Morningstar Rating

Stock Research and Analysis

by Jason Stevens

Bulls Say

Spectra Energy is the 800-pound gorilla of the natural gas midstream business. Its size, market knowledge, and customer relationships give it an edge when developing new projects.
The drop-down of UST to Spectra Energy Partners accelerated value recognition and will allow Spectra to fund future growth more efficiently.
Access to developing shale plays--particularly the Marcellus, Horn River, and Montney--provides Spectra with compelling, visible growth opportunities. Read more 

Bears Say

Higher costs of capital may change the types of projects Spectra can pursue, although so far the company has retained access to favorably priced capital.
The flip side to outsize cash flows from DCP Midstream in recent years is weak cash flows--and skittish shareholders--when commodity prices are falling.
Because of its size, Spectra has to spend a lot in order to move the needle. While Spectra has another $14 billion in identified projects, at some point it may become more difficult to put capital to work on attractive projects, and returns may begin to slip. Read more 

Management

Spectra Energy runs a tight ship, and is managed by longtime industry hands. With the retirement of longtime CEO and president Fred Fowler at the end of 2008, CFO and fellow board member Greg Ebel stepped up to lead the company. Independent director   Read more 

Profile

Spectra Energy Corporation is one of the largest natural gas midstream companies in North America. Its operations span the entire value chain, from wellhead to burner tip.  Read more 

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