Spectra Energy Income Fund
TSX : SP.UN

Spectra Energy Income Fund

May 04, 2007 17:33 ET

Spectra Energy Income Fund Reports First Quarter 2007 Results

CALGARY, ALBERTA--(CCNMatthews - May 4, 2007) - Spectra Energy Income Fund (TSX:SP.UN) (the "Fund") today released its financial and operating results for the three months ended March 31, 2007. Unless otherwise noted, the following references the results of Spectra Energy Facilities LP ("SEF LP"), of which the Fund currently has a 53.8 percent indirect ownership.

First Quarter Highlights:

- During the quarter, the Fund declared distributions of $5.1 million from distributable cash of $8.1 million, for a payout ratio of 63 percent.

- SEF LP's first quarter revenue increased 46 percent year-over-year to $34.0 million.

- Total operating cash flow for the first quarter was up 52 percent to $21.2 million, compared to the same quarter in 2006.

- Total average daily throughput for the first quarter was up 36 percent year-over-year to 589 mmcf/d.

- On March 8, Dominion Bond Rating Service confirmed the stability rating of the Fund's units at STA-3 (middle).

- On April 12, 2007, the Valhalla Pipeline commenced operations.

"The Fund's first quarter results for 2007 were favourable, exhibiting significant year-over-year growth. We recorded increases in operating cash flow and revenue as a result of the combined performance of our legacy assets and the addition of the Fort St. John region assets," said Doug Haughey, president and chief executive officer of the Fund's manager. "We have also achieved substantial construction progression in our expansion projects in the Peace River Arch region, as the Valhalla Pipeline Project recently commenced operations, and the West Doe processing facility is on track for completion later this year."

Financial and Operating Results:

SEF LP's revenue for the first quarter of 2007 was $34.0 million, an increase of 46 percent or $10.8 million from the comparable quarter in 2006. The increase was due mainly to the inclusion of revenues associated with the Westcoast Gas Services Inc. ("WGSI") acquisition, which now operates as the Fort St. John region, and increased revenue in the Brazeau River region from a positive equalization adjustment and higher average fees.

Earnings before interest, income taxes, depreciation and accretion ("EBITDA") for the first quarter was $17.7 million, an increase of approximately 54 percent, or $6.2 million, from the first quarter last year. The increase was due to higher revenue, in part offset by increased operations and maintenance and general and administrative costs. The increase in operations and maintenance expenses was due largely to the addition of the Fort St. John facilities and higher equalization payments at the Brazeau River plant, partially offset by lower maintenance costs at various facilities as a result of the timing of planned maintenance activities.

Net income for the first quarter of 2007 was $7.2 million, an increase of $2.2 million or 44 percent from the same period a year earlier. The increase was primarily due to an increase in revenue, in part offset by the aforementioned increases in operations and maintenance costs and general and administrative expenses. The improvement in net income was further offset by increases in depreciation mainly attributable to the inclusion of the Fort St. John facilities, as well as higher interest costs due to a higher average debt balance related to the WGSI acquisition and higher interest rates. Income taxes for the quarter also increased compared to the same period last year due to increased current period earnings.

For the first quarter of 2007, the Fund had distributable cash of $8.1 million and declared distributions were $0.210 per unit, totaling $5.1 million, for a payout ratio of 63 percent.



------------------------------------------------------------------------
(in thousand of dollars, except where noted) Three Months Ended
March 31
Statement of Distributable Cash 2007 2006(3)
------------------------------------------------------------------------

Spectra Energy Facilities LP
Cash flow from operating activities 16,978 13,505
Changes in non-cash working capital (626) (3,218)
Amortization of deferred financing charges (43) (36)
Maintenance capital expenditures (1,315) (231)
---------- ----------
Distributable Cash(1) from Spectra Energy
Facilities LP 14,994 10,020
---------- ----------
---------- ----------

Spectra Energy Income Fund
Share of Spectra Energy Facilities LP's
distributable cash 8,066 4,249
Interest income earned by the Fund 2 -
Management and administrative expenses (2) 9 -
---------- ----------
Distributable Cash(1) from Spectra Energy
Income Fund 8,077 4,249
---------- ----------
---------- ----------

Weighted average number of units outstanding
(units) 24,351,000 15,213,333
---------- ----------
Distributable Cash ($ / Unit) (1) 0.332 0.279
---------- ----------
Cash distributions declared ($ / Unit) 0.210 0.201
---------- ----------
Distributions declared 5,114 3,096
---------- ----------
Payout Ratio (distributions declared /
distributable cash) (1) 63% 73%
---------- ----------
------------------------------------------------------------------------

(1) References to "Distributable Cash" are to cash available for
distribution to unitholders in accordance with the distribution
policies of the Fund. Distributable cash, distributable cash per unit
and payout ratio are non-GAAP measures generally used by Canadian
open-ended trusts as an indicator of financial performance. They are
considered key measures, as they demonstrate the cash available for
distribution to unit holders. The method of determining Distributable
Cash for SEF LP is derived from cash flow from operating activities, a
measure recognized under GAAP, and is equivalent to EBITDA less net
interest expense, current taxes and maintenance capital expenditures
for the period.

References to "EBITDA" are to earnings before interest, income taxes,
depreciation and accretion. EBITDA is a non-GAAP measure that
represents earnings generated to fund capital investments, meet
financial obligations and fund distributions. It is considered a key
measure, as it demonstrates the ability of the business to meet its
capital and financing commitments.

(2) Management and administrative expenses are reimbursed by SEF LP.

(3) For periods prior to the third quarter of 2006, distributable cash for
the Partnership was calculated as EBITDA less net interest expense and
maintenance capital expenditures. Distributable cash from the
Partnership for periods after the second quarter of 2006 has been
recalculated and is derived from cash flow from operating activities
and is equivalent to EBITDA less net interest expense, current taxes
and maintenance capital expenditures. This has led to a decrease in
distributable cash of $39 thousand for the Partnership and $17
thousand for the Fund, for the three month period ended March 31, 2006.


Conference Call and Webcast:

A conference call to discuss the financial results will take place at 7 a.m. MT (9:00 a.m. ET), Monday, May 7. The call will be hosted by Doug Haughey, president and ceo of the Fund's manager. Also participating in the call from the Fund's manager will be Tim Curry, vice president, finance and accounting; Duane Rae, vice president; and Bob Bissett, director, business development and investor relations. Following management's presentation, there will be a question and answer session for analysts and institutional investors.

To participate in the conference call, please dial 416-644-3421 or 1-800-731-5319. A webcast of the call will be available at www.spectraenergyfund.com. A replay of the conference call will be available as of 12 p.m. ET the same day until 12 a.m. ET on May 14, 2007. To access the replay, dial 416-640-1917 or 1-877-289-8525 followed by the passcode 21227450#.

Non-GAAP Measures:

The Fund provides financial measures that do not have a standardized meaning prescribed by Canadian generally accepted accounting principles ("GAAP"). These non-GAAP measures may not be comparable to similar measures presented by other entities. All of the measures have been calculated consistent with previous disclosures by Spectra Energy LP.

Forward-Looking Statements:

This news release includes statements that do not directly or exclusively relate to historical facts, referred to as "forward-looking statements." You can typically identify forward-looking statements by the use of forward-looking words, such as "may", "will", "could", "should", "project", "believe", "anticipate", "expect", "estimate", "continue", "potential", "plan", "forecast" and other similar words. The forward-looking statements reflect management's current intentions, plans, expectations, beliefs and assumptions about future events, including the outlook for general economic trends, industry trends, commodity prices, capital markets, and the governmental, legal and regulatory environment. Forward-looking statements relate to, among other things, anticipated financial performance, business prospects, strategies, regulatory developments, new services, market forces, commitments and technological developments. These statements are subject to various known and unknown risks and uncertainties that are outside our control and could cause actual results to differ materially from the results expressed or implied by the forward-looking statements. Those risks and uncertainties include market and general economic conditions, future costs, treatment under government regulatory, tax and environmental regimes and the other material risks discussed in the Fund's Annual Information Form dated March 15, 2007, under "Risk Factors" and in the management's discussion and analysis of the Fund and Spectra Energy Facilities LP under the headings "Risk Profile" contained in the Fund's Annual Report for the year ended Dec. 31, 2006. Undue reliance should not be placed on this forward-looking information, which is given as of the date of this release, and the Fund undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise.

About Spectra Energy Income Fund

Spectra Energy Income Fund is an unincorporated open-ended trust established under the laws of the Province of Alberta and owns a 53.8 percent indirect interest in Spectra Energy Facilities LP ("SEF LP") which owns 100 percent of Spectra Energy Midstream Corporation ("Spectra Midstream"). Spectra Energy Corp. indirectly owns the remaining 46.2 percent interest of SEF LP and is the sponsor of the Fund. Spectra Midstream is one of the largest independent midstream operations in the Western Canadian Sedimentary Basin ("WCSB") with interests in thirteen natural gas processing plants with a net processing capacity of 908 mmcf/d and over 1,600 kilometres of natural gas gathering pipelines located throughout natural gas prone areas in the western extent of the WCSB. More information on Spectra Energy Income Fund can be found at: http://www.spectraenergyfund.com.

Spectra Energy Corp. (NYSE:SE) is one of North America's premier pure play natural gas midstream companies serving three key links in the natural gas value chain: gathering and processing, transmission and storage and distribution. For close to a century, Spectra Energy and its predecessor companies have developed critically important pipelines and related energy infrastructure connecting natural gas supply sources to premium markets. Based in Houston, Texas, the company operates in the United States and Canada approximately 17,500 miles of transmission pipeline, 265 billion cubic feet of storage, natural gas gathering and processing, natural gas liquids operations and local distribution assets. Spectra Energy Corp also has a 50 percent ownership in DCP Midstream, one of the largest natural gas gatherers and processors in the United States. Visit www.spectraenergy.com for more information.

SPECTRA ENERGY INCOME FUND

and

SPECTRA ENERGY FACILITIES LP

Interim

Management Discussion and Analysis

And

Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2007

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management's discussion and analysis ("MD&A") of financial condition and results of operations is prepared as of May 4, 2007. This MD&A should be read together with the accompanying unaudited consolidated financial statements of Spectra Energy Income Fund (the "Fund") and Spectra Energy Facilities LP (the "Partnership") as at and for the three months ended March 31, 2007 and the related notes thereto. The unaudited consolidated financial statements of the Fund and the Partnership are prepared in accordance with Canadian generally accepted accounting principles ("GAAP").

The selected financial information and discussion below also refers to certain measures to assist in assessing financial performance. These "non-GAAP measures" such as "EBITDA", "Distributable Cash", "Distributable Cash per unit", "Operating Cash Flow" and "Payout Ratio" should not be construed as alternatives to net income or loss or other comparable measures determined in accordance with GAAP as an indicator of performance or as a measure of liquidity and cash flow. Non-GAAP measures do not have standard meanings prescribed by GAAP and therefore may not be comparable to similar measures presented by other issuers.

Additional information relating to the Fund or the Partnership including the Annual Information Form ("AIF") is available on the Fund's profile on the System for Electronic Data Analysis and Retrieval ("SEDAR") website at www.sedar.com.

Forward-Looking Statements

This MD&A includes statements that do not directly or exclusively relate to historical facts, referred to as "forward-looking statements". You can typically identify forward-looking statements by the use of forward-looking words, such as "may", "will", "could", "should", "project", "believe", "anticipate", "expect", "estimate", "continue", "potential", "plan", "forecast" and other similar words. The forward-looking statements reflect management's current intentions, plans, expectations, beliefs and assumptions about future events, including the outlook for general economic trends, industry trends, commodity prices, capital markets, and the governmental, legal and regulatory environment. Forward-looking statements relate to, among other things, anticipated financial performance, business prospects, strategies, regulatory developments, new services, market forces, commitments and technological developments. These statements are subject to various known and unknown risks and uncertainties that are outside our control and could cause actual results to differ materially from the results expressed or implied by the forward-looking statements. Those risks and uncertainties include market and general economic conditions, future costs, treatment under government regulatory, tax and environmental regimes and the other material risks discussed in the Fund's Annual Information Form for the year ended December 31, 2006 under "Risk Factors" and in the management's discussion and analysis of the Fund and the Partnership under the headings "Risk Profile" contained in the Fund's Annual Report for the year ended December 31, 2006. Undue reliance should not be placed on this forward-looking information, which is given as of the date of this presentation, and the Fund undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise.

Overview

The Fund is an unincorporated open-ended trust created pursuant to a trust indenture dated November 2, 2005 as amended and restated on December 20, 2005, and governed by the laws of the Province of Alberta. The Fund is a "mutual fund trust" for the purposes of the Income Tax Act (Canada). The Fund is administered by Spectra Energy Facilities Management LP (the "Manager").

The Fund effectively commenced operations through its indirect investment in the Partnership on December 20, 2005, and income recorded by the Fund commenced on that date. The Fund now indirectly holds 53.8% of the Partnership and Spectra Energy Corp indirectly holds 46.2% of the Partnership.

The Partnership is a limited partnership established under the laws of the Province of Alberta. On December 20, 2005 it acquired all the issued and outstanding shares of Spectra Energy Midstream Corporation ("Spectra Midstream") from Spectra Energy Midstream Holdings Partnership. Spectra Midstream and its wholly owned subsidiaries own interests in thirteen natural gas processing plants and related gathering pipeline facilities in the Western Canadian Sedimentary Basin. Additional information relating to the business is available at www.spectraenergyfund.com.

Outlook

On October 31, 2006, the Minister of Finance announced proposed changes to tax income trusts at the rate of 31.5% on the taxable portion of distributions. The proposals also specified that "undue growth" may result in immediate taxation of income trusts that would otherwise not be subject to taxation until 2011. New draft legislation in substantially the same form as the draft legislation released on December 21, 2006 was tabled at House of Commons on March 29, 2007 under Bill C-52 and it is now on its second reading. The guidelines regarding normal growth released by the Department of Finance on December 15, 2006 are now incorporated by reference in the draft legislation. As such, if a particular fund exceeds "normal growth" the new tax will apply from the commencement of the taxation year in which normal growth has been exceeded. We expect that more expansive, or at the very least, more precise guidelines or draft legislation in lieu of the guidelines will be introduced at a later date. The implementation of the legislation could have an adverse effect on the Fund, its ability to pay distributions and the market value of its units.

On November 7, 2006, the Trustees of Spectra Energy Commercial Trust (the "CT") approved the construction of the Valhalla Pipeline Project ("Valhalla") in the Peace River Arch area of northwestern Alberta. Construction of the 25 kilometer, 8 inch sour gas pipeline has been completed with pipeline operations commencing on April 12, 2007. The final costs are expected to match the project budget costs of $7.1 million. Valhalla delivers gas for processing at the Fund's Gordondale East plant and is underpinned by firm take-or-pay contracts with area producers.

On November 7, 2006, the CT Trustees approved the construction of a greenfield sour gas processing facility at West Doe, which is located in the Peace River Arch area of northeast British Columbia. This facility, which will be located close to the Fund's existing Pouce Coupe plant, will consist of a sour gas plant capable of processing 23.5 million cubic feet of gas per day, plus related gas gathering and sales gas pipelines. The estimated $22.5 million capital cost of this facility will be financed from existing credit facilities and is underpinned by firm take-or-pay contracts. Project development is underway, with construction slated to start in June, 2007. Facility operations are expected to commence in September, 2007.

During the period 2004 through 2006, western Canada experienced historic levels of natural gas drilling activity. Beginning in late 2006, a reduction in western Canadian drilling has been occurring when compared to the levels generally experienced during the previous three years. On a longer-term basis, if drilling activity in the Fund's operating regions were to decrease from historical levels, the Fund's operating and financial results may be adversely impacted.

Spectra Energy Income Fund

Summarized Financial Results

The following table sets out summary consolidated financial results for the three months ended March 31, 2007 and 2006, as well as the summary consolidated financial condition as at March 31, 2007 and December 31, 2006.



---------------------------------------------------------------------------
Three Months Ended
March 31, March 31,
(in thousands of dollars, except where noted) 2007 2006
---------------------------------------------------------------------------

Statement of Operations
Equity income from Spectra Energy Facilities LP 3,913 2,119
Net income 3,924 2,119
Net income per unit (in dollars) 0.161 0.139

Distributions
Units outstanding at end of period (in units) 24,351,000 15,400,000
Distributions declared per unit (in dollars) 0.210 0.201

-------------------------
As at
March 31, December 31,
2007 2006
-------------------------

Balance Sheet
Total assets 257,072 258,236
Total liabilities 2,390 2,364
---------------------------------------------------------------------------


Quarterly Information

The following table sets forth selected consolidated financial information for each of the most recently completed quarters since the Fund began operations on December 20, 2005.



------------------------------------------------------------------------
(in thousands of
dollars, except 2007 2006 2005
where noted) Q1 Q4 Q3 Q2 Q1 Q4(1)
------------------------------------------------------------------------

Revenues 4,391 3,004 2,526 2,372 2,323 151

Expenses (467) (425) (320) (337) (204) (10)
------------------------------------------------------------------------

Net income 3,924 2,579 2,206 2,035 2,119 141
------------------------------------------------------------------------
------------------------------------------------------------------------

Earnings per unit,
basic and diluted
(in dollars) 0.161 0.106 0.142 0.132 0.139 0.010

Cash distributions
declared (2) 5,114 5,114 4,294 3,095 3,096 364
Cash distributions
declared per unit
(in dollars) 0.210 0.210 0.201 0.201 0.201 0.026
------------------------------------------------------------------------
(1) For the twelve days ended December 31, 2005.
(2) Includes $600 thousand distribution to Subscription Receipt holders
in third quarter of 2006.


Results of Operations

The following table presents the consolidated operating results for the three months ended March 31, 2007 and 2006.



-------------------------------------------------------------------------
Three months ended
March 31, March 31,
(in thousands of dollars) 2007 2006
-------------------------------------------------------------------------
Equity income from Spectra Energy Facilities LP 3,913 2,119
Other income 476 204
Interest income 2 -
----------- -----------
Total income 4,391 2,323
Management and administrative expenses 467 204
----------- -----------
Net income 3,924 2,119
-------------------------------------------------------------------------


Equity income represents the Fund's 53.80% (42.41% prior to September, 2006) indirect investment in the Partnership as well as its 100% indirect investment in the General Partner ("GP"), Spectra Energy Facilities Inc. The Partnership reimburses the Fund for all of its management and administrative expenses per the administration and governance agreement, and this reimbursement is described as other income.

Liquidity and Capital Resources

The Fund does not actively operate a business and is dependent upon distributions from the Partnership. During the first quarter of 2007, the Fund received $5,114 thousand of distributions from the Partnership, an increase of $2,686 thousand over the comparable period in 2006. The Fund paid distributions to unitholders of $5,114 thousand during the first quarter of 2007, an increase of $2,686 thousand over the comparable period in 2006. The increases in distributions received and paid during the first quarter of 2007 as compared to the same period in 2006 were due to the increased number of Units outstanding, as well as the increase in the per unit amount of distributions declared effective with the November, 2006 distribution. The Partnership's cash flow from operations, before changes in non-cash working capital, of $16,352 thousand (consisting of net cash provided by operating activities of $16,978 thousand less net working capital changes other than cash and short term investments of $626 thousand) for the first quarter of 2007 was sufficient to fund all the distributions made to the Fund and other partners. No borrowings were required by the Fund or the Partnership to support the distributions made to unitholders. Management expects that cash flows from the operations of the Partnership will continue to be sufficient to fund distributions to the Fund and other partners.

The Dominion Bond Rating Service ("DBRS") has assigned a rating of STA-3 (middle) to the Units. As a result of the proposed income tax changes announced by the Minister of Finance, DBRS placed the stability rating of the Fund "Under Review with Developing Implications", as they did with many other income funds. Subsequently, on March 8, 2007, DBRS confirmed the stability rating of the Fund at STA-3 (middle) noting primarily that: (1) while the proposed tax legislation is an evolving issue, DBRS expects that the Fund will not alter its fundamental financial and strategic objectives as a result of the proposed legislation and that the Fund's current cash distribution is sustainable based on its current operations until at least 2011 when the legislation is scheduled to take effect; (2) DBRS expects the Fund to continue to grow its cash available for distribution on a per-unit basis, primarily through continued accretive acquisitions and expansions; and (3) the Fund's natural gas gathering and processing systems derive virtually all of their revenues on a fee-for-service basis, resulting in no direct commodity price exposure.

Income funds rated at STA-3 are considered by DBRS to have good stability and sustainability of distributions per unit but performance may be more sensitive to economic factors, have greater cyclical tendencies, and may not be as well diversified as an income fund with a STA-2 rating, resulting in some potential for distributions per unit to fluctuate.

Distributions

The following table sets out the distributions for the three months ended March 31, 2007 and 2006.



------------------------------------------------------------------------
(in thousand of dollars,
except where noted) Three Months Ended March 31
Statement of Distributable Cash 2007 2006(3)
------------------------------------------------------------------------

Spectra Energy Facilities LP
Cash flow from operating activities 16,978 13,505
Changes in non-cash working capital (626) (3,218)
Amortization of deferred financing charges (43) (36)
Maintenance capital expenditures (1,315) (231)
----------- -----------
Distributable Cash(1) from Spectra Energy
Facilities LP 14,994 10,020
----------- -----------
----------- -----------

Spectra Energy Income Fund
Share of Spectra Energy Facilities LP's
distributable cash 8,066 4,249
Interest income earned by the Fund 2 -
Management and administrative expenses (2) 9 -
----------- -----------
Distributable Cash(1) from Spectra Energy
Income Fund 8,077 4,249
----------- -----------
----------- -----------

Weighted average number of units
outstanding (units) 24,351,000 15,213,333
----------- -----------
Distributable Cash ($ / Unit) (1) 0.332 0.279
----------- -----------
Cash distributions declared ($ / Unit) 0.210 0.201
----------- -----------
Distributions declared 5,114 3,096
----------- -----------
Payout Ratio (distributions declared /
distributable cash) (1) 63% 73%
----------- -----------
------------------------------------------------------------------------

(1) References to "Distributable Cash" are to cash available for
distribution to unitholders in accordance with the distribution
policies of the Fund. Distributable cash, distributable cash per
unit and payout ratio are non-GAAP measures generally used by
Canadian open-ended trusts as an indicator of financial performance.
They are considered key measures, as they demonstrate the cash
available for distribution to unit holders. The method of determining
Distributable Cash for the Partnership is derived from cash flow from
operating activities, a measure recognized under GAAP, and is
equivalent to EBITDA less net interest expense, current taxes and
maintenance capital expenditures for the period.

References to "EBITDA" are to earnings before interest, income taxes,
depreciation and accretion. EBITDA is a non-GAAP measure that
represents earnings generated to fund capital investments, meet
financial obligations and fund distributions. It is considered a key
measure, as it demonstrates the ability of the business to meet its
capital and financing commitments.

(2) Management and administrative expenses are reimbursed by the
Partnership.

(3) For periods prior to the third quarter of 2006, distributable cash
for the Partnership was calculated as EBITDA less net interest expense
and maintenance capital expenditures. Distributable cash from the
Partnership for periods after the second quarter of 2006 has been
recalculated and is derived from cash flow from operating activities
and is equivalent to EBITDA less net interest expense, current taxes
and maintenance capital expenditures. This has led to a decrease in
distributable cash of $39 thousand for the Partnership and $17
thousand for the Fund, for the three month period ended March 31,
2006.


Income Taxes

The Fund is a mutual fund trust for income tax purposes. As such, the Fund is only taxable on any amount not allocated to unitholders. The Fund intends to distribute substantially all of its taxable income to its unitholders and to comply with the provisions of the Income Tax Act (Canada) that permit, among other items, the deduction of distributions to unitholders from the Fund's taxable income.

On October 31, 2006, the Minister of Finance announced proposed changes to tax income trusts at the rate of 31.5% on the taxable portion of distributions. The proposals also specified that "undue growth" may result in immediate taxation of income trusts that would otherwise not be subject to taxation until 2011. New draft legislation in substantially the same form as the draft legislation released on December 21, 2006 was tabled at House of Commons on March 29, 2007 under Bill C-52 and it is now on its second reading. The guidelines regarding normal growth released by the Department of Finance on December 15, 2006 are now incorporated by reference in the draft legislation. As such, if a particular fund exceeds "normal growth" the new tax will apply from the commencement of the taxation year in which normal growth has been exceeded. We expect that more expansive or at the very least more precise guidelines or draft legislation in lieu of the guidelines will be introduced at a later date. The implementation of the legislation could have an adverse effect on the Fund, its ability to pay distributions and the market value of its units.

Related Party Transactions

Spectra Energy Facilities Management LP as administrator of the Fund, the manager of the CT and the Partnership, receives a base fee, an incentive fee, and reimbursement of costs for its services per the management agreement and the administration and governance agreement. During the three months ended March 31, 2007, these amounts were $119 thousand (2006 - $88 thousand). Accounts payable represents the unpaid portion of these fees, as well as amounts owing to various related parties for expenses paid on behalf of the Fund. The amount payable for these fees and advances at December 31, 2006 has been repaid in 2007.

The Partnership reimburses the Fund for all of its management and administrative expenses, per the administration and governance agreement, and this reimbursement is described as other income in the unaudited consolidated statements of operations and net accumulated deficit. The unpaid portion of these reimbursed expenses at March 31, 2007 has been netted against the amounts payable by the Fund to the Partnership for advances received from the Partnership, and has been included as part of accounts payable. The amount receivable for these reimbursed expenses at December 31, 2006 has been received in 2007.

Outstanding Securities of the Fund

The beneficial interests in the Fund are represented and constituted by two classes of units described and designated as Units and Special Voting Units. An unlimited number of the Units and Special Voting Units may be issued pursuant to the trust indenture of the Fund dated November 2, 2005, as amended on December 20, 2005 (the "Fund Trust Indenture"). The Fund may also issue an unlimited number of Other Fund Securities (as defined in the Fund Trust Indenture). As at May 4, 2007, there were 24,351,000 Units and 20,913,750 Special Voting Units outstanding.

Each Unit represents an equal, undivided beneficial interest in the Fund property and ranks equally with all of the other Units without discrimination, preference or priority. Each Unit entitles the holder to one vote at all meetings of holders of Units. Except for the right to attend and vote at meetings of holders of Units or in respect of written resolutions of holders of Units, Special Voting Units do not confer upon the holders thereof any other rights. Each Special Voting Unit entitles the holder to a number of votes at all meetings of trust unitholders or in respect of any written resolution of trust unitholders equal to the number of Units into which the Exchangeable Securities ("Exchangeable LP Units") to which such Special Voting Units relate are, directly or indirectly, exchangeable, exercisable or convertible. The Exchangeable LP Units, issued by the Partnership, are exchangeable for Units on the basis of one Unit for each Exchangeable LP Unit. The holder of an Exchangeable LP Unit may initiate the exchange procedure at any time by delivering to the GP, as exchange agent, a unit certificate in respect of that portion of its Exchangeable LP Units to be exchanged.

Risk Profile

The Fund's AIF for the year ended December 31, 2006 contains a thorough description of the business and other risk factors and should be read in conjunction herewith. Additional information relating to the Fund, including the Fund's AIF is available on SEDAR at www.sedar.com.

The Fund is entirely dependent on distributions from the Partnership to make its own distributions to unitholders. Any decrease in the cash generated by the Partnership or any requirements for the Partnership to retain cash for capital or other expenditures will reduce the cash distributions made by the Partnership to the Fund and as a result will decrease the distributions to unitholders.

As indicated in the Outlook section of this report, on October 31, 2006, the Minister of Finance announced proposed changes to the income tax treatment of "flow-through entities", including income trusts. The legislation is still in draft form. The implementation of the legislation could have an adverse effect on the Fund, its ability to pay distributions and the market value of its units.

Spectra Energy Facilities LP

Quarterly Information

The following table sets forth selected consolidated financial information for each of the eight most recently completed quarters. These results include the operations of the Fort St. John region subsequent to the closing of the acquisition of Westcoast Gas Services Inc. ("WGSI") on September 29, 2006.



--------------------------------------------------------------------------
(in thousands 2007 2006 2005
of dollars) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2
--------------------------------------------------------------------------
Revenues 34,001 32,989 22,862 22,754 23,240 22,065 21,368 19,287
Expenses (26,783)(28,806)(18,792)(17,980)(18,243)(20,879)(19,565)(19,847)
--------------------------------------------------------------------------
Net income
(loss) 7,218 4,183 4,070 4,774 4,997 1,186 1,803 (560)
--------------------------------------------------------------------------
--------------------------------------------------------------------------


Quarterly results are impacted primarily by the timing and level of costs associated with plant turnarounds (where a facility is taken out of service for a period of time to undergo inspections and maintenance), throughput volumes and plant and gathering system expansions.

Revenues and expenses during the fourth quarter of 2006 increased by $10,127 thousand and $10,014 thousand, respectively, compared to the third quarter of 2006 due primarily to the acquisition of the Fort St. John region facilities.

Results of Operations

The following table presents the unaudited consolidated operating results for the three months ended March 31, 2007 and 2006.



--------------------------------------------------------------------------
Three months ended March 31
(in thousands of dollars) 2007 2006 Variance
--------------------------------------------------------------------------
Operating revenues 34,001 23,240 10,761
Operating expenses (23,961) (16,634) (7,327)
Net interest expense and other income (1,388) (1,176) (212)
Income taxes (future and current) (1,434) (433) (1,001)
-------- -------- --------
Net income 7,218 4,997 2,221
-------- -------- --------
-------- -------- --------
--------------------------------------------------------------------------


For the Three Months Ended March 31, 2007 compared to the Three Months Ended March 31, 2006

Operating Revenues

During the three months ended March 31, 2007, operating revenues increased by $10,761 thousand compared to the same period in 2006, to a total of $34,001 thousand, due primarily to:

- Revenue of $9,069 thousand for the Fort St. John region has been included in the first quarter total following the closing of the acquisition of WGSI on September 29, 2006.

- Revenue increased in the Brazeau River region by $1,919 thousand due mainly to higher positive equalization adjustments of approximately $1,400 thousand and higher average fees of approximately $500 thousand as a result of increased operating cost recoveries and gas production on stream with higher sour gas content.

- Revenue decreased in the Pesh Complex region by $174 thousand due mainly to lower gathering and processing volumes.

Operating Expenses

Operating expenses increased by $7,327 thousand for the three months ended March 31, 2007 compared to the same period in 2006, to a total of $23,961 thousand, due primarily to:

Operations and Maintenance

Operations and maintenance expenses were $12,835 thousand for the three months ended March 31, 2007, an increase of $3,534 thousand compared to the same period in 2006. This was due largely to the addition of the Fort St. John facilities in the amount of approximately $4,500 thousand and higher equalization payments of approximately $450 thousand at the Brazeau River plant, partially offset by lower maintenance costs at various facilities of approximately $1,700 thousand as a result of the timing of planned maintenance activities.

Depreciation

Depreciation expense was $7,394 thousand for the three months ended March 31, 2007, an increase of $2,792 thousand compared to the same period in 2006, due primarily to the inclusion of the Fort St. John facilities.

General and Administrative

General and administrative expenses were $3,469 thousand for the three months ended March 31, 2007, an increase of $996 thousand compared to the same period in 2006, due primarily to the inclusion of the Fort St. John facilities, lower public company costs in the first quarter of 2006 due mainly to the timing of expenditures, an increase in services provided by affiliated companies in 2007, and an adjustment to employee incentive pay for favourable 2006 results.

Net Interest Expense and Other Income

Net interest expense and other income totaled $1,388 thousand for the three months ended March 31, 2007, an increase of $212 thousand compared to the same period in 2006, due primarily to a higher average debt balance related to the acquisition of the Fort St. John facilities and a higher interest rate.

Income Taxes

Partnership earnings are taxed at the partner level rather than at the Partnership financial statement reporting level. The Partnership reports only corporate income tax related to corporate entities included in the Partnership's consolidated financial statements.

Income tax expense for the three months ended March 31, 2007 was $1,434 thousand, an increase of $1,001 thousand compared to the same period in 2006. The increase is attributable to a higher income tax expense associated with increased current period earnings related to corporate entities included in the Partnership's consolidated financial statements.

Cash Flow, Liquidity and Capital Resources

Cash flow from operating activities provides the primary source of funds to finance operating needs, expansion projects and capital expenditures. In addition, the Partnership may supplement cash from operating activities with borrowings as needed, based on management's evaluation of the capital structure.

On December 20, 2005, the Partnership entered into a credit facility with a syndicate of financial institutions (the "Credit Facility"). The Credit Facility contains restrictive covenants that limit the discretion of management with respect to certain business matters. These covenants place restrictions on, among other things, the Partnership's ability to incur additional indebtedness, to create liens or other encumbrances, to pay dividends or make certain other payments, investments, loans and guarantees and to sell or otherwise dispose of assets and merge or consolidate with another entity. In addition, the Credit Facility contains financial covenants that require the Partnership to meet certain financial ratios and financial condition tests. A failure to comply with the obligations in the Credit Facility could result in an event of default which, if not cured or waived, could permit acceleration of the relevant indebtedness and may limit the Fund's ability to make distributions. The Partnership was in full compliance with all covenants of the Credit Facility as at March 31, 2007.

The following table sets out the comparison of cash flows for the three months ended March 31, 2007 and 2006.



--------------------------------------------------------------------------
Three months ended March 31
(in thousands of dollars) 2007 2006 Variance
--------------------------------------------------------------------------
Cash provided by operating activities 16,978 13,505 3,473
Cash used in investing activities (4,013) (785) (3,228)
Cash used in financing activities (11,507) (7,080) (4,427)
-------- -------- --------
Net increase in cash and short term
investments 1,458 5,640 (4,182)
-------- -------- --------
-------- -------- --------
--------------------------------------------------------------------------


Cash Provided by Operating Activities

Cash from operating activities was generated primarily from fees charged for the gathering, processing and transportation of natural gas and natural gas liquids fractionation and is reduced by facility operating costs, labour costs and general and administrative expenditures. During the three months ended March 31, 2007, cash provided by operating activities was $16,978 thousand, an increase of $3,473 thousand compared to the same period in 2006. This increase is due mainly to an increase in net income for the current period.

Cash Used in Investing Activities

Cash used in investing activities during the three months ended March 31, 2007 and 2006 was comprised of capital expenditures. The Partnership has invested the following maintenance and expansion amounts in the business.



--------------------------------------------------------------------------
Three months ended March 31
(in thousands of dollars) 2007 2006 Variance
--------------------------------------------------------------------------
Maintenance(i) 1,315 231 1,084
Expansion 2,698 554 2,144
-------- -------- --------
Total capital expenditures 4,013 785 3,228
-------- -------- --------
-------- -------- --------
--------------------------------------------------------------------------

(i)Includes maintenance and information systems costs.


The increase in maintenance capital expenditures during the three months ended March 31, 2007 is due primarily to the timing of the maintenance projects. The increase in expansion capital expenditures during the three months ended March 31, 2007 relates primarily to the Valhalla Pipeline Project and the greenfield sour gas processing facility at West Doe.

The Partnership anticipates that maintenance capital expenditures will be approximately $3.5 million and expansion capital expenditures will be approximately $32 million for the remaining nine months of 2007. The maintenance capital expenditures will be funded from operating cash flows, while the expansion capital expenditures will be funded primarily from additional borrowing under the Credit Facility as well as operating cash flows.

Cash Used in Financing Activities

Cash used in financing activities for the three months ended March 31, 2007 was comprised mainly of distributions of $9,507 thousand paid to partners, of which $5,114 thousand were paid to the Fund. The Partnership also made a payment of $2,000 thousand during the first quarter of 2007 to reduce the credit facility balance owing.

Distributable Cash Flow

The Partnership pays distributions to its partners on a monthly basis from its distributable cash, as determined in accordance with the terms of a partnership agreement dated December 5, 2005. The Partnership's distributable cash for each month will generally be all of its cash flow from operations for such month, including dividends received from subsidiaries, after satisfaction of its debt service obligations, reclamation expenditures, maintenance capital expenditures, other expense obligations and reasonable reserves for working capital and capital expenditures as may be considered appropriate by the Manager of the Partnership.

During the three months ended March 31, 2007, the Partnership declared $9,507 thousand of distributions to partners of which $5,114 thousand was due to the Fund.

Related Party Transactions

The Partnership has entered into various management, administrative and governance agreements with Spectra Energy Facilities Management LP (the "Manager") and its affiliates. The Manager provides management, administrative and governance services for a base fee plus reasonable direct costs. The Partnership has also entered into service agreements with Spectra Energy Corp. and its affiliates, who provide services such as legal, human resources, IT, infrastructure, information management, environmental health and safety, accounting, taxes, and corporate governance. The Partnership also had transactions with companies related through common or joint control for operational revenues and expenses, and these transactions are in the normal course of operations and are recorded at exchange amounts established and agreed between the related parties. In addition, the Partnership reimburses the GP for expenses it incurs in the performance of its duties under the limited partnership agreement.

The following table outlines the various transactions for the three months ended March 31, 2007 and 2006.



---------------------------------------------------------------------------
Management,
Administrative,
and
Processing Gathering Governance Service
(in thousands Fees Fees Operating Agreements Agreement
of dollars) Revenue Paid Expenses Charges Charges
---------------------------------------------------------------------------

Three months ended
March 31, 2007
Spectra Energy
Facilities
Management LP - - - 3,483 -
Westcoast Energy
Inc. 2,156 1,552 85 - 1,401
Union Gas Limited - - - - 128
Spectra Energy
Corp. - - - - 55
Spectra Energy
Facilities Inc. - - 40 - -
Westcoast Indemnity
Company Limited - - 8 - -
-------------------------------------------------------
Totals 2,156 1,552 133 3,483 1,584
-------------------------------------------------------
-------------------------------------------------------

Three months ended
March 31, 2006
Spectra Energy
Facilities
Management LP - - - 1,733 -
Westcoast Energy
Inc. - - - - 868
Union Gas Limited - - - - 39
Duke Energy
Corporation - - - - 58
-------------------------------------------------------
Totals - - - 1,733 965
-------------------------------------------------------
-------------------------------------------------------
---------------------------------------------------------------------------


The Partnership had the following balances receivable from and due to affiliates and related parties reflected in current assets and current liabilities.



---------------------------------------------------------------------------
As at
March 31, December 31,
(in thousands of dollars) 2007 2006
---------------------------------------------------------------------------
Due from affiliates 693 1,360
Due to affiliates 3,382 3,692
---------------------------------------------------------------------------


Due from affiliates at March 31, 2007 of $693 thousand represents primarily costs paid on behalf of the Fund.

Due from affiliates at December 31, 2006 of $1,360 thousand represents certain costs associated with the acquisition of WGSI due from Westcoast Energy Inc. ("WEI"), as well as fees due from WEI for natural gas processing by the Fort St. John facilities. The balance owing for these costs and fees has been received during the first quarter of 2007.

Due to affiliates at March 31, 2007 of $3,382 thousand relates to the management, administrative and governance agreement charges and the service agreement charges noted above, as well as other short-term advances. The balance owing for the management, administrative and governance agreement charges and the service agreement charges at December 31, 2006 was repaid during the first quarter of 2007.

Critical Accounting Estimates

In preparation of the Partnership's consolidated financial statements, management has made estimates that affect the recorded amounts of certain assets, liabilities, revenues and expenses. A description of the accounting estimates and the methodologies and assumptions underlying the estimates are described in management's discussion and analysis presented with the December 31, 2006 annual consolidated financial statements of the Partnership. There have been no changes to the methodologies and assumptions.

Supplemental Information on Quarterly Results

The Partnership's operating assets are located in five geographically distinct operating areas (the Peace River Arch region, the Nevis region, the Pesh Complex region, the Brazeau River region and the Fort St. John region). The following table illustrates throughput volumes by region for each of the eight most recently completed quarters:



--------------------------------------------------------------------------
Average Daily
Throughput 2007 2006 2005
(mmcf/d) Q1 Q4(1) Q3 Q2 Q1 Q4 Q3 Q2
--------------------------------------------------------------------------
Peace River
Arch Region 176 173 172 185 200 191 179 168
Nevis Region 84 85 83 82 77 75 73 67
Pesh Complex
Region 83 83 100 103 85 87 96 104
Brazeau River
Region 69 71 70 74 71 67 68 69
Fort St. John
Region (2) 177 184 - - - - - -
--------------------------------------------------------------------------
Total average
daily throughput 589 596 425 444 433 420 416 408
--------------------------------------------------------------------------

(1) Figures have been adjusted to reflect differences between actual and
estimated volumes.
(2) The Fort St. John facilities were acquired on September 29, 2006.


EBITDA and Operating Cash Flow by Region

The Partnership provides financial measures in this MD&A that do not have a standardized meaning prescribed by GAAP. These non-GAAP measures may not be comparable to similar measures presented by other entities.

The purpose of these financial measures and their reconciliation to GAAP financial measures is shown below. All of the measures have been calculated in a manner consistent with previous disclosures by the Partnership.

The following table illustrates Operating Cash Flow by region and EBITDA for each of the eight most recently completed quarters:



--------------------------------------------------------------------------
2007 2006 2005
(in thousands ----------------------------------------------------------
of dollars) Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2
--------------------------------------------------------------------------
Peace River Arch
Region 5,517 4,909 5,573 4,052 5,713 5,718 4,228 2,222
Nevis Region 2,782 3,706 1,977 2,747 2,723 2,718 1,916 969
Pesh Complex
Region 3,772 3,654 3,732 3,277 2,629 3,623 3,616 3,740
Brazeau River
Region 4,525 1,073 2,203 2,642 2,874 1,153 1,982 1,506
Fort St. John
Region (3) 4,570 4,150 109 - - - - -
--------------------------------------------------------------------------
Operating cash
flow (1) 21,166 17,492 13,594 12,718 13,939 13,212 11,742 8,437

General and
administrative 3,469 3,218 2,044 2,147 2,473 3,137 1,097 1,693
--------------------------------------------------------------------------
EBITDA (2) 17,697 14,274 11,550 10,571 11,466 10,075 10,645 6,744

Less:

Taxes (current
& future) 1,434 635 1,252 (319) 433 300 713 (22)

Net interest
expense 1,388 1,811 1,322 1,264 1,176 3,746 3,365 2,717

Depreciation
and accretion 7,657 7,645 4,906 4,852 4,860 4,843 4,764 4,609
--------------------------------------------------------------------------
Net income
(loss) (GAAP) 7,218 4,183 4,070 4,774 4,997 1,186 1,803 (560)
--------------------------------------------------------------------------

(1) References to "Operating Cash Flow" are to revenue less direct
operating expenses, which includes operating and maintenance expenses
but excludes general and administrative expenses and accretion expense.
It is considered a key measure, as it demonstrates the ability of the
business to generate cash to meet its capital and financing
commitments.
(2) References to "EBITDA" are to earnings before interest, income taxes,
depreciation and accretion. EBITDA is a non-GAAP measure that
represents earnings generated to fund capital investments, meet
financial obligations and fund distributions. It is considered a key
measure, as it demonstrates the ability of the business to meet its
capital and financing commitments.
(3) These facilities were acquired on September 29, 2006.


Peace River Arch Region

Operating cash flow decreased by $196 thousand during the three months ended March 31, 2007 as compared to the same period in 2006. The decrease was due primarily to higher operating expenses of $149 thousand due mainly to the timing of cost recoveries, partially offset by lower maintenance costs as a result of the timing of planned maintenance activities. The remainder of the decrease was due to lower revenues of $47 thousand due mainly to lower gathering and processing volumes, partially offset by more firm take-or-pay contracts.

Nevis Region

Operating cash flow increased by $59 thousand during the three months ended March 31, 2007 as compared to the same period in 2006. The increase was due primarily to lower operating expenses of $65 thousand due mainly to lower maintenance costs as a result of the timing of planned maintenance activities.

Pesh Complex Region

Operating cash flow increased by $1,143 thousand during the three months ended March 31, 2007 as compared to the same period in 2006. The increase was due primarily to lower operating expenses of $1,317 thousand due mainly to lower maintenance costs as a result of the timing of planned maintenance activities, partially offset by lower revenues of $174 thousand due mainly to lower gathering and processing volumes.

Brazeau River Region

Operating cash flow increased by $1,651 thousand during the three months ended March 31, 2007 as compared to the same period in 2006. The increase was due primarily to higher revenues of $1,919 thousand due mainly to higher positive equalization adjustments of approximately $1,400 thousand and higher average fees of approximately $500 thousand as a result of increased operating cost recoveries and gas production on stream with higher sour gas content, partially offset by higher operating expenses of $268 thousand due mainly to higher equalization payments.

Fort St. John Region

Operating cash flow during the three month period ended March 31, 2007 was $4,570 thousand. As the facilities were acquired on September 29, 2006, there are no comparative figures for the prior year.

EBITDA

EBITDA increased by $6,231 thousand during the three months ended March 31, 2007 to $17,697 thousand compared to the same period in 2006, primarily as a result of higher revenues of $10,761, partially offset by higher operations and maintenance costs of $3,534 thousand and higher general and administrative costs of $996 thousand.

New Accounting Standards

On April 1, 2005, the Accounting Standards Board issued new Handbook Sections 1530, 3855, and 3865, entitled "Comprehensive Income", "Financial Instruments - Recognition and Measurement", and "Hedges", respectively. Under these new standards, all financial assets should be measured at fair value with the exception of loans, receivables and investments that are intended to be held to maturity and certain equity investments, which should be measured at cost. Similarly, all financial liabilities should be measured at fair value when they are held for trading or they are derivatives.

Gains and losses on financial instruments measured at fair value will be recognized in the income statement in the periods in which they arise, with the exception of gains and losses arising from:

- financial assets held for sale, for which unrealized gains and losses are deferred in other comprehensive income until sold or impaired; and

- certain financial instruments that qualify for hedge accounting.

Other comprehensive income comprises revenues, expenses, gains and losses that are recognized in comprehensive income, but are excluded from net income. Unrealized gains and losses on qualifying hedging instruments, translation of self-sustaining foreign operations, and unrealized gains or losses on financial instruments held for sale will be included in other comprehensive income and reclassified to net income when realized. Comprehensive income and its components will be a required disclosure under the new standards.

These new standards have been adopted by the Fund and the Partnership as of January 1, 2007 on a prospective basis. There has been no significant financial impact on the consolidated financial statements of the Fund and the Partnership as a result of the adoption of these new standards.

On December 1, 2006, the Accounting Standards Board issued new Handbook Section 1535, entitled "Capital Disclosures". Under this new standard, an entity will be required to disclose information about its capital and how it is managed. This information will enable users of its financial statements to evaluate the entity's objectives, policies and processes for managing capital. This new standard is effective for fiscal years beginning on or after October 1, 2007 and early adoption is permitted. This standard will be adopted by the Fund and the Partnership as of January 1, 2008.

On December 1, 2006, the Accounting Standards Board issued new Handbook Sections 3862 and 3863, entitled "Financial Instruments - Disclosures" and "Financial Instruments - Presentation", respectively. Under these new standards, an entity will be required to disclose qualitative and quantitative information about its financial instruments and the risks associated with them. The new standard of disclosure will be more detailed than current disclosure requirements and is expected to give users of financial statements a better understanding of the significance of financial instruments in the determination of an entity's financial position, performance and cash flows, as well as a better understanding of the nature and extent of risks arising from financial instruments to which an entity is exposed during the period and at the balance sheet date, and how an entity manages those risks. These new standards are effective for fiscal years beginning on or after October 1, 2007 and early adoption is permitted. These standards will be adopted by the Fund and the Partnership as of January 1, 2008.



Spectra Energy Income Fund
Consolidated Statements of Operations, Comprehensive Income and Net
Accumulated Deficit
(unaudited)

--------------------------------------------------------------------------
(in thousands of Canadian dollars, except Three Months Ended March 31
unit and per unit amounts) 2007 2006
--------------------------------------------------------------------------

Equity income from Spectra Energy Facilities
LP (Note 4) $ 3,913 $ 2,119
Other income (Note 7) 476 204
Interest income 2 -
---------- ----------

Total income 4,391 2,323
Management and administrative expenses
(Note 7) 467 204
---------- ----------

Net income and comprehensive income 3,924 2,119

Net accumulated deficit, beginning of period (6,883) (223)

Distributions declared (5,114) (3,096)
---------- ----------

Net accumulated deficit, end of period $ (8,073) $ (1,200)
---------- ----------
---------- ----------

Weighted average number of units outstanding
During the period 24,351,000 15,213,333

Earnings per unit (basic and diluted)
(Note 5) $ 0.161 $ 0.139
---------- ----------
---------- ----------

See accompanying notes to the unaudited consolidated financial statements


Spectra Energy Income Fund
Consolidated Balance Sheets
(unaudited)

--------------------------------------------------------------------------
(in thousands of Canadian dollars) As at
March 31, December 31,
ASSETS 2007 2006
--------------------------------------------------------------------------
CURRENT ASSETS
Cash $ 493 $ 150
Accounts receivable (Note 7) 47 501
Prepaid expenses 148 -
Distributions receivable 1,705 1,705
---------- ----------
2,393 2,356
---------- ----------
LONG-TERM ASSETS
Investment in Spectra Energy Facilities LP
(Note 4) 254,679 255,880
---------- ----------
TOTAL ASSETS $ 257,072 $ 258,236
---------- ----------
---------- ----------

--------------------------------------------------------------------------
LIABILITIES AND UNITHOLDERS' EQUITY
--------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued liabilities
(Note 7) $ 685 $ 659
Distributions payable 1,705 1,705
---------- ----------
2,390 2,364
---------- ----------
UNITHOLDERS' EQUITY
Unitholders' capital (Note 6) 262,755 262,755
Accumulated earnings 13,004 9,080
Accumulated distributions (21,077) (15,963)
---------- ----------
Accumulated deficit (8,073) (6,883)
---------- ----------
254,682 255,872
---------- ----------
TOTAL LIABILITIES AND UNITHOLDERS' EQUITY $ 257,072 $ 258,236
---------- ----------
---------- ----------

See accompanying notes to the unaudited consolidated financial statements

Approved by the Trustees of Spectra Energy Commercial Trust on behalf of
Spectra Energy Income Fund

Beverley A. Briscoe John G. Schissel
Trustee Trustee


Spectra Energy Income Fund
Consolidated Statements of Cash Flows
(unaudited)

--------------------------------------------------------------------------
Three Months Ended March 31
(in thousands of Canadian dollars) 2007 2006
--------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 3,924 $ 2,119
Distributions received 5,114 2,428
Add (deduct) items not involving cash:
Equity income from Spectra Energy Facilities
LP (Note 4) (3,913) (2,119)
Net working capital changes other than cash 332 5
---------- ----------
Net cash provided by operating activities 5,457 2,433
---------- ----------
INVESTING ACTIVITIES
Increase in investment in Spectra Energy
Facilities LP - (14,000)
---------- ----------
Net cash used in investing activities - (14,000)
---------- ----------
FINANCING ACTIVITIES
Distributions declared (5,114) (3,096)
Change in distributions payable - 668
Issuance of Fund units - 14,000
---------- ----------
Net cash (used in) provided by financing
activities (5,114) 11,572
---------- ----------
INCREASE IN CASH 343 5
---------- ----------
CASH, BEGINNING OF PERIOD 150 -
---------- ----------
CASH, END OF PERIOD $ 493 $ 5
---------- ----------
---------- ----------

See accompanying notes to the unaudited consolidated financial statements


Spectra Energy Income Fund

Notes to the Consolidated Financial Statements

For the three months ended March 31, 2007 and 2006

(unaudited)

1. Organization and Business

Spectra Energy Income Fund (the "Fund") is an unincorporated open-ended trust established under the laws of the Province of Alberta by a Trust Indenture on November 2, 2005 as amended and restated on December 20, 2005. The Fund is a mutual fund trust for the purposes of the Income Tax Act (Canada). The Fund indirectly owns a 53.80% interest in Spectra Energy Facilities LP (the "Partnership").

Spectra Energy Facilities LP (the "Partnership") is a limited partnership established under the laws of the Province of Alberta. The Partnership through its subsidiaries operates and manages several natural gas processing plants and related natural gas gathering pipelines located throughout the Western Canadian Sedimentary Basin. The Fund is administered by and the Partnership is managed by Spectra Energy Facilities Management LP (the "Manager"). The general partner of the Partnership is Spectra Energy Facilities Inc. ("SEF Inc." or "GP"), a corporation incorporated under the laws of Canada.

2. Basis of Presentation

These unaudited interim consolidated financial statements as at and for the three months ended March 31, 2007 have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP"). The accounting policies applied, other than the new policies noted in Note 3 below, are consistent with those outlined in the Fund's audited consolidated financial statements as at and for the year ended December 31, 2006. These unaudited interim consolidated financial statements do not include all disclosures required in the annual consolidated financial statements and should be read in conjunction with the Fund's audited consolidated financial statements as at and for the year ended December 31, 2006 and the Partnership's audited consolidated financial statements as at and for the year ended December 31, 2006 as contained in the Fund's 2006 Annual Report to unitholders, as well as the unaudited interim consolidated financial statements of the Partnership as at and for the three months ended March 31, 2007.

Interim periods may not be representative of the results expected for the full year of operation due to seasonality. Certain of the comparative figures in prior periods have been reclassified to conform to the presentation in the current period.

3. Change in Accounting Policies

On January 1, 2007 the Fund adopted new Handbook Sections 1530, 3855, 3861, and 3865, entitled "Comprehensive Income", "Financial Instruments - Recognition and Measurement", "Financial Instruments - Disclosure and Presentation", and "Hedges", respectively. Under these new standards, all financial assets should be measured at fair value with the exception of loans, receivables and investments that are intended to be held to maturity and certain equity investments, which should be measured at cost. Similarly, all financial liabilities should be measured at fair value when they are held for trading or they are derivatives.

Gains and losses on financial instruments measured at fair value will be recognized in the income statement in the periods in which they arise, with the exception of gains and losses arising from:

- financial assets held for sale, for which unrealized gains and losses are deferred in other comprehensive income until sold or impaired; and

- certain financial instruments that qualify for hedge accounting.

Other comprehensive income comprises revenues, expenses, gains and losses that are recognized in comprehensive income, but are excluded from net income. Unrealized gains and losses on qualifying hedging instruments, translation of self-sustaining foreign operations, and unrealized gains or losses on financial instruments held for sale will be included in other comprehensive income and reclassified to net income when realized. Comprehensive income and its components will be a required disclosure under the new standards.

There has been no significant impact on the consolidated financial statements of the Fund as a result of the adoption of these new standards.

The Fund's financial instruments are comprised of cash, accounts receivable, distributions receivable and payable and accounts payable and accrued liabilities. The fair values are the same as the carrying values due to their short-term nature.

4. Investment in Spectra Energy Facilities LP

Changes in the Fund's equity investment in the Partnership and GP during the three months ended March 31, 2007 were as follows:



-------------------------------------------------------------------------
(in thousands of Canadian dollars)
-------------------------------------------------------------------------
Investment at December 31, 2006 $ 255,880

Equity income 3,913

Distributions (5,114)
-----------
Investment at March 31, 2007 $ 254,679
-----------
-----------
-------------------------------------------------------------------------


5. Earnings Per Unit

Earnings per unit are calculated using net income divided by the weighted average number of Units outstanding. Basic and diluted earnings per unit are the same because the Fund currently has no dilutive instruments.

6. Unitholders' Capital



-------------------------------------------------------------------------
(in thousands of Canadian dollars, As at
except unit amounts) March 31, December 31,
2007 2006
-------------------------------------------------------------------------

FUND UNITS
Cost $ 262,755 $ 262,755
----------- -----------
----------- -----------

Number of Units outstanding 24,351,000 24,351,000
----------- -----------
----------- -----------
-------------------------------------------------------------------------


7. Related Party Transactions

Spectra Energy Facilities Management LP as administrator of the Fund, the manager of Spectra Energy Commercial Trust (the "CT") and the Partnership, receives a base fee, an incentive fee, and reimbursement of costs for its services. During the three months ended March 31, 2007, these amounts were $119 thousand (2006 - $88 thousand). Accounts payable represents the unpaid portion of these fees, as well as amounts owing to various related parties for expenses paid on behalf of the Fund. The amount payable for these fees and advances at December 31, 2006 has been repaid in 2007.

The Partnership reimburses the Fund for all of its management and administrative expenses per the administration and governance agreement, and this reimbursement is described as other income in the consolidated statements of operations and net accumulated deficit. The unpaid portion of these reimbursed expenses at March 31, 2007 has been netted against the amounts payable by the Fund to the Partnership for advances received from the Partnership, and has been included as part of accounts payable. The amount receivable for these reimbursed expenses at December 31, 2006 has been received in 2007.



Spectra Energy Facilities LP
Consolidated Statements of Operations, Comprehensive Income and Partners'
Deficit
(unaudited)

--------------------------------------------------------------------------
(in thousands of Canadian dollars) Three Months Ended March 31
2007 2006
--------------------------------------------------------------------------

OPERATING REVENUES $ 34,001 $ 23,240
----------- -----------
OPERATING EXPENSES
Operations and maintenance 12,835 9,301
Depreciation 7,394 4,602
Accretion expense 263 258
General and administrative 3,469 2,473
----------- -----------
23,961 16,634
----------- -----------
OPERATING INCOME BEFORE OTHER INCOME
(EXPENSE) 10,040 6,606
----------- -----------

OTHER INCOME 395 67

INTEREST EXPENSE (Note 4) (1,783) (1,243)
----------- -----------

INCOME BEFORE TAXES 8,652 5,430
----------- -----------
TAXES
Current - 39
Future 1,434 394
----------- -----------
1,434 433
----------- -----------
NET INCOME AND COMPREHENSIVE INCOME 7,218 4,997
----------- -----------

PARTNERS' DEFICIT, BEGINNING OF PERIOD (14,627) (532)
----------- -----------

DISTRIBUTIONS DECLARED
To General Partner (1) (1)
To Ordinary Unitholders (5,114) (3,096)
To Exchangeable Unitholders (4,392) (4,203)
----------- -----------
(9,507) (7,300)
----------- -----------
PARTNERS' DEFICIT, END OF PERIOD $ (16,916) $ (2,835)
----------- -----------
----------- -----------

See accompanying notes to the unaudited consolidated financial statements


Spectra Energy Facilities LP
Consolidated Balance Sheets
(unaudited)

--------------------------------------------------------------------------
(in thousands of Canadian dollars) As at
ASSETS March 31, December 31,
--------------------------------------------------------------------------

CURRENT ASSETS 2007 2006
Cash and short term investments $ 7,891 $ 6,433
Accounts receivable 35,577 36,936
Accounts receivable - affiliate (Note 6) 693 1,360
Taxes receivable 378 377
Prepaid expenses and deposits 1,102 357
Other asset held for resale - 276
----------- -----------
45,641 45,739
----------- -----------

PROPERTY, PLANT AND EQUIPMENT
Cost 622,292 613,674
Accumulated depreciation (112,885) (105,491)
----------- -----------
509,407 508,183
----------- -----------
DEFERRED FINANCING CHARGES (Notes 3 and 4) - 513
GOODWILL 80,855 80,855
----------- -----------
TOTAL ASSETS $ 635,903 $ 635,290
----------- -----------
----------- -----------

--------------------------------------------------------------------------
LIABILITIES AND PARTNERS' EQUITY
--------------------------------------------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 15,054 $ 10,958
Accounts payable - affiliate (Note 6) 3,382 3,692
Distributions payable 3,169 3,169
----------- -----------
21,605 17,819
----------- -----------
LONG-TERM DEBT
Credit facility (Note 4) 139,031 141,609
----------- -----------

LONG-TERM LIABILITIES 16,453 16,193
----------- -----------

FUTURE INCOME TAX LIABILITIES 38,121 36,687
----------- -----------

PARTNERS' EQUITY (Note 2)
Partners' capital (Note 5) 419,209 419,209
Contributed surplus 18,400 18,400
Partners' deficit (16,916) (14,627)
----------- -----------
420,693 422,982
----------- -----------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 635,903 $ 635,290
----------- -----------
----------- -----------

See accompanying notes to the unaudited consolidated financial statements

On behalf of the Board of Directors of Spectra Energy Facilities Management
Inc. as general partner and on behalf of Spectra Energy Facilities
Management LP, manager of Spectra Energy Facilities LP

Douglas J. Haughey Bruce E. Pydee
Director Director


Spectra Energy Facilities LP
Consolidated Statements of Cash Flows
(unaudited)

--------------------------------------------------------------------------
(in thousands of Canadian dollars) Three Months Ended March 31
2007 2006
--------------------------------------------------------------------------

OPERATING ACTIVITIES
Net income $ 7,218 $ 4,997
Add (deduct) items not involving cash:
Future income taxes 1,434 394
Depreciation of property, plant and
equipment 7,394 4,602
Accretion of asset retirement obligation 263 258
Amortization of deferred financing charges
(Note 4) 43 36
Net working capital changes other than
cash and short term investments 626 3,218
----------- -----------
Net cash provided by operating activities 16,978 13,505
----------- -----------

INVESTING ACTIVITIES
Capital expenditures (8,618) (513)
Change in accounts payable related to
capital assets acquired 4,605 (272)
----------- -----------
Net cash used in investing activities (4,013) (785)
----------- -----------

FINANCING ACTIVITIES
Payment of financing fees - (234)
Net proceeds from the issuance of Ordinary
LP units - 14,000
Payment to SEMHP for exercise of
over-allotment option - (14,000)
Distributions declared (9,507) (7,300)
Change in distributions payable - 1,525
Credit facility payments (2,000) -
Capital lease payments - (1,071)
----------- -----------
Net cash used in financing activities (11,507) (7,080)
----------- -----------

INCREASE IN CASH AND SHORT TERM
INVESTMENTS 1,458 5,640

CASH AND SHORT TERM INVESTMENTS,
BEGINNING OF PERIOD 6,433 4,917
----------- -----------

CASH AND SHORT TERM INVESTMENTS,
END OF PERIOD $ 7,891 $ 10,557
----------- -----------
----------- -----------

Supplemental Information
Cash paid for
Interest $ 1,947 $ 1,000
Income taxes $ - $ -

See accompanying notes to the unaudited consolidated financial statements


Spectra Energy Facilities LP

Notes to the Consolidated Financial Statements

For the three months ended March 31, 2007 and 2006

(unaudited)

1. Organization and Business

Spectra Energy Facilities LP (the "Partnership") is a limited partnership established under the laws of the Province of Alberta. The Partnership through its subsidiaries operates and manages several natural gas processing plants and related natural gas gathering pipelines located throughout the Western Canadian Sedimentary Basin.

Spectra Energy Income Fund (the "Fund") is an unincorporated open-ended trust established under the laws of the Province of Alberta by a Trust Indenture on November 2, 2005 as amended and restated on December 20, 2005. The Fund is a mutual fund trust for the purposes of the Income Tax Act (Canada). The Fund indirectly owns a 53.80% interest in the Partnership.

The general partner of the Partnership is Spectra Energy Facilities Inc. ("SEF Inc." or "GP"), a corporation incorporated under the laws of Canada. As general partner, GP has the authority to manage the business and affairs of the Partnership and has unlimited liability for the obligations of the Partnership. GP is entitled to an allocation of 0.01% of income or loss of the Partnership for each fiscal year.

The Partnership itself is not subject to income tax however the Partnership consolidates corporate entities that are subject to corporate income taxes.

2. Basis of Presentation

The Partnership is considered to be a continuation of the business acquired from Spectra Energy Midstream Holdings Partnership ("SEMHP"). Accordingly, the Partnership follows the continuity of interest method of accounting. Under the continuity of interest method of accounting, the Partnership's acquisition of the issued and outstanding shares of Spectra Energy Midstream Corporation ("Spectra Midstream") from SEMHP were recorded at their net book value as of the purchase date and the equity of the Partnership represents the equity of the assets at that date. The consolidated financial statements include the accounts of the Partnership, its wholly-owned subsidiaries, and its investments in joint working interests. The joint working interests of the Partnership are its interests in Brazeau River, Boundary Lake, and Gordondale West. These joint working interests are recorded using the proportionate consolidation method, whereby its proportionate share of the assets, liabilities, revenues and expenses of the joint working interest are recorded in its financial statements.

These unaudited interim consolidated financial statements as at and for the three months ended March 31, 2007 have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP"). The accounting policies applied, other than the new policies noted in Note 3 below, are consistent with those outlined in the Partnership's audited consolidated financial statements as at and for the year ended December 31, 2006. These unaudited interim consolidated financial statements do not include all disclosures required in the annual consolidated financial statements and should be read in conjunction with the Partnership's audited consolidated financial statements as at and for the year ended December 31, 2006 and the Fund's audited consolidated financial statements as at and for the year ended December 31, 2006 as contained in the Fund's 2006 Annual Report to unitholders, as well as the unaudited interim consolidated financial statements of the Fund as at and for the three months ended March 31, 2007.

Interim periods may not be representative of the results expected for the full year of operation due to seasonality. Certain of the comparative figures in prior periods have been reclassified to conform to the presentation in the current period.

3. Change in Accounting Policies

On January 1, 2007 the Partnership adopted new Handbook Sections 1530, 3855, 3861, and 3865, entitled "Comprehensive Income", "Financial Instruments - Recognition and Measurement", "Financial Instruments - Disclosure and Presentation", and "Hedges", respectively. Under these new standards, all financial assets should be measured at fair value with the exception of loans, receivables and investments that are intended to be held to maturity and certain equity investments, which should be measured at cost. Similarly, all financial liabilities should be measured at fair value when they are held for trading or they are derivatives.

Gains and losses on financial instruments measured at fair value will be recognized in the income statement in the periods in which they arise, with the exception of gains and losses arising from:

- financial assets held for sale, for which unrealized gains and losses are deferred in other comprehensive income until sold or impaired; and

- certain financial instruments that qualify for hedge accounting.

Other comprehensive income comprises revenues, expenses, gains and losses that are recognized in comprehensive income, but are excluded from net income. Unrealized gains and losses on qualifying hedging instruments, translation of self-sustaining foreign operations, and unrealized gains or losses on financial instruments held for sale will be included in other comprehensive income and reclassified to net income when realized. Comprehensive income and its components will be a required disclosure under the new standards.

There has been no significant impact, other than the presentation of deferred financing charges, on the consolidated financial statements of the Partnership as a result of the adoption of these new standards. As a result of the new standards, deferred financing charges are now netted against the credit facility balance on the balance sheet.

The Partnership's financial instruments are comprised of cash, short term investments, accounts receivable, accounts payable, distributions payable, and the credit facility.

The Partnership has elected to classify the cash and short term investments as held-for-trading, and the fair value has been determined to be the same as the carrying value due to the short-term nature of these assets. As a result, there will not be any unrealized gains or losses.

Accounts receivable, accounts payable, and distributions payable are reported at their fair values on the balance sheet. The fair values are the same as the carrying values due to their short-term nature.

The Partnership's credit facility bears interest at rates that vary depending on the consolidated debt to EBITDA ratio of the Partnership and which may be based on the lender's Canadian prime rate or U.S. base rate, Canadian bankers' acceptance or the LIBOR drawing rate plus a margin. The carrying value of this debt approximates its fair value, as the market interest rates at the current time are not materially different from the interest rates for the debt currently reported on the Partnership's balance sheet.

The Partnership is exposed to various risks related to its financial instruments as follows:

Commodity Price Risk

The Partnership does not own the product that it processes and thus there is no direct exposure to commodity price risk as it relates to the Partnership's cash flows from its revenues. The pricing of the services provided is covered by contractual arrangements over varying terms.

The Partnership is subject to price fluctuations for electricity consumed in the operation of its facilities. In order to minimize this risk, a subsidiary of the Partnership has entered into a fixed price electricity purchase contract for the calendar year 2007.

Interest Rate Risk

The Partnership's Credit Facility bears interest at a variable rate and as such is exposed to interest rate fluctuations. There is minimal mitigation of interest rate exposure.

Currency Risk

All of the Partnership's operations are conducted in Canadian dollars and thus there is minimal exposure to foreign exchange fluctuations.

Credit Risk

Management monitors the creditworthiness of the customers on a regular basis and carries insurance coverage consistent with companies engaged in similar commercial operations with similar type properties.

4. Long-Term Debt

On December 20, 2005, the Partnership entered into a credit facility with a syndicate of financial institutions (the "Credit Facility"). The Credit Facility, which expires in December 2009, consists of a $200,000 thousand four year revolving facility that is extendible for further one year periods. The Credit Facility bears interest at rates that vary depending on the consolidated debt to EBITDA ratio of the Partnership and which may be based on the lender's Canadian prime rate or US base rate, Canadian bankers' acceptance or the LIBOR drawing rate plus a margin. The Partnership may drawdown the Credit Facility in either Canadian or US Dollars. The Credit Facility is unsecured and guaranteed by certain partners and subsidiaries of the Partnership. The Partnership was in full compliance with all covenants of the Credit Facility as at March 31, 2007.

The liability reported on the balance sheet at March 31, 2007 represents the face value of the loan, net of deferred interest and deferred financing charges.

The Partnership paid $704 thousand as arrangement fees and legal fees for the initial set up of the Credit Facility. These costs are deferred and are being amortized using the effective interest rate method over the term of the Credit Facility of four years. The unamortized portion of these costs are now netted against the balance of the Credit Facility after the implementation of the new accounting standards for financial instruments as described in Note 3 above. For the three months ended March 31, 2007, amortization expense of $43 thousand (2006 - $36 thousand) has been included in interest expense.

At March 31, 2007, there exists a Demand Operating Loan Agreement for $10 million between the Partnership and a Chartered Canadian bank that took effect on December 20, 2005. As at March 31, 2007, no drawings had occurred against the operating loan.

5. Partners' Capital

The Partnership is authorized to issue two classes of partnership interests, ordinary limited partnership units and exchangeable limited partnership units.



--------------------------------------------------------------------------
(in thousands of Canadian dollars, except unit amounts)
Units
--------------------------------------------------------------------------
ORDINARY LIMITED PARTNERSHIP UNITS
Balance, November 2, 2005 - $ -
Issued to Spectra Energy Commercial Trust 14,000,000 140,000
---------- ----------
Balance, December 31, 2005 14,000,000 140,000
Issued to Spectra Energy Commercial Trust 1,400,000 14,000
---------- ----------
Balance, March 31, 2006 15,400,000 154,000
Issued to Spectra Energy Commercial Trust 8,951,000 103,671
---------- ----------
Balance, December 31, 2006 and March 31, 2007 24,351,000 $ 257,671
---------- ----------
---------- ----------

EXCHANGEABLE LIMITED PARTNERSHIP UNITS
Balance, November 2, 2005 - $ -

Transfer of residual book value to Exchangeable
LP units Upon acquisition of Spectra Midstream 20,913,750 175,538
---------- ----------

Balance, December 31, 2005 20,913,750 175,538

Reduction of carrying value upon exercise of
over-allotment Option - (14,000)
---------- ----------
Balance, December 31, 2006 and March 31, 2007 20,913,750 $ 161,538
---------- ----------
---------- ----------
--------------------------------------------------------------------------


6. Related Party Transactions

The Partnership had the following balances receivable from and due to affiliates and related parties reflected in current assets and current liabilities.



-------------------------------------------------------------------------
(in thousands of Canadian dollars) As at
March 31, December 31,
2007 2006
-------------------------------------------------------------------------
Due from affiliates $ 693 $ 1,360
Due to affiliates $ 3,382 $ 3,692
-------------------------------------------------------------------------


Due from affiliates at March 31, 2007 of $693 thousand represents primarily costs paid on behalf of the Fund.

Due from affiliates at December 31, 2006 of $1,360 thousand represents certain costs associated with the acquisition of Westcoast Gas Services Inc. ("WGSI") due from Westcoast Energy Inc. ("WEI"), as well as fees due from WEI for natural gas processing by the Fort St. John facilities. The balance owing for these costs and fees has been received during the first quarter of 2007.

The Partnership has entered into various management, administration and governance agreements with Spectra Energy Corp and its affiliated companies. The Partnership receives management, administrative and governance services and pays a base fee and reimburses reasonable direct costs. During the three months ended March 31, 2007, the fees were $3,483 thousand (2006 - $1,733 thousand). At March 31, 2007, $1,377 thousand (December 31, 2006 - $1,388 thousand) remains outstanding as part of Due to affiliates.

The remaining balance in Due to affiliates relates to amounts owing to affiliate companies for services provided and short-term advances. These services include charges for legal, human resources, IT, infrastructure, information management, environmental health and safety, controllers and taxes as well as charges for corporate governance. During the three months ended March 31, 2007, total charges of $1,584 thousand (2006 - $965 thousand) were recognized as part of General and Administrative Expenses. The balance owing for these services at December 31, 2006 has been repaid during the first quarter of 2007.

The Partnership also had transactions with companies related through common or joint control and significantly influenced investees as follows:



--------------------------------------------------------------------------
(in thousands of
Canadian dollars) For the Three Months Ended March 31, 2007
--------------------------------------------------------------------------
Processing Gathering Operating
Fees Revenue Fees Paid Expenses

Westcoast Energy Inc. $ 2,156 $ 1,552 $ 85
Westcoast Indemnity Company
Limited $ - $ - $ 8
--------------------------------------------------------------------------


These transactions are in the normal course of operations and are recorded at exchange amounts established and agreed between the related parties. These transactions were related primarily to the Fort St. John facilities, which were acquired on September 29, 2006. As a result, there were no amounts for the three months ended March 31, 2006.

Contact Information