Good morning. My name is Heather, and I will be your conference operator today. At this time, I would like to welcome everyone to the Spectra Energy and Spectra Energy Partners Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, we will have a question-and-answer session. I will now introduce your conference leader, Julie Dill, Chief Communications Officer. You may begin your conference.

Thank you, Heather, and good morning everyone. I appreciate you joining us today for our review of Spectra Energy's and Spectra Energy Partners 2015 first quarter results. With me today are Greg Ebel, CEO of both Spectra Energy and Spectra Energy Partners, Pat Reddy, Chief Financial Officer of both companies and Bill Yardley, President of our U.S. Transmission Segment. You'll hear from both Greg and Pat this morning as they go through our results for the quarter and provide an update on our "Drive to 35." We will, of course, leave plenty of time for your questions. And with so many projects in execution and development originating at our U.S. Transmission business, Bill's here to help answer questions you may have on those topics. Our Safe Harbor statement is contained within our presentation materials and available on our websites. This disclaimer's important and integral to all of our remarks, so I would ask that you refer to it as you review our materials. Also contained in our presentation materials are non-GAAP measures that we reconcile to the most directly comparable GAAP measures, and those reconciliations are also available on our websites. With that, let me turn things over to Greg to make a few opening remarks.

Well, thanks very much, Julie, and good morning, everybody. Thanks for joining us. Before Pat speaks to the numbers for the quarter, I thought I'd take a little bit of an opportunity to give you my perspectives on the results and give you a quick update on our structuring efforts at DCP Midstream. So let's start there. As you recall, in February, we discussed that we were working with Phillips 66 to overcome the short-term challenges at DCP caused by the rapid drop in commodity prices and that we were also working to ensure that, over the long term, DCP and DPM were set up in a matter that provides the best opportunity for us to realize their full value. While there's still work to be completed, I'm pleased to report that we've make good progress on both fronts during this quarter. To address its short-term needs, DCP Midstream worked with its bank group to amend its bank revolver, and DCP has also taken action to reduce corporate costs and its capital budget. And of course, we continue to work on a longer-term structural solution. As we drive to the right solution, let me reiterate our structuring objectives. First, we are working to ensure that the entire DCP complex is structured to achieve an optimal balance of fee-based bank commodity expose contracts. Second, we expect to establish a foundation of sustainable cash flows and distribution for our public unit holders, while retaining the upside that will occur when commodity prices ultimately recover for the sponsors, Phillips 66 and ourselves. And third, we will ensure that any ultimate structuring still allows the DCP complex to retain and grow its number one position in NGL in production and gas processing, and that it positions DCP to efficiently finance that growth. So work…

Thanks, Greg, and good morning, everyone. As you've seen from our earning release, we delivered solid first quarter results with ongoing EBITDA of $788 million at Spectra Energy and $445 million at Spectra Energy Partners. As expected, Spectra Energy's EBITDA was down quarter-over-quarter due primarily to the significant drop in commodity prices combined with a weaker Canadian dollar. And while we experienced another cold winter, weather was generally comparable across both periods. SEP's ongoing EBITDA was up almost 8% over last year's first quarter, reflecting increased earnings from expansion projects and helped by virtually no exposure to commodity price or volume fluctuations. So I would draw your attention to the bottom of slide four as we take a look at the drivers of EBITDA results by segment. I'll start with Spectra Energy Partners, which is comprised of our U.S. Transmission and Liquids businesses. U.S. Transmission's ongoing EBITDA, $398 million, was $24 million higher than in the first quarter of 2014. This quarter's results primarily reflect increased earnings from two expansion projects we placed into service last year, TEAM 2014 and TEAM South as well as the Kingsport project that commenced service earlier this year. 2015 results excluded a $9 million special item related to an impairment of Ozark Gas Gathering assets. Our Liquids business reported first quarter EBITDA of $64 million compared with $58 million in 2014. The increase was primarily driven by a higher equity earnings from the Sand Hills natural gas liquids pipeline reflecting increased volumes year-over-year. The Express and Platte crude pipelines also continued to deliver strong results in the quarter, which were in line with our expectations. Distribution reported first quarter EBITDA of $192 million compared with $226 million in 2014. The decrease quarter-over-quarter was due mainly to the decline in the value of the Canadian…

Thanks very much, Pat. As you've just heard, Spectra Energy and Spectra Energy Partners first quarter results really benefited from new assets we put in the ground last year. And this ability to consistently deliver our projects into service as planned allows us to take advantage of opportunities to grow, reach new markets and enhance our pipeline systems. So let's take a look at how we're doing on that front. We have several projects scheduled to go into service this year, so let me begin with those. At U.S. Transmission, two projects, OPEN and Uniontown to Gas City, are under construction and scheduled to commence service in the fourth quarter. The OPEN project will bring incremental Marcellus and Utica supply to southern markets and the Uniontown to Gas City project will deliver gas to the Midwest. Together, these two projects, along with TEAM 2014 and TEAM South which you'll recall we brought into service last year, represent about 2/3 of the 2.4 Bcf a day in projects that will fully transform Texas Eastern to a bidirectional system by 2017. At our Liquids segment, we are constructing the Red Lake project to expand the reach of Sand Hills to access growing Permian base and production. The project is scheduled to go into service during the second quarter. We're also on track with the construction of our 2015 Dawn-Parkway project, which is the first of several expansion we're advancing along the Dawn-Parkway path at Union Gas. This project is scheduled to go into service during the fourth quarter of this year. In February, and DCP put its Keathley Canyon Connector gathering line in the Gulf of Mexico into service. This project is part of the Discovery joint venture, which is a jointly owned operation between DCP Midstream Partners and Williams Partners. And…

Thanks, Greg. And now, we're happy to take your questions. So, Heather, if you would please provide instructions on how folks can ask those questions.

Your first question from the line of Jennifer Hills with UBS. Your line is open.

Good morning. I'm pulling in for Shneur Gershuni. I had a question about the Northeast project. We understand that Kinder is getting traction. But based on your comments, it sounds like there's no risk of any delays to your project in the area. Can you talk about that a little bit?

Sure. Well, obviously, I can't speak to Kinder directly. But obviously, I can tell about what we think we're able to achieve. And fortunately, Bill's here, who's very much in charge of handling. Bill, do you want to address that?

Yes, these overall delays, I mean -- I don't – we really not – One thing we pride ourselves on is our ability to get these projects done along our existing footprint in the Northeast. It's one of the of the things we've done, whether it's through expanding Texas Eastern to the east with the six or seven projects we've done over the last several years or expanding up into New England with AIM, the Atlantic Bridge, and Access Northeast is really much the same. So we're still on track for 2018 to get some or all the projects in service and meet the electric needs.

Yeah. I think the really key thing is, again, what we see as a real competitive advantage i, the fact that you've got closed to five million out of the 6.5 million customers on the electric side represented by Eversource and Grid, we think is a powerful indication of the need for our project and the commercial acceptability of our project as well.

Okay. And just one other question. On maintenance CapEx in DCF for Spectra Energy, it was a lot lower than we had anticipated if you look at the guidance for the year. Is there certain timing that you're expecting with that? Is it back-end loaded?

Well, I think there's two things. I think there's some timing. We don't straight-line that. Much of the work on the maintenance is typically done in other quarters. But also impacting that would be the Canadian dollar. So much of our maintenance capital is done in Canada, so that would also have an impact as well.

Okay. Great. Thank you. That's all I had.

Thank you.

Your next question comes from the line of Darren Horowitz with Raymond James. Your line is open.

Good morning, guys.

Good morning, Darren.

A couple quick questions. The first, going back to the Marcellus and Utica supply to demand market context that you guys detailed, if you look at what you're doing with that Lebanon expansion and the Marcellus to market expansion on Texas Eastern, and then of course, in Philadelphia. Obviously there's some variability in terms of CapEx spend. I'm just wondering, outside of the 100 million cubic foot a day that you detailed that the Lebanon project could represent, what do you think the scale and scope of those expansions ultimately would be? And from a time to market perspective, just based on the competitive landscape and, certainly, the oversupply in the area, do you think that there's any opportunity for maybe those to get the green light added to backlog quicker and, from a net present value basis, just be more of a benefit for future organic growth to come?

Yeah, so it's Bill Yardley. I think I got most of those questions. So in terms of the scale and the scope of the projects that we have on origination now, there is a fair amount of variability. Philly is probably the biggest variable. We've identified a really good lift and relay project down the Philly lateral that that's probably an area that's next in line in our system as the most constrained beyond New York, which, of course, we solved a couple years ago and New England, which we are well on the way to solving with these three projects AIM, Atlantic Bridge and Access Northeast. Philly is probably the next biggest constrained area, but we probably have a project that's in the $1 billion range, maybe 0.5 Bcf a day to the Philly load, and we'll see what the season brings on May 8. To your question on getting things in service quicker, I think we all know the regulatory process and the permitting process isn't getting any easier as time goes on, nor is it any easier as you head north and east in the U.S. So difficult to see where we can get things in quicker, but I do think we have realistic timelines on these projects.

Yeah, Darren. Also those projects really underline the fact that a lot of this really isn't Greenfield. And one of the real advantages, as we've often said, is being one of the lifeguards and Bill's projects and the work his guys are doing really accentuate that. So some of the projects might be relatively small CapEx, but very powerful, obviously, for our customers. And then some other projects, like the Philly Lateral would be significant builds. But you got it right. It's a tough area.

Well, I think it makes the world of sense and, Bill, I'd love your opinion. But it seems like, especially when you talk about Access Northeast leveraging, your footprint with Algonquin, M&N I think is a significant advantage, correct me if I'm wrong, that you would have with regard to some of the other competing pipes. And certainly from a regulatory perspective. Is that the right way to think about it?

Yeah. It certainly is. And really, without talking about competitors, we've looked at Greenfield in the area. And the fact is this is a peak problem, number one. So you don't want to overbuild the summer. And then number two, you got to take advantage of whatever resources you have there, both from a stakeholder outreach perspective, from a timing perspective, and right size the development to meet the market needs and get solid returns.

Okay. I appreciate it. If I could just also switch real quickly just to Express-Platte. Outside of the $135 million project that you talked about from an on-system enhancement perspective, any update regarding your pursuit of twinning the system or just the ability especially with where differentials are today, the ability to move, like you've mentioned, Canadian Rockies, Bakken Crude to the Midwest, maybe rescoping the Wyoming line? It just seems like the economic incentive is only going to get greater, I think, as we deal with supply demand and balances and it would seem like that would be more in the forefront.

Right. Well, definitely, the team is working on those. As you know, the challenge, call it, we've had recent oil at $60, but typically in the first quarter closer to $50. Even with the differential, I think that you still have a number of producers, Darren, reeling from uncertainty. And some of those projects, they start to get pretty sizable from a CapEx perspective, particularly on the twinning side, and would take decade plus commitments. And I think producers have just been very hesitant to do that. That being said, I think you'll see us continue to push enhancement-type projects as well as the major projects. I think the issue is not if it's just when. So from a timing perspective, obviously, if you do a twinning, that has much different regulatory implications than if you're just doing enhancements to basically get up to the existing capacity. But we're looking to work with other partners. We're looking to do enhancements and even Greenfield, if necessary, to meet the customer needs. But I think the type of projects you see like the Enhancement where you had 25,000 barrels or 30,000 barrels a day is much more in line with what producers are willing to sign up today. So every month we see an increase in the price of oil, I think the likelihood of those projects coming back fully on the radar screen, and we believe that'll definitely allow us to secure those big projects before the end of the decade.

Okay. I appreciate it. Thank you very much.

Thanks, Darren.

Your next question comes from the line of Brandon Blossman with Tudor, Pickering, Holt. Your line is open.

Good morning, everyone.

Good morning, Brandon.

Couple of quick questions. One on the incremental Marcellus to the (33:52) projects that are under development. Would you characterize those as far as supply push demand pull customer base?

Yeah. So on the Lebanon project, it would be supplier push. Marcellus to market, mostly supplier push. And then Philly is likely to be a combination. The Philly area really has a number of customers that are trying to figure out how to get more energy into that area. And so I would bet on a fair amount of demand pull there.

Okay. That's helpful. Thank you. And then moving to a different part of the continent. Western Canadian propane, less than $0.10 a gallon. Are there any opportunities for near-term incremental infrastructure to relieve that supply problem?

Well, I think it's less of a – no. We have not seen a big desire again. In some respects, kind of like the oil side, people are waiting to see what the long-term price signals are, so that continues to be a challenge. There is some activity on the rail side, as you probably know. But you pointed out a good fact on the supplies sure aren't going down in terms of the volumes of gas. In fact, it's probably surprising to a lot of people. April saw Western Canada produce 15 BOEs a day, which is the highest production rate in a decade, or eight to ten years. So we'll look at those. I think, again, the issue is at those prices, as you can imagine, folks like ourselves, the margins are extremely small, hence our likelihood of earning more like $30 million in cash as opposed to what we've seen in some of the other years. So opportunity there. I think the price signals suggest that people probably don't want to commit for those long term. But again, just like on the oil side, I think it's a matter of matter of if, not when – I'm sorry, of when, not if.

Fair enough. Thank you. That's all for me.

Thanks, Brandon.

Your next question comes from the line of John Edwards with Credit Suisse. Your line is open. John Edwards - Credit Suisse Securities (USA) LLC (Broker) Yeah. Good morning everybody and nice quarter. Greg, could you just talk a little bit further on the Access Northeast? I mean, is there a way you can quantify, I guess, the competitive advantage you think you might have with Eversource and National Grid and because, obviously, you've got the competing proposal out there?

Well, I think, I'll start and then Bill can add to that. I think the number one competitive advantage is the one you just pointed to with Eversource and Grid. As we've been talking about a little bit on this call, John, is that how difficult it is to place assets into service. We take great pride on the fact we've been in those areas for a half a century or so. But the Eversource and Grid folks have been there even longer, and this is a ground game. And being able to understand the needs, how to use existing assets to maximize capabilities and, yet, minimize new infrastructure is a real advantage to have those folks along. And then, of course, we would expect them to help support the pipeline through contracts as well. And ultimately there needs to be, beyond the FERC approvals, there needs to be state approvals on some of this, and they obviously have probably the best insight on it from that perspective. So volume, in terms of 4.8 million versus 6.5 million, on the ground, existing assets, working as partnership, regulatory and our ability to put pipes in the ground, all add up to, we think, check, check, check from a competitive perspective, our pipeline proposals versus some others. Do you have anything to add to that? John Edwards - Credit Suisse Securities (USA) LLC (Broker) And also, I take it then, your thought is there's really going to be one winner here. There's not going to be a second player. It's going to be one or the other, correct?

Here's how I would answer that question. When Access Northeast is built, it will not be the end of needs in New England. Over time, with the projects we're building, AIM and Atlantic Bridge, we're not even touching the electric market. Access is the first one we're touching in the electric market. And over the last winter, it's probably cost consumers up there, or at least two winters, $2 billion plus in costs, and Access Northeast is not going to relieve all of that. So there will be a need for additional projects. I guess I would put it this way, Access Northeast will be the first of what I expect to be many continuing infrastructure needs on the gas side in New England. John Edwards - Credit Suisse Securities (USA) LLC (Broker) Okay. That's really helpful. That's all I had. Thanks.

Your next question comes from the line of Carl Kirst with BMO Capital. Your line is open.

Thank you. Good morning, everybody. Maybe we'll continue talking Access Northeast once more. And it's really just, Greg, to your comment of expecting to put this in execution later this year. Is the gating item here just having the NESCOE process run its course? And if that's the case, is there any insight as to when you think that happens?

Yeah. I don't think its necessarily NESCOE as opposed to just making sure that we're all on the same page that whatever regulatory approval for contracts and rates actually make very good progress and get done. So I think that the state approvals of rate structure is probably a bigger issue than NESCOE. Bill, would you add any -

Yeah. I think, Carl – so it's Bill. I think you got to figure this is a solution that's designed specifically to fit what NESCOE was contemplating as they went through the winter. And when you look at that and think about what we're trying to do here is trying to get all the states which are, frankly, lined up pretty well right now from a cooperative standpoint to make sure that they've got the right mechanisms in place to approve contracts that are signed by electric distribution companies. And within the six New England states, Greg hit it on the nose, you've got between Eversource and National Grid, you got between 2/3 and a 100% of the electric customers in four of those six states saying they want Access Northeast. So this process, I think, I'm very confident we're going to be getting into service, or rather, into execution later this year.

Does that – Bill, sorry. Does that require legislation by, I mean, as far as to meet that service date, call it, by the end of this year or do you see momentum of that building sooner rather than later?

Yeah. I would say sooner rather than later. I think it's a mixed bag in New England. You get some states that, I think, are fairly sure they can make those approvals now. And you've got other states that are saying, okay, how do we work towards getting that together? You know the process in Maine has been through an energy cost reduction plan and, still, other states will have, yet, another mechanisms perhaps one requiring legislation. But I think the good news is when the governors met last month, there was a pretty good agreement that this is the direction we want to head in and let's work to get this done as soon as we can.

Excellent. I appreciate the color. Maybe one just final question. Greg, given your prior sphere of Canadian politics, I'm just curious, NDP win yesterday in Alberta. Does that change anything for you all as you're looking at Western Canada with some of the challenges that may come because of it?

Well, I actually, as you know, most of our business in Western Canada is in British Columbia. So advantage British Columbia should the government, but let's get in time to see what they'll do, do things that hurt production in Alberta. We have very little activity in Alberta. As you know, we have a little bit of oil income in Alberta, but most of it's actually on the U.S. side of the border. So I think those companies whose sphere of activity is solely Alberta, I think they may find some challenges, if just from the chill effect of a change that hasn't occurred for at least four decades is just going to make people quite cautious. So we'll have to see what happens. Now that being said, Western Canada, parts of Western Canada have seen socialist-leaning governments in the past and done okay. So let's give them time to figure it all out. Meanwhile, full steam ahead in British Columbia as you've seen with Jackfish and RAM and then the open season that we announced today to make sure that we could move gas, that our customers want to move at a places like the Montney to markets that need it elsewhere.

Great. I appreciate the color.

Thanks, Carl.

Your next question comes from the line of Becca Followill with U.S. Capital Advisors. Your line is open.

Good morning, Becca.

Good morning, guys. Good morning. Touching on DCP Midstream and the restructuring process, I think a lot of us thought that this would have been reconciled maybe a little bit earlier. So can you talk to maybe where some of sticking points are? And the items, three items, that you outlined that you want to get out of this process, are those consistent with what your partner wants to get out of this?

well, on your last (43:56) absolutely, I think there's absolutely no daylight between Greg and Greg and Pat and Greg. And I think you heard that from them last week on their call. I don't think this is a timing that's any different than what we laid out. I think we said, sometime between April and October. And I would say a lot of really good progress during the quarter to deal with risk factors that the business is taking. Now they completed or launched and largely completed already some cost control measures that'll bring in reduced cost, call it $70 million in 2016, got the revolver set up to provide flexibility and time on the structuring. They've done activity on the risk management side vis-à-vis hedging to third parties and, yet, met financial expectations in a low market. So I think we're bang on. I don't think those objectives have changed. I don't think there's any sticking points. It's obviously a major entity, which we both like it, and we want to make sure that whatever structuring we do, we get right, Becca. So stay tuned, and I feel very confident that April to October timeframe, it will definitely happen.

Great. Thank you. That's all I had.

Thanks, Becca.

There are no further questions at this time. I will turn the call back over to Julie Dill for closing remarks.

Thank you, Heather. And thanks, everyone, for joining us today. And as always, feel free to give Roni Cappadonna or me a call with any additional questions. And we will be looking forward to seeing many of you over the next couple weeks at the AGA Financial Forum and at NAPTP conferences. Have a great day. Thanks.

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