Sea Limited (SE) Q4 2013 Earnings Report, Transcript and Summary

Good morning. My name is Natalia, and I will be your conference operator today. At this time, I would like to welcome everyone to the fourth quarter Spectra Energy and Spectra Energy Partners earnings call. [Operator Instructions] Thank you. I would now turn the call over to Ms. Julie Dill. You may begin your conference.

Thank you, Natalia, and good morning, everyone. I'm Julie Dill, the Chief Communications Officer for Spectra Energy. Thanks, all, for joining us today for our review of Spectra Energy's 2013 Fourth Quarter and Year-End Results. Before I hand the call over to Pat Reddy, our CFO, I'd like to mention a few items. You likely noticed in our press release this morning that we've made a number of changes to our financial reporting as a result of the drop-down to SEP and substantially all the U.S. pipeline, storage and liquid assets on November 1 of last year. I'd like to walk through those with you now in some detail to ensure you're aware of all changes you'll be seeing. Let me start with Spectra Energy. We have a new reporting segment, we call Spectra Energy Partners. This segment includes all U.S. Transmission and our liquids business as well, which as you know reflects our crude and natural gas liquid assets. For financial reporting purposes, Maritimes and Northeast Canada is now reflected in our Western Canada Transmission & Processing segment. Previously, it was included as the part of U.S. Transmission. As a note, that asset was not included in the November 2013 drop-down. Our segment financials have been recast to reflect these changes, so all variances will be on a comparable basis. Now what we heard from you is that EBITDA and distributable cash flow will be more relevant financial measures going forward because of the greater emphasis on cash flow and cash generation capabilities associated with the drop-down. Consequently, our primary financial reporting will be of those metrics. Our definition of EBITDA has changed just slightly. The EBITDA measure we'll use today and going forward differs from the proportional EBITDA we previously reported, which included our share of interest, taxes and depreciation associated with our unconsolidated subsidiaries and was reduced for minority interests in those same items. Our new EBITDA metric is more aligned with our peers and represents EBIT and depreciation for consolidated entities, along with the equity earnings of our joint ventures. This will make our EBITDA more transparent and easier to calculate. Now our EBITDA will reflect what is reported on the financial statements. These changes again in response to what we heard from you, as it will more closely align our reporting to that of our peers and should provide easier analysis as numbers will be more readily identifiable from the financial statements. For Spectra Energy Partners, the Gas Transmission and Storage segment has been renamed U.S. Transmission. SEP's other reporting segments are Liquids and Other. We're now using the term distributable cash flow instead of cash available for distribution. And EBITDA has been recast for 2012 and 2013 as if SEP owned all the U.S. assets from January 1, 2012, and as if SEP owned all of the Express-Platte as of March 14, 2013. This recasting was done as a direct requirement of our accounting rules. Distributable cash flow was not recast because we're required to reflect the cash as it actually flowed. We also did not recast any of our financing or number of outstanding units. One final note, you'll notice that EBITDA for SEP will be slightly different than the EBITDA reported in the Spectra Energy Partners segment within Spectra Energy. This is related to the charges SEP pays to SE for services rendered in support of the partnership, and because SEP reports its own corporate Other when it's reported as a stand-alone company. At the Spectra Energy consolidated level, those same amounts are included in corporate Other, not within the SEP segment. So there is lots of changes to be sure. And if you need some help navigating through all these, my team and I will be very happy to assist. Now a quick reminder that we will roll out our 2014 business outlook and 3-year financial plan tomorrow morning in New York, and we look forward to seeing many of you there. For those who can't make it, the meeting will be webcast and details are included on our website at spectraenergy.com and spectraenergypartners.com. Now given our forward-looking in-depth focus tomorrow, I anticipate today's call maybe a bit shorter than usual, though of course we'll allow ample time for your questions related to our 2013 results and the reporting changes we've made. For today's call, Pat Reddy, our Chief Financial Officer for both Spectra Energy and Spectra Energy Partners will go through our results for the quarter and the year; and then Greg Ebel, our President and CEO will wrap up the call with some closing thoughts on the year and what to look forward to in 2014. So let's get started. Some of what we'll discuss today concerning future company performance will be forward-looking information within the meanings of the securities laws. Actual results may materially differ from those discussed in these forward-looking statements, and you should refer to the additional information contained in Spectra Energy and Spectra Energy Partners' Form 10-K and other filings made with the SEC concerning factors that could cause those results to differ from those contemplated in today's discussion. As this is a joint presentation, the terms we, our and us refer to Spectra Energy and/or Spectra Energy Partners as appropriate. And in addition, today's discussion will include certain non-GAAP financial measures as defined under SEC Regulation G. A reconciliation of those measures to the most directly comparable GAAP measures is available on our website. And with that, let me now turn things over to Pat.

Thank you, Julie, and good morning, everyone. And thanks for joining us today as we report on our fourth quarter results and 2013 performance. As Julie explained, we're transitioning our reporting to reflect the structural changes implemented in late 2013 with the drop-down of the U.S. assets to Spectra Energy Partners. As a result, we will be focused on EBITDA and distributable cash flow as our primary measures, going forward. With that said, we thought it would be useful in the transition to share with you our fourth quarter and full year 2013 net income, earnings per share and EBIT results for the company and by business segment just as we did for the other quarters in 2013. We reported $0.41 in ongoing earnings per share and $278 million in ongoing earnings for the fourth quarter, compared with $0.32 of EPS and earnings of $213 million in the 2012 quarter. For the year, we delivered ongoing earnings of $1.64 per share or $1.1 billion in ongoing earnings. That's an almost 15% increase over the last year, and a 9% increase over the target we shared with you at the beginning of the year. And as a reminder, our earnings per share for the fourth quarter and for the full year 2013 were reduced by the drop-down transaction, which resulted in an increase in noncontrolling interest or NCI. This solution is inline with the $0.02 to $0.03 reduction in EPS we communicated to you last November when we announced the transactions closing. Ongoing EBIT results for the quarter were $603 million compared with $474 million in the prior year. The EBIT summarized here is at the 100% level prior to NCI reductions. This is different from the EBIT we discussed previously, which was net of the NCI reductions. You'll also notice that we have a new reporting segment, Spectra Energy Partners. As Julie explained, this segment includes the combined results of the Liquids segment and our former U.S. Transmission segment excluding Maritimes & Northeast Canada, which is now reflected in Western Canadian results. I'm not going to go through the variances quarter-to-quarter for EBIT as I will do that using EBITDA. So let's take a look at our fourth quarter EBITDA results. Slide 6 shows fourth quarter EBITDA for our 4 reporting segments and Other, which represents our corporate governance costs. This EBITDA measure is slightly different than the proportional EBITDA we reported on in the past. Specifically, the EBITDA that we previously provided included our share of interest, taxes and depreciation associated with unconsolidated subsidiaries, and was reduced for minority interest in those same items. Now EBITDA is more aligned with our peers and represents EBIT and depreciation for consolidated entities along with the equity earnings of our joint ventures. This will make our EBITDA more transparent and easier to calculate. So let's start with the Spectra Energy Partners segment, which includes 2 businesses: U.S. Transmission and Liquids. SEP's ongoing EBITDA was $369 million compared with $316 million in 2012. Quarterly results benefited greatly from the acquisition of the remainder of the Express-Platte Pipeline System, which has performed better than expected due to higher revenues. The increased earnings also reflects the contributions from pipeline expansions, including the New Jersey-New York project placed into service November 1. Year-end EBITDA for SEP was about $1.4 billion compared with approximately $1.3 billion in 2012. Turning to Distribution. That segment reported fourth quarter EBITDA of $156 million compared with $147 million in 2012. The increase is due to higher customer rates, colder weather and the negative effect in the fourth quarter of 2012 of the decision from the Ontario Energy Board requiring certain transportation revenues be refunded to customers. Partially offset by higher operating and fuel costs and a weaker Canadian dollar. Year-end reported EBITDA for Distribution was $574 million compared with $587 million in 2012. Our Western Canada business reported fourth quarter EBITDA of $215 million compared with $152 million in 2012. The increase was primarily due to higher earnings at the Empress natural gas liquids business attributable mainly to higher propane sales prices, improved contracting structures and lower cost compared to fourth quarter of last year. You'll recall that in the fourth quarter of 2012 we realized an EBITDA loss of $13 million in Empress, and this year Empress recorded EBITDA of $52 million, a $65 million improvement. We did a lot of work this past year to stabilize realized cash flows in Empress. And tomorrow, Mark Fiedorek will talk about our continued plans to de-risk this asset and reduce the margin volatility we've historically seen at Empress. Our expansion projects did contribute positively to our EBITDA. These increases were partially offset by the effect of a weaker Canadian dollar. Year-end reported EBITDA for this segment was $736 million compared with $694 million in 2012. Field Services reported fourth quarter EBITDA of $72 million compared with $58 million in 2012. The change in EBITDA is attributable primarily to higher commodity prices and a favorable effect of NGL marketing and the positive movement on hedges associated with drop-downs to DCP Midstream Partners. Higher earnings due to volume growth from the incremental processing capacity placed into service was more than offset by fourth quarter 2013 weather effects in the Permian Basin and higher interest expense primarily as a result of newly issued debt and lower capitalized interest in the 2013 quarter. During the fourth quarters of 2013 and 2012 respectively, DCP's realized NGL prices averaged $0.81 per gallon versus $0.77. NYMEX natural gas averaged $3.60 versus $3.40, and crude oil averaged $97 per barrel versus $88. Year-end reported EBITDA for Field Services was $343 million compared with $279 million in 2012. DCP Midstream paid distributions of $215 million to Spectra Energy during 2013 compared with $203 million in 2012. Other, as I mentioned, is comprised primarily of corporate costs including benefits and captive insurance. Net ongoing costs were $14 million in the fourth quarter compared with $10 million in the fourth quarter of 2012. Year-end ongoing costs for Other were $59 million compared with $36 million in 2012, with the increase primarily related to equity-based benefit cost. Total ongoing EBITDA for the Enterprise was $798 million for the quarter and just over $3 billion for the year. So let's move to our other new metric for Spectra Energy distributable cash flow. For those of you who follow our MLP, you're accustomed to seeing distributable cash flow, but this is a new metric for Spectra Energy at the corporate level. We think this is an important measure for you to follow as it will focus on the strength of our cash flows and our ability to pay and grow the dividend for our investors. Distributable cash flow for the 2013 quarter was $296 million compared with $161 million in 2012. For the year, DCF was approximately $1.2 billion compared with about $1 billion in 2012. This schedule is fairly straightforward, but I wanted to highlight a few of the more material items. 2013 interest expense was up compared with 2012 due to higher debt balances primarily related to the acquisition of Express-Platte and lower capitalized interest partially offset by a weaker Canadian dollar. 2013 cash taxes benefited from higher extended bonus depreciation. And lastly, maintenance CapEx for the year came in around $680 million, about $40 million more than 2012 primarily due to a 2013 plant turnaround in Western Canada. Let's look at Spectra Energy. So now let's turn our attention to results of Spectra Energy Partners. SEP reported strong results in the fourth quarter, which closed out a great year of transformative acquisitions, continued solid performance from our fee-based assets and substantial distribution growth for our unitholders. As Julie mentioned at the beginning of the call, for comparative purposes, SEP's distributable cash flow reflects the acquisitions as they occurred since cash is cash with no special accounting treatment. However EBITDA is reflected on this chart has been recast as if the acquisition of the U.S. Transmission assets occurred January 1, 2012, and the Express-Platte acquisition occurred as of March 14, 2013. So as you can see, the segments delivered strong results across the board. U.S. Transmission produced $326 million in EBITDA for the quarter and $1.3 billion for the year. Increased earnings were driven by expansion projects on our Texas Eastern pipeline most notably contributions from the New Jersey-New York project. Our Liquids business delivered $41 million in EBITDA for the quarter and $132 million for the year. We're very pleased with the contributions to our financial results that we're seeing from the Express-Platte System. In fact, the Express-Platte delivered EBITDA in the 9 months we owned it, equal to what we thought our first full year of EBITDA would be. Duane Rae will talk to you tomorrow about these assets, the value we've already captured and the opportunities we continue to see that will grow this segment's EBITDA. Next, SEP's ongoing EBITDA for Other reflected higher costs for both the year and the quarter primarily as a result of governance costs following the November 2013 drop-down. You'll also notice that ongoing 2013 EBITDA reported for SEP is slightly lower than EBITDA reflective within Spectra Energy's results. The difference represents the cost of services rendered by the Spectra Energy in support of the SEP, what we call governance. These amounts are included in the Spectra Energy's Corporate Other at the SE level, but SEP reports this on corporate others as stand-alone company. In total, SEP's ongoing EBITDA for the year was $1.4 billion, up from about $1.3 billion in 2012. I know you're particularly interested in distributable cash flow, so let's move there. First, you'll see that we renamed cash available for distribution to distributable cash flow to be more consistent with the terminology used by other MLPs. For the quarter, distributable cash flows was $120 million more than double the $54 million recorded in the 2012 quarter. Dcf for the quarter and the year was driven significantly higher by the November 1 drop-down of Spectra Energy's U.S. Transmission, Storage and Liquids assets, and by the addition of the Express-Platte assets. These acquired assets bring quality, fee-based distributable cash flows and future growth from organic expansions over the coming years. We'll have more to say about our growth tomorrow at our analyst meeting. These strong financial results enabled us to deliver our 25th consecutive quarterly distribution increase of $0.03 per unit, bringing us to the annual distribution equivalent of $2.185 for the limited [ph] partner unit. That's 10% above of the annualized distribution of the year ago and reflects our continued commitment to deliver unitholder value. The $0.03 increase was a significant one-time recognition of the acquisition of the U.S. assets. So going forward, you can expect at least a $0.01 per unit increase per quarter. As anticipated, we saw distribution coverage dip this quarter below one-times, primarily driven by just 2 months of cash contributions from the acquisition of the U.S. assets, offset by the full quarters distribution increase. Fourth quarter 2013 was unique, and the coverage ratios should not be viewed as being indicative of future coverage. As we've previously stated, and as you'll see tomorrow that reinforce when we go through our planned numbers, we continue to expect our ongoing distribution coverage to be between 1.05x to 1.15x. So to conclude, Spectra Energy and Spectra Energy Partners delivered great financial results and created substantial shareholder value in 2013. So let me turn the call back to Greg to wrap up.

Well thanks very much, Pat. As you said, 2013 really was a strong year for Spectra Energy, Spectra Energy Partners and for our investors. Beyond the financial results, it exceeded our commitments to investors in the reliable attractive dividend and distribution growth we've been able to deliver. I did want to take a minute to highlight a few other successes in 2013. Spectra Energy exceeded the S&P 500 averaged shareholder return, and SEP's return surpassed the Alerian MLP Index. We placed $6 billion of capital into service either through the expansion of our assets like New Jersey-New York or those at DCP, or from the acquisition of new assets like the Express-Platte System and our interest in Sand Hills and Southern Hills NGL pipelines. We secured $7 billion of new growth opportunities. Projects like our Sabal Trail pipeline into Florida, AIM, OPEN and the Gulf markets expansion. We successfully completed the drop-down of our remaining U.S. pipeline assets to SEP creating a $20 billion MLP with premier fee-based assets and an attractive distribution growth profile. We implemented a strategy at Empress that de-risks our earnings stream and that translates into an expected annual EBITDA in the $40 million to $70 million range. We completed a successful open season on Express pipeline resulting in 90% of the capacity now being committed for more than a decade and at higher rates. Union Gas reached a settlement on its 2014 to 2018 incentive rate structure, which ensures a stable platform for growth and with earnings upside. And we maintain the investment-grade ratings across all of our entities, and even secured an upgrade rating for SEP. With our first and last mile advantage, over the last 12 months, we furthered our leading positions in not only natural gas transportation in the Northeast and Southeast U.S. but also gathering and processing of natural gas in North America. Natural gas distribution in Ontario, NGL Production and Logistics in the U.S. and Western Canada, and we made a very positive move into the crude oil transportation business. I'm pretty pleased with the year-end real value we have delivered to our investors. The successes of the past year leave us well-positioned for the future and provide great momentum as we move into 2014. We're going to take full advantage of this positive momentum, and continue to deliver attractive returns for our investors now and over the longer term. And I'm looking forward to talking with you more tomorrow about what you can expect from us in 2014 and going forward. We appreciate you joining us today and your ongoing interest in Spectra Energy and SEP. And with that, let me turn things over to Julie, so that we can take your questions about 2013.

Thank you, Greg, and again thanks. We're ready to hear from you, so we're going to open the lines up for your questions. So we look forward to being with you tomorrow to discuss our 2014 outlook. So I'd ask that your questions this morning focus on our 2013 fourth quarter and year-end results. So Natalia, if you wouldn't mind giving instructions again on how to ask questions. I'd appreciate that.

[Operator Instructions] We have a question from the line of Stephen Maresca with Morgan Stanley.

So I'll be brief. Just one casual question, and then just one fundamental question. On distributable cash flow - you're now breaking this out for SE, and thanks for doing that - it seems like coverage for your dividend, based on the fourth quarter and full year, was around $1.3 billion to $1.4 billion. And I guess -- can you just remind us as the target for SE to be in that $1.1 billion to $1.2 billion range and then how does this fit into -- if you got this excess coverage, your stated dividend growth of 9% to 10%?

Yes, we're still expecting to be in that $1.1 billion to $1.2 billion. And in fact I think Q4 number was more like $1.5 billion and if you looked at it from a numbers perspective. But yes, we'll outline this tomorrow but absolutely still expect to be in that $1.1 billion to $1.2 billion range. Obviously, if we're doing a lot better than that, that would suggest we have more room. So that's just something to watch for from prospective over the longer term.

Okay, understood. And then the second one is just fundamentally can you give any update on the NEXUS project in terms of discussions to LTC's [ph] design agreements and how that's progressing?

You're going to hear from Mr. Yardley about that tomorrow. So Steve, if you will indulge us, but let's chat about that tomorrow.

Your next question is from the line of Brad Olsen with Tudor, Pickering.

Two quick ones for me. First, looks like Canadian results even leaving aside the impact of Maritimes & Northeast were about -- were up about $60 million year-over-year. I know one of your objectives for this year was to reduce the amount of commodity sensitivity in that business. And although upward commodities sensitivity is obviously better than downward, and I was wondering how to reconcile the really strong fourth quarter results in Western Canada with your objectives to reduce some of the propane exposure?

Well, I think a couple of things to say there. One, really as I think we talked about the focus in '13 was much more on contracting structure, so commercial issue and how we get product and sell the product. In 2014, really at the start, we've started to put some hedging in place. But it's still going to be a relatively small piece. So I'd say at any 1 point in time, there's probably only about 45% of the margin that you would hedge, if you will, from a commodity perspective. The rest of it's all going to be from commercial structures. You might recall, if you go back to 2012 in that second quarter period, we saw the big drop, that was because we got outside from a contracting perspective and what we pay for the input product versus what we could sell it. And between PADD and the commercial guys, they've made a real effort to break those down. So as I said, Brad, I think, thinking $40 million to $70 million in EBITDA, we feel pretty comfortable in that range. And that being said, obviously, much higher commodity prices that you're seeing in the first quarter are a real positive as well. So I think though the whole complex there in Western Canada has got a little bit more stable commercial outlook. When I say the whole complex, it's not just our assets but the entire - both the consumers, the producers providing us an obviously, the infrastructure players into a more, shall we say, a rational approach to how they're dealing with the commercial issues.

Got it. And I guess, following up on your comments about the contracting. Is it fair to say even as propane prices have climbed pretty dramatically here recently that we wouldn't expect to see the impact of the extraction premiums that caused you the headaches in 2012?

I think that's fair. Of course, the market bounced around, but as I said, I think there's a more rational approach from a commercial perspective. And I think I'm comfortable in saying the entire area if they realizes those extraction premiums weren't sustainable from a business perspective.

And Brad, this is Pat. We're -- when Greg refers to a sort of a different commercial model, we've got about a Bcf of in-let gas that we're purchasing and that's where our hedge is and our fix forward purchases of natural gas were concentrated. That's where we do have extraction premiums. And so our attempt there is to lock in that cash margin, then we buy raw mix in the field and we're able to fractionate at it our plant because we've got capacity that some others don't have. And that we do on a current basis. And so we know that the profitability of that is, and then we make spot purchases that tend to go in and out in a month although some does go into inventory, and as our inventory rebuilds, we will be doing some NGL hedging there. But -- so that's kind of the 3 pieces of the business.

Okay, great. And then just 1 last one for me. As far as the impact of the Express pipeline being fully contracted after your successful open season. Is there anything from that open season or anything that we're seeing contractually that is flowing through into the Q4 results, or will we have to wait till 2014 to see some impacts from that?

Yes, it's really a '14 and '15, those contracts ramp-up, Brad. And again we'll align -- you'll be able to see that very clearly tomorrow.

[Operator Instructions] Your next question is from the line of Carl Kirst with BMO Capital.

Just want to wrap back to Empress for a second, just to clarify some of the numbers that were said. And Pat, I apologize. You said $52 million, I didn't catch it that was from Empress, I didn't catch that was in the fourth quarter or that was for the full year 2013?

Carl, our EBITDA for the year from Empress was $80 million, and in the fourth quarter it was $52 million.

Okay. And then, Greg, did I understand that when you're saying that as you guys were looking forward to understand you'll go into more depth in this tomorrow. But generically if we think of a 100% margin from Empress, 55% of that kind of gets a field, if you will, by the new commercial structure and then 45% lends itself to hedges. Is that a correct mix?

Yes, that's away from a bottom line perspective. Obviously, yes, that's the way to think about it. Obviously, even on the commodity I mean, there's all commodity, but the part that you can't do contractually that easy, we wouldn't hedge all of that, that's why am thinking -- think 45%, 55%. I think that's probably a fair way to look at it.

Just to clarify, Carl, the 45% is what would be hedged, the rest would be field purchases and spot.

Okay. And then just a quick question with respect to DCP in the fourth quarter. Is there any way to quantify what the Permian freeze offs were, either by volume impact or EBITDA impact?

Let's see. It was I believe in about the $10 million range, Carl, I can check that for you.

Okay. And then maybe last question and understanding this is a little bit more macro and Greg you may speak to this tomorrow. But as you think about the migration from the EPS to EBITDA on distributable cash flow obviously, natural migration with everything you guys have been doing. Wind management, if we think back to prior years, the quote guidance wasn't always just a guidance, it was a budget, and it was a number that would hit, that would also influenced executive compensation, et cetera. Has that shifted as well from EPS to an EBITDA distributable cash flow or is this more, which you might call communication changes?

No, I'd say a bit of both. I mean, we'll still have some element of EPS, 20%, 25% because ultimately, that does flow through that. That's the only commodity exposure, if you will, directly on earnings that we have, because everything else is EBITDA and return on capital employed from a financial target perspective, which is commodity neutral. So I think having that balance there, obviously makes sense. And ultimately, as you know, the bulk of executive compensation is stock. And that's going to be driven by -- I think we would agree from a dividend perspective or distribution perspective which is obviously Bcf related.

Your next question comes from the line of Craig Shere with Tuohy Brothers.

Two quick questions. One, quick follow-up on Brad and Carl's Empress questions. Maybe I don't recall correctly what the long-term legacy guidance was, but I thought it was maybe in the $50 million range with volatility and now if I understand, that you're talking $40 million to $70 million with a lot of less volatility. Am I understanding that you're effectively perhaps raising the bar while lowering risk?

Not exactly. Craig, we talked about $30 million of EBITDA as I'm kind of looking forward to 2014. And as we refine that with our commercial model, which allows us to buy more raw mix, we're upping that EBITDA from $30 million to $40 million to $70 million. And I realize that's kind of a wide range, but just given the opportunities we're seeing right now because we've got frac capacity at our power plant to buy raw mix in the field. We believe for this year '14 and maybe '15, the $40 million to $70 million is the right range. So plus take the midpoint of that call it $55 million. I think that's up from the $30 million of EBITDA that we said was kind of our breakeven run rate.

I got you. Do you feel this '14 and '15 is somewhat indicative of very long-term sustainable, or we're just getting some nice tailwinds whereas before we had headwinds and we'll average a little lower long-term.

We'll talk to that a little bit tomorrow but I -- look, I mean, you're not going to remove all the commodity volatility. I think as we -- if you go back to 2012, Craig, you'll remember with that huge swing from very positive to very negative. That's what we're trying to take out. So that we don't actually have as many -- much discussion about Empress as a very small proportion of EBITDA and cash. But -- and so hence that why I think we're feeling pretty comfortable about the range. And again, let's avoid the negative type impacts and the extraordinary upsides while still leaving some variability in the business.

Understood. And the second question, and I don't know if it's appropriate for this call or tomorrow. But in a number of calls recently, there's been questions around the potential incremental, favorable, shareholder-friendly restructuring efforts particularly around the DCP interest. And you didn't quite get as good of uplift as you may in the beginning of '14. But there's some Permian shut-in headwinds but it's certainly looking a lot better, a lot better. And I wonder if the commodity tailwinds are in any way affecting your decision-making about when something might be appropriate there?

Well, I will speak to that tomorrow. But I guess, my long-term perspective would become -- we always -- from a planning perspective we always assume commodity neutral, and I think we've had a long history of doing that. So it's not to play an upside or downside on commodity, and that doesn't really go into the from a very long-term perspective if we didn't think NGLs were important and that might have an issue just the same way that if we didn't think natural gas was going to be viable. But in the near-term or transactional perspective we would stay neutral, which doesn't say positive or negative about any, the way we look at the transactions. They have to be from a complete material valuation uplift perspective on anything from M&A to restructuring, et cetera. And I think you'll see that with the SEP transaction.

The final question is from the line of Curt Launer with Deutsche Bank.

One question, cleaning up the fourth quarter relative to maintenance capital expenditures at SEP. This is the first time you disclosed the maintenance CapEx, well, without both segments being part of the C-Corp parent. So the $92 million was for the fourth quarter. Many companies talk about seasonality and maintenance CapEx being more in the second and third quarters rather than the fourth. Seems like your maintenance increased as you approach the year end, then I just wanted to ask whatever color you could provide about that at this point, so we could begin to think about '14?

Curt, good question. We sometimes see seasonality as we try to get work completed by year-end. Actually what happened in the fourth quarter at SEP was -- we had some invoices come in related to some work we did at a place we call our Oakmont compressor station, and we had thought that would be 2014 CapEx and that came in the fourth quarter of '13. So tomorrow we're going to give you some more insight into the run rate on growth and maintenance CapEx for SEP, and our 3-year plan on more of a normalized basis. We will occasionally see changes between quarters, or in this case a flip between the coming year and this year end, but we'll show you what our run rate is tomorrow.

And I think what you can see though from both the '12 and '13 numbers there, Curt, is that fourth quarter for us is not indicative of a run rate on an annual basis.

There are no further questions.

Thank you, Natalia, and thanks, everyone, for joining us today. And we do hope that we see or hear from you tomorrow when we roll out our 2014 business outlook and our financial plan during our analyst and investor meeting in New York. For information on participating on that via phone or the Internet, please visit the Investor Section of either spectraenergy.com or spectraenergypartners.com. And as always, if you have additional questions, before then, feel free to give Roni Cappadonna, Derick Smith or myself a call. We are traveling to New York today, so we may not be able to get back to you immediately, but we'll get back with you just as quick as we can. So anyway, hope to see you tomorrow and have a good day.

This concludes today's conference call. You may now disconnect.