Spectra Energy Reports 34% Jump in Fourth-Quarter Profit, Puts $800 Million in New Projects to Work in 2014

Researched by Industrial Info Resources (Sugar Land, Texas)--Pipeline and midstream company Spectra Energy Corporation (NYSE:SE) (Houston, Texas) reported fourth-quarter 2014 net income of $316 million, up 34% from a year earlier. Fourth-quarter operating revenues totaled $1.6 billion, up 2.2%.

Industrial Info is tracking 152 Spectra-related projects worth $15.69 billion. This includes 16 projects valued at $1.76 billion by DCP Midstream LLC, a 50:50 joint venture between Spectra Energy and Phillips 66 (NYSE:PSX) (Houston, Texas). A total of 87 projects, valued at $14.89 billion, are in the planning phases, where factors could increase, decrease or totally eliminate the expected spending; 61 projects, valued at $610 million, are under construction; and five projects, valued at $180 million, are in the engineering phases.

With a total investment value of $5.29 billion, the grassroot Prince Rupert Westcoast Connector natural gas pipeline in British Columbia, Canada, is a 50:50 joint venture between Spectra and BG Group (Reading, England). Fluor Canada, which is part of Fluor Corporation (NYSE:FLR) (Irving, Texas), has the engineering, procurement and construction management (EPCM) contract for the 525-mile pipeline, which would move up to 4.2 billion cubic feet per day (BCF/d) of natural gas to BG's planned liquefied natural gas (LNG) facility at Prince Rupert, British Columbia. Kickoff is expected in third-quarter 2016, with completion in second quarter 2019.

Chief Executive Officer Greg Ebel said during the company's earnings conference call that Spectra placed nearly $800 million worth of projects into service in 2014. He added that the company has secured $3 billion in projects through fee-based contracts.

Spectra recently completed the Kingsport natural pipeline expansion, which straddles the Virginia-Tennessee border. Part of project included installation of 6.4 miles of 16-inch-wide pipeline along an existing pipeline route; a new metering facility; and right-of-way to provide an additional million standard cubic feet of natural gas per day to the Eastman Chemical Company (NYSE:EMN) (Kingsport, Tennessee) facility in Kingsport. The project was valued at $120 million, according to Industrial Info. Hatch Mott MacDonald (Iselin, New Jersey) and MG Dyess (Bassfield, Massachusetts) were contracted for the project.

By segment, Spectra Energy Partners reported fourth-quarter 2014 earnings before interest, taxes, depreciation and amortization (EBITDA) of $444 million, up 20% from fourth-quarter 2013. The results reflect increased earnings from expansions, primarily on the Texas Eastern pipeline, as well as higher equity earnings due to the continued ramp-up of volumes on the Sand Hills and Southern Hills natural gas liquids (NGL) pipelines.

Spectra's Distribution segment reported fourth-quarter 2014 EBITDA of $132 million, down 15% from the year earlier, mostly due to a weaker Canadian dollar and lower customer usage as a result of warmer weather.

The Western Canada Transmission & Processing segment reported fourth-quarter EBITDA of $250 million, up 16%, due improved earnings from the Empress NGL processing facility in Alberta.

Spectra reported an $18 million fourth-quarter loss from its 50% share of equity earnings from Field Services, compared with earnings of $72 million in fourth-quarter 2013. Lower commodity prices were among the factors leading to the decrease, the company said.

For all of fiscal year 2014, Spectra reported $1.08 billion in net income, up 4.2% from 2013. Operating revenues for 2014 totaled $5.9 billion in 2014, up nearly 7%.

Total capital and investment spending for the year was $2.29 billion, up 1.2% from 2013. Company executives plan to unveil their spending plans for 2015 through 2017 on Thursday.

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