- Earnings Per Share from Continuing Operations:
$1.99 vs. $2.38 in Nine Months; 6 Cents vs. 9 Cents in Third Quarter
- Major Factors: Warm Weather, Low Oil and Natural Gas Prices
PITTSBURGH, Oct. 29 /PRNewswire/ -- Consolidated Natural Gas Company
(NYSE: CNG) today reported that income from continuing operations in the first
nine months of 1998 was $190.5 million, or $1.99 a diluted share, compared
with $229.8 million, or $2.38 a diluted share, a year earlier.
In the third quarter -- typically the least significant of the year for
CNG due to lower summertime demand for natural gas -- income from continuing
operations was $5.7 million, or 6 cents a diluted share, compared with
$8.7 million, or 9 cents a diluted share a year earlier.
The overall market decline in prices for oil and natural gas hurt the
company's results in both the nine months and the third quarter. Also,
production of oil and gas declined during the third quarter, in large part
because four hurricanes and tropical storms forced temporary shutdowns of oil
and natural gas wells in the Gulf of Mexico.
Weather was the biggest factor in the nine month results. Temperatures in
CNG's gas distribution territories were 21 percent warmer than normal in the
first nine months of 1998, reducing earnings by 38 cents a diluted share.
In the third quarter, positive factors included improved results from
international operations, the expansion of an oil and gas pipeline gathering
system in the Gulf of Mexico, the timing of the recognition of certain taxes
in the distribution segment, and ongoing cost control measures.
"Income from continuing operations" includes all of CNG's operations
except wholesale energy trading and marketing. CNG announced in April 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 -- was $143.8 million, or $1.51 a diluted share, in the first nine
months of 1998, compared with $215.0 million, or $2.23 a diluted share, a year
earlier. Net income during the third quarter of 1998 was $8.1 million, or
8 cents a diluted share, versus $4.5 million, or 5 cents a diluted share, a
year earlier.
Net income for the 1998 third quarter included income from discontinued
operations of $2.4 million, or 2 cents a diluted share; this reflects the
closing of the sale of CNG's wholesale gas marketing business to Sempra Energy
Trading and other adjustments to the reserve CNG had estimated earlier this
year in connection with its decision to discontinue that business.
"Despite warm weather, low oil prices and multiple storms and hurricanes,
CNG remained on course through the first nine months and is well-situated for
improvement in 1999," said George A. Davidson, Jr., chairman and chief
executive officer.
"Looking ahead to next year, we expect to increase oil and natural gas
production by 20 percent and to continue to see benefits from our ongoing cost
control program," Mr. Davidson said. "In addition, the new weather insurance
program we put in place for our two largest utilities this winter will help
protect our earnings if the weather turns out to be unusually warm, without
giving away the upside if the weather is cold."
Earnings per share (basic) were $1.52 in the first nine months of 1998,
versus $2.27 a year earlier. Earnings per share (basic) in the third quarter
of 1998 were 8 cents, versus 5 cents a year earlier.
Results by Business Component
Here are the 1998 third quarter results for each of the company's business
components:
Exploration and Production
Pretax operating income for exploration and production was $18.1 million
in the third quarter of 1998, compared with $38.6 million a year earlier.
The average wellhead price for CNG's gas production was $2.05 a thousand
cubic feet, down 22 cents from a year earlier. Reflecting the overall market,
CNG's average wellhead price for oil dropped to $11.26 a barrel in the third
quarter from $16.00 a year earlier.
Production of natural gas dropped 11 percent in the third quarter, to
36.6 billion cubic feet. Oil production declined nearly 20 percent, to
1.8 million barrels.
Natural Gas Distribution
The pretax operating loss for the company's four local gas utilities was
$20.0 million in the third quarter of 1998, compared with a pretax operating
loss of $28.5 million a year earlier. Lower operating expenses and
non-income-related taxes accounted for the improved results. A third-quarter
loss in this segment is considered normal, since customers need little gas
from July through September.
Distribution throughput -- the amount of gas sold and transported -- was
51.8 billion cubic feet in the third quarter, compared with 53.2 billion cubic
feet a year earlier.
Natural Gas Transmission
Pretax operating income for the company's interstate gas pipeline and
storage business was $30.0 million in the third quarter, versus $32.1 million
a year earlier.
Transmission throughput in the 1998 third quarter was 104.5 billion cubic
feet, compared with 110.9 billion cubic feet 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 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.
Consolidated Natural Gas Company (CNG)
Three Months Ended September 30, 1998 1997
Total operating revenues $423,448,000 $462,980,000
Income from continuing operations $5,627,000 $8,761,000
Discontinued operations* $2,425,000 $(4,223,000)
Net income $8,052,000 $4,538,000
Earnings per common share -- diluted
Income from continuing operations $0.06 $0.09
Discontinued operations* $0.02 $(0.04)
Net income $0.08 $0.05
Earnings per common share -- basic
Income from continuing operations $0.06 $0.09
Discontinued operations* $0.02 $(0.04)
Net income $0.08 $0.05
Average common shares - diluted 96,215,000 96,151,000
Average common shares - basic 95,509,000 94,994,000
Nine Months Ended September 30, 1998 1997
Total operating revenues $1,953,041,000 $2,236,166,000
Income from continuing operations $190,474,000 $229,825,000
Discontinued operations $(46,724,000) $(14,811,000)
Net income $143,750,000 $215,014,000
Earnings per common share -- diluted
Income from continuing operations $1.99 $2.38
Discontinued operations $(0.48) $(0.15)
Net income $1.51 $2.23
Earnings per common share -- basic
Income from continuing operations $2.01 $2.43
Discontinued operations $(0.49) $(0.16)
Net income $1.52 $2.27
Average common shares - diluted 96,388,000 100,326,000
Average common shares - basic 94,664,000 94,764,000
* 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 earlier this year in connection with its decision to
discontinue that business.
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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