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Spectra Energy Corp SE
Q1 2011 Earnings Call Transcript

Transcript Call Date 05/03/2011

Operator: Good morning. My name is Joanne and I will be your conference operator today. At this time, I would like to welcome everyone to the Spectra Energy Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

Thank you. Mr. Arensdorf, you may begin your conference.

John R. Arensdorf - Chief Communications Officer: Thanks, Joanne and good morning, everyone and welcome to Spectra Energy's first quarter 2011 earnings review. We're very pleased that you've been able to join us today. Leading our discussion today will be Greg Ebel, our President and Chief Executive Officer; and Pat Reddy, our Chief Financial Officer. Both Greg and Pat will discuss our quarterly results and provide more color around our strategic plans to enhance the value Spectra Energy delivers to its shareholders. We will then open the lines for your questions.

Before we begin, let me take a moment to remind you that some of the things we will discuss today concern future Company performance and include forward-looking statements within the meanings of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements. So you should refer to the additional information contained in Spectra Energy's Form 10-K and in our other SEC filings concerning factors that could cause these results to be different from those contemplated in today's discussion. In addition, today's discussion includes certain non-GAAP financial measures as defined by SEC Reg G. A reconciliation of those measures to the most directly comparable GAAP measures is available on our Investor Relations website at spectraenergy.com.

With that, I'll turn the call over to Greg.

Gregory L. Ebel - President and CEO: Thanks, John, and good morning, everybody. As you've seen from our earnings release, Spectra Energy delivered solid ongoing first quarter results of $350 million compared with $342 million in the first quarter of 2010. I'm pleased with our first quarter performance, which exceeded our expectations and has given us an excellent running start to the year. In fact, after levelizing for the unusually low tax rate in Q1 2010, our EPS was up about 10% quarter-over-quarter.

Key drivers for those solid results included the following; continued strong performance from our fee-based businesses, $45 million in incremental EBIT from expansion projects placed into service last year, projects like TEMAX and our Fort Nelson expansion in British Columbia, a strengthening Canadian dollar which benefited our Canadian businesses, colder than normal weather for the first quarter compared with warmer than normal weather in the first quarter of 2010 benefited our Distribution segment.

The harsh weather also led to record deliveries on our Northeast U.S. pipelines. Our system ran safely and reliably and met the customers' needs during critical periods. While cold weather is not an earnings driver for the quarter for U.S. pipelines, the high utilization of our system including about (1.5 billion) of Northeast capacity additions since 2007 really bodes well in terms of both ongoing business and future pipeline expansion opportunities. While cold weather is generally a positive for our business, it can create some challenges at our field services businesses, DCP Midstream.

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