Natural gas distributor Spectra Energy Corp. (SE) provided its financial estimates for 2012. The projections are ahead of the Zacks expectations of $1.89 on high demand for infrastructure in U.S. oil and gas producing regions.
Per the financial budget for 2012, the company expects to achieve annual diluted earnings per share of $1.90, which is approximately 15% above the 2011 target of $1.65. Spectra Energy also confirmed that it will raise its annual dividend in 2012 by 8 cents to $1.12 per share, which is consistent with its previously announced 7.7% increase in dividend.
The natural gas pipeline operator expects its 2012 target to exceed its projected growth rate, as it plans to spend in the $1 billion-plus range every year in the near future. For 2012, the company has set aside nearly $1.3 billion as expansion capital.
The company is also believed to be on the right track to effectively execute its growth plan in the current year with aggregate returns on capital employed moving beyond its targeted 10% to 12% range.
Spectra Energy expects it 2012 results to get a boost from higher earnings at its DCP Midstream division – a 50:50 joint venture with ConocoPhillips (COP), as it continues to deploy funds in the major gas producing areas of Eagle Ford, Permian, Mid-Continent, Denver-Julesburg and other basins.
Spectra Energy is one of North America’s premier natural gas infrastructure plays and has strong business positions in growth markets. These positions should lead to value-creating investment opportunities in the coming years.
Infrastructure development in the Haynesville, Eagle Ford and Marcellus Shale, along with the building of a new gas plant having long-term customer commitments, will also be a synergistic approach, in our view. The company’s core fee-based businesses have the potential to move the needle toward solid earnings and cash flow growth.
Spectra Energy holds a Zacks #2 Rank, which is equivalent to a Buy rating for a period of one to three months. For the long term, we maintain an Outperform rating on the stock.
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