OKLAHOMA CITY, Aug. 3 /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 $0.42 per diluted share for the
three months ended June 30, 2005, compared with $0.44 per diluted share for
the second quarter of 2004.
OG&E, the company's regulated electric utility contributed earnings of
$0.33 per diluted share in the second quarter, compared with $0.34 per diluted
share in the year-ago quarter. This slight decrease was attributable to
higher operating costs, which more than offset the positive impact of warmer
weather. Enogex, the company's pipeline subsidiary, recorded earnings of
$0.12 per diluted share, compared with $0.13 per diluted share in the second
quarter last year, as higher margins in the natural gas gathering and
processing business were offset by lower margins in the transportation and
storage and marketing businesses.
The holding company, which primarily has interest expense but no operating
revenue, posted a loss of $0.03 per diluted share, unchanged from the second
quarter of 2004. Earnings-per-share also were affected by an increase of
2.6 million diluted average common shares outstanding compared to last year.
"We are pleased to report another quarter of solid results," said Steven
E. Moore, OGE Energy chairman, president and CEO. "But as we're seeing across
our industry, the cost of doing business at our utility continues to rise.
These higher costs, plus the need to recover the half-billion dollars of
investments we've made to improve the reliability of our electric system
during the last two years, underscore the need for rate relief."
OG&E filed May 20 for an $89 million rate increase in Oklahoma.
Resolution of the rate case is expected by year-end.
For the six months ended June 30, OGE Energy reported net income of
$44 million, or $0.48 per diluted share, compared with $49 million, or
$0.56 per diluted share in the first half of 2004. Operating revenues were
$2.6 billion in the first six months of 2005, compared with $2.2 billion in
the comparable period in 2004; gross margins were $436 million, up from
$424 million in the year-ago period; and operating income was $107 million in
the first half of 2005, down from $114 million in the same period of 2004.
Discussion of Second Quarter 2005
OGE Energy reported consolidated operating revenues of $1.3 billion in the
second quarter, compared with $1.2 billion a year earlier. The second-quarter
gross margin on revenues was $246 million, compared with $237 million in the
year-earlier quarter. Higher gross margins were offset by increased operation
and maintenance expenses in both business segments. Operating income was
$81 million in the second quarter, compared with $83 million in the year-
earlier quarter. Net income was $38.5 million in the second quarter, compared
with $39.0 million a year ago.
OG&E reported gross margin on revenues of $178 million in the second
quarter, compared with $169 million in the comparable quarter last year. The
higher margin was offset by higher expenses, depreciation and taxes. OG&E
reported net income of $29.7 million, compared with $30.4 million a year ago.
Enogex reported gross margin on revenues of $68 million in the second
quarter, the same as in the comparable quarter last year. Net income was
$11.3 million, compared with $11.5 million in the second quarter of 2004. The
decrease was due to lower margins in the transportation and storage and
marketing businesses, partially offset by higher margins in the natural gas
gathering and processing business.
2005 Outlook
OGE Energy maintains its 2005 consolidated earnings guidance of
$1.65 - $1.75 per share. It assumes about 91 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, assuming a 1 to
2 percent growth in gross margins from customer growth, normal weather,
recovery of Enogex gas transportation and storage costs at the $41.9 million
annual rate as ordered July 14 by the Oklahoma Corporation Commission, no
change in base rates, and regulatory lag in recovering costs of the McClain
power plant acquisition. The earnings guidance also includes Enogex earnings
in a range between $49 million and $56 million, or $0.54 to $0.62 per share,
which assumes commodity spread projections of between $2.02 and $2.56 per
MMBtu and natural gas liquids price projections of between $0.82 and $0.89 per
gallon in 2005. The holding company earnings guidance is a loss between
$6 million and $8 million, or $.07 to $.09 per share, assuming lower interest
expenses.
Conference Call Webcast
OGE Energy will host a conference call for discussion of the results and
the outlook for 2005 on Wednesday, Aug. 3, at 8 a.m. CDT. 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 740,000 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", "project", "objective", "plan", "possible", "potential", "project"
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 and initiatives
that affect cost and investment recovery, have an impact on rate structures or
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 Income, Financial and Statistical Data
attached.
OGE Energy Corp.
consolidated statements of income
(unaudited) Three Months Ended Six Months Ended
June 30 June 30
2005 2004 2005 2004
(In millions, except per share data)
OPERATING REVENUES
Electric Utility operating
revenues $394.1 $411.5 $695.1 $715.8
Natural Gas Pipeline operating
revenues 950.6 743.9 1,930.4 1,481.3
Total operating revenues 1,344.7 1,155.4 2,625.5 2,197.1
COST OF GOODS SOLD
Electric Utility cost of goods
sold 204.1 230.6 367.2 402.0
Natural Gas Pipeline cost of
goods sold 895.0 688.0 1,822.6 1,371.5
Total cost of goods sold 1,099.1 918.6 2,189.8 1,773.5
Gross margin on revenues 245.6 236.8 435.7 423.6
Other operation and maintenance 101.8 93.1 200.7 184.2
Depreciation 45.2 44.2 91.8 90.2
Taxes other than income 17.2 17.0 35.8 35.7
OPERATING INCOME 81.4 82.5 107.4 113.5
OTHER INCOME (EXPENSE)
Other income 0.9 2.6 2.6 5.4
Other expense (1.0) (1.5) (3.0) (3.0)
Net other income (expense) (0.1) 1.1 (0.4) 2.4
INTEREST INCOME (EXPENSE)
Interest income 0.2 0.5 2.2 0.9
Interest on long-term debt (20.9) (18.9) (41.1) (37.1)
Interest expense - unconsolidated
affiliate --- (4.3) --- (8.6)
Allowance for borrowed funds used
during construction 0.7 0.2 1.3 0.3
Interest on short-term debt and
other interest charges (1.7) (1.0) (3.3) (2.1)
Net interest expense (21.7) (23.5) (40.9) (46.6)
INCOME FROM CONTINUING OPERATIONS
BEFORE TAXES 59.6 60.1 66.1 69.3
INCOME TAX EXPENSE 21.1 21.1 22.3 20.5
INCOME FROM CONTINUING OPERATIONS 38.5 39.0 43.8 48.8
DISCONTINUED OPERATIONS
Income from discontinued operations --- --- --- 0.7
Income tax expense --- --- --- 0.3
Income from discontinued operations --- --- --- 0.4
NET INCOME $38.5 $39.0 $43.8 $49.2
BASIC AVERAGE COMMON SHARES
OUTSTANDING 90.2 87.6 90.1 87.6
DILUTED AVERAGE COMMON SHARES
OUTSTANDING 90.8 88.2 90.6 88.1
BASIC EARNINGS PER AVERAGE COMMON
SHARE
Income from continuing operations $0.43 $0.44 $0.49 $0.55
Income from discontinued operations,
net of tax --- --- --- 0.01
NET INCOME $0.43 $0.44 $0.49 $0.56
DILUTED EARNINGS PER AVERAGE COMMON
SHARE
Income from continuing operations $0.42 $0.44 $0.48 $0.55
Income from discontinued operations,
net of tax --- --- --- 0.01
NET INCOME $0.42 $0.44 $0.48 $0.56
OGE Energy Corp.
financial and statistical data
(unaudited) Three Months Ended Six Months Ended
June 30 June 30
2005 2004 2005 2004
(In millions)
ELECTRIC UTILITY
Electric revenues
Residential $150.0 $151.6 $264.2 $276.6
Commercial 101.4 106.4 171.6 175.5
Industrial 82.2 88.7 147.9 153.6
Public authorities 40.5 42.2 69.6 71.1
Sales for resale 13.7 13.8 26.8 26.4
Provision for refund on gas
transportation and storage
case (1.1) --- (2.1) (6.4)
Other 6.5 8.6 15.8 18.7
Total system revenues 393.2 411.3 693.8 715.5
Sales to other utilities 0.9 0.2 1.3 0.3
Total electric revenues $394.1 $411.5 $695.1 $715.8
Sales of electricity - MWH (a)
Residential 1.9 1.8 3.8 3.7
Commercial 1.5 1.4 2.8 2.7
Industrial 1.8 1.7 3.5 3.4
Public authorities 0.7 0.7 1.3 1.3
Sales for resale 0.4 0.4 0.7 0.7
Total system sales 6.3 6.0 12.1 11.8
Sales to other utilities --- --- --- ---
Total electric sales 6.3 6.0 12.1 11.8
Number of customers 739,983 729,661 739,983 729,661
Average cost of energy per KWH (b)
- cents
Fuel 2.864 3.121 2.644 2.657
Fuel and purchased power 3.216 3.734 3.023 3.356
Degree days
Heating
Actual 202 177 1,867 1,962
Normal 236 236 2,199 2,218
Cooling
Actual 644 622 645 640
Normal 547 547 555 555
NATURAL GAS PIPELINE
Operating revenues (before
intercompany eliminations) $983.3 $775.5 $1,984.1 $1,524.7
Operating income $26.6 $27.3 $48.8 $53.3
Net income $11.3 $11.5 $19.4 $24.3
Net cash provided from operating
activities $35.4 $20.9 $71.7 $144.5
Capital expenditures from
continuing operations $9.0 $7.0 $15.2 $15.3
New well connects 73 57 126 120
Gathered volumes - TBtu/d (c) 1.02 0.99 1.02 1.00
Incremental transportation volumes
- TBtu/d 0.55 0.53 0.51 0.47
Total throughput volumes -
TBtu/d 1.57 1.52 1.53 1.47
Natural gas processed - Mmcf/d (d) 562 510 531 492
Natural gas liquids produced (keep
whole) - million gallons 84 50 162 103
Natural gas liquids produced (POL
and fixed-fee) - million gallons 3 4 7 8
Total natural gas liquids
produced - million gallons 87 54 169 111
Average sales price per gallon $0.750 $0.680 $0.748 $0.669
(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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