Credit Suisse MLP and Energy Logistics Conference Spectra Energy Partners: Moving Ahead, Building Value June 26-27, 2013 New York, New York
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 Partners 10-K and other filings made with the SEC concerning factors that could cause actual results to be different than those contemplated in today's discussion. eg G Disclosure In addition, today s discussion includes certain non-gaap financial measures as defined under SEC egulation G. A reconciliation of those measures to the most directly comparable GAAP measures is available on Spectra Energy Partners Investor elations website at www.spectraenergypartners.com. Spectra Energy Partners 2
Our Team Julie Dill Pat eddy Derick Smith President & Chief Executive Officer Chief Financial Officer Director, Investor & Public elations Spectra Energy Partners 3
Business Overview Growth-Oriented Master Limited Partnership Interstate gas pipelines & storage Fee-based, stable cash flow business No direct commodity exposure Diversifying to include fee-based, crude oil pipeline cash flows of the Express-Platte Pipeline System in 3Q13 Operating Totals: Transmission Pipe Capacity (Bcf/d): 4.5 Miles of Transmission Pipe: 3,233 Miles of Gathering Pipe: 365 Storage Capacity (Bcf): 57 Our Strategy for Growth Strategic acquisitions Organic growth Drop-downs from our General Partner Note: Express Platte Pipeline System drop-down is expected to close in 3Q13 Spectra Energy Partners 4
Business Segment Overview NYSE: SEP Gas Transportation & Storage Equity Investments East Tennessee Natural Gas Ozark Gas Transmission Big Sandy Pipeline Saltville Gas Storage Market Hub Partners Storage (50% Interest) Gulfstream Natural Gas System (49% Interest) Maritimes & Northeast US (38.76% Interest) Spectra Energy Partners 5
Asset and evenue Portfolio evenues are supported by stable cash flows from long-term contracts with a weighted average remaining life of ~13 years East Tennessee (100%) Saltville Gas Storage (100%) Ozark Gas Transmission (100%) Big Sandy Pipeline (100%) Gas Transportation & Storage Assets 99% 1% 14% 93% 6% 84% 97% 1% 2% 3% Avg. emaining Contract Life: 9 Years 6 Years 3 Years 13 Years Gulfstream (49%) Market Hub Partners (50%) Maritimes & Northeast Pipeline US (38.76%) Equity Investments 98% 89% 2% 10% 1% 99% 1% Capacity eservation Fees Interruptible Contracts Variable Fees Avg. emaining Contract Life: 17 Years 2 Years 20 Years Spectra Energy Partners 6
2013 and Beyond Third Party Acquisitions Target potential acquisitions that fit our fee-based profile Organic Growth Kingsport Expansion Project Express-Platte System opportunities Dropdowns from our General Partner $2B+ of Drop-downs: Express-Platte System drop-down, expected to close 3Q13 Over the next couple years, expect drop-downs like other half of Express-Platte and Sand Hills and Southern Hills NGL pipelines Spectra Energy Partners 7
Express-Platte Pipeline System Spectra Energy Corp to drop down 50% of Express-Platte Pipeline System to Spectra Energy Partners for $823 million Enhances SEP s profile of steady, fee-based cash flows Fee-based revenues with annual rate escalators and no direct commodity price exposure Expands SEP s reach into the Western U.S. & Canadian crude oil supply regions and Midwest markets and refiners Close expected in 3 rd quarter 2013 Nameplate Capacity: Express Platte Size: 785 mile, 24 pipe 932 mile, 20 pipe Hardisty, Alberta Casper, WY 280,000 Bbl/d Current Utilization: 80% 100% Casper, WY Guernsey WY 164,000 Bbl/d Guernsey, WY Wood iver, IL 145,000 Bbl/d Storage Capacity: 1.4 MMBbl, 10 tanks 3.4 MMBbl, 34 tanks Supplies Accessed: Alberta Alberta, Bakken, Niobrara Markets Served: ockies / PADD 4 Midwest / PADD 2 Hardisty Express Pipeline Casper Guernsey Express-Platte Pipeline System Platte Pipeline Wood iver Spectra Energy Partners 8
Express-Platte Leveraging a New Platform in Oil Transportation OIL SANDS Hardisty Casper BAKKEN NIOBAA PEMIAN Express-Platte storage Major oil pipeline terminal Natural gas pipeline NGL pipeline Crude pipeline Guernsey EAGLE FOD Wood iver Patoka Cushing Mont Belvieu Expanding unconventional oil production driving significant growth opportunities Increasing Canadian oil sands, Bakken and Niobrara production requires market outlet Near term: New rail and storage terminals needed Longer term: Opportunities for expanded and reconfigured pipeline infrastructure Existing pipe/ow, gas and oil, provide advantage in cost, timing and risk profile Steel in the ground is a proven springboard for growth in the pipeline sector Spectra Energy Partners 9
East Tennessee Natural Gas Industrial Demand Projects Kingsport Project East Tennessee Natural Gas Kingsport projects to provide 86 Mmcf/day of gas service to Eastman Chemical by 1Q15 25-year firm contract Subject to regulatory approvals Project CapEx est. $120 MM, primary spend in 2014 Industrial demand for natural gas is fueling organic growth opportunities Spectra Energy Partners 10
Moving Ahead, Building Value Executing a consistent strategy Investing in quality assets Express-Platte Pipeline System brings quality, fee-based cash flows and geographic diversity to our portfolio Kingsport Expansion Project builds on existing footprint to serve growing industrial demand Safe and reliable operations Creating value for our investors 22 nd consecutive quarterly cash distribution increase of 5/8 cent to $0.50125 per LP unit, an annual equivalent of $2.005/unit Upon closing the Express-Platte drop-down, expect quarterly distribution to increase 3/4 cent per LP unit Spectra Energy Partners 11
Appendix A: Asset Profiles & Sponsor Profile Download the I App:
East Tennessee Natural Gas Pipeline ETNG Operating Totals: 1,517 mile interstate pipeline ~1.7 Bcf/d of pipeline capacity 32 receipt - 179 delivery points ~1 Bcf LNG storage facility Kingsport Project CASCADE CEEK, NC Positioned to benefit from growth in gas for electric generation and industrial use Industrial demand projects Kingsport projects to provide 86 Mmcf/day of gas service to Eastman Chemical by 1Q15; subject to regulatory approvals ETNG connects supplies to its system to redeliver to Southeast & Mid-Atlantic markets Scalable growth Good customer mix: local distribution companies (LDCs), power plants, producers Spectra Energy Partners 13
Maritimes & Northeast Pipeline US Enhancing SEP s profile of steady, fee-based cash flows M&N US Snapshot 338 mile, FEC-regulated, mainline natural gas pipeline Capacity of ~0.8 Bcf/day evenues are over 90% fee-based with an average contract life of 20 years Acquired 38.76% interest on Oct. 31st Expands SEP s reach into Northeast U.S. and Atlantic Canadian natural gas supplies and markets Key interconnects: Spectra Energy Transmission including Algonquin Gas Transmission and Maritimes & Northeast Pipeline Canada Brunswick Pipeline, Tennessee Gas, and Portland Natural Gas Transmission Spectra Energy Partners 14
Gulfstream Natural Gas Pipeline One of two pipelines serving Florida peninsula Fully subscribed Well positioned to benefit from fuel oil conversions to natural gas for electric generation Gulfstream Operating Totals: 745 mile interstate natural gas pipeline 1.3 Bcf/d of pipeline capacity 8 receipt - 24 delivery points Spectra Energy Partners 15
Big Sandy Pipeline FEC-regulated pipeline in eastern Kentucky Access to the Huron Shale and Appalachian Basin Interconnect with Tennessee Gas Serves Mid-Atlantic & Northeast markets With an average contract life of 13 years, Big Sandy provides long-term, fee-based revenues to SEP s asset portfolio Big Sandy Operating Totals: 68 mile interstate pipeline 0.2 Bcf/day of pipeline capacity Spectra Energy Partners 16
Ozark Gas Transmission Well-positioned assets with a good mix of customers Access to Arkoma Basin, Fayetteville Shale & Woodford Shale Interconnects with Spectra Energy s Texas Eastern Transmission, Mississippi iver Transmission, NGPL, and Texas Gas Pipeline system reach from Oklahoma to southeastern Missouri Serves Mid-continent, Southeast & Northeast markets Positioned for growth over time from Fayetteville Shale production Ozark Operating Totals: 565 mile interstate pipeline 365 mile fee-based gathering system 0.5 Bcf/d of pipeline capacity Spectra Energy Partners 17
Market Hub Partners ( MHP ) Natural Gas Storage ecently completed major, multiyear expansion High deliverability storage Significant interconnectivity Access to markets in Northeast, Southeast, Midwest, and Gulf Coast Good customer mix including electric power generators Market Hub Operating Totals: 2 high deliverability salt cavern storage facilities ~51 Bcf capacity 80 miles of pipeline 13 interconnects Spectra Energy Partners 18
Our Sponsor: Spectra Energy Corp Spectra Energy (NYSE: SE) holds ~58% of SEP outstanding units (GP/LP) 2012 Natural Gas Pipeline Throughput: 4.2 Tcf Natural Gas Transmission Pipe: 19,000 mi Natural Gas Storage Capacity: 300+ Bcf Natural Gas Gathering Pipe: 66,000 mi Crude Transmission Pipe: 1,700 mi SE Gas Processing Capacity: 3.7 Bcf/d 2012 DCP Processing Volume: 6.2 Tbtu/d 2012 DCP NGLs Produced: 402 MBbl/d Distribution Pipe: 39,000 mi Union Gas etail Customers: 1.4 million Gas storage facility Gas processing plant Propane terminal NGL storage Shale gas formations Crude storage Major oil pipeline terminal Spectra Energy Partners 19
Appendix B: Financial & Other Information Download the I App:
evenue Profile Quarter Ended March 31, 2013 SEP Gas Transportation and Storage (1) Gulfstream Natural Gas Pipeline (49% Interest) MHP Storage (50% Int.) M&N Pipeline US (38.76% interest) ($ MM, unaudited) evenues @ 100% Quarter Ended March 31, 2013 SEP Ownership% (1) Includes revenues at 100% from East Tennessee, Saltville, Ozark and Big Sandy SEP Share of evenues Spectra Energy Partners (1) $ 60.9 100% $ 60.9 Gulfstream Natural Gas Pipeline $ 67.2 49% $ 32.9 Market Hub Partners - Storage $ 26.9 50% $ 13.5 M&N US $ 41.2 38.76% $ 16.0 Total $ 123.3 SEP Assets evenue Composition: Weighted Average emaining Contract Life: ~13 years evenue composition percentages are weighted for SEP s respective asset ownership interests as applicable during the year ended December 31, 2012. 95% Capacity eservation Fees 3% Variable Fees 2% Interruptible Contracts Spectra Energy Partners 21
Express-Platte Pipeline System Drop-down $823 million for 50% of Express-Platte $555 million in cash ~$139 million in newly issued units to the general partner ~$129 million in acquired Express-Platte debt Express-Platte s contribution to SEP (assuming a July 1, 2013 close): Projected 2013 EBITDA of ~$36 million (equates to full year proj. 2013 EBITDA of ~$72 million) Projected 2013 cash available for distribution of ~$20 million Outlook for 2013 Cash Available for Distribution is $259 million Spectra Energy Partners 22
Financial Position Credit Metrics Summary (3/31/13) Debt Balance $ 1.0 billion Debt / EBITDA (1) 3.4x Interest Coverage (2) 9.8x Available Liquidity $ 385 million Other Investments (3) $ 136 million Investment grade credit ratings S&P (BBB), Fitch (BBB), Moody s (Baa3) Enhanced financial position Completed 5.2 million unit public offering in April 2013 with net proceeds of ~$190 million Express-Platte acquisition to be funded using cash, debt and units to our general partner (1) Calculated in accordance with the SEP Credit Agreement. (2) Interest coverage shown for informational purposes only, as metric is not a financial covenant in the SEP Credit Agreement. Calculated using EBITDA as defined in the SEP Credit Agreement. (3) Includes portion of the net proceeds from equity issuance in November 2012 which will be used to fund capital expenditures and acquisitions Spectra Energy Partners 23
Debt and Available Liquidity Spectra Energy Partners ($MM, unaudited) March 31, 2013 December 31, 2012 Commercial Paper $ 324 $ 336 MHP Demand Note (1) 16 17 East Tennessee Notes Payable (3.1%; matures 2024) 200 200 Unsecured 5 year Note (2.95%; matures 2016) 250 250 Unsecured 10 year Note (4.60%; matures 2021) 250 250 Total Debt $ 1,040 $ 1,053 Credit Facility Capacity ($700MM; LIBO+117 bps; matures 2016) $ 700 $ 700 Credit Facility Drawings Commercial Paper 324 336 MHP Demand Note (1) 16 17 +Cash and Cash Equivalents 25 20 Available Liquidity $ 385 $ 367 Other Investments (2) $ 136 $ 141 (1) MHP Demand Note is reported as Note Payable Affiliates in the Consolidated Balance Sheets. (2) Includes portion of the net proceeds from equity issuance in November 2012 which may only be used to fund capital expenditures and acquisitions Significant liquidity to fund growth Spectra Energy Partners 24
Gulfstream Debt ($ MM, unaudited) March 31, 2013 Gulfstream Natural Gas System, LLC Debt (1) 100% 49% Unsecured 15 year note (5.56%; due 2015) $ 500 $ 245 Unsecured 25 year note (6.19%; due 2025) 350 172 Unsecured 7 year note (6.95%; due 2016) 300 147 Total Debt $1,150 $ 564 (1) Gulfstream is accounted for on the equity method of accounting, as such its debt is not consolidated on the SEP balance sheet. Spectra Energy Partners 25
M&N US Debt March 31, 2013 ($ MM, unaudited) Maritimes & Northeast Pipeline, LLC Debt (1) 100% 38.76% Unsecured 5 year notes (7.5%; due 2014) $ 429 $ 166 Total Debt $ 429 $ 166 2013 Amortizing Debt Payments Maritimes & Northeast Pipeline, LLC Payments (2) 100% 38.76% 2 nd Quarter 2013 $ 8.8 $ 3.4 4 th Quarter 2013 8.8 3.4 Total Amortization Debt Payments $ 17.6 $ 6.8 (1) M&N US is accounted for on the equity method of accounting, as such its debt is not consolidated on the SEP balance sheet. (2) M&N US amortizing debt payments will be a reduction to 2 nd & 4 th quarter 2013 cash available for distribution and is reflected in SEP s 2013 Outlook. Spectra Energy Partners 26
1Q13 Earnings Summary ($MM) 1Q13 1Q12 Operating evenues $ 60.9 $ 61.9 Operating Expenses 27.8 28.8 Operating Income 33.1 33.1 Equity Earnings 30.7 27.4 Interest Income and Other 0.2 - Interest Expense 7.6 7.7 Earnings Before Income Taxes $ 56.4 $ 52.8 Income Tax Expense 0.5 0.4 Net Income $ 55.9 $ 52.4 Spectra Energy Partners 27
1Q13 Cash Available for Distribution ($MM) 1Q13 1Q12 Adjusted EBITDA $ 42.5 $ 42.4 ADD: Cash available from equity investments Gulfstream 49% 19.5 19.6 Market Hub Partners 50% 10.3 13.5 M&N US 38.76% (1) 9.7 LESS: Interest expense (net) 7.6 7.7 Maintenance capital expenditures 1.6 1.7 Other (0.1) (0.1) Cash Available for Distribution $ 72.9 $ 66.2 (1) M&N US results reflect the 38.76% acquisition as of October 31, 2012 Spectra Energy Partners 28
EG G econciliation Schedules
SEC egulation G Adjusted Earnings Before Interest, Taxes and Depreciation and Amortization ( EBITDA ) The materials included for Spectra Energy Partners include a discussion of adjusted EBITDA, a non-gaap financial measure. The most directly comparable GAAP measure for adjusted EBITDA, on a historical basis, is net income plus, as applicable, interest expense, income taxes, and depreciation and amortization, less, as applicable, equity in earnings of Gulfstream, Market Hub Partners and M&N US, interest income, and other income and expenses. Cash Available for Distribution ( CAD ) The materials included for Spectra Energy Partners include a discussion of cash available for distribution, a non-gaap financial measure. The most directly comparable GAAP measure for CAD, on a historical basis, is adjusted EBITDA (defined above) plus Cash Available for Distribution for Gulfstream, Market Hub and M&N US, and net preliminary project costs, less interest expense, cash paid for income taxes, maintenance capital expenditures, excluding the impact of reimbursable projects, and other non-cash items affecting net income. Cash Available for Distribution for Gulfstream and Market Hub is defined on a consistent basis with Spectra Energy Partners. Cash Available for Distribution for M&N US includes an adjustment for amortizing bond payments. Spectra Energy Partners 30
econciliation of Net Income to Cash Available for Distribution Spectra Energy Partners econciliation of Non-GAAP "Adjusted EBITDA" and "Cash Available for Distribution" (Unaudited) (In millions) Three Months Ended March 31, 2013 2012 Net income $ 55.9 $ 52.4 Add: Interest expense 7.6 7.7 Income tax expense 0.5 0.4 Depreciation and amortization 9.4 9.3 Less: Equity in earnings of Gulfstream 15.3 15.3 Equity in earnings of Market Hub 8.7 12.1 Equity in earnings of M&N US 6.7 - Interest income 0.1 - Other income and expenses, net 0.1 - Adjusted EBITDA 42.5 42.4 Add: Cash Available for Distribution from Gulfstream 19.5 19.6 Cash Available for Distribution from Market Hub 10.3 13.5 Cash Available for Distribution from M&N US 9.7 - Preliminary project costs, net - - Less: Interest expense 7.6 7.7 Cash paid for income tax expense - - Maintenance capital expenditures 1.6 1.7 Other (0.1) (0.1) Cash Available for Distribution $ 72.9 $ 66.2 Spectra Energy Partners 31
econciliation of Net Income to Cash Available for Distribution (Gulfstream) Gulfstream econciliation of Non-GAAP "Adjusted EBITDA" and "Cash Available for Distribution" (Unaudited) (In millions) Three Months Ended March 31, 2013 2012 Net income $ 31.2 $ 31.2 Add: Interest expense 17.5 17.5 Depreciation and amortization 8.9 8.9 Less: Other income and expenses, net - - Adjusted EBITDA - 100% 57.6 57.6 Add: Preliminary project costs, net 0.4 0.3 Less: Interest expense 17.5 17.5 Maintenance capital expenditures 0.8 0.3 Other - - Cash Available for Distribution - 100% $ 39.7 $ 40.1 Adjusted EBITDA - 49.0% $ 28.2 $ 28.2 Cash Available for Distribution - 49.0% $ 19.5 $ 19.6 Spectra Energy Partners 32
econciliation of Net Income to Cash Available for Distribution (Market Hub) Market Hub econciliation of Non-GAAP "Adjusted EBITDA" and "Cash Available for Distribution" (Unaudited) (In millions) Three Months Ended March 31, 2013 2012 Net income $ 17.5 $ 24.2 Add: Interest expense (benefit) - (0.1) Income tax expense 0.1 0.1 Depreciation and amortization 2.9 2.8 Less: Interest income - - Other income and expenses, net - - Adjusted EBITDA - 100% 20.5 27.0 Less: Interest expense (benefit) - (0.1) Cash paid for income tax expense - - Maintenance capital expenditures - 0.1 Cash Available for Distribution - 100% $ 20.5 $ 27.0 Adjusted EBITDA - 50% $ 10.3 $ 13.5 Cash Available for Distribution - 50% $ 10.3 $ 13.5 Spectra Energy Partners 33
econciliation of Net Income to Cash Available for Distribution (M&N US) Maritimes & Northeast Pipeline econciliation of Non-GAAP "Adjusted EBITDA" and "Cash Available for Distribution" (Unaudited) (In millions) Three Months Ended March 31, 2013 2012(a) Net income $ 17.2 $ - Add: Interest expense 9.6 - Income tax expense - - Depreciation and amortization 6.4 - Less: Other income and expenses, net - - Adjusted EBITDA - 100% 33.2 - Less: Interest expense 9.6 - Cash paid for amortizing bond payments - - Cash paid for income tax expense - - Maintenance capital expenditures - - Other (b) (1.3) - Cash Available for Distribution - 100% $ 24.9 $ - Adjusted EBITDA - 38.76% (a) $ 12.9 $ - Cash Available for Distribution - 38.76% (a) $ 9.7 $ - (a) M&N US results reflect October 31, 2012 acquisition, and no (0%) ownership preceding that date. (b) Amortization of Loss on eacquired Debt Spectra Energy Partners 34
Express-Platte Pipeline System eg. G econciliation Schedule Express-Platte Pipeline System econciliation of "Projected Earnings before Interest and Taxes (EBIT)" to Non-GAAP "Projected EBITDA" and "Projected Cash Available for Distribution" Projected* July 1, 2013 - December 31, 2013 (in millions) Projected EBIT - 50% $ 28 Add: Depreciation expense 8 Projected EBITDA - 50% $ 36 Less: Interest expense and other $ (11) Income tax expense (1) Maintenance capital expenditures (4) Projected Cash Available for Distribution - 50% $ 20 *Assumes July 1, 2013 transaction close Note: The financial data used in developing these projections represent estimates based on historical experience and what are believed to be reasonable assumptions with respect to future events. These financials may change as a result of inclusion into Spectra Energy Partners, LP, and the resulting changes may be material. These projected results are forward-looking statements and may change as discussed in more detail above. Spectra Energy Partners 35
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