Spectra Energy Corp SE
Q1 2012 Earnings Call Transcript

Transcript Call Date 05/04/2012

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

Thank you. Mr. John Arensdorf, you may begin.

John R. Arensdorf - Chief Communications Officer: Thanks, Tanisha. Good morning, everyone. Welcome to Spectra Energy's first quarter 2012 earnings review. Thanks for joining us today. As usual, leading today's discussion 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 are then going to open the lines for your questions.

But before we begin, let me take a moment to remind you that some of the statements 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. 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 than 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

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

Gregory L. Ebel - President and CEO: Thanks very much, John and good morning everybody. As you have seen from our earnings release, Spectra Energy is off to a good start in 2012, delivering solid first quarter ongoing results of $331 million or $0.51 performance share. A couple of key takeaways for you that I am sure will come as no surprise, first our results of the quarter were affected by much longer than normal winter weather. Historically warm in fact, Union Gas experienced its warmest winter in more than 100 years which in turn lowered customer usage by almost 18%.

Second, weaker commodity prices, lower NGL and natural gas prices did adversely affect DCP Midstream's earnings and higher extraction premiums reduced margins at our Empress facility in Canada. Fortunately and positively the effect of low commodity prices at DCP will more than offset by volume increases. DCP's NGL production increased by more than 15% quarter-over-quarter and gathering and processing throughput increased by almost 8%.

With the exception of commodity prices and weather, earnings for the quarter were in line with or slightly ahead of our expectations and continue to execute well on our business expansion plans. The power of diverse portfolio helped us manage through the effects of lower commodity prices and weather and with NGL prices typically lower in the first quarter of the year and with petchem facilities coming back online from outages and the expectation of greater propane exports, we remain optimistic regarding NGL prices for the remainder of year. That said, however, at least through today, the outlook for natural gas on its own continues to look challenging as due to the steep extraction premiums at Empress.

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