A weak Canadian dollar cut into Spectra Energy Corp.’s earnings in the third quarter, but both the Houston-based company and its MLP, Spectra Energy Partners LP (SEP), posted results that beat estimates.

Spectra’s ongoing EBITDA in the quarter slipped to $704 million from $758 million recorded in third-quarter 2013, while SEP delivered $401 million, a $51 million jump from its EBITDA of the same quarter last year.

“This trend will continue with future drop-downs,” said Pat Reddy, CFO for both entities, during a recent conference call to discuss results with analysts. “But while we will lose net income, Spectra Energy will continue to benefit from the growth in GP and LP distributions from [DCP Midstream Partners LP (DPM)]. In addition, DCP [Midstream LLC] had lower gains associated with the issuance of DPM units compared with last year’s quarter.”

Spectra’s distributable cash flow of $236 million beat 2013’s 3Q performance by $10 million. The expectation of distribution on full-year coverage to be 1.5 times is on schedule and ahead of the company’s original 1.4 times estimate. SEP posted DCF of $247 million for the quarter, on track for 1.2 times on a full-year basis.

Spectra’s stock close of $39.08 as of Nov. 6 is up 9.7% for the year, ahead of many of its peers. Kinder Morgan Inc. is up 7.0%, CenterPoint Energy is up 7.6%, Questar is up 5.3% and ONEOK is up 2.8% so far in 2014. SEP’s stock has jumped ahead by 25.7% since the start of the year.

The collective target price from analysts following the company is $41.56 and the average rating is hold.

Spectra is looking at $35 billion of expansion projects between 2013 and 2020, of which $16 billion is already in play. Among them:

  • Kingsport expansion project in East Tennessee;
  • Spraberry supply lateral off the Sand Hills NGL line;
  • Access South and Adair Southwest projects in the Texas Eastern pipeline;
  • Stratton Ridge, a component of the Gulf Coast LNG project;
  • Dawn to Parkway transmission pipeline in Ontario, Canada;

“Our U.S. transmission business has made great strides towards its $3 billion in expansion project goal, getting very close to that target at this point,” said Greg Ebel, chairman, president and CEO of Spectra. “Year to date, the business has secured $2.3 billion of new projects.”

Ebel pointed to strong fundamentals underpinning the company’s prospects.

“Keep in mind, the projects we’re delivering are firm, fixed-fee projects, with very long-term contracts,” he said. “We've got the financial strength and flexibility to continue executing on our expansion plans and we’re able to move quickly and decisively to optimally leverage our structure and our balance sheet. And we’re able to finance all this growth with an advantaged cost of capital vs. our peers.”