Premier natural gas company Spectra Energy Corp. (NYSE:SE) reported second-quarter 2015 earnings per share from continuing operations of 24 cents, which missed the Zacks Consensus Estimate of 26 cents. The bottom line was a penny higher than the year-ago quarter earnings.
The company’s operating revenues of $1,159 million fell 2.8% from the year-ago level of $1,192 million and also came in below the Zacks Consensus Estimate of $1,300 million.
Operational Analysis
Spectra Energy Partners: The segment posted quarterly earnings before interest, taxes, depreciation and amortization (EBITDA) of $471.0 million, down 1.5% from the year-ago quarter. The decrease was mainly due to the absence of equity earnings from Sand Hills and Southern Hills natural gas liquids (NGL) pipelines, which Spectra Energy Partners owned till Oct 2015. Earnings from these NGL pipeline interests are now reflected in the Field Services segment.
Distribution: The segment reported a year-over-year increase of 6.1% in EBITDA to $104.0 million from $98.0 million. The upside was mainly driven by incremental earnings from the 2015 Dawn-Parkway expansion project and higher storage margins.
Western Canada Transmission & Processing: The segment witnessed an EBITDA of $97.0 million, down 6.7% from the year-earlier level.
Field Services: Spectra Energy reported that the 50% it owns of the Field Services segment incurred a loss of $6 million in the second quarter. The loss was also wider than the year-ago quarter. The decrease in equity earnings mainly stemmed from lower commodity prices.
Production and Price Realizations
The company produced NGLs of 416 thousand barrels per day (MBbl/d), up from the year-ago quarter level of 408 MBbl/d. Price of NGLs dipped 4.2% and averaged 46 cents per gallon, while crude oil costs declined 21.2% and averaged approximately $45.64 per barrel, both on a year-over-year basis. Natural gas was sold at $1.95 per million British thermal units (MMBtu) as against $2.64 per MMBtu in the second quarter of 2015.
Balance Sheet
As of Jun 30, 2016, Spectra Energy had long-term debt of approximately $13.6 billion with a debt-to-capitalization ratio of 54.8% compared with 55.9% in the year-ago quarter.
Zacks Rank
Spectra Energy holds a Zacks Rank #2 (Buy). Other well-ranked players from the energy sector are Sasol Ltd (NYSE:SSL) , Murphy USA, Inc. (NYSE:MUSA) and Total SA (TO:TOT) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
SPECTRA ENERGY (SE): Free Stock Analysis Report
MURPHY USA INC (MUSA): Free Stock Analysis Report
TOTAL FINA SA (TOT): Free Stock Analysis Report
SASOL LTD -ADR (SSL): Free Stock Analysis Report
Original post
Zacks Investment Research