Spectra Energy Reports Third Quarter 2007 Results



    
    - Third quarter ongoing net income of $240 million up 32 percent over
prior
    year quarter; reported net income of $234 million

    - Ongoing earnings per diluted share (EPS) of $0.38; reported EPS of $0.37

    - Strong performance in U.S. Transmission, Distribution, and Western
Canada
    Transmission & Processing businesses

    - On plan to achieve 2007 financial goals, with significant progress made
    on $3 billion 2007-2009 capital investment program

    - Quarterly dividend of $0.22 paid
    

    HOUSTON, Nov. 6 /CNW/ -- Spectra Energy (NYSE:   SE) today reported third
quarter 2007 net income of $234 million, or $0.37 diluted earnings per share,
compared with net income of $447 million, which included $254 million from
discontinued operations, in third quarter 2006.
    
    (Logo: http://www.newscom.com/cgi-bin/prnh/20061030/CLM051LOGO )
    
    Reported net income for the current quarter included special items of $5
million in costs and $4 million for an extraordinary loss, as well as earnings
from discontinued operations of $3 million; the prior year period included
special items of $11 million in income as well as earnings of $254 million
from discontinued operations related to operations transferred back to Duke
Energy prior to the spin-off of Spectra Energy.   Excluding these items in
both periods, third quarter 2007 net income was $240 million compared to $182
million in third quarter 2006.
    "We had an exceptionally strong third quarter.  Ten months into Spectra
Energy's first year as a public company, we're continuing to execute against
our short-term objectives and have made excellent progress investing in
longer-term development projects to fuel future growth," said Fred Fowler,
president and chief executive officer of Spectra Energy.  "We remain confident
that we will meet our 2007 financial goals and are on track to deliver on our
2007-2009 $3 billion capital investment program."
    Higher third quarter 2007 earnings reflected strong operational results
in U.S. transmission and storage operations and the Canadian businesses, and a
lower effective tax rate, partially offset by lower earnings at Field Services
and Other.
    "As we move into the final quarter of 2007, we remain committed to
delivering solid, steady growth and an attractive dividend," concluded Fowler.
    
    CAPITAL INVESTMENT PROGRESS
    
    Year-to-date capital expenditures total $940 million with $625 million of
that directed toward expansion projects.  By the close of 2007, capital
expansion projects totaling $625 to $650 million are expected to be brought
into service.  Those projects, which include Northeast Gateway, Time II -
Phase I, Dawn-Trafalgar - Phase II, Pine River, Cape Cod and Egan, will fuel
revenue and earnings growth as the company moves into 2008.
    
    SEGMENT RESULTS
    U.S. Transmission
    
    U.S. Transmission reported third quarter 2007 segment earnings before
income and taxes (EBIT) of $230 million compared with $179 million in third
quarter of 2006.  Strong operational results from all U.S. pipeline and
storage businesses, primarily reflecting higher demand for services and
increased earnings from expansion projects, drove the improvement.  This
segment also benefited from the capitalization of previously expensed
development costs, primarily as a result of favorable regulatory orders and
other progress on the Southeast Supply Header and Gulfstream Phase IV
projects.
    The U.S. Transmission segment is comprised of more than 12,800 miles of
transmission pipelines and 115 billion cubic feet of storage capacity serving
customers in various regions of the Northeast and Southeast United States.
    
    Distribution
    
    Distribution reported third quarter 2007 segment EBIT of $40 million
compared with $24 million in third quarter of 2006. This increase primarily
reflected higher storage and transmission revenues and increased distribution
margin.  Favorable market conditions continued to drive strong storage
revenues while transmission revenues benefited from the completion of Phase I
of the Dawn-Trafalgar expansion at the end of 2006.  These increases were
partially offset by higher operating and maintenance costs, including higher
costs for conservation efforts.
    Spectra Energy's Distribution segment, through its Union Gas business,
provides natural gas distribution services to commercial, industrial and
residential customers in Ontario, as well as storage and transportation
services for other utilities and end market participants in Ontario, Quebec,
and the United States.
    
    Western Canada Transmission & Processing
    
    Western Canada Transmission & Processing reported third quarter 2007
segment EBIT of $102 million compared with $98 million in third quarter of
2006.   The prior year period included a $15 million gain relating to Spectra
Energy Income Fund's issuance of units for the purchase of Westcoast Gas
Services Inc.  Excluding this gain, EBIT improved $19 million, primarily due
to higher maintenance costs in third quarter 2006 from a plant turnaround at
Fort Nelson, as well as the timing of costs related to pipeline integrity work
and a stronger Canadian dollar this year.   Similar to third quarter 2006, the
Empress facility had a positive quarter due to strong commodity prices.
    The Western Canada Transmission & Processing business is focused on the
gathering, processing and transmission of natural gas, and the extraction,
fractionation, transportation, storage and marketing of natural gas liquids.
    
    Field Services
    
    Field Services, which consists of Spectra Energy's 50 percent interest in
DCP Midstream, reported third quarter 2007 segment EBIT of $140 million
compared with $158 million in third quarter of 2006.  Lower margins in
gathering and processing, and gas marketing, as well as higher operating
costs, were partially offset by favorable commodity prices.  2007 results also
included $3 million in costs related to the creation of stand-alone corporate
functions.
    During the quarter, Field Services paid distributions of approximately
$247 million to Spectra Energy, which included a special distribution of $122
million associated with the sale of certain assets to DCP Midstream Partners,
LP, which is the master limited partnership vehicle for Field Services.
    DCP Midstream is a gathering and processing, transportation, storage and
marketing company.
    
    Other
    
    "Other" reported net costs of $15 million in third quarter 2007 including
$5 million of gas operations separation costs, compared with net earnings of
$19 million in third quarter 2006, including $7 million of costs to achieve
the Duke Energy / Cinergy merger and the launch of Spectra Energy.  Prior year
results also included mark-to-market gains of $21 million on the discontinued
hedge contracts associated with the Field Services segment, and $26 million of
management fees billed to Duke Energy affiliates in 2006.
    Excluding these items in both periods, net costs in "Other" were $10
million in the current year quarter compared to net costs of $21 million a
year ago.  "Other" continues to benefit from lower corporate costs to support
the Spectra Energy operations as compared to the prior period.
    
    "Other" is primarily comprised of corporate costs and captive insurance.
    Interest Expense
    
    Interest expense was $156 million for the quarter compared with $152
million for the third quarter 2006.  The increase largely reflected interest
costs capitalized in the prior period for capital projects of businesses
transferred to Duke Energy prior to the spin-off of Spectra Energy.
    
    Income Taxes
    
    Third quarter 2007 income tax expense from continuing operations was $110
million, compared with $132 million in third quarter 2006.  For the 2007
quarter, Spectra Energy's effective tax rate was 32 percent compared with 41
percent in the prior year quarter, which included non-deductible costs
associated with the spin-off of Spectra Energy from Duke Energy and an
increase in a reserve for state income taxes.

    
    Special items affecting Spectra Energy's EPS for the quarter include:
    (in millions, except per share amounts)
                                           Pre-tax   Tax       Net       EPS
                                          amount    Effect    Income    Impact
                                                              Impact
    Third Quarter 2007
        Separation costs                    $(5)      $2       $(3)
        DCP Midstream stand alone costs      (3)       1        (2)        -
    Total                                   $(8)      $3       $(5)   $(0.01)
    

    
    Third Quarter 2006
        Gain on Income Fund (1)             $15      $ -       $15       N/A
        Cinergy merger costs to achieve      (4)       2        (2)      N/A
        Separation costs                     (3)       1        (2)      N/A
    Total                                    $8       $3       $11       N/A*
    

    
    * There were no shares of Spectra Energy outstanding in 2006, therefore
      EPS is not applicable
    (1) Gain related to the issuance of units by Spectra Energy Income Fund
    


    
    Reconciliation of reported to ongoing net income (in millions)
                                        Three months ended
                                           September 30,
                                        2007          2006
    Net Income as Reported             $ 234          $ 447
    

    
    Adjustments to Reported Net
    Income:
        Special Items                     5              (11)
        Income from Discontinued         (3)            (254)
         Operations*
        Extraordinary Items               4                -
    Ongoing Net Income                 $240             $182
    
    * In 2006, relates to operations transferred back to Duke Energy prior to
spin-off of Spectra Energy from Duke Energy


    
    Reconciliation of reported to ongoing diluted EPS
                                               Three months ended
                                               September 30, 2007
    Diluted EPS as reported                          $0.37
        Special Items                                 0.01
         Discontinued Operations                     (0.01)
        Extraordinary Items                           0.01
    Diluted EPS, ongoing                             $0.38
    Additional Information
    
    Additional information about third quarter 2007 earnings can be obtained
at the Spectra Energy Web site: www.spectraenergy.com.
    The Analyst call is scheduled for 9 a.m. CST today, Tuesday November 6,
to discuss Spectra Energy's third quarter results.  The conference call can be
accessed via the investors' section of Spectra Energy's Web site or by dialing
(888) 252-3715 in the United States or (706) 634-8942 outside the United
States. The confirmation code is "19594906" or "Spectra Energy's Earnings
Call."
    Please call in five to ten minutes prior to the scheduled start time. A
replay of the conference call will be available until midnight CST, February
10, 2008, by dialing (800) 642-1687 with a Conference ID 19594906.  The
international replay number is (706) 645-9291, Conference ID 19594906.  A
replay and transcript also will be available by accessing the investors'
section of the company's Web site.
    
    Non-GAAP Financial Measures
    
    The primary performance measure used by management to evaluate segment
performance is segment EBIT from continuing operations, which at the segment
level represents all profits from continuing operations (both operating and
non-operating), including any equity in earnings of unconsolidated affiliates,
before deducting interest and taxes, and is net of the minority interest
expense related to those profits. Management believes segment EBIT from
continuing operations, which is the GAAP measure used to report segment
results, is a good indicator of each segment's operating performance as it
represents the results of our ownership interests in continuing operations
without regard to financing methods or capital structures.
    Spectra Energy's management uses ongoing diluted EPS, which is a non-GAAP
financial measure as it represents diluted EPS 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 diluted EPS provides useful information to
investors, as it allows them to more accurately compare the company's ongoing
performance across periods. Ongoing diluted EPS is also used as a basis for
employee incentive bonuses.
    Spectra Energy also uses ongoing segment and Other EBIT as a measure of
performance.  Ongoing segment and Other EBIT are non-GAAP financial measures
as they represent reported segment and Other EBIT adjusted for special items.
Management believes that the presentation of ongoing segment and Other EBIT
provides useful information to investors, as it allows them to more accurately
compare a segment's or Other's ongoing performance across periods. The most
directly comparable GAAP measure for ongoing segment or Other EBIT is reported
segment or Other EBIT, which represents EBIT from continuing operations,
including any special items.
    
    Forward-looking statement
    
    This release includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements represent our intentions,
plans, expectations, assumptions and beliefs about future events. One can
typically identify forward-looking statements by the use of forward-looking
words such as: may, will, could, project, believe, expect, estimate, continue,
potential, plan, forecast and other similar words. 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. Those factors
include: the levels of supply and demand for natural gas in our areas of
operation; our ability to identify opportunities for our business units and
the timing and success of efforts to develop pipeline, storage, gathering,
processing and other infrastructure projects; our ability to successfully
complete and integrate future acquisitions; the extent of success in
connecting natural gas supplies to gathering, processing and transmission
systems and in connecting to expanding gas markets; the implementation of
state, federal and foreign legislative and regulatory initiatives that affect
cost and investment recovery, have an effect on rate structure, and affect the
speed at and degree to which competition enters the natural gas industries;
the timing and extent of changes in commodity prices, interest rates and
foreign currency exchange rates; our ability to obtain financing on favorable
terms, which can be affected by various factors, including our credit ratings
and general economic conditions; and our ability to operate effectively as a
stand-alone, publicly-traded company. These factors, as well as additional
factors that could affect our forward-looking statements, are described under
the headings "Risk Factors" and "Forward-Looking Statements" in our 2006 Form
10-K, filed on April 2, 2007, and in our other filings made with the
Securities and Exchange Commission, 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.
    Spectra Energy Corp (NYSE:   SE) is one of North America's premier natural
gas infrastructure companies serving three key links in the natural gas value
chain:  gathering and processing, transmission and storage, and distribution.
For close to a century, Spectra Energy and its predecessor companies have
developed critically important pipelines and related energy infrastructure
connecting natural gas supply sources to premium markets. Based in Houston,
Texas, the company operates in the United States and Canada approximately
17,500 miles of transmission pipeline, 265 billion cubic feet of storage,
natural gas gathering and processing, natural gas liquids operations and local
distribution assets. Spectra Energy Corp also has a 50 percent ownership in
DCP Midstream, one of the largest natural gas gatherers and processors in the
United States. Visit www.spectraenergy.com for more information.


    
                             Spectra Energy Corp
                                  September 2007
                               Quarterly Highlights
                                   (Unaudited)
             (In millions, except per share amounts and where noted)
    

    
                                         Three Months Ended  Nine Months Ended
                                            September 30,      September 30,
                                            2007    2006       2007    2006
    COMMON STOCK DATA
    Earnings Per Share, from continuing
     operations
       Basic and Diluted                    $0.37   N/A       $1.04    N/A
    Earnings Per Share - total
       Basic and Diluted                    $0.37   N/A       $1.05    N/A
    Dividends Per Share                     $0.22   N/A       $0.66    N/A
    Weighted-Average Shares Outstanding
       Basic                                  632   N/A         632    N/A
       Diluted                                635   N/A         635    N/A
    

    
    INCOME
    Operating Revenues                       $959    $869    $3,345    $3,335
    Total Reportable Segment EBIT             512     459     1,480     1,544
    Income from Discontinued Operations         3     254        14       295
    Net Income                                234     447       666       989
    

    
    CAPITALIZATION
    Common Equity                                               39%
    Minority Interests                                           5%
    Total Debt                                                  56%
    

    
    Total Debt                                               $9,503
    Book Value Per Share                                     $10.61
    Actual Shares Outstanding                                   632
    

    
    CAPITAL AND INVESTMENT EXPENDITURES(a)
    U.S. Transmission                                          $573      $211
    Distribution                                                224       197
    Western Canada Transmission & Processing                    114        90
    Other(b)                                                     29       355
    Total Capital and Investment Expenditures                  $940      $853
    

    
    EBIT BY BUSINESS SEGMENT
       U.S. Transmission                    $230    $179      $673      $644
       Distribution                           40      24       238       181
       Western Canada Transmission &
        Processing                           102      98       224       269
       Field Services                        140     158       345       450
    Total Reportable Segment EBIT           $512    $459    $1,480    $1,544
       Other EBIT                            (15)      19       (56)      (65)
       Interest Expense                     (156)    (152)     (467)     (443)
       Interest Income and Other (c)           4       (1)       13        11
    Consolidated Earnings from Continuing
     Operations Before Income Taxes         $345     $325      $970    $1,047
    


    
    (a) Includes loans to affiliates for capital expansion projects.
    (b) Other in 2006 includes capital expenditures of operations transferred
        to Duke Energy.
    (c) Other includes foreign currency transaction gains and losses and
        additional minority interest not allocated to the segment results.
    


    
                             Spectra Energy Corp
                                September 2007
                             Quarterly Highlights
                                  (Unaudited)
                       (In millions, except where noted)
    

    
                                           Three Months
                                              Ended      Nine Months Ended
                                           September 30,    September 30,
                                           2007    2006     2007     2006
    U.S. TRANSMISSION
      Operating Revenues                    $386    $367   $1,133   $1,135
      Operating Expenses
        Operating, Maintenance and Other     126     141      328      378
        Depreciation and Amortization         57      51      162      152
      Gains on Sales of Other Assets, net    -         1        1       29
      Other Income, net of expense            41      10       63       32
      Minority Interest Expense               14       7       34       22
      EBIT                                  $230    $179     $673     $644
    


    Proportional Throughput, Tbtu (a)      531     461    1,641    1,435

    
    DISTRIBUTION
      Operating Revenues                    $266    $220   $1,330   $1,305
      Operating Expenses
        Natural Gas Purchased                 98      85      726      778
        Operating, Maintenance and Other      91      75      252      238
        Depreciation and Amortization         42      36      119      108
      Gains on Sales of Other Assets, net      5     -          5      -
      EBIT                                   $40     $24     $238     $181
    


    
      Number of customers                                   1,280    1,259
      Heating Degree Days (Fahrenheit)       258     313    4,893    4,462
      Pipeline Throughput, Tbtu              137     133      590      537
    

    
    WESTERN CANADA TRANSMISSION &
     PROCESSING
      Operating Revenues                    $307    $283     $880     $883
      Operating Expenses
        Natural Gas and Petroleum Products    68      67      241      240
         Purchased
        Operating, Maintenance and Other      99     101      303      289
        Depreciation and Amortization         36      32      102      100
      Other Income, net of expense           -        18        1       22
      Minority Interest Expense                2       3       11        7
      EBIT                                  $102     $98     $224     $269
    


    
      Pipeline Throughput, Tbtu              144     137      436      436
      Volumes Processed, Tbtu                183     175      531      551
      Empress Inlet Volumes, Tbtu            188     194      521      612
    

    
    FIELD SERVICES
      Operating Expenses                    $-        $1     $-         $4
      Equity in Earnings of DCP
       Midstream, LLC                        140     159      345      454
      EBIT                                  $140    $158     $345     $450
    


    
      Natural Gas Gathered and
       Processed/Transported, Tbtu/day
       (b)                                   6.8     6.7      6.7      6.8
      Natural Gas Liquids Production,
       MBbl/d (b, c)                         365     361      358      361
      Average Natural Gas Price per MMBtu
       (d)                                 $6.16   $6.58    $6.83    $7.45
      Average Natural Gas Liquids Price
       per Gallon                          $1.14   $1.02    $1.02    $0.96
    

    
    OTHER
      Operating Revenues                      $8     $(3)     $23      $29
      Operating Expenses                      25      25       85      137
      Gains on Sales of Other Assets, net    -         2      -          2
      Other Income, net of expense             2      45        6       41
      EBIT                                  $(15)    $19     $(56)    $(65)
    



    
    (a)  Trillion British thermal units
    (b)  Includes 100% of DCP Midstream volumes.
    (c)  Thousand barrels per day
    (d)  Million British thermal units.  Average price based on NYMEX Henry
         Hub.
    


    
                               Spectra Energy Corp
                 Condensed Consolidated Statements of Operations
                                   (Unaudited)
                                  (In millions)
    


    
                                            Three Months
                                               Ended       Nine Months Ended
                                            September 30,     September 30,
                                            2007    2006     2007      2006
    

    
    Operating Revenues                      $959    $869    $3,345    $3,335
    Operating Expenses                       631     619     2,296     2,408
    Gains on Sales of Other Assets, net        5       2         6        31
    Operating Income                         333     252     1,055       958
    

    
    Other Income and Expense                 186     237       431       566
    Interest Expense                         156     152       467       443
    Minority Interest Expense                 18      12        49        34
    

    
    Earnings From Continuing Operations
     Before Income Taxes                     345     325       970     1,047
    Income Tax Expense from Continuing
     Operations                              110     132       314       353
    Income From Continuing Operations        235     193       656       694
    

    
    Income From Discontinued Operations,
     net of tax                                3     254        14       295
    

    
    Income Before Extraordinary Items        238     447       670       989
    Extraordinary Items                       (4)    -          (4)      -
    

    Net Income                              $234    $447      $666      $989


    
                               Spectra Energy Corp
                      Condensed Consolidated Balance Sheets
                                   (Unaudited)
                                  (In millions)
    


    
                                            September 30,    December 31,
                                               2007             2006
    ASSETS
    

    
    Current Assets                             $1,595          $1,625
    Investments and Other Assets                6,139           5,357
    Net Property, Plant and Equipment          13,977          12,394
    Regulatory Assets and Deferred Debits       1,148             969
    

    Total Assets                            $22,859        $$20,345

    
    LIABILITIES AND STOCKHOLDERS' /
     MEMBER'S EQUITY
    

    
    Current Liabilities                        $1,996          $2,358
    Long-term Debt                              8,593           7,726
    Deferred Credits and Other
     Liabilities                                4,771           4,057
    Minority Interests                            790             565
    Stockholders' Equity / Member's Equity      6,709           5,639
    

    
      Total Liabilities and Stockholders'
       Equity / Member's Equity               $22,859         $20,345
    


    
                               Spectra Energy Corp
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)
                                  (In millions)
                                                         Nine Months Ended
                                                           September 30,
                                                       2007           2006
    

    
    CASH FLOWS FROM OPERATING ACTIVITIES
       Net income                                      $666           $989
       Adjustments to reconcile net income
        to net cash provided by
           operating activities                         186           (630)
                 Net cash provided by
                  operating activities                  852            359
    

    
    CASH FLOWS FROM INVESTING ACTIVITIES
                 Net cash provided by (used
                  in) investing activities           (1,117)         1,422
    

    
    CASH FLOWS FROM FINANCING ACTIVITIES
                 Net cash provided by (used
                  in) financing activities               39         (1,705)
    

    
                 Effect of exchange rate
                  changes on cash                        62             10
    


    
       Net increase (decrease) in cash and
        cash equivalents                               (164)            86
       Cash and cash equivalents at
        beginning of period                             299            491
       Cash and cash equivalents at end of
        period                                         $135           $577
    


    
                               Spectra Energy Corp
                   Reported to Ongoing Earnings Reconciliation
                          September 2007 Quarter-to-date
                     (In millions, except per-share amounts)
    


    Special Items (Note 1)


    
                                                      Extra-   Total
                      Reported Costs to Discontinued ordinary Adjust-  Ongoing
                      Earnings Achieve  Operations    Item     ments  Earnings
    SEGMENT EARNINGS
     BEFORE INTEREST
     AND TAXES FROM
     CONTINUING
     OPERATIONS
    

    U.S. Transmission   $230      $-        $-         $-        $-     $230

    Distribution          40       -         -          -         -       40

    
    Western Canada
     Transmission &
     Processing          102       -         -          -         -      102
    

    Field Services       140       3  A      -          -         3      143

    
        Total Reportable
         Segment EBIT    512       3         -          -         3      515
    

    Other                (15)      5  B      -          -         5      (10)

    
        Total Reportable  $8      $-        $-         $8      $505
         Segment EBIT
         and Other
         EBIT $497
    

    EARNINGS

    
    Total Reportable
     Segment EBIT and
     Other EBIT         $497       $8       $-         $-       $8      $505
    Interest Expense    (156)       -        -          -        -      (156)
    Interest Income
     and Other             4        -        -          -        -         4
    Income Taxes from
     Continuing
     Operations         (110)      (3)       -          -       (3)     (113)
    Discontinued
     Operations, Net of
     Taxes                 3        -       (3) C       -       (3)        -
    Extraordinary Items,
     Net of Taxes         (4)       -        -          4 D      4         -
    

    Total Earnings      $234       $5      $(3)        $4       $6      $240

    
    EARNINGS PER SHARE,
     BASIC             $0.37    $0.01   $(0.01)     $0.01    $0.01     $0.38
    

    
    EARNINGS PER SHARE,
     DILUTED           $0.37    $0.01   $(0.01)     $0.01    $0.01     $0.38
    

    
    Note 1 - Amounts for special items are net of minority interest, if
             applicable
    

    A - Costs to create stand-alone corporate functions at DCP Midstream.

    B - Separation costs resulting from the spin-off from Duke Energy.

    C - Primarily income from Ft Frances revenue sharing.

    D - Loss from deregulated storage assets at Distribution.

    Weighted Average Shares (reported and ongoing) - in millions

    Basic      632

    Diluted    635


    
                             Spectra Energy Corp
                   Reported to Ongoing Earnings Reconciliation
                          September 2006 Quarter-to-date
                     (In millions, except per-share amounts)
    


    Special Items (Note 1)


    
                      Reported Costs to Gain on  Discontinued  Total   Ongoing
                      Earnings  Achieve Income   Operations   Adjust- Earnings
                                         Fund                 ments
    

    
    SEGMENT EARNINGS
     BEFORE INTEREST
     AND TAXES FROM
     CONTINUING
     OPERATIONS
    

    U.S. Transmission    $179      $-      $-           $-       $-     $179

    Distribution           24       -       -            -        -       24

    
    Western Canada
     Transmission &
     Processing            98       -     (15)B          -       (15)     83
    

    Field Services        158       -       -            -         -     158

    
        Total Reportable
         Segment EBIT     459       -     (15)           -       (15)    444
    

    Other                  19       7 A     -            -         7      26

    
        Total Reportable
         Segment EBIT
         and Other EBIT  $478      $7    $(15)           $-      $(8)   $470
    

    EARNINGS

    
    Total Reportable
     Segment EBIT and
     Other EBIT          $478       $7   $(15)           $-      $(8)   $470
    Interest Expense     (152)       -      -             -        -    (152)
    Interest Income
     and Other             (1)       -      -             -        -      (1)
    Income Taxes from    (132)      (3)     -             -       (3)   (135)
     Continuing
     Operations
    Discontinued          254        -      -          (254) C  (254)      -
     Operations,
     Net of Taxes
    

    Total Earnings       $447       $4   $(15)         $(254)  $(265)   $182

    
    EARNINGS PER SHARE,   N/A       $-     $-             $-      $-     N/A
     BASIC
    

    
    EARNINGS PER SHARE,   N/A       $-     $-             $-      $-     N/A
     DILUTED
    

    
    Note 1 - Amounts for special items are net of minority interest, if
    applicable.
    

    
    A - $3 million Gas Spin-Off costs to achieve allocated from Duke Energy;
        $4 million Cinergy merger costs to achieve allocated from Duke Energy.
    

    
    B - Gain related to Spectra Energy Income Fund's issuance of additional
        units for the purchase of Westcoast Gas Services Inc.
    

    
    C - Gain on sale of Crescent interest and businesses transferred to Duke
        Energy prior to the spin-off of Spectra Energy.
    

    Weighted Average Shares (reported and ongoing) - in millions

    Basic         N/A

    Diluted       N/A




For further information:

For further information: Media, Molly Boyd, +1-713-627-5923, 
+1-713-627-4747 (24-hour media line), Analysts, John Arensdorf,
+1-713-627-4600,  both of Spectra Energy Web Site:
http://www.spectraenergy.com/

Organization Profile

SPECTRA ENERGY CORP

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