Company Will Cease Wholesale Energy Marketing and Trading
Discontinued Operation to Result In First-Quarter Charge Estimated
At $55 Million to $75 Million Pretax
Existing Commitments to Customers and Suppliers Will Be Honored
PITTSBURGH, April 21 /PRNewswire/ -- Consolidated Natural Gas Company
(NYSE: CNG) said today it will concentrate its unregulated energy marketing
activities on retail customers and will discontinue wholesale marketing and
trading of natural gas and electricity, including integrated energy
management.
The cost of exiting the unregulated wholesale energy marketing operations
will result in a pretax charge against first-quarter earnings that is
estimated to range from $55 million to $75 million. The company will publicly
report first-quarter earnings on April 30. It will no longer report financial
results for energy marketing services as a separate segment.
All existing customer and supplier commitments will be honored as the
company conducts an orderly transition from the wholesale business. The
company will close offices in suburban Pittsburgh and in Norwalk, Conn.
Layoffs are expected to total about 125. Employees who work for the company's
retail energy marketing business will not be affected.
CNG will continue to compete in the unregulated retail marketplace. Doing
business as Peoples Plus and East Ohio Energy, the company sells competitively
priced natural gas and electricity and other products and services to
homeowners and small businesses in Pennsylvania and Ohio.
"Within the growing competitive marketplace for energy, we believe the
best prospects for profitable growth are occurring on the retail side, and we
intend to continue to build on our very strong position in this part of the
business," said George A. Davidson, Jr., chairman and chief executive officer.
"CNG already is the largest non-utility retail energy marketer in the U.S.
"We do not see the same opportunities to build shareholder value in
wholesale marketing and trading, despite our determined efforts over the last
five years. Wholesale margins across the industry have been driven to
virtually zero," Mr. Davidson said. "We believe that the time, cost and risk
involved in further scaling up a wholesale marketing and trading company at
this stage of market maturity are too great to justify, given the potential
rewards.
"We therefore have decided to devote our attention and resources to other
opportunities that will better enable us to meet our five-year goals of
increasing income by an average of 10 percent a year and obtaining half our
income from exploration and production, international and retail energy
marketing operations."
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 Ohio,
Pennsylvania, Virginia, West Virginia, New York and other states in the
Northeast and Mid-Atlantic regions. CNG explores for and produces natural gas
and oil in the United States and Canada. The company also selectively
participates in energy businesses abroad.
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 1998, 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.
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 company extension, 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.
SOURCE Consolidated Natural Gas Company
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Related links:
http://www.cng.com
CONTACT:
Cynthia Navadeh of Consolidated Natural Gas,
412-690-1442
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