OKLAHOMA CITY, Feb. 25 /PRNewswire-FirstCall/ -- OGE Energy Corp.
(NYSE: OGE), the parent company of Oklahoma Gas and Electric Company (OG&E)
and Enogex Inc., today reported earnings of $1.73 per diluted share for 2004,
compared with $1.58 per diluted share for 2003. Earnings were higher due to
improved financial performance at Enogex, the natural gas pipeline, partially
offset by lower earnings at OG&E, the regulated electric utility.
For the three months ended Dec. 31, 2004, OGE Energy reported earnings of
$0.10 per diluted share, compared with a loss of $0.02 per diluted share for
the fourth quarter of 2003.
Financial results improved in the fourth quarter of 2004 due to a
significant increase in operating income and the absence of impairment charges
at Enogex, partially offset by lower earnings at OG&E which were primarily due
to milder weather and increased expenses for system reliability projects.
"We are pleased to report solid improvement in our financial results again
this year," said Steven E. Moore, OGE Energy chairman, president and CEO. "A
key component of our strategy is the diversity of our assets and operations,
so in a year when our regulated utility earnings were hampered by unfavorable
weather and higher expenses for reliability projects, the benefit of better
performance in our unregulated pipeline business is clear."
Discussion of full-year 2004
OGE Energy reported consolidated operating revenues of $4.9 billion in
2004, compared with $3.8 billion in 2003. Gross margin on revenues was
$964 million in 2004, compared with $933 million in 2003. Operating income
was $318 million in 2004, compared with operating income of $307 million in
2003.
OG&E reported operating revenues of $1.6 billion in 2004, compared with
$1.5 billion in 2003. Gross margin on revenues at the electric utility was
$664 million, compared with $680 million in 2003. OG&E reported net income of
$108 million and contributed $1.22 in earnings per share in 2004, compared
with net income of $115 million, or $1.41 per share in 2003. The decline in
earnings was primarily due to the impact on revenues of milder weather during
the heating and cooling seasons of 2004, as well as higher operation and
maintenance expenses for electric system reliability.
Enogex reported operating revenues of $3.4 billion in 2004, compared with
$2.3 billion in 2003. Gross margin on revenues at the natural gas pipeline
was $301 million, compared to $253 million in 2003. Enogex reported net
income of $61 million and contributed $0.69 in earnings per share in 2004,
compared with net income of $27 million, or $0.33 per share for 2003.
Earnings at Enogex were positively affected in 2004 primarily by generally
higher commodity prices and improved profit margins from more favorable
contractual terms in the natural gas gathering and processing business.
The holding company posted a loss of $0.18 per share to OGE Energy's
consolidated results in 2004, compared with a loss of $0.16 per share in 2003.
Discussion of Fourth Quarter 2004
OGE Energy reported consolidated operating revenues of $1.4 billion in the
fourth quarter, compared with $816 million a year earlier. The fourth-quarter
gross margin on revenues was $220 million, compared with $182 million in the
year-earlier quarter. Operating income was $42 million in the fourth quarter,
compared with $15 million in the year-earlier quarter.
OG&E posted a net loss of $14 million, or $0.16 per share to OGE Energy's
consolidated fourth-quarter results, compared with a net loss of $4 million,
or $0.05 per share for the fourth quarter a year ago. This was due primarily
to higher expenses for infrastructure projects in the fourth quarter, many of
which were postponed from earlier in the year. Gross margin on revenues at
OG&E was $119 million, compared with $116 million in the fourth quarter of
2003. The operating loss at OG&E was $15 million, in the fourth quarter,
compared with $2 million in operating income a year earlier.
Enogex posted net income of $30 million, or $0.34 per share to OGE
Energy's consolidated fourth-quarter results, compared with $5 million, or
$0.06 per share for the fourth quarter a year ago. Fourth-quarter gross
margin on revenues at the natural gas pipeline was $102 million, compared with
$66 million a year earlier. Operating income was $58 million, compared with
$18 million in the fourth quarter last year.
Enogex recorded a pre-tax impairment charge of $9.2 million ($0.06 per
share) for the write-down of natural gas compression assets in the fourth
quarter of 2003, and there were no such impairments in the fourth quarter of
2004. The company benefited from favorable commodity prices and its ability
to capture value from the positive business environment. Fourth-quarter
results also were enhanced by an increase in transactions at higher profit
margins in the marketing business.
The holding company recorded a loss of $0.08 per share in the fourth
quarter, compared to a loss of $0.03 per share in the 2003 quarter. The 2004
quarter included expenses associated with the redemption of the company's
8.375% trust preferred securities. The redemption of the trust preferred
securities will result in lower interest expenses in the future.
2005 Outlook
The consolidated earnings guidance for 2005 is $1.50 to $1.60 per share,
assuming about 90.5 million average diluted shares outstanding. The earnings
guidance includes a utility earnings range between $106 million and
$110 million or $1.17 to $1.22 per share with a 1 to 2 percent growth in
margins, normal weather, recovery of Enogex gas transportation and storage
costs at the $41.9 million level recommended by the Oklahoma Corporation
Commission Administrative Law Judge, and regulatory lag in recovering costs of
the McClain plant acquisition. The earnings guidance also includes Enogex
earnings in a range between $39 million and $43 million or $0.43 to $0.48 per
share, with a conservative commodity price outlook. The holding company
earnings guidance is a loss between $6 million and $8 million, or $.07 to $.09
per share, with lower interest expenses.
Conference Call Webcast
OGE Energy will host a conference call for discussion of the results and
the outlook for 2005 on Friday, Feb. 25, at 8 a.m. CST. The conference,
hosted by James R. Hatfield, senior vice president and CFO, will be available
through http://www.oge.com .
OGE Energy is the parent company of Oklahoma Gas and Electric Company
(OG&E), which serves approximately 735,000 customers in a service territory
spanning 30,000 square miles in Oklahoma and western Arkansas, and of Enogex
Inc., a natural gas pipeline business with principal operations in Oklahoma
and Arkansas.
Some of the matters discussed on this news release may contain forward-
looking statements that are subject to certain risks, uncertainties and
assumptions. Such forward-looking statements are intended to be identified in
this document by the words "anticipate", "believe", "estimate", "expect",
"intend", "objective", "plan", "possible", "potential" and similar
expressions. Actual results may vary materially. Factors that could cause
actual results to differ materially include, but are not limited to: general
economic conditions, including the availability of credit, actions of rating
agencies and their impact on capital expenditures; the Company's ability and
the ability of its subsidiaries to obtain financing on favorable terms; prices
of electricity, natural gas and natural gas liquids, each on a stand-alone
basis and in relation to each other; business conditions in the energy
industry; competitive factors including the extent and timing of the entry of
additional competition in the markets served by the Company; unusual weather;
federal or state legislation and regulatory decisions (the proceeding
currently pending before the OCC related to OG&E's recovery of the costs
billed to it by Enogex for gas transportation and storage services) and
initiatives that affect cost and investment recovery, have an impact on rate
structures and affect the speed and degree to which competition enters the
Company's markets; environmental laws and regulations that may impact the
Company's operations; changes in accounting standards, rules or guidelines;
creditworthiness of suppliers, customers and other contractual parties; the
higher degree of risk associated with the Company's nonregulated business
compared with the Company's regulated utility business; and other risk factors
listed in the reports filed by the Company with the Securities and Exchange
Commission.
* Note: Consolidated Statements of Operations, Financial and Statistical
Data follow.
OGE Energy Corp.
consolidated statements of operations
(unaudited) Three Months Ended Twelve Months Ended
December 31 December 31
2004 2003 2004 2003
(In millions, except per share data)
OPERATING REVENUES
Electric Utility operating
revenues $326.4 $286.3 $1,578.1 $1,517.1
Natural Gas Pipeline operating
revenues 1,078.4 529.9 3,348.5 2,261.9
Total operating revenues 1,404.8 816.2 4,926.6 3,779.0
COST OF GOODS SOLD
Electric Utility cost of goods
sold 195.4 158.7 865.0 792.7
Natural Gas Pipeline cost of
goods sold 989.2 475.3 3,097.7 2,053.3
Total cost of goods sold 1,184.6 634.0 3,962.7 2,846.0
Gross margin on revenues 220.2 182.2 963.9 933.0
Other operation and maintenance 119.0 98.0 392.2 371.7
Depreciation 44.9 43.8 178.6 176.9
Impairment of assets (0.8) 9.2 7.8 10.2
Taxes other than income 15.4 15.9 67.8 67.3
OPERATING INCOME 41.7 15.3 317.5 306.9
OTHER INCOME (EXPENSE)
Other income 1.2 1.1 12.1 8.1
Other expense (2.4) (2.7) (5.5) (9.0)
Net other income (expense) (1.2) (1.6) 6.6 (0.9)
INTEREST INCOME (EXPENSE)
Interest income 3.9 0.8 5.2 1.3
Interest on long-term debt (18.8) (18.5) (74.4) (75.2)
Interest expense -
unconsolidated affiliate (0.7) (4.4) (13.7) (17.3)
Allowance for borrowed funds
used during construction 0.5 0.1 1.7 0.5
Interest on short-term debt and
other interest charges (7.1) (0.9) (9.7) (6.0)
Net interest expense (22.2) (22.9) (90.9) (96.7)
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE TAXES 18.3 (9.2) 233.2 209.3
INCOME TAX EXPENSE (BENEFIT) 8.7 (7.0) 80.2 73.7
INCOME (LOSS) FROM CONTINUING
OPERATIONS 9.6 (2.2) 153.0 135.6
DISCONTINUED OPERATIONS
Income from discontinued operations 0.1 0.1 0.8 1.8
Income tax expense --- --- 0.3 2.2
Income (loss) from discontinued
operations 0.1 0.1 0.5 (0.4)
INCOME (LOSS) BEFORE CUMULATIVE
EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE 9.7 (2.1) 153.5 135.2
CUMULATIVE EFFECT ON PRIOR YEARS OF
CHANGE IN ACCOUNTING PRINCIPLE,
NET OF TAX OF $3.4 --- 0.5 --- (5.4)
NET INCOME (LOSS) $9.7 $(1.6) $153.5 $129.8
BASIC AVERAGE COMMON SHARES
OUTSTANDING 89.0 86.9 88.0 81.8
DILUTED AVERAGE COMMON SHARES
OUTSTANDING 89.5 87.2 88.5 82.1
BASIC EARNINGS (LOSS) PER AVERAGE
COMMON SHARE
Income (loss) from continuing
operations $0.10 $(0.03) $1.73 $1.66
Income from discontinued
operations, net of tax --- --- 0.01 ---
Income (loss) from cumulative
effect of accounting change, net
of tax --- 0.01 --- (0.07)
NET INCOME (LOSS) $0.10 $(0.02) $1.74 $1.59
DILUTED EARNINGS (LOSS) PER AVERAGE
COMMON SHARE
Income (loss) from continuing
operations $0.10 $(0.03) $1.72 $1.65
Income from discontinued
operations, net of tax --- --- 0.01 ---
Income (loss) from cumulative
effect of accounting change, net
of tax --- 0.01 --- (0.07)
NET INCOME (LOSS) $0.10 $(0.02) $1.73 $1.58
DIVIDENDS DECLARED PER SHARE $0.3325 $0.3325 $1.33 $1.33
OGE Energy Corp.
financial and statistical data
(unaudited) Three Months Ended Twelve Months Ended
December 31 December 31
2004 2003 2004 2003
(In millions)
ELECTRIC UTILITY
Electric revenues
Residential $116.1 $92.9 $611.4 $601.4
Commercial 80.2 70.9 389.9 372.5
Industrial 72.7 68.5 326.7 293.4
Public authorities 34.1 30.7 158.5 146.1
Sales for resale 12.7 12.1 57.0 57.7
Provision for refund on gas
transportation and storage case --- --- (6.9) ---
Other 10.3 10.8 40.7 41.9
Total system revenues 326.1 285.9 1,577.3 1,513.0
Sales to other utilities 0.3 0.4 0.8 4.1
Total electric revenues $326.4 $286.3 $1,578.1 $1,517.1
Sales of electricity - MWH (A)
Residential 1.6 1.6 7.9 8.2
Commercial 1.3 1.3 5.7 5.8
Industrial 1.8 1.8 7.0 6.8
Public authorities 0.7 0.7 2.7 2.7
Sales for resale 0.3 0.3 1.4 1.5
Total system sales 5.7 5.7 24.7 25.0
Sales to other utilities 0.1 --- 0.1 0.1
Total electric sales 5.8 5.7 24.8 25.1
Number of customers 735,008 725,470 735,008 725,470
Average cost of energy
per KWH (B) - cents
Fuel 2.875 1.925 2.887 2.454
Fuel and purchased power 3.350 2.793 3.436 3.128
Degree days
Heating
Actual 1,152 1,209 3,114 3,488
Normal 1,403 1,403 3,650 3,631
Cooling
Actual 79 95 1,839 1,898
Normal 61 61 1,911 1,911
NATURAL GAS PIPELINE
Operating revenues (before
intercompany eliminations) $1,102.6 $541.7 $3,443.9 $2,327.8
Operating income $57.9 $17.9 $126.6 $91.2
Net income $30.1 $5.3 $60.7 $26.9
Net cash (used in) provided from
operating activities $(36.7) $(9.0) $134.3 $29.4
Capital expenditures from
continuing operations $9.0 $5.7 $32.1 $28.1
New well connects 83 65 277 232
Gathered volumes - TBtu/d (C) 1.03 1.00 1.01 0.99
Incremental transportation
volumes - TBtu/d 0.58 0.40 0.51 0.44
Total throughput volumes -
TBtu/d 1.61 1.40 1.52 1.43
Natural gas processed - Mmcf/d (D) 552 407 502 414
Natural gas liquids sold (keep-
whole) - million gallons 87 57 263 207
Natural gas liquids sold (POL &
fixed fee) - million gallons 4 5 16 18
Total natural gas sold
produced - million gallons 91 62 279 225
Average sales price per gallon $0.777 $0.606 $0.720 $0.595
(A) Megawatt-hours.
(B) Kilowatt-hours.
(C) Trillion British thermal units per day.
(D) Million cubic feet per day.
SOURCE OGE Energy Corp.
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Related links:
http://www.oge.com
CONTACT:
Brian Alford, +1-405-553-3187, or financial,
Todd Tidwell, +1-405-553-3966, both of OGE Energy Corp.
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