Wachovia Pipeline and MLP Symposium. John Arensdorf Chief Communications Officer

Transcription

1 Wachovia Pipeline and MLP Symposium John Arensdorf Chief Communications Officer December 10, 2008

2 Safe Harbor Statement Some of the statements in this document concerning future company performance will be forward-looking within the meanings of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements, and you should refer to the additional information contained in Spectra Energy s Form 10-K and other filings made with the SEC concerning factors that could cause those results to be different than contemplated in today's discussion. Reg G Disclosure In addition, today s discussion includes certain non-gaap financial measures as defined under SEC Regulation G. A reconciliation of those measures to the most directly comparable GAAP measures is available at the end of this packet and on our website. 2

3 Strategically Located Assets 2007 Natural Gas Throughput 3.6 Tcf Miles of Transmission Pipe 18,000 Miles of Gathering & Processing Pipe 58,500 Miles of Distribution Pipe 37,000 Storage Capacity 265 Bcf Retail Customers 1.3 million 3

4 Third Quarter 2008 Excellent earnings in 3Q08 $0.49 ongoing fully diluted EPS 29% increase over 3Q07 Solid financial performance from all segments - robust commodity prices fueled Field Services and Western Canada earnings Completed share repurchase program in mid-august 2008 expansion projects substantially complete Healthy balance sheet and liquidity position 4

5 2008 Outlook and Beyond Expect to exceed our $1.56 ongoing, fully diluted EPS employee incentive target for 2008 Dividend growth Increased by $0.04/share to $0.92/share in January 2008 Further increased by $.08/share to $1.00/share in July 2008 Targeted dividend payout ratio of 60% Continue to execute on Capex plans About $1 billion+ per year spending through projects substantially complete; $1.7 billion in-service during expansion projects expected to add $500 million in incremental annualized EBIT by 2011 Aggressively pursuing post-2010 opportunities 2008 Long Term Incentive 50% based on TSR relative to a peer group of companies for three years 5

6 Natural Gas Flows: Shifting Sources, Growing Demand Demand Volume CAGR : Combined SET Markets 2.5% Northeast 1.6% Southeast 4.1% Pacific Northwest 1.9% British Columbia 1.1% Ontario 1.5% Lower 48 States 1.6% Source: ICF International (Formerly EEA), January 2008 Emerging Shale Plays Supply Basins Major Spectra Energy Markets Supply Flows 6

7 Well-Positioned for Growth Expansion Opportunities Northeast Region Projects Tribute Storage In-Service 6/08- $35 MM Dawn Area Storage In-Service 1H09 / 2H09 $25 / $15 MM Dawn Storage Deliverability In-Service 1/09 - $120 MM Dawn Trafalgar (Phase III) In-Service 12/08 - $75 MM TEMAX In-Service 2H10 M&NE Phase V In-Service 2H10- $255 MM M&NE Phase IV In-Service 11/08 - $320 MM AGT East West In-Service 2H09 - $395 MM Algonquin J-2 In-Service 2H09 - $35 MM Islander East In-Service Post 2010 NYC Extension In-Service Post 2010 Ramapo In-Service 11/08 - $260 MM TIME III In-Service 2H10 Steckman Ridge In-Service 1H09 - $140 MM Northern Bridge In-Service 2H09 - $45 MM TIME II (Phase II) In-Service 11/08 - $90 MM Lebanon Connector In-Service Post 2010 Execution Development 7

8 Texas Eastern Transmission Northeast Market - Rockies Supply Strategy Destination of Rockies Supply Rockies Supply ~ 1.5 Bcf/d (Bcf/d) Rockies Supply Arriving at Clarington, OH ~ Confirmed TETLP Expansions from Clarington, OH (0.695) Third Party Projects (0.400) Remaining at Ohio ~ Ohio 2 Northern Bridge 11,000 HP add l compression Nov, MMcf/d BP, Merrill Lynch Oakford, PA 1 TIME II 32 mi 36 looping / replacement 34,000 HP add l compression Nov MMcf/d NJN, PSEG Texas Texas Eastern Eastern Market Market Area Area New Jersey 4 TEMAX 20 mi 36 looping / replacement 30 mi 30 new pipeline 95,000 HP add l compression Nov MMcf/d ConocoPhillips 3 TIME III 4.5 mi 36 replacement Nov MMcf/d PPL Energy Plus, Centerpoint Transco Interconnect 8

9 Well-Positioned for Growth Expansion Opportunities Southeast Region Projects Glade Spring In-Service 10/08 - $20 MM Egan Storage Cavern 4 & 3 In-Service 7/08 / 2H09 $60 / $160 MM Moss Bluff Storage In-Service Post 2010 $115 MM Southeast Supply Header In-Service 9/08 - ~$600 MM Gulfstream IV In-Service 10/08-1/09 - $95 MM Gulfstream III In-Service 8/08 - $60 MM Copiah Storage In-Service Post 2010 Execution Development Gulfstream Expansion (G-2) In-Service Post

10 Well-Positioned for Growth Expansion Opportunities Western Region Projects West Doe (Phase III) In-Service 2H09 - $60 MM Pine River (Phase 3) In-Service 11/08 - $50 MM West Doe (Phase II) In-Service 2H08 / 1H09 $5 / $40 MM South Peace Pipeline In-Service 2H09 - $130 MM Execution Development West Project In-Service Post

11 Major 2008 Projects Substantially Complete Expansion Project Segment Est. CapEx ($MM) In-Service M&NE Phase IV (Canaport TM ) Expansion UST 320 4Q08 Ramapo UST 260 4Q08 Dawn Storage Deliverability Dist 120 1Q09 TIME II (Phase II) UST 90 4Q08 Gulfstream Phase III UST (1/2 SEP) 60 3Q08 Egan Storage (Caverns 4) UST (1/2 SEP) 60 3Q08 West Doe Phase II WC 5 4Q08 Dawn-Trafalgar Pipeline Phase III Dist 75 4Q08 Pine River Phase 3 WC 50 4Q08 Glade Spring Expansion UST (SEP) 20 4Q08 Tribute Storage Dist 35 2Q08 Southeast Supply Header UST ~600 3Q08 Total Major 2008 Projects 2008 projects deliver returns on capital employed at the upper end of our 10-12% targeted range $ 1.7 B Total est 2008 EBIT $ 90 million Total est 2009 Incremental EBIT $ 110 million 11

12 Financial Overview

13 9/30/08 Liquidity Summary As of 9/30/2008 (USD in Millions) Spectra Capital Westcoast Union Gas SEP Total Revolving Credit Commitments * $ 1,500 $ 188 $ 470 $ 500 $ 2,658 Plus: Net Available Cash / Investments Total Liquidity Sources $ 1,523 $ 230 $ 476 $ 594 $ 2,823 Less: Borrowings (782) - (131) (240) (1,153) Less: Letter of Credit Utilization (5) (5) Available Liquidity $ 736 $ 230 $ 345 $ 354 $ 1,665 * A subsidiary of Lehman Brothers is a lender under the Spectra Capital and SEP bank credit facilities and as of September 30, 2008 was in default in its obligation to fund borrowings under the Spectra Capital facility. As a result, Spectra Capital and SEP consider the $64 million of unfunded Lehman Brothers commitments to be unavailable. Well-positioned to manage through current market volatility. 13

14 Long-term Debt Maturities 4Q08, 2009 & 2010 As of 9/30/02008 (USD in Millions) Long-term Debt Maturities Spectra Capital TETLP Westcoast Union Gas SEP Total 4Q08 $ - $ - $ - $ - $ - $ - 1Q09 $ 148 $ - $ - $ - $ - $ 148 2Q Q Q Total 2009 $ 648 $ - $ - $ 28 $ Total 2010 $ - $ 300 $ 235 $ 209 $ - $ 743 No significant long-term funding needs until late

15 Commodity Sensitivity Overview Jan 2008 DCP Midstream s primary sensitivity is to NGL prices (for which we assume a 60% price relationship to oil); changes in contract mix have resulted in some exposure to natural gas DCP Midstream* * Represents Spectra Energy s 50% interest in DCP Midstream Estimated average price of crude oil for 2008 is $83 / Bbl 1 $1.00 / Bbl change in oil = ~ $12 MM change in EBIT Estimated average price of natural gas for 2008 is $8.00 / MMBtu $0.10 / MMBtu change in natural gas = ~ $2 MM change in EBIT 1 Based upon 2008 forward curve for last half of October Empress Empress is sensitive to changes in frac spread Empress: estimated average frac spread for 2008 is ~ $7.25 / MMBtu 2 $0.50 / MMBtu change in frac = ~ $16 MM EBIT 2 Based upon average frac spread for 2006 and 2007 Canadian Dollar Canadian earnings have exchange rate risk Exchange rate at parity for full year $0.01 change in Fx rate = ~ $3 MM change in Net Income Hedging No hedges in place for above sensitivities, except cash flow hedges at DCP Midstream s MLP 15

16 Hypothetical Example for Commodity Price Change Effect on Field Services EBIT Hypothetical average commodity prices for calendar year 2008: $100/bbl crude oil 55% Crude/NGL price relationship $10/MMBtu natural gas Change for Crude Oil Price Assumption $ 204 ($100 - $83) x $12 Change in Correlation Assumption (75) (55% - 60%) x $15 Change for Natural Gas Assumption 40 (($10 - $8)/$0.10)) x $2 Total potential EBIT Increase $ 169 Field Services Sensitivities: (SE's 50% share) MM $ per each $1.00/barrel move in Crude Oil $ 12 MM $ per each percentage move in Correlation $ 15 MM $ per each $0.10/MMBTU change in Natural Gas $ 2 16

17 Great Investment Opportunity Premier Natural Gas Infrastructure Company Attractive industry dynamics Connects diverse supply base to fastest growing markets Solid investment grade balance sheet; strong & stable cash flows Financial flexibility Solid, steady growth and attractive dividend yield Management committed to enhancing shareholder value Expect to deliver total shareholder return in excess of 10% 17

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