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Actionable news in SEP: SPECTRA ENERGY PARTNERS LP,

SECURITIES AND EXCHANGE COMMISSION

state, provincial, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, have an effect on rate structure, and affect the speed at and degree to which competition enters the natural gas and oil industries;
outcomes of litigation and regulatory investigations, proceedings or inquiries;
weather and other natural phenomena, including the economic, operational and other effects of hurricanes and storms;
the timing and extent of changes in interest rates and foreign currency exchange rates;
general economic conditions, including the risk of a prolonged economic slowdown or decline, or the risk of delay in a recovery, which can affect the long-term demand for natural gas and oil and related services;
potential effects arising from terrorist attacks and any consequential or other hostilities;
results and costs of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings and general market and economic conditions;
increases in the cost of goods and services required to complete capital projects;
growth in opportunities, including the timing and success of efforts to develop U.S. and Canadian pipeline, storage, gathering and other related infrastructure projects and the effects of competition;
the performance of natural gas transmission, storage and gathering facilities, and crude oil transportation and storage;
the extent of success in connecting natural gas and oil supplies to transmission and gathering systems and in connecting to expanding gas and oil markets;
the effects of accounting pronouncements issued periodically by accounting standard-setting bodies;
conditions of the capital markets during the periods covered by forward-looking statements; and
the ability to successfully complete merger, acquisition or divestiture plans; regulatory or other limitations imposed as a result of a merger, acquisition or divestiture; and the success of the business following a merger, acquisition or divestiture.
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017201620172016
Operating Revenues
Transportation of natural gas$541
$482
$1,617
$1,441
Transportation of crude oil94
89
295
262
Storage of natural gas and other58
57
176
167
Total operating revenues693
628
2,088
1,870
Operating Expenses
Operating, maintenance and other197
225
633
594
Depreciation and amortization86
78
258
232
Property and other taxes36
45
148
135
Total operating expenses319
348
1,039
961
Operating Income374
280
1,049
909
Other Income and Expenses
Earnings from equity investments161
35
239
92
Other income and expenses, net15
38
109
89
Total other income and expenses176
73
348
181
Interest Expense75
53
191
165
Earnings Before Income Taxes475
300
1,206
925
Income Tax Expense4
4
14
13
Net Income471
296
1,192
912
Net Income—Noncontrolling Interests11
21
87
52
Net Income—Controlling Interests$460
$275
$1,105
$860
Calculation of Limited Partners’ Interest in Net Income:
Net income—Controlling Interests$460
$275
$1,105
$860
Less: General partner’s interest in net income101
81
284
226
Limited partners’ interest in net income$359
$194
$821
$634
Weighted average limited partner units outstanding—basic and diluted311
304
310
296
Net income per limited partner unit—basic and diluted$1.15
$0.64
$2.65
$2.14
Distributions paid per limited partner unit $0.71375
$0.66375
$2.10375
$1.95375
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017201620172016
Net Income$471
$296
1,192
$912
Foreign currency translation adjustments8
(4)15
8
Change in unrealized loss on cash flow hedges (3)
(3)
Total Comprehensive Income476
292
1,204
920
Less: Comprehensive Income—Noncontrolling Interests11
21
87
52
Comprehensive Income—Controlling Interests $465
$271
$1,117
$868
September 30,
2017
December 31,
2016
ASSETS
Current Assets
Cash and cash equivalents$107
$216
Receivables, net310
380
Inventory40
40
Fuel tracker23
6
Other24
18
Total current assets504
660
Investments and Other Assets
Investments in and loans to unconsolidated affiliates3,207
1,127
Goodwill2,957
3,234
Other assets, net134
108
Total investments and other assets6,298
4,469
Property, Plant and Equipment
Cost18,633
19,958
Less accumulated depreciation and amortization4,037
3,866
Property, plant and equipment, net14,596
16,092
Regulatory and Other Assets321
385
Total Assets$21,719
$21,606
September 30,
2017
December 31,
2016
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable$188
$441
Commercial paper2,033
574
Taxes payable76
76
Interest payable38
79
Current portion of long-term debt506
416
Other151
193
Total current liabilities2,992
1,779
Long-term Debt5,714
6,223
Deferred Credits and Other Liabilities
Deferred income taxes45
42
Regulatory and other liabilities158
158
Total deferred credits and other liabilities203
200
Commitments and Contingencies



Equity
Partners’ Capital
Common units (311.0 and 308.4 units issued and outstanding at September 30, 2017 and December 31, 2016, respectively)11,933
11,650
General partner units (6.3 units issued and outstanding at September 30, 2017 and December 31, 2016)537
452
Accumulated other comprehensive loss(33)(45)
Total partners’ capital12,437
12,057
Noncontrolling interests373
1,347
Total equity12,810
13,404
Total Liabilities and Equity$21,719
$21,606
Nine Months Ended
September 30,
20172016
OPERATING ACTIVITIES
Net income$1,192
$912
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization255
237
Deferred income tax expense2
4
Earnings from equity investments(239)(92)
Distributions from equity investments105
87
Other(174)(78)
Net cash provided by operating activities1,141
1,070
INVESTING ACTIVITIES
Capital expenditures(1,592)(1,546)
Investments in and loans to unconsolidated affiliates(218)(181)
Purchase of intangible, net(40)(80)
Distributions from equity investments27
45
Distribution to equity investment
(148)
Purchases of held-to-maturity securities(15)(31)
Proceeds from sales and maturities of held-to-maturity securities13
26
Purchases of available-for-sale securities(69)(550)
Proceeds from sales and maturities of available-for-sale securities76
546
Other changes in restricted funds3
7
Net cash outflow from deconsolidation of subsidiary(67)
Other3
(2)
Net cash used in investing activities(1,879)(1,914)
FINANCING ACTIVITIES
Proceeds from the issuance of long-term debt400

Payments for the redemption of long-term debt(816)(267)
Net increase in commercial paper1,459
701
Distributions to noncontrolling interests(37)(22)
Contributions from noncontrolling interests416
437
Proceeds from the issuances of units115
972
Distributions to partners(907)(777)
Other(1)(3)
Net cash provided by financing activities629
1,041
Net increase (decrease) in cash and cash equivalents(109)197
Cash and cash equivalents at beginning of period216
168
Cash and cash equivalents at end of period$107
$365
Supplemental Information
Property, plant and equipment non-cash accruals$84
$219
Partners’ CapitalNoncontrolling InterestsTotal
CommonGeneralPartnerAccumulated OtherComprehensive Income (Loss)
December 31, 2016$11,650
$452
$(45)$1,347
$13,404
Net income821
284

87
1,192
Other comprehensive income

12

12
Attributed deferred tax benefit
55


55
Issuances of units113
2


115
Distributions to partners(651)(256)

(907)
Contributions from noncontrolling interests


416
416
Distributions to noncontrolling interests


(37)(37)
Sabal Trail deconsolidation


(1,440)(1,440)
September 30, 2017$11,933
$537
$(33)$373
$12,810
December 31, 2015$10,527
$336
$(50)$533
$11,346
Net income634
226

52
912
Other comprehensive income

8

8
Attributed deferred tax benefit
42

14
56
Issuances of units952
20


972
Distributions to partners(577)(200)

(777)
Contributions from noncontrolling interests


437
437
Distributions to noncontrolling interests


(22)(22)
September 30, 2016$11,536
$424
$(42)$1,014
$12,932
Condensed Consolidated Statements of OperationsTotal Operating RevenuesDepreciation and AmortizationSegment EBITDA/ Consolidated Earnings Before Income Taxes
(in millions)
Three Months Ended September 30, 2017
U.S. Transmission$595
$78
$589
Liquids98
8
67
Total reportable segments693
86
656
Other

(21)
Depreciation and amortization

86
Interest expense

75
Interest income and other

1
Total consolidated$693
$86
$475
Three Months Ended September 30, 2016
U.S. Transmission$535
$71
$392
Liquids93
7
60
Total reportable segments628
78
452
Other

(21)
Depreciation and amortization

78
Interest expense

53
Interest income and other


Total consolidated$628
$78
$300
Nine Months Ended September 30, 2017
U.S. Transmission$1,783
$234
$1,548
Liquids305
24
197
Total reportable segments2,088
258
1,745
Other

(92)
Depreciation and amortization

258
Interest expense

191
Interest income and other

2
Total consolidated$2,088
$258
$1,206
Nine Months Ended September 30, 2016
U.S. Transmission$1,602
$210
$1,209
Liquids268
22
174
Total reportable segments1,870
232
1,383
Other

(63)
Depreciation and amortization

232
Interest expense

165
Interest income and other

2
Total consolidated$1,870
$232
$925
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017201620172016
(in millions, except per unit amounts)
Net income—controlling interests$460
$275
$1,105
$860
Less: Net income attributable to:
General partner’s interest in general partner units—2%10
5
23
17
General partner’s interest in incentive distribution rights91
76
261
209
Limited partners’ interest in net income attributable to common units$359
$194
$821
$634
Weighted average limited partner units outstanding—basic and diluted311
304
310
296
Net income per limited partner unit—basic and diluted$1.15
$0.64
$2.65
$2.14
provide funds for minimum quarterly distributions to the unitholders and to the general partner for any one or more of the next four quarters,
plus, if the general partner so determines, all or a portion of cash and cash equivalents on hand on the date of determination of Available Cash for the quarter.
Marginal PercentageInterest in Distributions
Distribution TargetsPortion of Quarterly Distribution Per Common UnitCommonUnitholdersGeneralPartner
Minimum Quarterly Distribution$0.3098%2%
First Target Distributionabove $0.30 up to $0.34598%2%
Second Target Distributionabove $0.345 up to $0.37585%15%
Third Target Distributionabove $0.375 up to $0.4575%25%
Thereafterabove $0.4550%50%
Maturity DateTotal Facility Commercial Paper Outstanding at September 30, 2017Available
(in millions)
Spectra Energy Partners, LP2021-2022$2,500
$2,033
$467
DescriptionCondensed Consolidated Balance Sheet CaptionSeptember 30, 2017
TotalLevel 1Level 2Level 3
(in millions)
Canadian equity securitiesInvestments and other assets — other assets, net$3
$3
$
$
Interest rate swapsInvestments and other assets — other assets, net6

6

Total Assets$9
$3
$6
$

Interest rate swapsCurrent liabilities — other$6
$
$6
$
Total Liabilities$6
$
$6
$
DescriptionCondensed Consolidated Balance Sheet CaptionDecember 31, 2016
TotalLevel 1Level 2Level 3
(in millions)
Corporate debt securitiesCash and cash equivalents$145
$
$145
$
Corporate debt securitiesInvestments and other assets — other assets, net9

9

Canadian equity securitiesInvestments and other assets — other assets, net1
1


Interest rate swapsInvestments and other assets — other assets, net9

9

Total Assets$164
$1
$163
$
September 30, 2017December 31, 2016
BookValueApproximateFair ValueBookValueApproximateFair Value
(in millions)
Note receivable, noncurrent (a)$71
$71
$71
$71
Long-term debt, including current maturities (b)6,256
6,635
6,672
6,855
(b)Excludes commercial paper, unamortized items and fair value hedge carrying value adjustments.
September 30, 2017December 31, 2016
Gross AmountsPresented inthe CondensedConsolidatedBalance SheetAmounts NotOffset in theCondensedConsolidatedBalance SheetNetAmountGross AmountsPresented inthe CondensedConsolidatedBalance SheetAmounts NotOffset in theCondensedConsolidatedBalance SheetNetAmount
Description(in millions)
Assets$6
$
$6
$9
$
$9
Liabilities$6
$
$6
$
$
$
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017201620172016
(in millions)
Operating revenues$693
$628
$2,088
$1,870
Operating expenses319
348
1,039
961
Operating income374
280
1,049
909
Earnings from equity investments161
35
239
92
Other income and expenses, net15
38
109
89
Interest expense75
53
191
165
Earnings before income taxes475
300
1,206
925
Income tax expense4
4
14
13
Net income471
296
1,192
912
Net income—noncontrolling interests11
21
87
52
Net income—controlling interests$460
$275
$1,105
$860
higher transportation revenues on the Express pipeline due to expansion and higher tariff rates.
lower pipeline inspection and other compliance costs related to the 2016 Texas Eastern pipeline incident and
higher transportation revenues on the Express pipeline due to expansion and higher tariff rates, partially offset by
lower recoveries of electric power and other costs passed through to gas transmission customers.
higher costs related to expansion and maintenance, partially offset by
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017201620172016
(in millions)
U.S. Transmission$589
$392
$1,548
$1,209
Liquids67
60
197
174
Total reportable segment EBITDA656
452
1,745
1,383
Other(21)(21)(92)(63)
Depreciation and amortization86
78
258
232
Interest expense75
53
191
165
Interest income and other1

2
2
Earnings before income taxes$475
$300
$1,206
$925
Three Months Ended
September 30,
Nine Months Ended
September 30,
20172016Increase (Decrease)20172016Increase (Decrease)
(in millions)
Operating revenues$595
$535
$60
$1,783
$1,602
$181
Operating expenses
Operating, maintenance and other181
217
(36)582
572
10
Other income and expenses175
74
101
347
179
168
EBITDA$589
$392
$197
$1,548
$1,209
$339
a $2 million increase primarily due to merger-related severance costs.
a $203 million increase due to expansion, primarily on the Algonquin pipeline and Texas Eastern pipeline, partially offset by
a $13 million decrease in recoveries of electric power and other costs passed through to gas transmission customers.
a $26 million increase primarily due to merger-related severance costs, partially offset by
a $13 million decrease in electric power and other costs passed through to gas transmission customers,
a $12 million decrease due to pipeline inspection costs related to the 2016 Texas Eastern pipeline incident and
Three Months Ended
September 30,
Nine Months Ended
September 30,
20172016Increase (Decrease)20172016Increase (Decrease)
(in millions)
Operating revenues$98
$93
$5
$305
$268
$37
Operating expenses
Operating, maintenance and other28
32
(4)104
94
10
Other income and expenses(3)(1)(2)(4)
(4)
EBITDA$67
$60
$7
$197
$174
$23
Express pipeline revenue receipts, MBbl/d (a)255
235
20
260
234
26
Platte PADD II deliveries, MBbl/d119
131
(12)133
131
2
an increase of $21 million in transportation revenues due to the Express Enhancement expansion project placed into service in October 2016,
Three Months Ended
September 30,
Nine Months Ended
September 30,
20172016Increase (Decrease)20172016Increase (Decrease)
(in millions)
Operating expenses$21
$21
$
$92
$63
$29
EBITDA$(21)$(21)$
$(92)$(63)$(29)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017201620172016
(in millions)
Net income$471
$296
$1,192
$912
Add:
Interest expense75
53
191
165
Income tax expense4
4
14
13
Depreciation and amortization86
78
258
232
Foreign currency (gain) loss(1)
(1)
Less:
Third party interest income

1
2
EBITDA635
431
1,653
1,320
Add:
Earnings from equity investments(161)(35)(239)(92)
Distributions from equity investments54
35
132
132
Other9
9
9
12
Less:
Interest expense75
53
191
165
Equity AFUDC14
38
107
84
Net cash paid for income taxes4
2
12
7
Distributions to noncontrolling interests12
7
37
22
Maintenance capital expenditures69
70
148
178
Distributable Cash Flow$363
$270
$1,060
$916
Nine Months Ended
September 30,
20172016
(in millions)
Net cash provided by (used in):
Operating activities$1,141
$1,070
Investing activities(1,879)(1,914)
Financing activities629
1,041
Net increase (decrease) in cash and cash equivalents(109)197
Cash and cash equivalents at beginning of the period216
168
Cash and cash equivalents at end of the period$107
$365
an increase of $37 million in investments in unconsolidated affiliates, mainly due to Sabal Trail.
Nine Months Ended
September 30,
20172016
(in millions)
U.S. Transmission$1,794
$1,673
Liquids16
54
Total consolidated$1,810
$1,727
may have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement;
may apply contract standards of “materiality” that are different from “materiality” under the applicable securities laws; and
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement.

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