-- Earnings per share from continuing operations:
$3.00 in 1998 vs. $3.30 in 1997; $1.01 vs. 92 cents in fourth quarter
-- Warmest weather in 52 years, lower oil and natural gas prices hurt results
-- Cost-cutting and higher production lift fourth quarter
PITTSBURGH, February 9 /PRNewswire/ -- Consolidated Natural Gas Company
(NYSE: CNG) today reported that income from continuing operations for 1998 was
$287.7 million, or $3.00 a diluted share, compared with $318.9 million, or
$3.30 a diluted share, in 1997.
For the three months ended December 31, 1998, income from continuing
operations was $97.2 million, or $1.01 a diluted share, compared with
$89.1 million, or 92 cents a diluted share for the same period in 1997.
Results for the quarter and all of 1998 were hurt by the negative impacts
of significantly warmer weather in the service territories of CNG's local gas
distribution companies and lower oil and natural gas wellhead prices caused by
a slump in those markets. The weather in CNG's service territories was
18 percent warmer than normal in 1998, the warmest year since 1946.
Results in the 1998 fourth quarter also benefited from lower operating
expenses compared with 1997, but were hurt by a pretax charge of $9.4 million
for previously announced workforce reduction costs. The 1997 fourth quarter
included a noncash charge of $10.4 million pretax related to the impairment of
Canadian oil-producing properties.
Income from continuing operations includes all of CNG's operations except
wholesale energy marketing and trading. CNG announced in April 1998 that it
would exit that business, results of which now fall under discontinued
operations.
Net income, which includes income from both continuing and discontinued
operations, for all of 1998 was $238.8 million, or $2.49 a diluted share,
versus $304.4 million, or $3.15 a diluted share, for 1997. The 1998 net income
was reduced by 51 cents a diluted share because of discontinued operations,
including 33 cents a diluted share for costs related to the shutdown of the
company's wholesale energy marketing and trading business. Net income for the
1998 fourth quarter was $95.0 million, or 99 cents a diluted share, versus
$89.4 million, or 92 cents a diluted share, in the comparable 1997 period.
"The 1998 results were disappointing for CNG coming off two consecutive
years of record earnings," said George A. Davidson, Jr., chairman and chief
executive officer. "However, 1998 was also marked by a number of significant
accomplishments that should benefit the company in 1999 and beyond."
Among the accomplishments cited by Mr. Davidson were:
-- A record-setting year by CNG's exploration and production operations,
which added 413 billion cubic feet equivalent (Bcfe) of reserves, equal to
more than 204 percent of production. Included in the reserve additions were
39 billion cubic feet of reserves purchased by CNG Producing Company from The
Peoples Natural Gas Company, a CNG local distribution company. This is the
fifth consecutive year CNG Producing has added reserves of at least
150 percent of production and the third consecutive year of increased
production.
-- Reorganizing the management of CNG's four local gas distribution
companies and its gas transmission and storage subsidiary under a single
management team to improve the efficiency of those operations and better
position them for growth.
-- Installation of common financial systems at CNG and its subsidiaries
that are resulting in lower costs as well as more timely reporting.
Results by Business Segment
Here are the full-year and fourth quarter 1998 results for each of the
company's primary business segments.
Exploration and Production
Pretax operating income for exploration and production in 1998 was
$116.6 million, compared with $142.8 million in 1997. For the fourth quarter,
pretax operating income for this segment was $35.6 million, compared with
$30.8 million a year earlier.
Primarily due to the effects of an active storm season in the Gulf of
Mexico that caused well shut-ins and delays in completing new facilities, gas
production for all of 1998 remained about flat at 154.9 billion cubic feet
(Bcf), compared with 155.3 Bcf in 1997. Natural gas production increased
8 percent in the fourth quarter, to 41.4 Bcf from 38.4 Bcf a year earlier.
In 1998, oil production was up 8 percent, to 7.9 million barrels from
7.3 million barrels. Oil production increased by 4 percent in the fourth
quarter, to 2.1 million barrels, versus 2.0 million barrels a year earlier.
On a gas-equivalent basis, production was up 2 percent in 1998 to
202.3 Bcfe from 199.2 Bcfe in 1997 and up 7 percent in the fourth quarter to
53.8 Bcfe from 50.4 Bcfe. However, the impact of the Asian economic crisis on
oil demand and an abundance of natural gas related to mild U.S. weather
resulted in lower wellhead prices that more than offset the benefits of
production gains.
The average wellhead price for CNG's natural gas production in 1998 was
$2.26 a thousand cubic feet (Mcf), compared with $2.43 an Mcf in 1997. For the
fourth quarter, the average wellhead price for gas was $2.17 an Mcf, compared
with $2.54 an Mcf a year earlier.
CNG's average wellhead price for oil in 1998 was $11.54 a barrel, compared
with $16.07 a barrel in 1997. In the fourth quarter of 1998, the average
wellhead price for oil was $9.74 a barrel, compared with $15.69 a barrel a
year earlier.
Natural Gas Distribution
Pretax operating income for the company's four local gas distribution
utilities in 1998 was $208.2 million, compared with $266.6 million in 1997.
For the fourth quarter, pretax operating income was $76.1 million in 1998,
compared with $95.4 million a year earlier.
Warmer weather in CNG's distribution service territories was the main
factor for the lower income in both 1998 periods. The weather was 18 percent
warmer than normal for all of 1998 and 19 percent warmer than 1997. The
warmer-than-normal weather resulted in a 46-cent reduction in earnings a
diluted share in 1998. The weather was 12 percent warmer than normal in the
fourth quarter of 1998 and 16 percent warmer than a year earlier. The warmer-
than-normal weather resulted in an 8-cent reduction in earnings a diluted
share. This amount is net of the benefit of a new weather insurance program
realized in the fourth quarter.
Weather also adversely affected natural gas throughput at the distribution
companies. Throughput was 406.5 Bcf in all of 1998, compared with 462.1 Bcf in
1997. For the fourth quarter, throughput was 124.7 Bcf in 1998, compared with
141.8 Bcf a year earlier.
Natural Gas Transmission
Pretax operating income for CNG's interstate gas pipeline and storage
segment was $183.6 million in 1998, compared with $180.9 million in 1997. For
the fourth quarter, pretax operating income was $45.5 million in 1998,
compared with $40.2 million a year earlier.
The warmer weather also reduced transmission gas throughput, although
pipeline rate design makes income in this segment much less sensitive to
weather variations. Throughput for all of 1998 was 612.5 Bcf, compared with
732.8 Bcf in 1997. In the fourth quarter, throughput was 172.6 Bcf in 1998,
compared with 211.5 Bcf a year earlier.
Consolidated Natural Gas Company is one of the nation's largest producers,
transporters, distributors and retail marketers of natural gas. The company's
natural gas transmission and distribution operations serve customers in
Pennsylvania, Ohio, Virginia, West Virginia, New York and other states in the
Northeast and Mid-Atlantic regions. CNG explores for and produces oil and
natural gas in the United States and Canada. The company also selectively
participates in energy businesses abroad.
CNG's recent news releases are available 24 hours a day on the Internet,
by fax machine, or by voice recording. On the Internet, use CNG's Web site:
http://www.cng.com. For faxing, call 1-800-758-5804 on a touch-tone phone and enter
CNG's extension number, which is 203456. From a menu, you will then be able to
select releases that will be faxed to you immediately without charge. For
voice recordings, call 1-888-CNG-NEWS. This line is toll-free.
This press release contains forward-looking statements. The company wishes
to caution readers that the assumptions which form the basis for forward-
looking statements with respect to or that may impact earnings for fiscal
1999, and thereafter, include many factors that are beyond the company's
ability to control or estimate precisely, such as estimates of future market
conditions and the behavior of other market participants. Other factors
include, but are not limited to, weather conditions, economic conditions in
the company's service territory, fluctuations in energy-related commodity
prices, conversion activity, other marketing efforts and other uncertainties.
Consolidated Natural Gas Company (CNG)
Years Ended December 31, 1998 1997
Total operating revenues $2,760,406,000 $3,177,110,000
Income from continuing operations $287,711,000 $318,908,000
Discontinued operations* $(48,945,000) $(14,528,000)
Net income $238,766,000 $304,380,000
Earnings per common share -- diluted
Income from continuing operations $3.00 $3.30
Discontinued operations* $(0.51) $(0.15)
Net income $2.49 $3.15
Earnings per common share -- basic
Income from continuing operations $3.03 $3.36
Discontinued operations* $(0.51) $(0.15)
Net income $2.52 $3.21
Average common shares - diluted 96,335,000 100,460,000
Average common shares - basic 94,836,000 94,868,000
Three Months Ended December 31, 1998 1997
Total operating revenues $807,365,000 $940,944,000
Income from continuing operations $97,237,000 $89,083,000
Discontinued operations* $(2,221,000) $283,000
Net income $95,016,000 $89,366,000
Earnings per common share -- diluted
Income from continuing operations $1.01 $0.92
Discontinued operations* $(0.02) --
Net income $0.99 $0.92
Earnings per common share -- basic
Income from continuing operations $1.02 $0.94
Discontinued operations* $(0.02) --
Net income $1.00 $0.94
Average common shares - diluted 96,178,000 100,859,000
Average common shares - basic 95,348,000 95,176,000
* The 1998 amount reflects the closing of the sale of CNG's wholesale gas
trading and marketing business and other adjustments to the reserve CNG had
estimated in 1998 in connection with its decision to discontinue that
business.
SOURCE Consolidated Natural Gas Company
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Related links:
http://www.cng.com
Company News On-Call:
http://www.prnewswire.com/comp/203456.html or fax,
800-758-5804, ext. 203456
CONTACT:
Chet Wade of Consolidated Natural Gas,
412-690-1361
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