http://www.morningstar.com/earnings/41736559-spectra-energy-partners-lp-sep-q2-2012.aspx

Spectra Energy Partners LP SEP
Q2 2012 Earnings Call Transcript

Transcript Call Date 08/02/2012

Operator: Good morning. My name is Matthew and I will be your conference operator today. At this time, I would like to welcome everyone to the Spectra Energy Corp., Second Quarter 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.

I'll now turn the call over to your host Derick Smith. Mr. Smith, you may begin.

Derick Smith - Director, Investor & Public Relations: Thank you, Matthew. Good morning. I'm Derick Smith, Spectra Energy Partners' Director of Investor Relations and I'm pleased that you could join us for a review of our second quarter 2012 earnings.

This morning, Laura Buss Sayavedra, our Chief Financial Officer, will cover the financial results for the quarter. Following Laura's presentation, our Chief Executive Officer, Julie Dill, will provide some remarks on the business looking ahead before opening the floor to any questions you may have.

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

With that, I will turn the call over to Laura.

Laura Buss Sayavedra - VP and CFO: Thanks, Derick. Good morning everyone and thank you for joining us today. I'm pleased to report that Spectra Energy Partners had a solid second quarter thanks to the benefits of our portfolio with revenues driven by capacity charges and an average contract life of 11 years. Net income increased from around $38 million in the prior year quarter to $47 million in the second quarter 2012 and cash available for distribution was $53 million, up $8 million over the second quarter of 2011.

Now let me walk through the performance at each of our individual businesses. Let's start with Gas Transportation and Storage, which includes East Tennessee, Saltville, Ozark and Big Sandy. Revenues were up from the prior year quarter reflecting the Big Sandy acquisition that closed at the beginning of the third quarter 2011 and East Tennessee's NET project that went into service last fall. This was partially offset by lower revenues at Ozark Gas Transmission.

Expenses in the second quarter 2012 increased from the prior year quarter reflecting O&M and depreciation for the Big Sandy and NET assets that were brought online last year. Also keep in mind that our operating expenses for the segment are typically a bit higher in the second half of the year and we'd expect this to be the case again in 2012. Overall, this brings EBIT up to $33 million for the second quarter around $14 million over the prior year quarter.

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