Spectra Energy Corp. (SE) reported first-quarter earnings of 53 cents per share, beating the Zacks Consensus Estimate of 47 cents and the year-earlier profit of 33 cents. Results were driven by the contribution from all business segments on better commodity-price environment.
The U.S. Transmission segment posted quarterly earnings before interest and taxes (EBIT) of $247 million, up nearly 14% year over year. The segment benefited from the contribution of business expansion projects. The Distribution segment reported an EBIT of $146 million, down approximately 4% year over year. However, this was partially offset by the strong Canadian dollar.

Western Canada Transmission & Processing segment reported an EBIT of $119 million, up 47% from the year-earlier level. This significant increase was driven by improved revenues in the fee-based gathering and processing business on the back of higher contracted volumes and expansion projects.
The Field Services segment reported an EBIT of $99 million, significantly increased from the year-earlier level, driven primarily by higher commodity prices.
During the quarter, crude oil averaged approximately $79 per barrel, up nearly 84% year over year. At the end of the reported quarter, long-term debt stood at $9.1 billion. This represents a debt-to-capitalization ratio of 53%.

Management hinted that Spectra is on track to meet its financial goals for the year. It continues to execute expansion projects for a target annual earnings growth of 8% to 12% through 2012. We currently have a Neutral rating on Spectra shares.

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