Spectra Energy Partners, LP Reports Third Quarter 2007 Financial Results



    
    - Ongoing net income of $23.8 million

    - Cash Available for Distribution of $37.1 million

    - Declared Cash Distribution of $0.30 per common unit on October 24
    

    HOUSTON, Nov. 7 /CNW/ -- Spectra Energy Partners, LP (NYSE:   SEP) today
reported third quarter 2007 net income of $134.3 million. This includes a
one-time benefit of $110.5 million from the reversal of income tax
liabilities. As a master limited partnership, Spectra Energy Partners is not
subject to federal income taxes.
    
    (Logo: http://www.newscom.com/cgi-bin/prnh/20071107/CLW064LOGO )
    
    Excluding this one-time benefit, ongoing net income for the current
quarter was $23.8 million compared with $13.6 million for third quarter 2006.
The increase resulted primarily from higher demand for transportation and
storage services and earnings from expansion projects placed into service in
2006 and 2007.
    For the quarter ended September 30, 2007, Spectra Energy Partners
reported Cash Available for Distribution of $37.1 million.
    "The strength of our asset portfolio combined with a well-executed growth
plan founded on organic expansion was clearly evident in this quarter's
results," said Greg Harper, president and chief executive officer of Spectra
Energy Partners. "We are confident we will deliver on the financial
expectations for our first year," Harper added.
    Spectra Energy Partners closed its initial public offering on July 2,
2007. Earnings for periods prior to the date of the initial public offering
are attributable to Spectra Energy Partners Predecessor, which consists of
various subsidiaries and assets of Spectra Energy Partners' general partner,
Spectra Energy Corp (NYSE:   SE).
    
    Results from Operations
    
    During the quarter, Spectra Energy Partners reported operating income of
$9 million compared with $6.1 million in third quarter 2006. The increase in
earnings resulted primarily from the completion of East Tennessee Natural Gas'
(ETNG) Jewell Ridge expansion project and other new contracts commencing
service near the end of 2006. Operating income excludes equity earnings from
investments in Gulfstream Natural Gas System, L.L.C. (Gulfstream) and Market
Hub Partners Holding (MHP).
    
    Equity Investment in Gulfstream
    
    Spectra Energy Partners recognized $9.9 million equity earnings from its
24.5 percent interest in Gulfstream in the third quarter compared with $5
million in third quarter 2006. The increase in earnings resulted from strong
demand for interruptible transportation services and capitalization of
previously expensed development costs, a result of favorable regulatory orders
and other progress at Gulfstream's Phase IV project. For the quarter, Spectra
Energy Partners' share of Gulfstream's Cash Available for Distribution was $14
million.
    
    Equity Investment in MHP
    
    Spectra Energy Partners recognized $8.6 million in equity earnings from
its 50 percent interest in MHP during the third quarter compared with $5.7
million in third quarter 2006. The increase in earnings is primarily a result
of high demand for storage services and an increase in storage capacity from
expansion projects placed into service in 2006. For the quarter, Spectra
Energy Partners' share of MHP's Cash Available for Distribution was $9.7
million.
    
    Interest Income and Expense
    
    At the close of the initial public offering, Spectra Energy Partners
borrowed approximately $319 million. As a result, interest expense increased
by $4.4 million over third quarter 2006. In connection with the indebtedness
incurred at closing, Spectra Energy Partners purchased marketable securities
of approximately $196 million. As a result, interest income increased by $2.8
million over third quarter 2006.
    
    Capital Expenditures and Equity Investments
    
    During the quarter, Spectra Energy Partners spent $6 million for
expansion and maintenance capital expenditures at ETNG and invested an
additional $6.9 million in Gulfstream and $7.1 million in MHP for expansion
projects.
    
    Additional Information
    
    An analyst conference call is scheduled for 9:00 a.m. CST today, November
7, 2007 to discuss Spectra Energy Partners' third quarter results. The
conference call can be accessed via the investors' section of Spectra Energy
Partners, LP's web site (http://www.spectraenergypartners.com) or by dialing
(888) 252-3715 in the United States or (706) 634-8942 outside the United
States. The confirmation code is 19764372 or "Spectra Energy Partners Earnings
Call."
    Please call in 5 to 10 minutes prior to the scheduled start time. A
replay of the conference call will be available after 12:30 pm November 7,
2007, until midnight CST, February 7, 2008, by dialing (800) 642-1687 with
Conference ID 19764372. The international replay number is (706) 645-9291,
Conference ID 19764372. A replay and transcript also will be available by
accessing the investors' section of Spectra Energy Partners, LP's web site.
    This release includes "forward-looking statements" which represent our
intentions, plans, expectations, assumptions and beliefs about future events.
Such statements are subject to risks, uncertainties and other factors, many of
which are outside our control and could cause actual results to differ
materially from the results expressed or implied by those forward-looking
statements. These factors, as well as additional factors that could affect our
forward-looking statements, are described in our filings that we make with the
SEC, which are available at the SEC's website at www.sec.gov. In light of
these risks, uncertainties and assumptions, the events described in the
forward-looking statements might not occur or might occur to a different
extent or at a different time than we have described. We undertake no
obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
    
    Reconciliation of Non-GAAP Financial Measures
    
    This press release includes certain financial measures, including ongoing
net income, Adjusted EBITDA, and Cash Available for Distribution that are non-
GAAP financial measures as defined under the rules of the Securities and
Exchange Commission.
    Spectra Energy Partners' management uses ongoing net income, which is a
non-GAAP financial measure as it represents earnings from continuing
operations, adjusted for special items, as a measure to evaluate operations of
the company. Special items represent certain charges and credits which
management believes will not be recurring on a regular basis. Management
believes that the presentation of ongoing net income provides useful
information to investors, as it allows them to more accurately compare the
company's ongoing performance across periods.
    Spectra Energy Partners defines Adjusted EBITDA as net income plus
interest expense, income taxes, and depreciation and amortization, less equity
in earnings of Gulfstream and MHP, interest income, and other income and
expenses, net, which primarily includes non-cash allowance for funds used
during construction (AFUDC).
    Spectra Energy Partners defines Cash Available for Distribution as
Adjusted EBITDA plus Cash Available for Distribution from Gulfstream and MHP,
less net cash paid for interest expense (income), net and maintenance capital
expenditures. Cash Available for Distribution does not reflect changes in
working capital balances.
    This press release is accompanied by a reconciliation of these non-GAAP
financial measures to their nearest GAAP financial measures. Management uses
these financial measures because they are accepted financial indicators used
by investors to compare company performance. In addition, management believes
that these measures provide investors an enhanced perspective of the operating
performance of the Partnership's assets and the cash that the business is
generating. Neither Adjusted EBITDA nor Cash Available for Distribution are
presented as alternatives to net income (loss) or cash flow from operations.
They should not be considered in isolation or as substitutes for a measure of
performance prepared in accordance with United States generally accepted
accounting principles.
    Spectra Energy Partners, LP (NYSE:   SEP) is a Delaware master limited
partnership that owns interests in natural gas transportation and storage
assets in the United States. Spectra Energy Partners' assets include the East
Tennessee Natural Gas system, a 1,400-mile natural gas transportation pipeline
located in the Southeastern United States, and 24.5 percent of Gulfstream
Natural Gas System, L.L.C., which owns a 690-mile natural gas pipeline that
connects Mobile Bay to the central Florida peninsula through the Gulf of
Mexico. The combined systems are capable of transporting 2.4 billion cubic
feet (Bcf) of natural gas per day. Spectra Energy Partners also owns 50
percent of Market Hub Partners, a partnership that owns high deliverability
salt cavern storage assets capable of storing 35 Bcf of natural gas. Visit
www.spectraenergypartners.com for more information.



    
                           Spectra Energy Partners, LP
                                  September 2007
                               Quarterly Highlights
                                   (Unaudited)
                                  (In millions)
    

    
                                                  Three Months Ended
                                                     September 30,
                                                2007               2006
    INCOME
    Operating revenues                          $23.8             $18.6
    Operating expenses                           14.8              12.5
    Operating income                              9.0               6.1
    Equity in earnings of unconsolidated
     affiliates                                  18.5              10.7
    Other income and expenses, net                0.1               0.4
    Interest income                               2.8                -
    Interest expense                              6.5               2.1
    Earnings before income taxes                 23.9              15.1
    Income tax expense (benefit) (a)           (110.4)              1.5
    Net income                                 $134.3             $13.6
    Adjusted EBITDA (b)                         $16.6             $10.8
    Cash Available for Distribution (c)         $37.1             $24.1
    

    
    CAPITAL AND INVESTMENT EXPENDITURES
    Capital expenditures - East Tennessee        $6.0             $38.5
    Investments
      Gulfstream - our 24.5%                      6.9                -
      Market Hub - our 50%                        7.1                -
    Total capital and investment
     expenditures                               $20.0             $38.5
    


    
    (a) The 2007 third quarter includes a one-time benefit of $110.5 million
        from the reversal of income tax liabilities.
    (b) Adjusted EBITDA is defined as net income plus interest expense, income
        taxes, and depreciation and amortization, less equity in
        earnings of Gulfstream and Market Hub, interest income, and other
        income and expenses, net, which primarily includes non-cash
        allowance for funds used during construction (AFUDC).
    (c) Cash Available for Distribution is defined as Adjusted EBITDA plus
        Cash Available for Distribution from Gulfstream and Market
        Hub less net cash paid for interest expense (income), net and
        maintenance capital expenditures. Cash Available for Distribution does
        not reflect changes in working capital balances.
    


    
                           Spectra Energy Partners, LP
                                  September 2007
               Cash Available for Distribution and Adjusted EBITDA
                                   (Unaudited)
                                  (In millions)
    

    
                                                  Three Months Ended
                                                     September 30,
                                                   2007         2006
    Spectra Energy Partners
    Reconciliation of Non-GAAP "Adjusted EBITDA" and "Cash Available for
    Distribution" to GAAP "Net Income"
    Net income                                    $134.3        $13.6
    Add:
      Interest expense                               6.5          2.1
      Income tax expense (benefit)                (110.4)         1.5
      Depreciation and amortization                  7.5          4.7
    Less:
      Interest income                                2.8          -
      Equity in earnings of Gulfstream               9.9          5.0
      Equity in earnings of Market Hub               8.6          5.7
      Other income (expenses), net                   -            0.4
    Adjusted EBITDA                                $16.6        $10.8
    Add:
      Cash Available for Distribution
       from Gulfstream                              14.0          9.5
      Cash Available for Distribution
       from Market Hub                               9.7          5.7
    Less:
       Net cash paid for interest
        expense (income), net                        1.0          -
       Maintenance capital expenditures              2.2          1.9
    Cash Available for Distribution                $37.1        $24.1
    



    
                         Spectra Energy Partners, LP
                                 September 2007
        Gulfstream - Cash Available for Distribution and Adjusted EBITDA
                                   (Unaudited)
                                  (In millions)
    

    
                                                    Three Months Ended
                                                      September 30,
                                                   2007           2006
    Gulfstream
    Reconciliation of Non-GAAP "Adjusted EBITDA" and "Cash Available for
    Distribution" to GAAP "Net Income"
    Net income (a)                                $40.2           $20.4
    Add:
      Interest expense                             12.0            12.2
      Depreciation and amortization                 7.5             7.6
    Less:
      Other income (expenses), net                  0.6             0.4
    Adjusted EBITDA- 100%                         $59.1           $39.8
    Adjusted EBITDA- our 24.5%                    $14.5            $9.8
    Less:
      Net cash paid for interest expense            1.1             0.9
      Maintenance capital expenditures              0.7             0.1
    Cash Available for Distribution - 100%        $57.3           $38.8
    Cash Available for Distribution - our 24.5%   $14.0            $9.5
    

    
    (a) Quarter ended September 30, 2007 includes a net favorable impact of $7
        million representing capitalized project development costs that were
        previously expensed.
    



    
                           Spectra Energy Partners, LP
                                 September 2007
        Market Hub - Cash Available for Distribution and Adjusted EBITDA
                                   (Unaudited)
                                  (In millions)
    

    
                                                    Three Months Ended
                                                        September 30,
                                                     2007           2006
    Market Hub
    Reconciliation of Non-GAAP "Adjusted EBITDA" and "Cash Available for
    Distribution" to GAAP "Net Income"
    Net income                                       $17.1         $11.2
    Add:
      Interest expense                                 0.9           1.1
      Depreciation and amortization                    2.4           1.9
    Less:
      Interest income                                  0.9           -
      Other income (expenses), net                    (0.1)          -
    Adjusted EBITDA- 100%                            $19.6         $14.2
    Adjusted EBITDA- our 50.0%                        $9.8          $7.1
    Less:
      Maintenance capital expenditures                 0.3           2.9
    Cash Available for Distribution - 100%           $19.3         $11.3
    Cash Available for Distribution - our 50.0%       $9.7          $5.7
    



    
                           Spectra Energy Partners, LP
                                  September 2007
                                    Net Income
                                   (Unaudited)
                                  (In millions)
    


    Reconciliation of Reported to Ongoing Net Income

    
                                                   Three Months Ended
                                                       September 30,
                                                    2007          2006
    Net Income as Reported *                        134.3         13.6
        Special Item - Tax Benefit                 (110.5)          -
    Ongoing Net Income                              $23.8        $13.6
    

    
    *The 2007 third quarter includes a one-time benefit of $110.5 million from
    the reversal of income tax liabilities.
    




For further information:

For further information: Media & Analysts, Sean Blakley of Spectra
Energy  Partners, LP, +1-713-627-4963 Web Site:
http://www.spectraenergypartners.com                 
http://www.spectraenergy.com

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