Spectra Energy Reports Earnings, Pushes Ahead With MLP Strategy

Spectra Energy (NYSE: SE  ) reported earnings today, missing slightly on both top and bottom lines.

Revenue clocked in at $1.22 billion, up 9.7% from Q2 2012 but $44 million less than analysts had hoped for. On the bottom line, adjusted EPS clocked in at $0.30, three cents below last year's second quarter and two cents below market predictions.

"Spectra Energy's earnings for the quarter were in line with the company's expectations, but more importantly, we have secured $3 billion of new expansion projects so far this year," said President and CEO Greg Ebel in a statement today. "Spectra Energy is in the midst of a major capital expansion program with $25 billion in growth opportunities through the end of the decade. That growth is the catalyst to advance our master limited partnership (MLP) strategy which will efficiently fund growth and enhance Spectra Energy's dividend growth."

The utility is in the midst of splitting itself up into two separate entities, Spectra Energy and Spectra Energy Partners (NYSE: SEP  ) , so as to gain favorable MLP tax status for the Partners division. According to Ebel, the strategy is working: "Since the end of the third quarter of 2012, the total market capitalization of Spectra Energy and Spectra Energy Partners has increased by $6 billion. We remain focused on continually finding opportunities to enhance our value proposition for investors while expanding our operations and asset footprint ."

With the latest handoff of Spectra Energy's U.S. transmission, storage, and liquid assets scheduled to be completed by 2014, Spectra Energy Partners will enjoy 9% annual distribution growth over the next few years, with more than $8 billion in organic growth opportunities by the end of the decade, according to Spectra.


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