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Spectra Energy reports 4Q14 and 2014 results

Published by , Editor - Hydrocarbon Engineering
World Pipelines,


Spectra Energy Partners, LP reported 4Q14 distributable cash flow of US$245 million, compared with US$120 million in the prior-year quarter. For the year, distributable cash flow was up US$740 million over 2013, with distributable cash flow of US$1.06 billion, compared with US$315 million in 2013. Distributions per limited partner unit for 2014 were US$2.2875, compared with US$2.07 per limited partner unit in 2013.

"Spectra Energy Partners had an outstanding fourth quarter, closing out a great year driven by our fee-based business and successful execution of our capital expansion programme," said Greg Ebel, President and Chief Executive Officer, Spectra Energy Partners. "2014 exceeded our expectations in every way – financially, operationally, through our origination and execution efforts as well as on the safety front. With no commodity exposure, our suite of fee-based assets and expansion projects are well positioned to deliver continued steady growth and value creation for our investors."

For the quarter, reported earnings before interest, taxes, depreciation and amortisation (EBITDA) were US$424 million, compared with US$351 million in the prior-year quarter. Ongoing EBITDA was US$424 million for the quarter, compared with US$352 million in the prior-year quarter. For the year, reported EBITDA was US$1.59 billion, up from US$1.38 billion in 2013. Ongoing EBITDA for 2014 was US$1.59 billion, compared with US$1.39 billion in 2013.

Reported net income from controlling interests was US$283 million for 4Q14, compared with US$540 million in 4Q13. For the year, reported net income from controlling interests was US$1.0 billion. Excluding a special item related to the elimination of deferred income tax liabilities associated with the November 2013 dropdown, ongoing net income from controlling interests was US$283 million for 4Q14 compared with US$187 million in 4Q13 and US$1.0 billion in 2014, up US$304 million compared to 2013.

Expansion project updates

Spectra Energy Partners placed US$550 million of capital into service during the year, including the Kingsport Expansion Project in 4Q14. The company secured US$2.4 billion of new growth projects supported by firm, fee-based contracts.

On the growth front, the company is advancing its projects in execution. The Sabal Trail pipeline into Florida submitted the project's Federal Energy Regulatory Commission (FERC) application in November and is on track to meet its planned in-service date of 2017. The Algonquin Incremental Market project, or AIM, is 100% subscribed by the major local distribution companies (LDCs) in New England. The project received its final environmental impact statement (FEIS) from FERC and expects to receive its FERC certificate in 1Q15.

The NEXUS pipeline, which will bring supply diversity to the US Midwest and Eastern Canada by delivering Utica and Marcellus gas, received its pre-file authorisation from FERC in January 2015. With an in-service date of 2017, the 1.5 billion ft3/d project provides Spectra Energy with an investment opportunity in the US$700 million to US$1 billion range.

The Ohio Pipeline Energy Network (OPEN) project and the Uniontown to Gas City project both received their FERC certificates in December 2014. The OPEN project and Uniontown to Gas City project have scheduled in-service dates in 4Q15.

Spectra Energy Partners acquired the Brazoria Interconnector Gas (BIG) Pipeline last month and is expected to close in 2Q16, pending final investment decision of the Freeport Liquefied Natural Gas (LNG) facility. The acquisition is a component of the Stratton Ridge project, a Texas Eastern expansion to deliver supplies to Gulf Coast LNG markets. The US$200 million capital expansion project, which includes the BIG Pipeline acquisition cost, is scheduled to be in service in 2019.

The Texas Eastern South Texas Expansion Project (STEP) is designed to provide an efficient means to transport Louisiana natural gas supplies to high-demand markets in South Texas, and is advancing. The targeted in-service date for STEP is early 2017. Additionally, Access South and Adair Southwest, two projects that advance bi-directional capabilities on Texas Eastern are moving forward. The PennEast Pipeline, the Pennsylvania to New Jersey project that Spectra Energy Partners joined during the quarter, is also progressing.

Further, the Atlantic Bridge project, an expansion of the company's Algonquin and Maritimes & Northeast systems, is moving forward and submitted its pre-file application with FERC in late January 2015. A new project in execution, the Loudon Expansion, is a 10 mile, 12 in. loop of the existing Loudon Lateral to move incremental supplies of natural gas on the East Tennessee system. The project is advancing with an in-service target of 3Q16.

Beyond the above listed projects in execution, Spectra Energy Partners also is advancing several other development projects. Access Northeast will provide improved electric reliability in New England by directly supplying approximately 70% of the region's most efficient gas-fired power generation. The project will expand the Algonquin and Maritimes & Northeast transmission systems by using existing pipeline footprints. Spectra Energy Partners is partnering with Northeast Utilities and also has a strategic alliance with Iroquois Gas Transmission to advance this US$3 billion pipeline development.

Also in development is the Texas Eastern Appalachian Lease Project, which will provide pipeline transportation capacity to deliver incremental production from the Appalachian Basin to gas distribution and end-use markets in the US Midwest and Canada via a lease of the capacity to NEXUS. The target in-service date for the approximately US$180 million project is 1 November 2017.

In its liquids business, the company is continuing to work on further enhancements to its Express and Platte pipelines. On Express, Spectra Energy Partners is pursuing the construction of on-system storage to allow for additional contracted capacity. An open season on the Express pipeline enhancement, for service commencing in 2016, is currently under way. Separately, the new pipeline from Wyoming to Illinois, which was announced in October, is being re-scoped to reflect market dynamics and will likely be incorporated into a larger long-term project to twin the Express and Platte systems later in the decade.

Spectra Energy Partners is also continuing development work on the Inland California Express oil transportation project with Questar Corporation, which includes a new rail terminal in Southern California and reactivation of an existing pipeline into the Los Angeles/Long Beach refining complex. The company has selected a site for the terminal and will complete preliminary engineering and submit permits in the next few months. The project has a targeted in-service date of 2017.

Finally, during the quarter, the second phase of the drop-down of assets from Spectra Energy to Spectra Energy Partners was completed, which involved dropping 24.95% of the Southeast Supply Header (SESH) into the company.


Adapted from press release by Rosalie Starling

Read the article online at: https://www.worldpipelines.com/business-news/09022015/spectra-energy-reports-4q14-and-2014-results-111/

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