1. Spectra Energy Conference Call
May 8, 2007
Page 1 of 13
Spectra Energy Conference Call
May 8, 2007
John Arensdorf:
Good morning, and welcome to Spectra Energy’s first quarter 2007 earnings review.
Thank you for joining us today on this our first ever quarterly conference call as Spectra
Energy.
Leading our discussion today are Fred Fowler, our president and chief executive officer,
and Greg Ebel, our chief financial officer. Also available to take your questions at the end
of the call are Martha Wyrsch, president and CEO of Spectra Energy Transmission, and
Sabra Harrington, our vice president and controller.
Fred will begin our discussion today by providing his perspective on our results for first
quarter. Greg will then provide more detail and context around our company’s results,
and those of each of our business segments. Fred will close with a discussion of some of
our key capital projects. Following our prepared remarks we will open the lines for your
questions.
Before we begin, let me take a moment to remind you that some of the things we will
discuss today concern future company performance and include forward looking
statements 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’s form 10K, filed with the SEC
on April 2, and our other SEC filings concerning factors that could cause these results to
be different than contemplated in today’s discussion.
In addition, today’s discussion includes certain non-gap financial measures as defined by
the SEC regulation G. A reconciliation of those measures to the most directly
comparable gap measures is available on our investor relations web site, at
www.spectraenergy.com.

2. Spectra Energy Conference Call
May 8, 2007
Page 2 of 13
And finally, I want to remind you that Spectra Energy Partners filed an S1 on March 30
to IPO a portion of our newly formed MLP. As such, regulatory requirements do not
permit us to comment on the MLP beyond our prepared remarks. You may access
Spectra Energy Partners filings on the SEC website. With that, I will turn the call over to
Fred.
Fred: Thanks, John, and good morning everyone. Our first year is off to a good start,
and I am very pleased with our accomplishments over the last four months. Since
January 1, we have put in place the infrastructure needed to stand alone, but I
think more importantly, to boldly move forward. I am pleased with our first
quarter operating results which you will hear more about shortly. Our U.S.
Transmission and our distribution segments each contributed solid financial
results this quarter.
One challenge we did encounter this quarter was the severity of this winter’s
impact on operations in our Field Services business. While you might normally
think of cold weather as being good for volumes, the severity of the weather
caused problems with well freeze-offs, as well as other operational difficulties,
which did reduce the volumes that we processed. The good news is that
operations were closer to normal by the end of the first quarter.
While commodity prices are typically weaker in the first quarter, that weakness
was a little more pronounced this year than in recent years. The average oil price
of $58 for the first quarter was about $10 below our forecast for the year.
Fortunately, commodity prices have strengthened, and the 12-month strip for oil
is now in the mid $60’s again. If today’s forward strip and the improved
correlations between natural gas liquids and crude are realized for the rest of the
year, we should be very close to the EBIT numbers that we gave you last fall for
DCP Midstream.
Our solid first quarter operating results overall put us on firm footing to achieve
our goals. We are well on track to meet our three-year, $3 billion capital
expansion plans, which will drive our stated goal of five to seven percent
compound annual EPS growth for the period 2007 through 2009.
I will update you on the progress that we are making on several of our more
significant projects a little later in the call.
Let me reiterate our dedication to delivering solid, sustainable shareholder value.
We have targeted a dividend payout ratio of approximately 60 percent, with an
annual dividend of $0.88 per share. We paid our first quarterly dividend of $0.22

3. Spectra Energy Conference Call
May 8, 2007
Page 3 of 13
per share on March 15, and we declared our second quarter dividend on April 4.
And as our earnings grow, we would expect our dividend to grow as well.
With just four months under our belt, Spectra Energy has distinguished itself as
one of the premier pure-play midstream natural gas companies in North America.
I am very proud of the efforts of my leadership team and everyone at Spectra
Energy in executing a successful spin-off while staying firmly focused on
delivering long-term value to our shareholders.
I know that you are all anxious to hear about the numbers, so let me turn things
over to Greg who will discuss our quarterly performance in more detail.
Greg: Thanks, Fred.
Earlier this morning, Spectra Energy reported first quarter 2007 earnings of $236
million, or $0.37 per diluted share, compared with earnings of $222 million in the
first quarter of 2006. This quarter’s results included the negative impact of
special items of $4 million related to the Spectra Energy spinoff, compared to a
net $3 million positive impact for discontinued operations and special items in the
prior year quarter.
Ongoing earnings were up 10 percent over first quarter 2006, reflecting strong
operational results in our U.S. Transmission and our Distribution segments. We
also benefited from a lower net effective tax rate. Those increases were partially
offset by lower processing revenues in western Canada and the impact of weather-
related challenges, and lower commodity prices at our Field Services segment,
which Fred mentioned earlier.
As a reminder, prior year results are those of Spectra Energy Capital, previously
known as Duke Capital. Also, you will note that we have no EPS data for 2006
since, as you know, we had no shares outstanding prior to January 2, 2007. I will
now discuss each business segment in a little more detail.
U.S. Transmission
U.S. Transmission reported first quarter 2007 EBIT, of $220 million, compared
with $235 million in first quarter 2006.
The decrease is primarily due to a favorable special item in last year’s results of
$24 million, related to the settlement of a customer transportation contract.
Absent that special item, ongoing EBIT from first quarter 2007 was $220 million,
compared with $211 million in the previous year’s quarter. The increase is

4. Spectra Energy Conference Call
May 8, 2007
Page 4 of 13
primarily due to a combination of lower operating expenses, and higher revenues
from improved storage prices and expansion projects, partially offset by lower
natural gas processing revenues associated with pipeline operations.
The key item contributing to lower operating expenses this quarter was the
capitalization of expansion project development costs incurred in prior years. As
we’ve previously discussed with you, when we start projects, we expense the
costs until we are comfortable that the project will move forward to successful
completion. At that time we reverse the expenses and capitalize those
development costs.
All in all, it was a good solid quarter for our U.S. Transmission business.
Gas Distribution
Gas Distribution reported strong first quarter 2007 EBIT of $144 million,
compared with $118 million in the first quarter of 2006, or a 22 percent increase.
This increase primarily reflects the return to more normal weather, the increase in
distribution rates, and higher storage revenues.
First quarter 2007 natural gas usage at Union Gas increased as a result of weather,
which was closer to normal this year and nearly 12 percent colder than last year.
Distribution margins also benefited as a result in an increase in our 2007 cost of
service rates. Storage results were also higher this quarter, reflecting strong
storage values.
Also contributing to the improvement this quarter was the additional capacity on
the Dawn Trafalgar pipeline. Phase 1 of our three-phase project was
commissioned at the end of fourth quarter 2006.
Now let’s move to western Canada.
Western Canada Transmission & Processing
Western Canada Transmission and Processing reported first quarter 2007 EBIT of
$74 million, compared to $82 million in the first quarter 2006. The decrease was
primarily a result of lower processing revenues in field service operations due to
reduced producer activity in the Fort Nelson area of northeast British Columbia,
and higher overall operating costs. These reductions were partially offset by
higher NGL results at our Empress facility. During the quarter, the Empress frac
spread averaged $4.20, compared to about $3.80 for the same quarter last year.
Field Services

5. Spectra Energy Conference Call
May 8, 2007
Page 5 of 13
The Field Services segment, which represents Spectra Energy’s 50 percent
interest in DCP Midstream, reported first quarter 2007 EBIT of $82 million,
compared with $144 million in the first quarter of 2006. 2007 EBIT includes
special items of $3 million in costs resulting from the partnership initiative to
create stand-alone corporate functions. 2006 earnings included a gain on sale of
assets of $14 million.
So, first quarter 2007 ongoing EBIT was $85 million, compared with $130
million in the prior year’s first quarter. Lower ongoing results were primarily due
to lower volumes in operating efficiencies at various facilities, as a result of
extreme winter storms.
As Fred said earlier, the DCP system experienced a large number of well freeze-
offs this winter. That, coupled with the inability to access facilities to service
them, caused volume reductions in the first quarter 2007. We did see a return to
more normal volume and activities at these facilities by the end of the quarter.
Lower commodity prices during the first quarter of 2007, compared to 2006, also
reduced margins. Crude oil prices averaged slightly above $58 a barrel for the
quarter, compared to about $63 a barrel in 2006. They have recovered
significantly over the past several weeks, and the strip for the remainder of 2007
is in the mid $60 range. We did see improved NGL to crude correlations during
the quarter, which helped somewhat to mitigate the affect of lower crude prices on
Field Services earnings.
It is worth noting that significant basis differentials existed in the first quarter of
2006 following the 2005 hurricane season. These differentials boosted gas
marketing margins in the first quarter of 2006.
Let me turn now to “Other,” which are primarily our corporate costs and the
operation of Spectra Energy’s wholly owned captive insurance subsidiary.
Other
“Other” reported net costs of $15 million in first quarter 2007, compared with net
costs of $49 million in the first quarter of 2006. The 2007 period includes
separation costs of $3 million. The ongoing EBIT costs of $12 million in 2007
compares favorably with the ongoing EBIT costs in 2006 of $49 million.
While not considered a special item in 2006, prior year results included mark-to-
market losses of $24 million related to corporate hedges associated with Field
Services’ earnings. Those hedges expired at the end of 2006.

6. Spectra Energy Conference Call
May 8, 2007
Page 6 of 13
The remaining improvement over the prior year quarter resulted primarily from
lower corporate costs, as well as the favorable resolution of a legal matter.
Let me now turn to ongoing EBITDA.
Ongoing EBITDA
As we mentioned in our December 2006 road show, we believe investors’ views
of our EBITDA are an important valuation metric, so we are reporting that to you
here today.
We have attempted to make our EBITDA calculation
all-encompassing, and as such have adjusted for interest, taxes and depreciation
for our unconsolidated businesses – Gulfstream and DCP Midstream.
Interest Expenses
With respect to interest and taxes, interest expense for the quarter was $155
million, compared with $143 million for the first quarter 2006. The increase is
largely the result of interest costs capitalized in the prior period for capital
projects of businesses transferred to Duke Energy.
Income Taxes
First quarter 2007 income tax expenses from continuing operations were $119
million, compared with $148 million for the first quarter 2006. This quarter, our
effective tax rate was 34 percent, an improvement from the prior year’s rate of 38
percent, which is largely due to the fact that as a stand-alone entity in 2007, we
enjoyed tax benefits on certain debt and corporate costs that had previously gone
to Duke corporate.
Other Items
A couple of final items of note:
The Canadian currency net income impact for the quarter was unfavorable by
$1.2 million, when compared with the first quarter 2006.
Debt to total capitalization as of March 31, 2007 was 59 percent. However, we
had almost $600 million of cash on our balance sheet at March 31, so net debt to
total capitalization was approximately 57.5 percent.

7. Spectra Energy Conference Call
May 8, 2007
Page 7 of 13
Later this month we expect to enter into a new Spectra Energy credit facility with
a total capacity of approximately $1.5 billion, which will replace our existing
$950 million U.S. facility.
Now let me turn things back over to Fred, who will update you on several of the
more significant projects in our capex plan.
Fred: I want just to finish up today’s call by giving you an in-depth update on a few of
our key growth projects – projects which will make our earnings growth in the
future a reality. As you know, we have earmarked more than $1 billion for
expansion this year to grow our business both organically and through Greenfield
project development.
While our total capital expenditures for the first quarter were around $175
million, the lion’s share of our construction activity will take place between now
and the end of the year, so we fully expect to deploy over $1 billion of growth
capital this year.
I do want to walk you through where we are on one of our larger organic growth
projects and a couple of our large Greenfield projects.
Maritimes Phase IV Expansion
Our Maritimes Phase IV project is an expansion of the capacity on the U.S. leg of
our Maritimes & Northeast pipeline to connect the Canaport LNG terminal in
New Brunswick. This terminal is being developed jointly by Repsol and Irving
Oil, and is expected to be on-stream by November of 2008, with a send out
capacity of 1 Bcf per day. We are doubling the capacity of the U.S. piece of
Maritimes & Northeast to over 830 million cubic feet per day to accommodate
this new LNG.
This is mainly a compression project, involving the re-piping of two of our
existing stations, building five new stations, and constructing less than two miles
of new pipe.
We are making great progress on this expansion:
• Repsol has signed a firm 25-year contract for 730 million cubic feet per
day on the Maritime system for delivery into the Northeast market.
• We have our FERC approval in hand, and are in the process of finalizing
our remaining state permits.
• We have ordered more than 60 percent of the project materials and
equipment, completed the majority of the design work, and selected
contractors for the station construction.

8. Spectra Energy Conference Call
May 8, 2007
Page 8 of 13
• We are going to build the project over two construction seasons, beginning
this year, which will allow us to spread the work over a very doable
schedule and utilize several different contractors.
• We expect to spend about $320 million on this project, and we anticipate
completing its construction to meet the commencement of service from the
Canaport LNG terminal in November of 2008.
Northeast Gateway
A good example of a significant Greenfield project is Northeast Gateway, which
remains on track for a December 2007 in-service date.
Northeast Gateway will be a 16-mile, 24-inch offshore pipeline in Massachusetts
Bay that will connect Excelerate Energy’s deep water LNG port to our Algonquin
Hubline system. The new lateral is designed to transport 800 million cubic feet
per day of supply into the Algonquin system.
We have achieved several key project milestones:
• We received our FERC certificate in March.
• We ordered the pipe for this project last year, and entered into a
comprehensive construction contract with an offshore contractor.
• The offshore lay barge is making its way up from Columbia as we speak,
and it will be in Boston in the next few weeks. As we secure our final
permits for the project, we will be in position to begin construction at the
end of May, which will allow us to place the project in-service by late this
year.
• We have entered into a 25 year contract with Excelerate Energy for all 800
million cubic feet per day of the capacity for this pipeline.
• The $240 million that we expect to spend on this project will start
generating returns later in the year.
Southeast Supply Header
Our Southeast Supply Header is another good example of a Greenfield project. It
involves the construction of about 270 miles of new pipeline from the Perryville
hub in northern Louisiana to our Gulfstream Natural Gas System near Mobile,
Alabama. With our partner, CenterPoint Energy, we have made our filing with
FERC. We expect to receive certification later this year and begin construction
shortly thereafter.
This project will link the onshore natural gas supply basins of East Texas and
North Louisiana to the Southeast markets, which are now predominantly served
by offshore natural gas supplies from the Gulf of Mexico.

9. Spectra Energy Conference Call
May 8, 2007
Page 9 of 13
The pipeline will give customers an important alternative to offshore supply,
which as we have learned over the past couple of years, can be very vulnerable to
weather- related service disruptions.
We expect that natural gas transported by the Southeast Supply Header will
probably end up being used in the Northeast during the winter months, and then it
will supply Florida and other Southeastern markets during the summer.
95 percent of the capacity has been subscribed under long-term agreements.
The pipe on this project has been ordered and is scheduled for delivery, and all the
prime contractors have been retained, which will allow us to start construction
later this year. Our half of the construction costs of this project will be $400
billion, and we expect an in-service date in the summer of 2008.
These three projects alone will account for almost $1 billion of the $3 billion in
capex that we expect to spend over the next three years. They are real projects
that are moving toward completion.
I hope this gives you a comfort that we are well on our way toward deploying $3
billion over the 2007 to 2009 timeframe in growth capex projects, which will
serve as the catalyst for our earnings growth.
Let me finish up by reminding you why we believe that Spectra Energy has the
best midstream assets and opportunities for growth in North America. That
growth is being driven by:
• Changing dynamics around gas supply and the need for new midstream
infrastructure.
• Our position of serving the fastest growing gas demand markets.
• A stable of homegrown expansion projects equaling more than $3 billion in
investment opportunities
• A management team with a proven record in operations, delivering results and
earnings growth.
• And the financial flexibility to handle virtually any opportunities that arise in this
sector.
We’ve just wrapped up our first quarter as a publicly traded entity. We have
delivered strong core results, even in the face of a challenging commodity
environment. We are on-plan to achieve our goals. And we are optimistic about the
growth opportunities that lay ahead for Spectra Energy and our investors. With that,
let’s open up the lines for your questions.

10. Spectra Energy Conference Call
May 8, 2007
Page 10 of 13
Operator Instructions
Ramzi Faris with Fidelity Investments: Just wondering what your plan was for
funding the $800 million cash flow deficit for this year.
Greg: We will do that with debt. The intention was not to actually issue any equity over
the next three years, but we have some room on our balance sheet that we will
use. And it will be a combination of short term and long term debt.
Karen Taylor with BMO Capital Markets: Can you just perhaps run through some of
these items that maybe contributed to the quarter in not normalized form, but we
need to know how much they are. The ad valorem tax issues that were resolved,
how much EBIT did that contribute, or how much was that?
Greg: That is approximately $8 million, Karen.
Karen: 8 million?
Greg: Yes.
Karen: The tax issues, or legal issues that were resolved in the other segment, how much
were those?
Greg: Similar number. Approximately $8 million.
Karen: Okay. And the costs that were capitalized that were basically expensed in prior
periods, how much was that?
Greg: The difference year-over-year was about $22 million.
Karen: I just want to make sure – those were costs that were incurred on projects that are
now definitive, so you have capitalized them in this quarter and then reduced what
would normalize – normally be a higher run rate on cost in that segment.
Greg: Correct. We take the expenses, we build the project up, and so you do not have
big write offs if a project does not go forward, and then we capitalize that.
Fred: But Karen -- this is Fred -- I would tell you at the level of project development
that we are at, we have a lot of new expenses that hit this current quarter as well.
Karen: Okay, how much were those?

11. Spectra Energy Conference Call
May 8, 2007
Page 11 of 13
Greg: I cannot give that to you off the top of my head, but it is a pretty high level, just
because of the level of activity.
Karen: All right. And just lastly, the run rate for the other segment – we always talked
about an EBIT loss of 100 million – you did quite a bit better than that in the first
quarter – does that suggest that there might be some back-end loading to the other
segment loss, or are we—
Greg: I think that is a fair way to look at it. We are still comfortable with the
approximately $100 million we talked about that for the year.
Karen: Okay. Lastly, on the Union Gas, how much – you are 12% colder than last year.
Last year was significantly warmer than normal – how much versus normal were
we this year?
Greg: In a dollar sense, as you know, there is a variety of factors that move up and
down. Weather was about $6 million.
Karen: So an adverse affect versus normal.
Greg: Positive.
Karen: Oh, positive. Okay. Thank you.
Matthew Akman with CIBC World Market: Thanks guys. On the mid-stream business –
the DEFS – what is the thought behind sort of maintaining guidance there, I guess
despite some of the issue in the quarter, and your guidance set – it was based on
$68 oil WTI going into the year. What has improved there that can offset some of
these – some of the commodity price drag and operating issues in Q1?
Greg: Well, Matt, the real issue there is that, you are right, we saw weaker prices in the
first quarter. I will also say that, as you know, we talk about the average price for
the year, so you are going to have quarterly differences there. And then you are
seeing some improvement on the relationship between NGL and oil. So as NGL’s
have a better relationship to oil, you can see an improvement there with your
results, assuming NGL and oil are going the same way.
Matt: Okay. All right. In terms-- My next question is around the western Canadian
segment and Fred did not touch on any growth projects there, but I know Q1 was
a low drilling quarter because of unusual weather factors, but there is a lot of
activity there. Fred, is there anything on the horizon there that you guys can start
to talk about in terms of growth in that part of your business?

12. Spectra Energy Conference Call
May 8, 2007
Page 12 of 13
Fred: There’s really kind of two stories going on in western Canada. We do have areas
that have growth in them, and they actually fit our system well because they are
deeper gas and they are more sour. It is sour gas which we are very prepared to
handle. At the same time, in the Fort Nelson area, we have seen a real drop off in
drilling activity. We have not seen a big drop off in volumes yet, but at this low
level of drilling activity, it is probably only a question of time. So I think
probably overall, flat to down a little until we see drilling start back up. One of
the big drivers that we have seen on the lack of drilling has just been the
escalation in drilling costs. So it is a question, with this cut back, how quickly
will that come back in line.
Matt: Okay. Thanks. Those were my questions.
Anna Agarwal with Jeffries: Actually I had one question: Based on your first quarter
results, how comfortable are you with your annual EPS target of $1.40?
Fred: Well number one, that $1.40 is an employee incentive target. We do not actually
give guidance on EPS, and that will not change – that employee incentive target
will not change regardless of how the rest of the year ends. I think, to me one of
the key inputs into that incentive target was our commodity price assumption, and
I think that after just one quarter, I think it is premature really to determine if our
annual commodity assumptions are going to play out for the full year. Oil prices
did start out the year weaker than we expected, but recovered nicely into the mid
$60’s at this point, and as Greg said, NGL prices in relation to crude have
improved. And then the other bright spot is frac spreads, although it is a much
smaller determinant of our earnings. They have been in excess of our annual
average to date.
Anna: Okay, thank you.
Faisel Khan with Citi: Actually, this is Barry Klein. I just had a quick question on the
effective tax rate. You guys, I guess for the quarter, had a 34% rate. I think in
one of the previous presentations you had mentioned 32% effective tax rate.
What do you think we should be using going forward?
Greg: I think 32 is the right number for the full year. As you know, we have got some
quarter-over-quarter changes, so 32% for all of ’07 is the right number to be
using.
Barry: Okay. And then going forward into ’08, ’09?
Greg: I think that 32-33% number is good going forward.
Barry: Okay, great. Thanks a lot.

13. Spectra Energy Conference Call
May 8, 2007
Page 13 of 13
Winfred Fruehauf with W. Fruehauf Consulting Ltd.: In terms of AFUDC, what were the
amounts booked in the last quarter compared with a year ago?
Greg: The delta was about $9 million.
Winfred: In the last quarter?
Greg: In the first quarter, correct.
Winfred: I was not asking you for the delta. I was asking for the actual amounts in
both quarters.
Greg: Okay, let’s see if we can get that for you. Winfred, we can probably follow up
with you and get you the AFUDC number. It was not a massive number. I want
to say 3 or 4, but let me kind of get it for you. Because last year-- Yeah, the delta
was 9, so this year was about $4 million and last year would have been
approximately $12 million.
Winfred: And what is the weighted average cost of capital you used to calculate the
AFUDC in both quarters?
Greg: I do not have that, but it will be a little big north of -- probably more like 8% kind
of thing.
Winfred: Thanks very much.
Operator Instructions
John: Okay, thank you Jennifer, and thank you everyone for joining us today. If there
are no further questions – if you have additional questions, I would encourage you
to give me a call later, or you may call Patti Fitzpatrick. So with that, thank you
for joining us and we will look forward to speaking to you when we are in New
York on next Tuesday, the 15 of May. Thank you.