Spectra Energy third quarter profit was down sharply on discontinued operations, but when special items are excluded net income shows a nearly 32% gain from the year-ago period on strong results in the company's gas pipeline and storage businesses.
Net income in the third quarter was $234 million (37 cents/share) compared with net income of $447 million, which included $254 million from discontinued operations, in third quarter 2006. Reported net income 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 (see NGI, Jan. 8).
Excluding special 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," said CEO Fred Fowler. "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. 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" segments.
Year-to-date capital expenditures total $940 million with $625 million of that directed toward expansions. By the close of 2007, capital expansion projects totaling $625-650 million are expected to be brought into service.
U.S. Transmission reported third quarter 2007 segment earnings before income and taxes (EBIT) of $230 million compared with $179 million in the 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.
Distribution reported third quarter 2007 segment EBIT of $40 million compared with $24 million in the third quarter of 2006, reflecting higher storage and transmission revenues and increased distribution margin. Transmission revenues benefited from the completion of Phase I of the Dawn-Trafalgar expansion at the end of 2006.
Western Canada Transmission & Processing reported third quarter 2007 segment EBIT of $102 million compared with $98 million in the 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.
Field Services, which consists of Spectra Energy's 50% interest in DCP Midstream, reported third quarter 2007 segment EBIT of $140 million compared with $158 million in the 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.
©Copyright 2007 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.