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Spectra Energy Brings $2 Billion in Projects Online for 2015

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   |    Thursday,August 06,2015

Spectra Energy Partners has announced results for the second quarter 2015.

Expansion Project Updates

Spectra Energy Partners

  • At U.S. Transmission, the Uniontown to Gas City project was placed into service and began delivering gas to the Midwest on August 1, earlier than the planned start date of November 1.
  • U.S. Transmission remains on track with all the projects it has in execution. The OPEN project will bring incremental Marcellus and Utica supply to southern markets on or before the planned November 2015 in-service date. 
  • The AIM project in New England began construction this quarter and is scheduled to be in service in the second half of 2016. 
  • The company is also on track with the NEXUS project, which has a scheduled fourth quarter 2017 in-service date. FERC resource reports for NEXUS were completed in June, and the company anticipates filing a formal FERC application later this year. 
  • The Lebanon Extension project, which will deliver new natural gas supplies to Midwest markets, moved into execution during the quarter, with secured commercial commitments and an anticipated 2017 in-service date. The Gulf Markets, Loudon, Atlantic Bridge, and Sabal Trail projects are also proceeding well towards their respective in-service dates.
  • Also under development, two Appalachian expansion projects would further connect Marcellus and Utica supply to demand markets. The Greater Philadelphia Expansion and Marcellus to Market projects both received positive responses to open seasons during the quarter and discussions with potential customers are under way.
  • In the Liquids business, the Red Lake project to expand the reach of Sand Hills to access growing Permian Basin production will go fully into service once DCP's Zia II plant – which is in the final stages of starting up – comes on line. On the crude oil system, the $135 million Express Enhancement project is currently in execution with an estimated 2016 in-service date.

Western Canada Transmission & Processing

  • Work is advancing on projects highlighting the benefits of the company's expansive and attractive existing footprint in Western Canada. Two of these expansions are expected to be in service in 2017: the Jackfish Lake and RAM projects.
  • The company moved another Western Canada project, High Pine, into execution in the second quarter 2015 to further expand the BC pipeline. The customer agreement has been executed, and the $325 million project will have a late 2016 in-service date.

Field Services

  • Field Services placed the Lucerne II processing plant in the DJ basin into service this quarter and is in the final stages of starting up its Zia II processing plant in the Permian Basin. 

Segment Results

Spectra Energy Partners

  • Spectra Energy Partners reported second quarter 2015 EBITDA of $478 million, compared with $374 million in second quarter 2014. These quarterly EBITDA results reflect increased earnings mainly from expansion projects placed into service: TEAM 2014, TEAM South, and Kingsport. In addition, the increased earnings reflect higher transportation revenues due to higher volumes and tariff rates on the Express pipeline, as well as higher earnings from increased volumes on the Sand Hills natural gas liquids (NGL) pipeline.

Distribution

  • The Distribution business reported second quarter 2015 EBITDA of $98 million, compared with $112 million in second quarter 2014. This change was almost entirely due to a lower Canadian dollar in second quarter 2015.

Western Canada Transmission & Processing

  • Western Canada Transmission & Processing reported second quarter 2015 ongoing EBITDA of $115 million, compared with $111 million in second quarter 2014. The 2015 period excludes a special item of $11 million related to employee and overhead reductions. The segment's 2015 ongoing results reflect higher earnings at Empress, mostly offset by the effect of a lower Canadian dollar.

Field Services

  • Spectra Energy reported its 50 percent share of ongoing EBITDA from Field Services of $(27) million in second quarter 2015, compared with $54 million in second quarter 2014. The 2015 period excludes a special item of a $194 million non-cash goodwill impairment and $12 million related to a loss on the sale of an asset. The decrease in EBITDA was mainly attributable to continued lower commodity prices, partially offset by asset growth, improved operating efficiencies and other initiatives.
  • During the second quarters of 2015 and 2014, respectively, NGL prices averaged $0.48 per gallon versus $0.93 per gallon, NYMEX natural gas averaged $2.64 per million British thermal units (MMBtu) versus $4.67 per MMBtu, and crude oil averaged approximately $58 per barrel versus $103 per barrel.

Liquidity and Capital Expenditures

  • Total debt outstanding at Spectra Energy as of June 30, 2015, was $14.2 billion. Total Spectra Energy liquidity at the end of the quarter was $3.5 billion, including $2.1 billion of available liquidity at Spectra Energy Partners.
  • Spectra Energy has $2.8 billion of capital expansion spending planned in 2015, of which $2.2 billion is at Spectra Energy Partners. Excluding reimbursements from noncontrolling interests, total capital spending for the six months ended June 30, 2015, was slightly more than $1 billion, comprised of approximately $760 million of growth capital expenditures and about $260 million of maintenance capital expenditures.

Greg Ebel, chief executive officer, Spectra Energy said: "Our second quarter results once again underline our resilient business model, which is anchored by our robust portfolio of fee-based assets and growth projects.  Our ongoing earnings not only exceeded our results for the same quarter last year, they exceeded our own expectations. Even in a challenging energy market, Spectra Energy's business mix continues to demonstrate its ability to generate solid earnings and cash flows, allowing us to drive value for our investors through the ongoing growth in our dividend. Our strong performance in the first and second quarters of the year confirms our confidence in achieving our full year distribution coverage target of at least 1.2.

During the quarter, we placed $600 million of projects into service, while growing our backlog of projects in execution by $400 million, to a total of $9.6 billion – projects which are all underpinned by secured, long-term contracts. This year, we will bring more than $2 billion of projects into service, creating additional earnings and cash flow growth in 2016 and beyond.  We continued to demonstrate our solid execution record by placing the Uniontown to Gas City project into service on August 1, well ahead of plan."



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