OGE Energy Corp. Reports 3rd Quarter Results
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OKLAHOMA CITY, Oct. 30 /PRNewswire-FirstCall/ -- OGE Energy Corp. (NYSE: OGE), the parent company of Oklahoma Gas and Electric Company (OG&E) and Enogex LLC, today reported earnings of $1.40 per diluted share for the three months ended Sept. 30, 2009, compared with earnings of $1.50 per diluted share for the third quarter of 2008.
Earnings-per-share in the quarter were driven by strong results at OG&E, offset by cooler weather in the OG&E service territory, lower commodity prices in the Enogex midstream pipeline business and an increase in the number of shares outstanding.
OG&E posted earnings of $1.26 per share in the third quarter, compared with $1.15 per share last year. Enogex recorded earnings of $0.18 per share, compared with $0.30 per share in the year-ago quarter. The holding company, including results from the OGE Energy Resources marketing business, posted a loss of $0.04 per share in the third quarter, compared to earnings of $0.05 per share a year ago.
"We are pleased to report solid results in a difficult economy," said Pete Delaney, OGE Energy chairman, president and CEO. "In addition, we continue to make progress in positioning our businesses for growth. As a result, we are increasing our projected long term earnings growth rate to 5%-7%."
For the nine months ended Sept. 30, OGE Energy reported net income of $224 million, or $2.31 per diluted share, compared with $210 million, or $2.26 per diluted share, in the first nine months of 2008.
Discussion of Third Quarter 2009
OGE Energy reported consolidated gross margin on revenues of $431 million in the third quarter of 2009, compared with $418 million in the same period a year ago. Operating income was $230 million in the third quarter, compared with $231 million in the same period a year ago.
OG&E reported gross margin on revenues of $342 million in the third quarter of 2009, compared with $302 million in the third quarter of 2008. The increase was primarily due to retail rate increases in 2009 partially offset by milder weather. Also affecting OG&E's third quarter results were higher expenses primarily due to increased depreciation expense associated with higher levels of plant in service and higher operation and maintenance expenses, mainly a result of increased payroll and benefits costs. Net income at OG&E was $123 million in the third quarter, compared with $107 million in the same period a year ago.
Enogex reported gross margin on revenues of $93 million in the third quarter of 2009, compared with $108 million in the comparable quarter last year. The decrease was due primarily to lower commodity prices, partially offset by continued volume growth. Net income at Enogex was $18 million in the third quarter this year, compared with $28 million in the third 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 between approximately 96 million and 97 million average diluted shares outstanding and normal weather for the remainder of the year. The Company currently projects 2009 earnings to be towards the middle of the range.
2010 Outlook
OGE Energy consolidated earnings guidance for 2010 is $2.70 - $2.95 per diluted share. The guidance assumes between approximately 98 million and 99 million average diluted shares outstanding and normal weather for the year.
More information regarding the Company's 2009 and 2010 earnings guidance and third-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 the outlook for both the rest of 2009 and 2010 on Friday, Oct. 30, 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 776,000 customers in a service territory spanning 30,000 square miles in Oklahoma and western Arkansas, and of Enogex LLC, a 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 accounting principles for certain types of rate-regulated activities; 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 Nine Months
Ended Ended
September 30 September 30
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
(In millions, except per share data)
OPERATING REVENUES
Electric Utility operating
revenues $577.9 $682.5 $1,339.9 $1,589.6
Natural Gas Pipeline operating
revenues 267.4 571.8 756.1 1,795.1
----- ----- ----- -------
Total operating revenues 845.3 1,254.3 2,096.0 3,384.7
COST OF GOODS SOLD (exclusive of
depreciation and amortization shown
below)
Electric Utility cost of goods
sold 223.8 368.9 559.3 892.4
Natural Gas Pipeline cost of
goods sold 190.3 467.9 532.2 1,515.3
----- ----- ----- -------
Total cost of goods sold 414.1 836.8 1,091.5 2,407.7
----- ----- ------- -------
Gross margin on revenues 431.2 417.5 1,004.5 977.0
Other operation and maintenance 113.0 113.6 335.1 357.8
Depreciation and amortization 66.6 53.4 193.8 156.5
Impairment of assets 0.6 - 2.0 -
Taxes other than income 21.3 19.3 65.5 60.7
---- ---- ---- ----
OPERATING INCOME 229.7 231.2 408.1 402.0
OTHER INCOME (EXPENSE)
Interest income 0.3 2.3 1.4 4.4
Allowance for equity funds
used during construction 5.5 - 10.7 -
Other income 7.0 0.2 20.0 8.6
Other expense (3.9) (3.6) (8.9) (18.6)
---- ---- ---- -----
Net other income (expense) 8.9 (1.1) 23.2 (5.6)
INTEREST EXPENSE
Interest on long-term debt 37.3 25.7 100.6 73.4
Allowance for borrowed funds
used during construction (2.9) (0.8) (5.9) (2.4)
Interest on short-term debt
and other interest charges 2.3 3.5 6.4 14.0
--- --- --- ----
Interest expense 36.7 28.4 101.1 85.0
---- ---- ----- ----
INCOME BEFORE TAXES 201.9 201.7 330.2 311.4
INCOME TAX EXPENSE 64.4 60.3 104.2 96.6
---- ---- ----- ----
NET INCOME $137.5 $141.4 226.0 214.8
Less: Net income attributable
to noncontrolling interest 0.7 1.9 1.9 5.2
--- --- --- ---
NET INCOME ATTRIBUTABLE TO OGE
ENERGY $136.8 $139.5 $224.1 $209.6
====== ====== ====== ======
BASIC AVERAGE COMMON SHARES
OUTSTANDING 96.7 92.6 96.0 92.2
DILUTED AVERAGE COMMON SHARES
OUTSTANDING 97.7 93.0 96.9 92.7
BASIC EARNINGS PER AVERAGE COMMON
SHARE ATTRIBUTABLE TO OGE ENERGY
COMMON SHAREHOLDERS $1.42 $1.51 $2.34 $2.27
===== ===== ===== =====
DILUTED EARNINGS PER AVERAGE COMMON
SHARE ATTRIBUTABLE TO OGE ENERGY
COMMON SHAREHOLDERS $1.40 $1.50 $2.31 $2.26
===== ===== ===== =====
OGE Energy Corp.
financial and statistical data
(unaudited) Three Months Nine Months
Ended Ended
September 30 September 30
------------ ------------
2009 2008 2009 2008
---- ---- ---- ----
(In millions)
ELECTRIC UTILITY
Operating revenues by
classification
Residential $253.4 $285.4 $557.3 $617.1
Commercial 144.4 169.0 336.1 385.0
Industrial 52.5 71.9 128.3 178.4
Oilfield 38.4 47.6 100.5 120.3
Public authorities and street
light 54.0 66.0 126.8 153.7
Sales for resale 15.3 20.3 40.0 52.1
Provision for rate refund - (0.2) (0.6) (0.2)
--- ---- ---- ----
System sales revenues 558.0 660.0 1,288.4 1,506.4
Off-system sales revenues 11.1 13.5 25.6 59.0
Other 8.8 9.0 25.9 24.2
--- --- ---- ----
Total operating revenues $577.9 $682.5 $1,339.9 $1,589.6
====== ====== ======== ========
Sales of electricity - MWH (a)
sales by classification
Residential 2.7 2.8 6.8 7.0
Commercial 1.8 1.8 4.9 4.9
Industrial 1.0 1.1 2.7 3.1
Oilfield 0.8 0.8 2.2 2.2
Public authorities and street
light 0.8 0.9 2.2 2.3
Sales for resale 0.4 0.4 1.0 1.1
--- --- --- ---
System sales 7.5 7.8 19.8 20.6
Off-system sales 0.3 0.3 0.8 1.0
--- --- --- ---
Total sales 7.8 8.1 20.6 21.6
=== === ==== ====
Number of customers 775,863 768,857 775,863 768,857
Average cost of energy per
KWH (b) - cents
Natural gas 3.468 9.962 3.497 9.362
Coal 1.886 1.181 1.737 1.144
Total fuel 2.575 4.033 2.394 3.648
Total fuel and purchased
power 2.803 4.410 2.677 4.038
Degree days
Heating
Actual 17 2 1,946 2,036
Normal 29 29 2,228 2,247
Cooling
Actual 1,189 1,290 1,849 2,023
Normal 1,295 1,295 1,850 1,851
NATURAL GAS PIPELINE
Operating revenues (before
intercompany eliminations) $210.7 $320.5 $591.7 $911.1
Operating income $41.9 $55.6 $106.3 $160.8
Net income attributable to
Enogex LLC $18.1 $28.3 $49.5 $81.7
Net cash provided from operating
activities $5.1 $76.1 $74.8 $136.8
Capital expenditures $36.3 $78.7 $179.7 $206.2
New well connects (includes
wells behind CRP's (c)) (d) 65 101 176 289
New well connects (excludes
wells behind CRP's) (d) 21 59 86 155
Gathered volumes - Tbtu/d (e) 1.27 1.20 1.25 1.13
Incremental transportation
volumes - Tbtu/d 0.66 0.49 0.55 0.43
---- ---- ---- ----
Total throughput volumes - Tbtu/d 1.93 1.69 1.80 1.56
==== ==== ==== ====
Natural gas processed - Tbtu/d 0.74 0.67 0.69 0.65
Natural gas liquids sold
(keep-whole) - million gallons 21 49 69 154
Natural gas liquids sold
(purchase for resale) - million
gallons 100 57 254 146
Natural gas liquids sold
(percent-of-liquids) - million
gallons 8 6 25 16
-- -- -- --
Total natural gas liquids
produced - million gallons 129 112 348 316
=== === === ===
Average net sales price per
gallon $0.735 $1.465 $0.677 $1.459
Estimated realized keep-whole
spreads (f) $3.73 $6.94 $3.40 $7.05
(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.
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