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Spectra Energy Corp SE
Q2 2012 Earnings Call Transcript

Transcript Call Date 08/02/2012

Operator: Good morning. My name is Christa, and I will be your conference operator today. At this time, I would like to welcome everyone to the Spectra Energy Quarterly 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 Christa, and good morning, everyone. Welcome to Spectra Energy's second quarter 2012 earnings review. Thanks for joining us today. 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 that Spectra Energy delivers to its shareholders. We'll then open the lines for your questions.

But 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. 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 second quarter ongoing results of $215 million or $0.33 per share. Like many in the sector, we felt the effects of weak commodity prices which were much lower than our original assumptions. Our Field Services segment experienced the most significant impact. However, lower propane prices also adversely affected our Empress plant in Western Canada.

It was definitely a tough quarter for commodity prices. NGL prices dropped almost 40% from 2011. NYMEX natural gas averaged almost 50% lower prices and prices were weakened by lower demand caused by petchem outages, lower economic conditions, record warm winter weather and exceptionally dry summer affecting crop drying expectations.

Recently, we have seen an uptick in commodity prices off the low point about six weeks ago, but I think it's fair to say that it would take an extraordinary increase in NGL prices for the rest of 2012 to be at the average level we projected at the beginning of the year. Pat will provide more details around our commodity price expectations in just a few minutes, but given the current and near-term commodity price environment, it's very unlikely we'll realize our $1.90 earnings per share target for 2012.

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