Spectra Energy Concludes Amendment of Revolving Facility - Analyst Blog

Natural gas company Spectra Energy Corp.'s (SE) wholly owned subsidiary Spectra Energy Capital, LLC amended its $1 billion revolving amended and restated credit agreement dated Nov 1, 2013.

The amendment extends the termination date of the revolving credit facility to Dec 11, 2019, which may be extended for up to two additional one-year periods. Interest rates on borrowings under the amended credit agreement will be based on prevailing interest rates and the credit ratings of Spectra Energy Capital. As of Sep 30, 2014, Spectra Energy had long-term debt of approximately $13.1 billion with a debt-to-capitalization ratio of 55.4%.

Spectra Energy is one of North America's leading pipeline and midstream companies. Based in Houston, TX, 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 305 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.

Management remains optimistic on its future performance as its expansion program is on track. With its market leading position, diversified asset portfolio and strong investment opportunities, we expect Spectra Energy to sustain its growth momentum. Additionally, Spectra plans to invest $1 billion per year through 2015 in fee-based gas infrastructure growth projects.

The company expects to commission around 8 projects through 2016. Among these, Southern Hills and Sand Hills Pipelines, Front Range Pipeline, and Texas Express Pipeline, are expected to come online in the near future.

However, Spectra's results are vulnerable to fluctuations in natural gas markets. The proposed liquid-rich drilling activities by the company clearly suggest that volatility in natural gas prices will change little going forward. Major investments in several projects in Canada also expose Spectra to fluctuations in currency rates that may affect its operations.

Spectra Energy carries a Zacks Rank #3 (Hold). Better-ranked players in the energy sector include SandRidge Mississippian Trust I (SDT), Sandridge Mississippian Trust II (SDR) and Seadrill Partners LLC (SDLP). All these stocks sport a Zacks Rank #1 (Strong Buy).

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