2009 year-end results reflect strong earnings growth from expansion projects brought into service in both 2008 and 2009. These results were more than offset by lower commodity prices relative to the record-high prices seen in 2008 and a weaker Canadian dollar.

The company reported 2009 fourth quarter net income from controlling interests of $219 million, or $0.34 diluted EPS, compared with $171 million, $0.28 diluted EPS, in the prior year quarter. Ongoing net income from controlling interests for the 2009 quarter was $217 million, or $0.33 diluted EPS, versus $197 million, $0.32 diluted EPS, in the prior year quarter.

The 2009 fourth quarter results reflect the effects of improving commodity prices, a stronger Canadian dollar and increased gathering and processing revenues at Western Canada Transmission & Processing.

"We experienced solid earnings and strong performance from our core, fee-based businesses last year. We also executed extremely well on our capital expansion projects and signed multiple new customer contracts, which will fuel continued growth," said Greg Ebel, president and chief executive officer, Spectra Energy Corp. "We finished the year financially strong and that momentum gives us confidence in our ability to achieve 20 percent earnings growth this year."

"We will continue our focus on securing new growth opportunities for the future, as well as executing on our current portfolio of attractive expansion projects - projects that will deliver returns in excess of 12 percent, and that underpin our strong, sustainable earnings growth," said Ebel.

SEGMENT RESULTS

U.S. Transmission

U.S. Transmission reported fourth quarter 2009 earnings before interest and taxes (EBIT) of $204 million, compared with $161 million in fourth quarter 2008. The 2008 period included a $44 million special item for an impairment of the Islander East project.

Ongoing EBIT for fourth quarter 2009 was $204 million and, excluding the above special item, compares with $205 million in the prior year quarter. The segment benefited during the 2009 quarter from business expansion projects placed into service during 2009. These earnings were offset by the timing of operating and maintenance expenses, including increased pipeline integrity and lower capitalized costs. In addition, the 2008 quarter included a favorable customer settlement.

Year-end reported EBIT for U.S. Transmission was $894 million, compared with $844 million in 2008.

Distribution

Distribution reported fourth quarter 2009 EBIT of $96 million, compared with $90 million in fourth quarter 2008. Excluding the effect of a stronger Canadian dollar, earnings were $7 million lower than in the 2008 quarter, primarily a result of warmer weather.

Year-end reported EBIT for Distribution was $336 million, compared with $353 million in 2008.

Western Canada Transmission & Processing

Western Canada Transmission & Processing reported fourth quarter 2009 EBIT of $120 million, compared with $65 million in fourth quarter 2008. Beyond the effect of the stronger Canadian dollar, which added $16 million to earnings this quarter compared with last year, the increase was due mainly to higher frac spreads affecting our Empress natural gas liquids (NGL) earnings. The segment also benefited from improved results in the base gathering and processing business, primarily driven by higher contracted volumes and revenues from expansions.

Year-end reported EBIT for Western Canada Transmission & Processing was $343 million, compared with $398 million in 2008.

Field Services

Field Services reported fourth quarter 2009 EBIT of $77 million, compared with $69 million in fourth quarter 2008. The increase in earnings was driven by higher commodity prices. During fourth quarter 2009, crude oil averaged approximately $76 per barrel, compared with approximately $59 per barrel in the prior year quarter, and the NGL to crude relationship averaged 53 percent versus 46 percent in fourth quarter 2008.

These results were partially offset by non-cash mark-to-market losses in fourth quarter 2009, compared with gains in fourth quarter 2008 on hedges used to protect distributable cash flow at DCP Midstream's master limited partnership. Volumes were lower in fourth quarter 2009 versus 2008; however, drilling activity and rig counts around DCP Midstream's assets have continued to increase since the first half of 2009.

DCP Midstream paid distributions of $70 million to Spectra Energy for the 2009 quarter and $100 million for the year.

Year-end reported EBIT for Field Services was $296 million, compared with $716 million in 2008.

Other

"Other" reported net costs of $28 million in fourth quarter 2009, compared with net costs of $21 million in fourth quarter 2008. This increase primarily reflects higher benefit costs.

Year-end reported net costs for "Other" were $74 million, compared with $78 million in 2008.

Interest Expense

Interest expense was $154 million for fourth quarter 2009, compared with $166 million for the 2008 quarter. The decrease was primarily due to the benefit of interest rate swaps and lower commercial paper balances, partially offset by the effects of a stronger Canadian dollar during the 2009 quarter.

Interest expense for 2009 was $610 million, compared with $636 million in 2008.

Income Taxes

Fourth quarter 2009 income tax expense from continuing operations was $93 million, compared with $43 million in fourth quarter 2008. The increase was primarily a result of higher earnings in 2009. The effective tax rate was 28 percent in fourth quarter 2009, compared with 19 percent in fourth quarter 2008. The lower effective tax rate in fourth quarter 2008 was due to favorable adjustments in 2008 for final 2007 tax returns, and lower 2008 state income taxes.

Spectra Energy Corp is one of North America's premier natural gas infrastructure companies serving three key links in the natural gas value chain: gathering and processing, transmission and storage, and distribution. For nearly a century, Spectra Energy and its predecessor companies have developed critically important pipelines and related infrastructure connecting natural gas supply sources to premium markets. Based in Houston, Texas, the company operates in the United States and Canada approximately 19,100 miles of transmission pipeline, more than 285 billion cubic feet of storage, as well as natural gas gathering and processing, natural gas liquids operations and local distribution assets. The company also has a 50 percent ownership in DCP Midstream, one of the largest natural gas gatherers and processors in the United States.