general partner Spectra Energy closed yesterday. I’m delighted with this acquisition. If accretive, it expands our reach into the Northeast U.S. and it brings Spectra Energy Partners more long-term cash flows and average contract life of 19 years, and revenues that are over 90% demand charge.

As you can see on the map if you are able to follow it’s on our webcast. The full Maritimes system operated by Spectra Energy originates in Nova Scotia. However, our ownership starts at the border, near Baileyville, Maine.

The pipeline goes through Maine and New Hampshire into Massachusetts just north of Boston, where it connects with Spectra Energy’s Algonquin Gas Transmission system and the rest of the North American pipeline grid. It’s a 338 mile interstate pipeline that brings steady fee-based cash flows to Spectra Energy Partners.

The Maritimes system was placed into service in 1999 and completed an expansion in 2009 that broadest capacity to 800 million cubic feet per day. Maritime is important to the region as it provides transportation for natural gas from LNG and Canadian sources to downstream markets in the Northeast.

With supply evolving throughout North America, Maritimes will continue to evaluate capital investment opportunities for this pipeline. It’s a great addition to our portfolio and its characteristics are consistent with our strategy of how we deliver value to our unitholders.

Our overall strategy is unchanged. We will create value through strategic acquisitions, organic opportunities and when appropriate drop down from our general partner. We continue to be active in the marketplace to find additional opportunities to support further growth of our portfolio and our distributions as well.

We have a high quality portfolio of assets that are positioned to serve growing natural gas market. We do continue to see increasing demand along our footprint for new gas-fired electric generation and existing plans that are converting the natural gas. And we are also ideally located to serve industrial and residential market growth in the Southeast and Northeast regions.

Overall, I am very pleased with the performance of our assets and with the opportunities offered by the latest edition to our portfolio of the Maritimes asset. The third quarter was a good one.

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