CIBC World Markets Institutional Investor Conference. Greg Ebel Chief Financial Officer

Transcription

1 CIBC World Markets Institutional Investor Conference Greg Ebel Chief Financial Officer February 21, 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 17,500 Miles of Gathering & Processing Pipe 58,500 Miles of Distribution Pipe 35,000 Storage Capacity 265 Bcf Retail Customers 1.3 million 3

4 2007 Accomplishments $1.53 ongoing fully diluted EPS - 9% over our $1.40 employee incentive target Strong earnings at all businesses Excellent 4Q07 $0.47 ongoing fully diluted EPS Capital expansion plans delivered: $1 billion in expansion capex 13 new projects in-service totaling about $650 million 10-12% return on capital employed $20 million corporate cost reduction Strong investment grade balance sheet IPO of Spectra Energy Partners at a record yield Successfully launched Spectra Energy and delivered on 2007 financial, operational and investment commitments 4

5 Earnings Summary ($ millions) 4Q07 4Q Reported Net Income $ 291 $ 255 $ 957 $ 1,244 Special Items (17) Discontinued Operations 1 (13) (13) (308) Extraordinary Items (4) Ongoing Net Income $ 297 $ 253 $ 969 $ 919 Reported Diluted EPS $ 0.46 n/a $ 1.51 n/a Ongoing Diluted EPS $ 0.47 n/a $ 1.53 n/a Special items: 4Q07 gas spin-off separation costs 4Q06 gas spin-off separation costs and costs to achieve Duke Energy/Cinergy merger Discontinued Operations: 4Q06 operations transferred back to Duke Energy prior to the spin-off of Spectra Energy Extraordinary Item: 4Q07 adjustment of deferred tax liability associated with Distribution s unregulated storage 5

6 2008 Outlook and Beyond $1.56 ongoing, fully diluted EPS employee incentive target for % increase over 2007 target Committed to dividend growth 2008 dividend increased by $0.04/share to $0.92/share Continue to execute on Capex plans $1 billion+ per year spending through 2010 $1.5 billion in projects expected in-service during 2008 $500 million annualized EBIT expected 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 Targeting 5-7% compounded annual ongoing diluted EPS growth from 2007 through

7 Natural Gas Flows: Shifting Sources, Growing Demand Demand Volume CAGR : Combined SET Markets Northeast Southeast Pacific Northwest Ontario British Columbia Lower 48 States Source: EEA. 3.5% 2.4% 5.4% 2.5% 2.7% 2.5% 2.2% Supply Basins Major Spectra Energy Markets Current Supply Flows Future Supply Push 7

8 Well-Positioned for Growth Expansion Opportunities Pine River Expansion South Peace Pipeline Bronco Pipeline / West Egan Expansion TIME II (Phase II) Lebanon Connector TIME III Dawn Area Storage Northern Bridge Tribute Storage Dawn Storage Deliverability Dawn-Trafalgar Phase III Glade Spring M&NE Phase IV (Canaport TM ) M&NE Phase V AGT East/West Algonquin J-2 Islander East Ramapo NY City Extension Steckman Ridge post 2010 Moss Bluff Expansion Gulfstream Expansion (G-2) Copiah Storage SE Supply Header Gulfstream III & IV 8

9 Significant Growth Projects Organic Growth Projects (Execution) Expansion Project Segment Status Execution agreement with shippers completed, currently in permitting process and/or in construction Segments: UST = U.S. Transmission UST (SEP) = Part of U.S. Transmission but is Spectra Energy Partners project Dist = Distribution WC = Western Canada Transmission and Processing Est. CapEx ($MM) In-Service M&NE Phase IV (Canaport TM ) Expansion UST Execution 320 2H08 Ramapo UST Execution 245 2H08 Dawn Storage Deliverability Dist Execution 110 2H08 TIME II (Phase II) UST Execution 90 2H08 Gulfstream Phase III UST (1/2 SEP) Execution 65 2H08 Egan Storage (Caverns 4 & 3) UST (1/2 SEP) Execution 60 / 140 2H08 / 2H09 Dawn-Trafalgar Pipeline Phase III Dist Execution 60 2H08 Pine River Phase 3 WC Execution 45 2H08 Glade Spring Expansion UST (SEP) Execution 20 2H08 Gulfstream Phase IV UST (1/2 SEP) Execution 75 1H09 South Peace Pipeline WC Execution 130 2H09 Dawn Area Storage Dist Execution 35 / 15 1H09 / 2H09 Algonquin J-2 Expansion UST Execution 35 2H09 AGT East to West UST Execution 350 2H09 M&NE Phase V UST Execution 240 2H10 Total Organic Projects in Execution $ 2.0 B 9

10 Significant Growth Projects Organic Growth Projects (Development) Expansion Project Segment Status Est. CapEx ($MM) In-Service Northern Bridge UST Development N/A 1 2H09 TIME III UST Development N/A 1 2H10 Total Organic Projects in Development Total Organic Projects (incl( Execution) $.7 B $ 2.7 B Development in various stages of negotiation 1 Not Available - Scope of project subject to change Segments: UST = U.S. Transmission UST (SEP) = Part of U.S. Transmission but is Spectra Energy Partners project Dist = Distribution WC = Western Canada Transmission and Processing 10

11 Significant Growth Projects Greenfield Projects Expansion Project Segment Status Est. CapEx ($MM) In-Service Tribute Storage Dist Execution 35 1H08 Southeast Supply Header UST Execution 500 2H08 Steckman Ridge Storage UST Execution 125 1H09 Total Greenfield Projects in Execution $ 0.7 B Execution agreement with shippers completed, currently in permitting process and/or in construction Segments: UST = U.S. Transmission UST (SEP) = Part of U.S. Transmission but is Spectra Energy Partners project Dist = Distribution WC = Western Canada Transmission and Processing 11

12 Significant Growth Projects Major Opportunities post-2010 Expansion Project Segment Status Est. CapEx Gulfstream Expansion (G-2) UST (1/2 SEP) Development N/A 1 NY City Extension (formerly Rockaway Beach) UST Development N/A 1 Moss Bluff Storage Expansion UST (1/2 SEP) Development N/A 1 Copiah Storage UST Development N/A 1 Bronco Pipeline / West UST Development N/A 1 Islander East UST Development N/A 1 Lebanon Connector UST Development N/A 1 Total Major Opportunities post-2010 $4 B $5 B Development in various stages of negotiation 1 Not Available - Scope of project subject to change Segments: UST = U.S. Transmission UST (SEP) = Part of U.S. Transmission but is Spectra Energy Partners project Dist = Distribution WC = Western Canada Transmission and Processing 12

13 2008 Projects In-Service Major Projects expected to be in-service in 2008: Southeast Supply Header - $500 million Ramapo - $245 million M&NE Phase IV - $320 million Dawn Storage Deliverability/Tribute- $145 million Time II (Phase II) - $90 million Gulfstream Phase III - $65 million Dawn Trafalgar Phase III $60 million Egan Storage Expansion - $60 million Pine River Phase 3 - $45 million Total 2008 EBIT contribution from these projects ~$90 million Additional 2009 EBIT expected to be ~ $110 million About $1.5 billion of projects expected to be placed in-service in

14 Strong Investment Grade Balance Sheet 2008 Estimated 12/31/08 Debt Balance (billion) $ 11.4 Estimated Debt/Total Capitalization 58.0% Estimated FFO / Interest 3.2x Estimated FFO / Total Debt 14.4% Spectra Capital Operating Companies* Credit Ratings (1) * Texas Eastern, Union Gas, Westcoast Energy (1) Moody s reaffirmed ratings for Spectra Capital in Feb BBB/Baa1 BBB capital expenditures financed with debt with substantially no effect on debt/total capitalization or coverage ratios 14

15 Access to Immediately Available Funds We have four separate liquidity positions December 31, 2007 ($MM) Spectra Capital Westcoast Union Gas SEP Total Consol SE Revolving Credit Commitments $ 1,500 $ 200 $ 501 $ 500 $ 2,701 Less: Letter of Credit Utilization (16) (16) Plus: Cash / ST Investments 11 (33) Total Liquidity Sources $ 1,495 $ 167 $ 503 $ 670 $ 2,835 Less: Borrowings (478) - (237) (250) (965) Available Liquidity $ 1,017 $ 167 $ 266 $ 420 $ 1,870 In 2007, added $700 MM to Spectra Energy facilities and entered into $500 MM facility at SEP. Liquidity more than adequate for our operations and capital expansion program. 15

16 Key Investment Highlights Premier Natural Gas Infrastructure Company Attractive industry dynamics Positioned in fastest growing markets Diverse supply base Management depth and experience Strong investment grade balance sheet and stable cash flows Financial flexibility Solid, steady growth and attractive dividend yield EPS growth plus dividend yield expected to provide total shareholder return in the 10% range 16

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