OGE Energy Corp. Announces 2007 Results, 2008 Guidance
OKLAHOMA CITY, Feb. 28 /PRNewswire-FirstCall/ — OGE Energy Corp. , the parent company of Oklahoma Gas and Electric Company (OG&E) and Enogex Inc., reported income from continuing operations of $2.64 per diluted share in 2007, compared with $2.45 per diluted share in 2006.
Net income for 2007 also was $2.64 per diluted share, while net income for 2006, including discontinued operations, was $2.84 per diluted share.
In 2007, OG&E reported net income of $162 million and contributed $1.75 per diluted share, compared with $149 million, or $1.62 per diluted share in 2006. Enogex reported income from continuing operations of $86 million, or $0.93 per diluted share in 2007, compared with $78 million, or $0.84 per diluted share for 2006.
“We are pleased to again report solid earnings,” said Pete Delaney, OGE Energy chairman, president and CEO. “We continue to increase our level of investment in both businesses as we meet the energy infrastructure needs of Oklahoma, positioning OGE Energy for higher growth. At the same time, we remain focused on our operations to deliver returns to our shareholders and excellent service to our customers.”
For the three months ended Dec. 31, 2007, OGE Energy reported earnings of $0.40 per diluted share, compared with $0.24 per diluted share in the fourth quarter of 2006. Expenses associated with the December 2007 ice storm in the OG&E service area are not included in fourth-quarter results, having been deferred pending future regulatory recovery.
Discussion of 2007 results
OGE Energy reported consolidated operating revenues of $3.8 billion in 2007, compared with $4.0 billion in 2006. Gross margin on revenues was $1.2 billion in 2007, compared with $1.1 billion in 2006. Operating income was $455 million in 2007, compared with $433 million in 2006. Net income was $244 million in 2007, compared with $262 million in 2006.
OG&E reported operating revenues of $1.8 billion in 2007, compared with $1.7 billion in 2006. Gross margin on revenues at OG&E was $810 million, compared with $796 million in 2006. OG&E’s higher earnings, $1.75 in diluted earnings per share in 2007 compared with $1.62 per diluted share in 2006, primarily reflects higher electric rates from the Centennial Wind Farm rider, security rider, Arkansas rate case and customer growth, partially offset by cooler summer weather in OG&E’s service area. Also contributing to higher earnings for OG&E in 2007 were lower interest expenses, primarily a result of a settlement of an Internal Revenue Service audit.
Enogex reported operating revenues of $2.1 billion in 2007, compared with $2.4 billion in 2006. Gross margin on revenues at Enogex was $353 million in 2007, compared to $307 million in 2006. Higher income from continuing operations at Enogex, $0.93 per diluted share in 2007 compared to $0.84 per diluted share in 2006, were primarily due to increased gross margins in all of Enogex’s business segments, which continued to benefit from higher volumes and a favorable commodity price environment, partly offset by higher operating expenses associated with system growth.
The holding company posted a loss of $0.04 per share to OGE Energy’s consolidated results in 2007, compared with a loss of $0.01 per share in 2006. The 2006 result benefited from a tax adjustment.
2008 Outlook
OGE Energy’s earnings guidance for 2008 is between $223 million and $242 million of net income or $2.40 to $2.60 per diluted share. The guidance assumes, among other factors, approximately 93.1 million average diluted shares outstanding, normal weather, sales growth at OG&E of approximately 2 percent, and a 7 to 10 percent increase in gross margins at Enogex, or $23 million to $37 million. The components of 2008 guidance include:
— OG&E: $1.56 – $1.66 per diluted share on net income of $145 – $155 million. — Enogex: $0.89 – $0.98 per diluted share on net income of $83 – $91 million. — Holding Co.: loss of $0.04 – $0.05 per diluted share on a net loss of $4 – $5 million.
More detailed information on the Company’s 2008 outlook is provided in its Annual Report on Form 10-K for the year ended December 31, 2007, which is being filed today with the Securities and Exchange Commission.
Conference Call Webcast
OGE Energy will host a conference call for discussion of the results and the outlook for 2008 on Thursday, Feb. 28, 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 762,000 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.
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,”"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, coal, natural gas and natural gas liquids, each on a stand-alone basis and in relation to each other; business conditions in the energy and natural gas midstream industries; competitive factors including the extent and timing of the entry of additional competition in the markets served by the Company; unusual weather; availability and prices of raw materials for current and future construction projects; federal or state legislation and regulatory decisions (including the approval of future regulatory filings related to the proposed acquisition of the Redbud power plant) 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; the discontinuance of regulated accounting principles under SFAS No. 71; 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; the impact of the proposed initial public offering of limited partner interests of OGE Enogex Partners L.P.; and other risk factors listed in the reports filed by the Company with the Securities and Exchange Commission including Risk Factors and Exhibit 99.01 to the Company’s Form 10-K for the year ended December 31, 2007.
OGE Energy Corp. consolidated statements of income (unaudited) Three Months Ended Twelve Months Ended December 31 December 31 2007 2006 2007 2006 (In millions, except per share data) OPERATING REVENUES Electric Utility operating revenues $431.3 $318.3 $1,835.1 $1,745.7 Natural Gas Pipeline operating revenues 526.9 512.6 1,962.5 2,259.9 Total operating revenues 958.2 830.9 3,797.6 4,005.6 COST OF GOODS SOLD (exclusive of depreciation shown below) Electric Utility cost of goods sold 249.2 177.2 977.8 902.5 Natural Gas Pipeline cost of goods sold 441.0 437.5 1,656.9 2,000.0 Total cost of goods sold 690.2 614.7 2,634.7 2,902.5 Gross margin on revenues 268.0 216.2 1,162.9 1,103.1 Other operation and maintenance 126.0 110.0 436.8 416.6 Depreciation 50.2 46.1 195.3 181.4 Impairment of assets – – 0.5 0.3 Taxes other than income 18.2 17.5 75.0 72.1 OPERATING INCOME 73.6 42.6 455.3 432.7 OTHER INCOME (EXPENSE) Interest income 0.7 1.6 2.1 6.2 Allowance for equity funds used during construction (0.7) 1.6 – 4.1 Other income 4.3 8.4 17.4 16.3 Other expense (8.7) (4.3) (23.7) (16.7) Net other income (expense) (4.4) 7.3 (4.2) 9.9 INTEREST EXPENSE Interest on long-term debt 21.4 21.3 87.8 87.4 Allowance for borrowed funds used during construction (1.6) (0.7) (4.0) (4.5) Interest on short-term debt and other interest charges (4.3) 2.8 6.4 13.1 Interest expense 15.5 23.4 90.2 96.0 INCOME FROM CONTINUING OPERATIONS BEFORE TAXES 53.7 26.5 360.9 346.6 INCOME TAX EXPENSE 16.1 4.4 116.7 120.5 INCOME FROM CONTINUING OPERATIONS 37.6 22.1 244.2 226.1 DISCONTINUED OPERATIONS Income rom discontinued operations – – – 59.1 Income tax expense – – – 23.1 Income from discontinued operations – – – 36.0 NET INCOME $37.6 $22.1 $244.2 $262.1 BASIC AVERAGE COMMON SHARES OUTSTANDING 91.8 91.2 91.7 91.0 DILUTED AVERAGE COMMON SHARES OUTSTANDING 92.6 92.5 92.5 92.1 BASIC EARNINGS PER AVERAGE COMMON SHARE Income from continuing operations $0.41 $0.25 $2.66 $2.48 Income from discontinued operations – – – 0.40 NET INCOME $0.41 $0.25 $2.66 $2.88 DILUTED EARNINGS PER AVERAGE COMMON SHARE Income from continuing operations $0.40 $0.24 $2.64 $2.45 Income from discontinued operations – – – 0.39 NET INCOME $0.40 $0.24 $2.64 $2.84 OGE Energy Corp. financial and statistical data (unaudited) Three Months Ended Twelve Months Ended December 31 December 31 2007 2006 2007 2006 (In millions) ELECTRIC UTILITY Operating revenues by classification Residential $155.1 $114.2 $706.4 $698.8 Commercial 108.9 81.3 450.1 428.3 Industrial 55.7 42.8 221.4 215.7 Oilfield 37.2 25.8 140.9 129.3 Street light 2.2 2.1 9.1 11.4 Public authorities 42.3 30.8 172.3 159.6 Sales for resale 19.3 14.0 68.8 65.4 Provision for refund on gas transportation and storage case – (0.9) 0.1 (0.9) System sales revenues 420.7 310.1 1,769.1 1,707.6 Off-system sales revenues 1.8 0.4 35.1 2.7 Other 8.8 7.8 30.9 35.4 Total operating revenues $431.3 $318.3 $1,835.1 $1,745.7 Sales of electricity – MWH (a) sales by classification Residential 2.0 1.8 8.7 8.7 Commercial 1.5 1.4 6.3 6.2 Industrial 1.0 1.0 4.2 4.4 Oilfield 0.7 0.7 2.8 2.7 Street light – – 0.1 0.1 Public authorities 0.7 0.7 2.9 2.8 Sales for resale 0.3 0.3 1.4 1.5 System sales 6.2 5.9 26.4 26.4 Off-system sales 0.1 – 0.7 – Total sales 6.3 5.9 27.1 26.4 Number of customers 762,234 754,840 762,234 754,840 Average cost of energy per KWH (b) – cents Natural gas 6.628 6.465 6.872 6.829 Coal 1.252 1.111 1.143 1.114 Total fuel 3.657 2.598 3.173 3.003 Total fuel and purchased power 3.912 2.958 3.523 3.366 Degree days Heating Actual 1,249 1,150 3,175 2,746 Normal 1,403 1,403 3,631 3,631 Cooling Actual 141 94 2,221 2,485 Normal 61 61 1,911 1,911 NATURAL GAS PIPELINE Operating revenues (before intercompany eliminations) $556.2 $529.8 $2,065.2 $2,367.8 Operating income $42.9 $41.6 $163.5 $138.8 Income from continuing operations $22.2 $23.1 $86.2 $77.5 Net cash provided from operating activities $38.8 $57.8 $107.8 $131.6 Capital expenditures from continuing operations $69.3 $16.9 $165.9 $67.1 New well connects (includes wells behind CRP’s (c)) (d) 79 86 374 362 New well connects (excludes wells behind CRP’s) (d) 41 52 178 206 Gathered volumes – Tbtu/d (e) 1.10 1.00 1.05 0.98 Incremental transportation volumes – Tbtu/d 0.44 0.41 0.47 0.46 Total throughput volumes – Tbtu/d 1.54 1.41 1.52 1.44 Natural gas processed – Tbtu/d 0.62 0.56 0.57 0.54 Natural gas liquids sold (keep-whole) – million gallons 74 63 252 244 Natural gas liquids sold (purchase for resale) – million gallons 34 37 117 113 Natural gas liquids sold (percentage of liquids) – million gallons 4 4 16 14 Total natural gas liquids produced – million gallons 112 104 385 371 Average sales price per gallon $1.206 $0.869 $1.048 $0.902 (a) Megawatt-hours. (b) Kilowatt-hours. (c) Central receipt points. (d) As reported to management by third parties. (e) Trillion British thermal units per day.
OGE Energy Corp.
CONTACT: Brian Alford, +1-405-553-3187, or Financial Contact, ToddTidwell, +1-405-553-3966, both of OGE Energy Corp.
Web site: http://www.oge.com/