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Spectra Energy (SE) Earnings, Revenues Miss Q4 Estimates

Premier natural gas company Spectra Energy Corp.SE reported fourth-quarter 2016 earnings per share from continuing operations of 28 cents, which lagged the Zacks Consensus Estimate of 33 cents. The bottom line remained flat on a year-over-year basis. The decline is mainly attributable to lackluster performance of Western Canada Transmission & Processing and Field Services segment.

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The company's operating revenues of $1,298 million fell 1.4% from the year-ago level of $1,316 million and also came in below the Zacks Consensus Estimate of $1,426 million.

Full-year 2016 earnings of $1.19 per share lagged the Zacks Consensus Estimate of $1.20. Enbridge Energy Partners posted earnings of $1.15 per share in 2015.

Total revenue for the full year decreased to $4,916 million from $5,234 million in 2015. It also lagged the Zacks Consensus Estimate of $5,098.0 million.

Operational Analysis

Spectra Energy Partners : The segment posted quarterly earnings before interest, taxes, depreciation and amortization (EBITDA) of $537.0 million, up 11% from the year-ago quarter. The improvement was mainly driven by higher earnings from expansion projects commissioned in the second half of 2016 in both the natural gas transmission and liquids businesses. Also, increased Allowance for Funds Used During Construction (AFUDC), mainly from the Sabal Trail project, supported the upside.

Distribution : The segment reported year-over-year increase of 8% in EBITDA to $122.0 million from $113.0 million. The upside was mainly driven by incremental earnings from the 2015 Dawn-Parkway expansion project and colder weather.

Western Canada Transmission & Processing : The segment recorded an EBITDA of $105.0 million, down 14.6% from the year-earlier level. The downside can mainly be attributed to lower gathering and processing revenues.

Field Services : Spectra Energy reported that the 50% it owns of the Field Services segment incurred loss of $5 million in the fourth quarter. This is much narrower than a loss of $36 million in the year-ago quarter. Favorable contract realignment efforts, stronger commodity prices and asset growth contributed to the improvement.

Spectra Energy Corp Price, Consensus and EPS Surprise

Spectra Energy Corp Price, Consensus and EPS Surprise | Spectra Energy Corp Quote

Production and Price Realizations

The company produced NGLs of 371 thousand barrels per day (MBbl/d) compared with the year-ago quarter level of 409 MBbl/d. Price of NGLs increased 31% and averaged 55 cents per gallon, while crude oil costs were up 16.5% and averaged approximately $49.15 per barrel, both on a year-over-year basis. Natural gas was sold at $2.98 per million British thermal units (MMBtu) as against $2.27 per MMBtu in the fourth quarter of 2015.

Balance Sheet

As of Dec 31, 2016, Spectra Energy had long-term debt of approximately $13.6 billion with a debt-to-capitalization ratio of 54.1% compared with 55.9% in the preceding quarter.

Zacks Rank

Spectra Energy currently carries a Zacks Rank #2 (Buy). Other well-ranked players in the same space include W&T Offshore Inc. WTI , Holly Energy Partners LP HEP and Sunrun Inc. RUN . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

W&T Offshore posted a positive earnings surprise of 44.19% in the preceding quarter. It beat estimates in all the four trailing quarters with an average positive earnings surprise of 31.49%.

Holly Energy Partners posted a negative earnings surprise of 23.26% in the preceding quarter. It had an average negative earnings surprise of 0.96% in the four trailing quarters.

Sunrun posted a positive earnings surprise of 137.21% in the preceding quarter. It beat estimates in all the four trailing quarters with an average positive earnings surprise of 134.71%.

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Spectra Energy Corp (SE): Free Stock Analysis Report

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Sunrun Inc. (RUN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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