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Gas Natural Inc. Reports Fiscal Year 2011 Results

April 10, 2012

MENTOR, Ohio, April 10, 2012 /PRNewswire/ — Gas Natural Inc. (NYSE Amex: EGAS) (the “Company”), a natural gas utility company serving approximately 70,000 customers in seven states, reported financial results for the full-year ended December 31, 2011. Reported results included the Company’s April 8, 2011 acquisition of pipeline and right-of-way assets in Ohio and Kentucky as well as the acquisition of the net assets of Independence Oil & LP Gas, Inc. on August 1, 2011.

Full-year consolidated net income was $5.4 million in 2011 compared with $5.8 million in 2010. Net income from the Natural Gas Operations segment increased by $140,000, driven primarily by customer growth and colder weather in most of its service territories. Also included in the consolidated 2011 results was a pre-tax gain on the bargain purchase of the assets of Independence of $955,000. Offsetting those gains were net losses within the Company’s Marketing and Production Operations segment due to an impairment charge of $790,000 from an investment in Kykuit, a developer and operator of oil, gas and mineral leasehold estates in Montana and a net loss from the corporate and other operations segment as the 2010 period included dividends and gains on the sale of marketable securities that did not occur in 2011.

On a per diluted share basis, net income was $0.66 in 2011 compared with $0.92 in 2010, and reflects an increase in weighted average outstanding shares of 1.9 million as a result of the Company’s successful equity raised in the fourth quarter of 2010.

Richard M. Osborne, Gas Natural’s chairman and chief executive officer, commented, “In 2011, we successfully moved our strategy forward by investing in our growth utilities and making capital improvements in order to maintain our reliable infrastructure. Those investments are reflected in our expanded distribution system and customer base and have resulted in an overall strengthening of our natural gas business.

“We also continued to augment our organic growth strategy with two acquisitions in 2011. We acquired intrastate pipeline assets in Ohio and Kentucky in April and since then, have rehabilitated portions of the pipeline in Ohio to transport natural gas to new markets where natural gas service is currently not available, as well as connect to markets served by our Ohio subsidiaries. The Independence acquisition was a situational opportunity for us and added approximately 4,500 residential, commercial and agricultural customers in North Carolina and Virginia that utilize liquid propane, heating oil, and kerosene.”

Gas Natural acquired the stock of Public Gas Company, Inc. (PGC) for $1.6 million from Kentucky Energy Development, LLC, on April 1, 2012. PGC is a regulated natural gas distribution company serving approximately 1,600 customers in 8 counties in the eastern part of Kentucky.

Natural Gas Operations Segment

The Company annually distributes over 32 billion cubic feet of natural gas to approximately 70,000 customers through regulated utilities operating in Montana, Wyoming, Ohio, Pennsylvania, Maine, North Carolina and Kentucky.


                                      Year Ended December
                                               31,
                                     --------------------
    ($ in thousands)                                    2011     2010
                                                        ----     ----

    Natural Gas Operations
    Operating revenues                               $89,995  $83,608
    Gas Purchased                                   53,018   48,877
                                                    ------   ------
    Gross Margin                                    36,977   34,731
    Operating expenses                              26,804   24,682
                                                    ------   ------
    Operating income                                10,173   10,049
    Other income                                       639      872
                                                       ---      ---

    Income before interest and taxes                10,812   10,921
    Interest (expense)                              (1,926)  (2,086)
                                                    ------   ------

    Income before income taxes                       8,886    8,835
    Income tax (expense)                            (3,072)  (3,161)
                                                    ------   ------

    Net Income                                      $5,814   $5,674
                                                    ======   ======

For 2011, the Natural Gas Operations segment contributed net income of $5.8 million, an increase of 2.5%, or $140,000, from $5.7 million for 2010.

Operating income was $10.2 million, or 27.5% of gross margin, for 2011 compared with $10.0 million, or 28.9% of gross margin, for 2010.

Full service distribution volumes delivered increased 931 MMcf to 9,346 MMcf in 2011 as the Company continues to expand its customer base and benefited from colder weather in a number of markets.

Other Operating Segments

The Marketing and Production segment reported a net loss of $287,000 for 2011 compared with a net gain of $116,000 for 2010. This change in net income was primarily attributable to the previously noted impairment charge. The Pipeline Operations segment contributed net income of $162,000, an increase of $9,000 from 2010. The Propane Operations segment, acquired on August 1, 2011, contributed net income of $255,000 in 2011, which was primarily the result of the pre-tax gain of $955,000 on the bargain purchase of the net assets.

Balance Sheet and Cash Management

Cash and cash equivalents at the end of 2011 were $10.5 million, down $2.5 million from the 2010 year-end balance of $13.0 million.

Cash provided by operating activities increased by $8.2 million to $14.9 million in 2011 compared with $6.7 million for 2010. The increase in cash from operations was principally due to improved working capital and timing differences related to taxes and prepayments.

Capital expenditures for 2011 totaled $23.2 million and were primarily focused on expanding the Company’s Natural Gas Operations segment and included $3.3 million related to the pipeline assets acquired in Ohio and Kentucky in April 2011. Capital spending in 2010 was $8.5 million.

The Company maintains a revolving credit facility with $23.2 million in use at the end of 2011 compared with $18.2 million at the end of 2010. In November 2011, the Company exercised the $10 million accordion feature on the revolving credit facility to increase the capacity from $20 million to $30 million.

About Gas Natural Inc.

Gas Natural Inc. distributes and sells natural gas to end-use residential, commercial, and industrial customers. It distributes approximately 32 billion cubic feet of natural gas to approximately 70,000 customers through regulated utilities operating in Montana, Wyoming, Ohio, Pennsylvania, Maine, North Carolina and Kentucky. The Company markets approximately 1.2 billion cubic feet of natural gas to commercial and industrial customers in Montana and Wyoming on an unregulated basis. The Company also acquired intrastate pipelines assets in Ohio and Kentucky in April 2011. In August 2011, the Company acquired its propane operations, delivering liquid propane, heating oil, and kerosene to approximately 4,300 customers in North Carolina and Virginia. The Company also has ownership interests in 160 natural gas producing wells and gas gathering assets and owns the Shoshone interstate and the Glacier gathering pipelines located in Montana and Wyoming. The Company’s Montana public utility was originally incorporated in 1909 and is headquartered in Great Falls, Montana.

The Company’s toll-free number is 800-570-5688. The Company’s address is 1 First Avenue South, Great Falls, Montana 59401 and its website is www.ewst.com.

Safe Harbor Regarding Forward-Looking Statements

The Company is including the following cautionary statement in this release to make applicable and to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, Gas Natural Inc. Forward-looking statements are all statements other than statements of historical fact, including, without limitation, those that are identified by the use of the words “anticipates,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “believes” and similar expressions. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those expressed. Factors that may affect forward-looking statements and the Company’s business generally include but are not limited to the Company’s ability to successfully integrate the operations of the companies it has recently acquired and consummate additional acquisitions, the Company’s continued ability to make dividend payments, the Company’s ability to implement its business plan, fluctuating energy commodity prices, the possibility that regulators may not permit the Company to pass through all of its increased costs to its customers, changes in the utility regulatory environment, wholesale and retail competition, the Company’s ability to satisfy its debt obligations, including compliance with financial covenants, weather conditions, litigation risks, and various other matters, many of which are beyond the Company’s control, the risk factors and cautionary statements made in the Company’s public filings with the Securities and Exchange Commission, and other factors that the Company is currently unable to identify or quantify, but may exist in the future. Gas Natural Inc. expressly undertakes no obligation to update or revise any forward-looking statement contained herein to reflect any change in Gas Natural Inc.’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

For more information contact:

    Gas Natural Inc.                 Investor Relations:  Kei Advisors LLC
    Thomas J. Smith, Chief Financial
     Officer                         Deborah K. Pawlowski, Chairman & CEO
    Phone: (440) 974-3770            Phone:  (716) 843-3908
    Email:  tsmith@ewst.com          Email:  dpawlowski@keiadvisors.com

FINANCIAL TABLES FOLLOW

                         Gas Natural Inc. and Subsidiaries
                         Consolidated Statements of Income

                                                           2011         2010
                                                           ----         ----
    REVENUES
    Natural gas
     operations                                     $89,994,616  $83,607,356
    Marketing and
     production                                       5,789,938    7,466,057
    Pipeline operations                                 417,768      426,644
    Propane operations                                3,014,971            -
                                                      ---------          ---
    Total revenues                                   99,217,293   91,500,057

    COST OF SALES
    Natural gas
     purchased                                       53,017,926   48,876,837
    Marketing and
     production                                       4,470,504    5,829,103
    Propane purchased                                 2,695,187            -
                                                                         ---
    Total cost of sales                              60,183,617   54,705,940
                                                     ----------   ----------

    GROSS MARGIN                                     39,033,676   36,794,117

    OPERATING EXPENSES
    Distribution,
     general, and
     administrative                                  19,610,054   17,338,172
    Maintenance                                       1,122,448    1,051,766
    Depreciation and
     amortization                                     4,464,881    4,034,383
    Accretion                                           142,214      128,294
    Taxes other than
     income                                           3,451,860    3,162,200
    Total operating
     expenses                                        28,791,457   25,714,815
                                                     ----------   ----------

    OPERATING INCOME                                 10,242,219   11,079,302

    LOSS FROM
     UNCONSOLIDATED
     AFFILIATE                                         (877,465)    (193,951)
    OTHER INCOME, net                                   224,938      578,368
    GAIN ON BARGAIN
     PURCHASE                                           955,423            -
    INTEREST EXPENSE                                 (2,033,603)  (2,178,222)
                                                     ----------   ----------

    INCOME BEFORE INCOME
     TAXES                                            8,511,512    9,285,497

    INCOME TAX EXPENSE                               (3,141,995)  (3,488,996)
                                                     ----------   ----------

    NET INCOME                                       $5,369,517   $5,796,501
                                                     ==========   ==========

    EARNINGS PER SHARE -
     BASIC                                                $0.66        $0.92

    EARNINGS PER SHARE -
     DILUTED                                              $0.66        $0.92

    WEIGHTED AVERAGE
     DIVIDENDS DECLARED
    PER COMMON SHARE                                     $0.540       $0.560

    WEIGHTED AVERAGE
     SHARES
    OUTSTANDING - BASIC                               8,151,935    6,292,717

    WEIGHTED AVERAGE
     SHARES
    OUTSTANDING -
     DILUTED                                          8,159,827    6,300,972

                             Gas Natural Inc. and Subsidiaries
                                Consolidated Balance Sheets

                                                         2011          2010
                                                         ----          ----
                      ASSETS
                      ------
    CURRENT ASSETS
    Cash and cash
     equivalents                                  $10,504,845   $13,026,585
    Marketable securities                             367,875       274,950
    Accounts receivable
    Trade, less allowance
     for doubtful accounts
     of $630,632
    and $354,719,
     respectively                                   9,381,625     9,593,840
    Related parties                                   519,084       559,384
    Unbilled gas                                    4,232,854     5,724,346
    Note receivable -
     related parties,
     current portion                                   10,256         9,565
    Inventory
    Natural gas and
     propane                                        6,967,739     5,876,710
    Materials and supplies                          1,958,858     1,414,367
    Prepaid income taxes                            1,584,869     1,601,798
    Prepayments and other                             741,101       912,959
    Recoverable cost of
     gas purchases                                  2,627,416     2,628,824
    Deferred tax asset                              1,061,314       114,362
    Total current assets                           39,957,836    41,737,690

    PROPERTY, PLANT AND
     EQUIPMENT
    Gas transmission and
     distribution
     facilities                                   100,492,234    89,094,495
    Land                                            2,600,023     1,663,759
    Buildings and
     leasehold
     improvements                                   4,966,511     4,775,954
    Transportation
     equipment                                      2,968,405     2,104,664
    Computer equipment                              3,501,492     3,408,189
    Other equipment                                 8,302,395     5,457,504
    Construction work-in-
     progress                                      12,003,916     3,260,004
    Producing natural gas
     properties                                     3,911,404     3,911,404
                                                    ---------     ---------
    Property, plant and
     equipment                                    138,746,380   113,675,973
    Less accumulated
     depreciation,
     depletion and
     amortization                                 (41,134,123)  (37,541,572)
                                                  -----------   -----------
    Property, plant and
     equipment, net                                97,612,257    76,134,401

    OTHER ASSETS
    Notes receivable -
     related parties, less
     current portion                                   35,408        45,665
    Deferred tax assets,
     less current portion                                   -     1,804,264
    Regulatory assets
    Property taxes                                    590,464       873,197
    Income taxes                                      452,645       452,645
    Rate case costs                                   205,714        64,271
    Debt issuance costs,
     net                                              869,593       485,244
    Goodwill                                       14,607,952    14,607,952
    Customer relationships                            639,333       662,167
    Investment in
     unconsolidated
     affiliate                                        330,351       640,216
    Restricted cash                                   949,907             -
    Other assets                                      159,954       220,224
    Total other assets                             18,841,321    19,855,845
                                                   ----------    ----------

    TOTAL ASSETS                                 $156,411,414  $137,727,936
                                                 ============  ============
                                                     Gas Natural Inc. and Subsidiaries
                                                  Consolidated Balance Sheets, Continued

                                                                                          2011         2010
                                                                                          ----         ----
                   LIABILITIES AND CAPITALIZATION
                   ------------------------------
    CURRENT LIABILITIES
    Checks in excess of amounts on deposit                                          $1,027,376     $532,145
    Line of credit                                                                  23,160,000   18,149,999
    Accounts payable
    Trade                                                                            8,755,623    9,200,297
    Related parties                                                                    191,763      417,543
    Notes payable, current portion                                                       7,885      910,917
    Notes payable -related parties, current
     portion                                                                                 -       49,361
    Accrued liabilities
    Taxes other than income                                                          3,018,964    2,961,853
    Vacation                                                                           115,940       86,194
    Employee benefit plans                                                             140,149      103,257
    Interest                                                                            30,688       29,810
    Deferred payments received from levelized
     billing                                                                         2,948,188    2,916,408
    Customer deposits                                                                  707,062      679,237
    Property tax settlement, current portion                                           242,128      242,120
    Related parties                                                                    635,192      413,399
    Other current liabilities                                                        1,280,670    1,020,733
    Overrecovered gas purchases                                                      2,237,827    1,203,191
    Total current liabilities                                                       44,499,455   38,916,464

    LONG-TERM LIABILITIES
    Deferred investment tax credits                                                    176,379      197,441
    Deferred tax liability                                                           2,908,167            -
    Asset retirement obligation                                                      1,689,081    1,546,867
    Customer advances for construction                                                 880,851      949,434
    Regulatory liability for income taxes                                               83,161       83,161
    Regulatory liability for gas costs                                                  57,570      131,443
    Property tax settlement, less current portion                                            -      243,008
                                                                                           ---      -------
    Total long-term liabilities                                                      5,795,209    3,151,354

    NOTES PAYABLE, less current portion                                             31,344,723   21,958,616

    COMMITMENTS AND CONTINGENCIES (see Note 12)

    STOCKHOLDERS' EQUITY
    Preferred stock; $0.15 par value, 1,500,000
     shares authorized,
    no shares issued or outstanding                                                          -            -
    Common stock; $0.15 par value, 15,000,000
     shares authorized,
    8,154,301 and 8,149,801 shares issued and
    outstanding, respectively                                                        1,223,145    1,222,470
    Capital in excess of par value                                                  41,978,799   41,910,067
    Accumulated other comprehensive income                                              80,405       46,590
    Retained earnings                                                               31,489,678   30,522,375
    Total stockholders' equity                                                      74,772,027   73,701,502
                                                                                    ----------   ----------

    TOTAL CAPITALIZATION                                                           106,116,750   95,660,118
                                                                                   -----------   ----------

    TOTAL LIABILITIES AND CAPITALIZATION                                          $156,411,414 $137,727,936
                                                                                  ============ ============
                                                               Gas Natural Inc. and Subsidiaries
                                                             Consolidated Statements of Cash Flows

                                                                                                          2011         2010
                                                                                                          ----         ----
    CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                                                                      $5,369,517   $5,796,501
    Adjustments to reconcile net income to net cash provided
    by operating activities
    Depreciation and amortization                                                                    4,464,881    3,982,602
    Accretion                                                                                          142,214      128,294
    Amortization of debt issuance costs                                                                144,739       51,781
    Stock based compensation                                                                            69,407       83,336
    Gain on sale of marketable securities                                                                    -     (159,520)
    Loss on sale of assets                                                                             150,338            -
    Loss from unconsolidated affiliate                                                                 877,465      193,951
    Gain on bargain purchase                                                                          (955,423)           -
    Investment tax credit                                                                              (21,062)     (21,062)
    Deferred income taxes                                                                            3,745,373    2,426,479
    Changes in assets and liabilities
    Accounts receivable, including related parties                                                     448,310    3,664,598
    Unbilled gas                                                                                     1,491,492      193,584
    Natural gas and propane inventory                                                                 (964,417)       6,810
    Accounts payable, including related parties                                                     (1,259,006)  (3,226,273)
    Recoverable/refundable cost of gas purchases                                                     1,036,044   (2,944,969)
    Prepayments and other                                                                              171,858      (94,112)
    Other assets                                                                                      (644,075)      32,250
    Other liabilities                                                                                  628,649   (3,387,344)
    Net cash provided by operating activities                                                       14,896,304    6,726,906

    CASH FLOWS FROM INVESTING ACTIVITIES
    Capital expenditures                                                                           (23,205,518)  (8,522,517)
    Proceeds from sale of fixed assets                                                                  43,058            -
    Proceeds from sale of marketable securities                                                              -    4,185,867
    Purchase of marketable securities                                                                  (39,004)     (52,948)
    Proceeds from related party note receivable                                                          9,566            -
    Purchase of Cut Bank shares and Kidron Investment                                                        -     (206,067)
    Cash acquired in acquisition                                                                             -      144,203
    Purchase of Independence Oil & LP Gas, Inc.                                                     (1,400,656)           -
    Investment in unconsolidated affiliate                                                            (567,600)     (62,581)
    Customer advances for construction                                                                 (68,583)     149,184
    Contributions in aid of construction                                                               217,277      (59,536)
    Net cash used in investing activities                                                          (25,011,460)  (4,424,395)

    CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from  lines of credit                                                                  30,960,000   20,800,000
    Repayment on lines of credit                                                                   (25,949,999) (20,899,170)
    Proceeds from notes payable                                                                     18,355,215       57,336
    Repayments of notes payable                                                                     (9,872,140)  (5,255,578)
    Repayments of related party notes payable                                                          (49,361)  (2,086,167)
    Net proceeds from the sale of common stock                                                               -   18,806,986
    Debt issuance costs                                                                               (498,381)           -
    Restricted cash                                                                                   (949,907)           -
    Dividends paid                                                                                  (4,402,011)  (3,451,501)
    Net cash provided by financing activities                                                        7,593,416    7,971,906
                                                                                                     ---------    ---------

    NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                            (2,521,740)  10,274,417

    CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                  13,026,585    2,752,168
                                                                                                    ----------    ---------

    CASH AND CASH EQUIVALENTS, END OF PERIOD                                                       $10,504,845  $13,026,585
                                                                                                   ===========  ===========
                                                                                             Gas Natural Inc. and Subsidiaries
                                                                                                   Segments of Operations
    Year Ended December 31, 2011
                                                                        Marketing
                                             Natural Gas                   and                                         Pipeline              Propane              Corporate and
                                              Operations               Production                                     Operations           Operations                 Other                  Consolidated
                                              ----------               ----------                                     ----------           ----------                 -----                  ------------

    OPERATING REVENUES                                    $90,325,379             $13,461,470                                    $417,768             $3,014,971   $                      -               $107,219,588
    Intersegment eliminations                                (330,763)             (7,671,532)                                          -                      -                          -                 (8,002,295)
                                                             --------              ----------                                         ---                    ---                        ---                 ----------
    Total operating revenue                                89,994,616               5,789,938                                     417,768              3,014,971                          -                 99,217,293

    COST OF SALES                                          53,348,689              12,142,036                                           -              2,695,187                          -                 68,185,912
    Intersegment eliminations                                (330,763)             (7,671,532)                                          -                      -                          -                 (8,002,295)
                                                             --------              ----------                                         ---                    ---                        ---                 ----------
    Total cost of sales                                    53,017,926               4,470,504                                           -              2,695,187                          -                 60,183,617
                                                           ----------               ---------                                         ---              ---------                        ---                 ----------

    GROSS MARGIN                                          $36,976,690              $1,319,434                                    $417,768               $319,784   $                      -                $39,033,676

    OPERATING EXPENSES
    Distribution, general and administrative               18,297,497                 517,155                                      67,237                597,620                    130,545                 19,610,054
    Maintenance                                             1,061,672                     648                                      18,076                 42,052                          -                  1,122,448
    Depreciation and amortization                           4,016,981                 285,254                                      60,195                102,451                          -                  4,464,881
    Accretion                                                  96,536                  45,678                                           -                      -                          -                    142,214
    Taxes other than income                                 3,330,549                  24,997                                      25,853                 44,061                     26,400                  3,451,860
                                                            ---------                  ------                                      ------                 ------                     ------                  ---------
    Total operating expenses                               26,803,235                 873,732                                     171,361                786,184                    156,945                 28,791,457
                                                           ----------                 -------                                     -------                -------                    -------                 ----------

    OPERATING INCOME (LOSS)                               $10,173,455                $445,702                                    $246,407              $(466,400)                 $(156,945)               $10,242,219

    OTHER INCOME (EXPENSE)                                    638,583                (877,465)                                          -              1,004,929                   (282,903)                   483,144
    INTEREST EXPENSE                                       (2,106,130)                (87,744)                                    (16,811)                     -                     (3,166)                (2,213,851)
    Intersegment eliminations                                 180,248                       -                                           -                      -                   (180,248)                         -
                                                              -------                     ---                                         ---                    ---                   --------                        ---

    INCOME (LOSS) FROM
    CONTINUING OPERATIONS                                  $8,886,156               $(519,507)                                   $229,596               $538,529                  $(623,262)                $8,511,512

    INCOME TAX BENEFIT
    (EXPENSE)                                              (3,072,056)                232,393                                     (67,167)              (283,313)                    48,148                 (3,141,995)
                                                           ----------                 -------                                     -------               --------                     ------                 ----------

    NET INCOME (LOSS)                                      $5,814,100               $(287,114)                                   $162,429               $255,216                  $(575,114)                $5,369,517
                                                           ==========               =========                                    ========               ========                  =========                 ==========

    Capital expenditures                                  $22,495,616     $                 -                                     $19,248               $582,889                   $107,765                $23,205,518

    As of December 31, 2011
    Investment in unconsolidated affiliate    $                     -                $330,351                           $               -     $                -   $                      -                   $330,351
    Goodwill                                              $14,607,952     $                 -                           $               -     $                -   $                      -                $14,607,952

    Total assets                                         $142,040,028              $5,900,392                                    $872,341             $3,638,634                $68,057,539               $220,508,934
    Intersegment eliminations                             (50,723,758)             (1,567,600)                                    (28,368)            (2,125,742)                (9,652,052)               (64,097,520)
                                                          -----------              ----------                                     -------             ----------                 ----------                -----------
    Total assets                                          $91,316,270              $4,332,792                                    $843,973             $1,512,892                $58,405,487               $156,411,414
                                                          ===========              ==========                                    ========             ==========                ===========               ============
                                                                                                 Gas Natural Inc. and Subsidiaries
                                                                                                       Segments of Operations
    Year Ended December 31, 2010
                                                                         Marketing
                                             Natural Gas                    and                                             Pipeline             Propane                Corporate and
                                             Operations                  Production                                        Operations           Operations                  Other                  Consolidated
                                             ----------                  ----------                                        ----------           ----------                  -----                  ------------

    OPERATING REVENUES                                    $83,926,733               $15,116,196                                       $426,644   $                    -  $                      -                $99,469,573
    Intersegment eliminations                                (319,377)               (7,650,139)                                             -                        -                         -                 (7,969,516)
                                                             --------                ----------                                            ---                      ---                       ---                 ----------
    Total operating revenue                                83,607,356                 7,466,057                                        426,644                        -                         -                 91,500,057

    COST OF SALES                                          49,196,214                13,479,242                                              -                        -                         -                 62,675,456
    Intersegment eliminations                                (319,377)               (7,650,139)                                             -                        -                         -                 (7,969,516)
                                                             --------                ----------                                            ---                      ---                       ---                 ----------
    Total cost of sales                                    48,876,837                 5,829,103                                              -                        -                         -                 54,705,940
                                                           ----------                 ---------                                            ---                      ---                       ---                 ----------

    GROSS MARGIN                                          $34,730,519                $1,636,954                                       $426,644    $                   -   $                     -                $36,794,117

    OPERATING EXPENSES
    Distribution, general and administrative               16,774,046                   411,815                                        132,529                        -                    19,782                 17,338,172
    Maintenance                                             1,036,836                       627                                         14,303                        -                         -                  1,051,766
    Depreciation and amortization                           3,679,147                   299,649                                         55,587                        -                         -                  4,034,383
    Accretion                                                  84,998                    43,296                                              -                        -                         -                    128,294
    Taxes other than income                                 3,106,991                    24,285                                         27,641                        -                     3,283                  3,162,200
                                                            ---------                    ------                                         ------                      ---                     -----                  ---------
    Total operating expenses                               24,682,018                   779,672                                        230,060                        -                    23,065                 25,714,815
                                                           ----------                   -------                                        -------                      ---                    ------                 ----------

    OPERATING INCOME (LOSS)                               $10,048,501                  $857,282                                       $196,584    $                   -                  $(23,065)               $11,079,302

    OTHER INCOME (EXPENSE)                                    872,221                  (635,328)                                             -                        -                   196,659                    433,552
    INTEREST EXPENSE                                       (2,134,869)                  (67,070)                                       (25,418)                       -                         -                 (2,227,357)
    Intersegment eliminations                                  49,135                         -                                              -                        -                   (49,135)                         -
                                                               ------                       ---                                            ---                      ---                   -------                        ---

    INCOME (LOSS) FROM
    CONTINUING OPERATIONS                                  $8,834,988                  $154,884                                       $171,166    $                   -                  $124,459                 $9,285,497

    INCOME TAX EXPENSE                                     (3,161,630)                  (39,280)                                       (18,383)                       -                  (269,703)                (3,488,996)
                                                           ----------                   -------                                        -------                      ---                  --------                 ----------

    NET INCOME (LOSS)                                      $5,673,358                  $115,604                                       $152,783    $                   -                 $(145,244)                $5,796,501
                                                           ==========                  ========                                       ========    =====================                 =========                 ==========

    Capital expenditures                                   $8,489,529  $                      -                            $                 -   $                    -                   $32,988                 $8,522,517

    As of December 31, 2010
    Investment in unconsolidated affiliate    $                     -                  $640,216                            $                 -   $                    -  $                      -                   $640,216
    Goodwill                                              $14,607,952  $                      -                            $                 -   $                    -  $                      -                $14,607,952

    Total assets                                         $114,279,877                $5,527,185                                       $658,198   $                    -               $77,068,782               $197,534,042
    Intersegment eliminations                             (46,254,358)               (1,114,867)                                       (17,122)                       -               (12,419,759)               (59,806,106)
                                                          -----------                ----------                                        -------                      ---               -----------                -----------
    Total assets                                          $68,025,519                $4,412,318                                       $641,076   $                    -               $64,649,023               $137,727,936
                                                          ===========                ==========                                       ========   ======================               ===========               ============
                                                         Gas Natural Inc. and Subsidiaries
                                                               Natural Gas Operations
                                                                    (Unaudited)

    Utility Throughput

                                                                    Year Ended December
                                                                    31,
                                                                   -------------------
    (in million cubic feet (MMcf))                                                   2011                          2010
                                                                                     ----                          ----

    Full Service Distribution
                        Residential                         4,644                         4,401
                        Commercial                          4,552                         3,885
                        Industrial                            150                           129

                         Total full
                         service                    9,346                         8,415

    Transportation                                                                9,050                         7,334
    Bucksport                                                                    13,925                        14,500

                         Total
                         Volumes                   32,321                        30,249
                                                   ======                        ======
    Degree Days
                                 Years Ended        Percent (Warmer)
                                                        Colder
                                December 31,       2011 Compared to
                                ------------       ----------------
                 Normal        2011           2010                   Normal           2010
                 ------        ----           ----                   ------           ----
    Great Falls,
     MT                 7,576 7,800          7,611                            2.96%   2.48%
    Cody, WY            6,925 7,434          7,253                            7.35%   2.50%
    Bangor, ME          7,676 7,267          6,543                          (5.33%)  11.07%
    Elkin, NC           3,963 3,901          4,101                          (1.56%) (4.88%)
    Youngstown,
     OH                 6,522 6,024          5,988                          (7.64%)   0.60%

SOURCE Gas Natural Inc.


Source: PR Newswire