HOUSTON, Oct. 19, 2015 /PRNewswire/ -- Spectra Energy
Corp (NYSE: SE) and Spectra Energy Partners, LP (NYSE: SEP) have
executed an agreement for the acquisition by Spectra Energy of
Spectra Energy Partners' one-third ownership interests in the Sand
Hills and Southern Hills natural gas liquids (NGL) pipelines.
Spectra Energy has also executed an agreement with Phillips 66
(NYSE: PSX) and DCP Midstream, LLC (the 50-50 joint venture between
Spectra Energy and Phillips 66) under which Spectra Energy will
contribute its interests in the Sand Hills and Southern Hills
pipelines and Phillips 66 will contribute $1.5 billion in cash, respectively, to DCP
Midstream. The plan to contribute these assets was previously
announced on Sept. 8, 2015 as part of a series of actions that
would establish a foundation for sustainable cash flows at DCP
Midstream.
In consideration for Spectra Energy Partners' interests in Sand
Hills and Southern Hills, Spectra Energy will transfer for
redemption and cancellation 21,560,000 limited partner (LP) units,
440,000 general partner (GP) units, and a reduction in the
distribution right payments associated with the cancelled units. In
addition, Spectra Energy will grant a three-year, $4 million per calendar quarter giveback of
distributions on its incentive distribution rights (IDRs),
beginning with distributions payable in the first quarter 2016.
"The contribution of cash and the interests in the Sand Hills
and Southern Hills NGL pipelines to DCP Midstream will provide DCP
with a stronger balance sheet and increased financial flexibility
while positioning it to grow through future commodity cycles. The
solution we have put in place with our joint venture partner,
Phillips 66, allows DCP to retain and expand upon its leading
position in the NGL sector while preserving the upside for the
owners that will occur when commodity prices ultimately recover,"
said Greg Ebel, chairman and CEO,
Spectra Energy and Spectra Energy Partners.
"The transaction between Spectra Energy and Spectra Energy
Partners allows SEP to realize consistent distributable cash flow
per unit and enhanced distribution coverage as a result of the
redemption of units and the IDR giveback. Spectra Energy Partners'
strong growth profile with solid, fee-based revenues gives us
continued confidence in distribution coverage in the range of 1.05
to 1.15 times, which is consistent with our previous guidance. In
addition, Spectra Energy Partners' distribution growth guidance
continues at 8 to 9 percent through at least 2017," continued
Ebel.
Subject to customary closing conditions, both transactions are
expected to close in the fourth quarter.
The transaction between Spectra Energy and Spectra Energy
Partners was unanimously approved by the Board of Directors of
Spectra Energy Partners, based on the unanimous approval and
recommendation of its Conflicts Committee, which is comprised
entirely of independent directors.
CAUTIONARY STATEMENTS
This press release contains forward-looking statements as
defined under the federal securities laws. Although the companies
believe that expectations reflected in such forward-looking
statements are reasonable, no assurance can be given that such
expectations will prove to be correct. In addition, these
statements are subject to certain risks, uncertainties and other
assumptions that are difficult to predict and may be beyond the
companies' control. If one or more of these risks or uncertainties
materialize, or if underlying assumptions prove incorrect, actual
results may vary materially from what the companies anticipated,
estimated, projected or expected. Factors that may have a direct
bearing on the forward-looking statements include, without
limitation, completion or timing of the anticipated contributions.
Other factors that may have direct bearing on the forward-looking
statements are described in the filings that each company makes
with the Securities and Exchange Commission. In light of these
risks, uncertainties and assumptions, the events described in the
forward-looking statements might not occur or might occur to a
different extent or at a different time than as described. All
forward-looking statements in this release are made as of the date
hereof and the companies undertake no obligation to publicly update
or revise any forward-looking statements, whether as a result of
new information, future events or otherwise.
Spectra Energy Corp (NYSE: SE), a FORTUNE 500 company, is one of
North America's leading pipeline
and midstream companies. Based in Houston, Texas, the company's operations in
the United States and Canada include more than 22,000 miles of
natural gas, natural gas liquids, and crude oil pipelines;
approximately 300 billion cubic feet (Bcf) of natural gas storage;
4.8 million barrels of crude oil storage; as well as natural gas
gathering, processing, and local distribution operations. Spectra
Energy is the general partner of Spectra Energy Partners (NYSE:
SEP), one of the largest pipeline master limited partnerships in
the United States and owner of the
natural gas, natural gas liquids, and crude oil assets in Spectra
Energy's U.S. portfolio. Spectra Energy also has a 50 percent
ownership in DCP Midstream, the largest producer of natural gas
liquids and the largest natural gas processor in the United States. Spectra Energy has served
North American customers and communities for more than a century.
For more information, visit www.spectraenergy.com and
www.spectraenergypartners.com.
Spectra Energy Partners, LP (NYSE: SEP) is a Houston-based master limited partnership,
formed by Spectra Energy Corp (NYSE: SE). SEP is one of the largest
pipeline MLPs in the United States
and connects growing supply areas to high-demand markets for
natural gas, natural gas liquids, and crude oil. These assets
include more than 17,000 miles of transmission and gathering
pipelines, approximately 170 billion cubic feet of natural gas
storage, and approximately 4.8 million barrels of crude oil
storage.
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SOURCE Spectra Energy Corp; Spectra Energy Partners, LP