OGE Energy Corp. Achieves Solid 2nd Quarter Results
OKLAHOMA CITY, Aug. 5 /PRNewswire-FirstCall/ — OGE Energy Corp. (NYSE: OGE), the parent company of Oklahoma Gas and Electric Company (OG&E) and Enogex LLC, today announced second-quarter earnings of $0.72 per diluted share, compared with $0.62 per share in the second quarter of 2008. The 10-cent increase was due primarily to improved second-quarter results for OG&E.
OG&E, a regulated electric utility, contributed second-quarter net income of $0.58 per diluted share, compared with $0.33 per share in the same period last year. Enogex, a midstream natural gas pipeline business, recorded net income of $0.16 per diluted share, compared with $0.33 per share in the year-ago quarter. The holding company, including results from the OGE Energy Resources marketing business, posted a loss of $0.02 per diluted share in the second quarter this year, compared with a loss of $0.04 per share in the second quarter a year ago.
“We are pleased to report that we are successfully managing our business in a challenging economy,” said Pete Delaney, OGE Energy chairman, president and CEO. “We have achieved positive regulatory outcomes, including the rate relief we need to continue investing in our system and to begin implementing our smart grid program. We also are looking forward to future opportunities to add new transmission and renewable generation.”
Discussion of Second Quarter 2009
OGE Energy reported consolidated gross margin on revenues of $320 million in the second quarter of 2009, compared with $314 million in the same period a year ago. Operating income was $126 million in the second quarter, compared with $123 million in the year-earlier quarter.
OG&E reported gross margin on revenues of $237 million in the second quarter of 2009, compared with $208 million in the second quarter of 2008, primarily due to regulatory recovery for the Redbud power plant, warmer weather in the OG&E service area and higher electric rates in Arkansas. Improved results for OG&E in the second quarter of 2009 also reflect the absence of two one-time write-downs in 2008. Net income at OG&E was $56 million in the second quarter, compared with $31 million in the same period a year ago.
Enogex reported gross margin on revenues of $84 million in the second quarter of 2009, compared with $112 million in the comparable quarter last year. The decrease was due primarily to lower commodity prices. Net income at Enogex was $16 million in the second quarter this year, compared with $31 million in the second quarter of 2008.
2009 Outlook
OGE Energy has reaffirmed its 2009 consolidated earnings guidance at $2.30 – $2.60 per diluted share. The guidance assumes approximately 96 million to 97 million average diluted shares outstanding and normal weather for the remainder of the year.
The 2009 guidance includes:
- OG&E: $1.83 to $1.98 per share on net income of $177 million to $191 million.
- Enogex: $0.53 to $0.70 per share on net income of $51 million to $68 million.
- Holding company (including the marketing business): a loss of $0.05 to $0.10 per share on a net loss of $5 million to $10 million.
More information regarding the Company’s 2009 earnings guidance and second-quarter financial results is contained in the Company’s Form 10-Q filed today with the Securities and Exchange Commission.
Conference Call Webcast
OGE Energy will host a conference call for discussion of the results and 2009 outlook on Wednesday, Aug. 5, at 8 a.m. CDT. The conference will be available through www.oge.com.
OGE Energy is the parent company of Oklahoma Gas and Electric Company (OG&E), which serves approximately 773,000 customers in a service territory spanning 30,000 square miles in Oklahoma and western Arkansas, and of Enogex LLC, a midstream natural gas pipeline business with principal operations in Oklahoma.
Some of the matters discussed in 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, access to existing lines of credit, actions of rating agencies and their impact on capital expenditures; the Company’s ability and the ability of its subsidiaries to access capital markets and obtain financing on favorable terms; prices and availability 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 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; 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, 2008.
*Note: Consolidated Statements of Income, Financial and Statistical Data attached.
OGE Energy Corp.
consolidated statements of income
(unaudited) Three Months Six Months
Ended Ended
June 30 June 30
------- -------
2009 2008 2009 2008
---- ---- ---- ----
(In millions, except per share data)
OPERATING REVENUES
Electric Utility operating
revenues $425.3 $520.7 $762.0 $907.1
Natural Gas Pipeline operating
revenues 218.8 615.0 488.7 1,223.3
----- ----- ----- -------
Total operating revenues 644.1 1,135.7 1,250.7 2,130.4
COST OF GOODS SOLD (exclusive of
depreciation and amortization
shown below)
Electric Utility cost of goods
sold 176.4 294.7 335.5 523.5
Natural Gas Pipeline cost
of goods sold 147.8 527.4 341.9 1,047.4
----- ----- ----- -------
Total cost of goods sold 324.2 822.1 677.4 1,570.9
----- ----- ----- -------
Gross margin on revenues 319.9 313.6 573.3 559.5
Other operation and
maintenance 105.6 119.0 222.1 244.2
Depreciation and amortization 64.6 52.4 127.2 103.1
Impairment of assets 1.4 - 1.4 -
Taxes other than income 21.9 19.5 44.2 41.4
---- ---- ---- ----
OPERATING INCOME 126.4 122.7 178.4 170.8
OTHER INCOME (EXPENSE)
Interest income 0.4 1.2 1.1 2.1
Allowance for equity funds
used during construction 3.9 - 5.2 -
Other income 6.5 4.5 13.0 8.4
Other expense (2.7) (12.5) (5.0) (15.0)
---- ----- ---- -----
Net other income (expense) 8.1 (6.8) 14.3 (4.5)
INTEREST EXPENSE
Interest on long-term debt 31.9 24.3 63.3 47.7
Allowance for borrowed
funds used during
construction (1.9) (0.9) (3.0) (1.6)
Interest on short-term debt
and other interest charges 1.7 4.0 4.1 10.5
--- --- --- ----
Interest expense 31.7 27.4 64.4 56.6
---- ---- ---- ----
INCOME BEFORE TAXES 102.8 88.5 128.3 109.7
INCOME TAX EXPENSE 31.9 29.7 39.8 36.3
---- ---- ---- ----
NET INCOME $70.9 $58.8 88.5 73.4
Less: Net income attributable
to noncontrolling interest 0.4 1.7 1.2 3.3
--- --- --- ---
NET INCOME ATTRIBUTABLE TO
OGE ENERGY $70.5 $57.1 $87.3 $70.1
===== ===== ===== =====
BASIC AVERAGE COMMON SHARES
OUTSTANDING 96.5 92.1 95.6 92.0
DILUTED AVERAGE COMMON
SHARES OUTSTANDING 97.5 92.5 96.4 92.5
BASIC EARNINGS PER AVERAGE
COMMON SHARE ATTRIBUTABLE
TO OGE ENERGY COMMON
SHAREHOLDERS $0.73 $0.62 $0.91 $0.76
===== ===== ===== =====
DILUTED EARNINGS PER AVERAGE
COMMON SHARE ATTRIBUTABLE
TO OGE ENERGY COMMON
SHAREHOLDERS $0.72 $0.62 $0.91 $0.76
===== ===== ===== =====
OGE Energy Corp.
financial and statistical data
(unaudited) Three Months Six Months
Ended Ended
June 30 June 30
-------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
(In millions)
ELECTRIC UTILITY
Operating revenues
by classification
Residential $167.6 $185.3 $303.9 $331.7
Commercial 112.3 126.6 191.7 216.0
Industrial 43.0 59.9 75.8 106.5
Oilfield 33.2 40.1 62.1 72.7
Public authorities
and street light 41.3 51.6 72.8 87.7
Sales for resale 12.0 16.5 24.7 31.8
Provision for rate refund (0.4) - (0.6) -
---- --- ---- ---
System sales revenues 409.0 480.0 730.4 846.4
Off-system sales revenues 8.6 33.2 14.5 45.5
Other 7.7 7.5 17.1 15.2
--- --- ---- ----
Total operating revenues $425.3 $520.7 $762.0 $907.1
====== ====== ====== ======
Sales of electricity - MWH (a)
sales by classification
Residential 2.1 2.0 4.1 4.2
Commercial 1.7 1.7 3.1 3.1
Industrial 0.8 1.0 1.7 2.0
Oilfield 0.7 0.7 1.4 1.4
Public authorities
and street light 0.8 0.8 1.4 1.4
Sales for resale 0.3 0.3 0.6 0.7
--- --- --- ---
System sales 6.4 6.5 12.3 12.8
Off-system sales 0.3 0.5 0.5 0.7
--- --- --- ---
Total sales 6.7 7.0 12.8 13.5
=== === ==== ====
Number of customers 773,436 766,407 773,436 766,407
Average cost of energy
per KWH (b) - cents
Natural gas 3.310 10.412 3.519 8.996
Coal 1.778 1.166 1.659 1.124
Total fuel 2.340 3.718 2.285 3.435
Total fuel and purchased power 2.624 4.166 2.601 3.816
Degree days
Heating
Actual 254 220 1,929 2,034
Normal 236 236 2,199 2,218
Cooling
Actual 637 721 660 733
Normal 547 547 555 556
NATURAL GAS PIPELINE
Operating revenues (before
intercompany eliminations) $190.9 $323.9 $381.0 $590.6
Operating income $32.6 $59.6 $64.4 $105.2
Net income attributable to
Enogex LLC $16.0 $30.9 $31.4 $53.4
Net cash provided from
operating activities $78.3 $42.2 $69.7 $60.7
Capital expenditures $70.1 $65.2 $143.4 $127.5
New well connects (includes
wells behind CRP's (c)) (d) 36 103 113 188
New well connects (excludes
wells behind CRP's) (d) 25 57 65 96
Gathered volumes - Tbtu/d (e) 1.25 1.12 1.25 1.09
Incremental transportation
volumes - Tbtu/d 0.57 0.41 0.49 0.41
---- ---- ---- ----
Total throughput
volumes - Tbtu/d 1.82 1.53 1.74 1.50
==== ==== ==== ====
Natural gas processed - Tbtu/d 0.70 0.65 0.67 0.64
Natural gas liquids sold (keep-
whole) - million gallons 26 52 48 105
Natural gas liquids sold (purchase
for resale) - million gallons 85 48 154 89
Natural gas liquids sold (percent-
of-liquids) - million gallons 9 6 17 10
--- --- --- ---
Total natural gas liquids
produced - million gallons 120 106 219 204
=== === === ===
Average net sales price per gallon $0.657 $1.551 $0.643 $1.456
Estimated realized keep-whole
spreads (f) $3.50 $7.18 $3.20 $7.11
(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.
(f) The estimated realized keep-whole spread is an approximation of
the spread between the weighted-average sales price of the
retained NGL commodities and the purchase price of the replacement
natural gas shrink. The spread is based on the market commodity
spread less any gains or losses realized from keep-whole hedging
transactions. The market commodity spread is estimated using the
average of the Oil Price Information Service daily average posting
at the Conway, Kansas market for NGL and the Inside FERC monthly
index posting for Panhandle Eastern Pipe Line Co. Texas, Oklahoma
for the forward month contract for natural gas prices.
SOURCE OGE Energy Corp.