Spectra Energy CEO Explains How The Company Is 'Not Exposed To Price Of Natural Gas'

Stock of natural gas infrastructure company Spectra Energy Corp. SE opened higher after the company announced an optimistic business outlook and 2015-2017 financial plan. Spectra Energy CEO Greg Ebel was on CNBC after the announcement to talk about the company’s growth plans and earnings.

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Not Exposed To Price Of Natural Gas

“We feel really confident about it just given the nature of our business.” Ebel said. “I think you mentioned earlier the stock has been down a little bit over the last quarter, that’s really I think some misunderstanding that the bulk of our revenues are long-term contracts.”

"So, while we ship oil and we ship natural gas, natural gas liquids, we are really not exposed to the price of that. We’re putting the infrastructure on the ground,” Ebel stated.

He continued, “So like last year we put in a new pipeline in here to Manhattan. So, the price of natural gas is cheaper here, but we get paid whether or not the product actually goes through the line or not. So, you have got long-term reservation charges.”

“We signed up new contracts last year for about $3.5 billion worth of new projects, average contract life would be 20 years and so it gives us confidence to keep increasing the dividend.”

Low Commodity Price Yet Higher Cash-Flow

“So, $0.14 per year, which is $0.02 higher than we promised investors a year ago. So, our cash flows in 2015 are actually higher despite the commodity prices than we laid out a year ago.”

“Which is a little counter-intuitive for folks, it talks about that re-plumbing that’s going on in the United States and, frankly, North America for energy. ”