Company reaffirms 2009 earnings guidance
OKLAHOMA CITY, Feb. 13 /PRNewswire-FirstCall/ -- OGE Energy Corp. (NYSE: OGE), the parent company of Oklahoma Gas and Electric Company (OG&E) and Enogex LLC, reported earnings of $2.49 per diluted share in 2008, compared with $2.64 per diluted share in 2007.
In 2008, OG&E reported net income of $143 million and contributed $1.54 per diluted share, compared with $162 million, or $1.75 per diluted share in 2007. Enogex reported record net income of $91 million, or $0.98 per diluted share in 2008, compared with $86 million, or $0.93 per diluted share for 2007.
"Consolidated earnings were well within our expectations and our guidance," said Pete Delaney, OGE Energy chairman, president and CEO. "The lower earnings at the utility largely reflect the lag in recovery of the investments made since the last rate case, supporting the rate case filing scheduled for later this month. Enogex achieved record earnings for the year despite commodity price declines in the fourth-quarter. Both businesses remain well positioned for continued investment and growth in the current environment."
For the three months ended Dec. 31, 2008, OGE Energy reported earnings of $0.23 per diluted share, compared with $0.40 per diluted share in the fourth quarter of 2007. The decrease was due primarily to lower profit margins in the Enogex pipeline business. The 2008 results also included a $0.06 per share non-recurring charge related to the planned initial public offering of Enogex LLC and the previously proposed ETP Enogex Partners joint venture.
Discussion of 2008 results
OGE Energy reported consolidated operating revenues of $4.1 billion in 2008, compared with $3.8 billion in 2007. Gross margin on revenues was $1.3 billion in 2008, compared with $1.2 billion in 2007. Operating income was $462 million in 2008, compared with $455 million in 2007. Net income was $231 million in 2008, compared with $244 million in 2007.
OG&E reported operating revenues of $2 billion in 2008, compared with $1.8 billion in 2007. Gross margin on revenues at OG&E was $845 million, compared with $810 million in 2007. OG&E's lower earnings, $1.54 in diluted earnings per share in 2008 compared with $1.75 per diluted share in 2007, were primarily due to higher operating and interest expenses, a result of increased investment in the utility system, more than offsetting higher gross margins.
Enogex reported operating revenues of $1.1 billion in 2008, compared with $2.1 billion in 2007, before the OGE Energy Resources Inc. marketing business was moved from Enogex to the holding company on January 1, 2008. Gross margin on revenues at Enogex was $393 million in 2008, compared to $353 million in 2007. Record earnings at Enogex, $0.98 per diluted share in 2008 compared to $0.93 per diluted share in 2007, were primarily due to increased gross margins in both business segments, which benefited from volume growth and a favorable commodity price environment for most of the year, partly offset by higher operating expenses associated with system growth.
The holding company posted a loss of $0.03 per share to OGE Energy's consolidated results in 2008, compared with a loss of $0.04 per share in 2007.
2009 Outlook
OGE Energy consolidated earnings guidance for 2009 remains unchanged at $2.30 - $2.60 per diluted share. However, shifting business and economic conditions have caused some of the underlying assumptions to change. The 2009 guidance includes:
- OG&E, $1.83 to $1.98 per diluted share on net income of $177 million to $191 million.
- Enogex, $0.53 to $0.70 per diluted share on net income of $51 million to $68 million.
- Holding company, loss of $0.05 to $0.10 per diluted share on a net loss of $5 million to $10 million.
More information regarding the Company's 2009 earnings guidance and 2008 financial results is contained in the Company's Form 10-K 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 2009 on Friday, Feb. 13, at 8 a.m. CST. 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 770,000 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 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, 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 Ended Twelve Months Ended
December 31 December 31
----------- -----------
2008 2007 2008 2007
---- ---- ---- ----
(In millions, except
per share data)
OPERATING REVENUES
Electric Utility operating
revenues $369.9 $431.3 $1,959.5 $1,835.1
Natural Gas Pipeline operating
revenues 316.1 526.9 2,111.2 1,962.5
----- ----- ------- -------
Total operating revenues 686.0 958.2 4,070.7 3,797.6
COST OF GOODS SOLD (exclusive of
depreciation and amortization shown
below)
Electric Utility cost of
goods sold 168.8 249.2 1,061.2 977.8
Natural Gas Pipeline cost of
goods sold 241.5 441.0 1,756.8 1,656.9
----- ----- ------- -------
Total cost of goods sold 410.3 690.2 2,818.0 2,634.7
----- ----- ------- -------
Gross margin on revenues 275.7 268.0 1,252.7 1,162.9
Other operation and
maintenance 134.4 126.0 492.2 436.8
Depreciation and amortization 61.0 50.2 217.5 195.3
Impairment of assets 0.4 - 0.4 0.5
Taxes other than income 19.8 18.2 80.5 75.0
---- ---- ---- ----
OPERATING INCOME 60.1 73.6 462.1 455.3
OTHER INCOME (EXPENSE)
Interest income 2.3 0.7 6.7 2.1
Allowance for equity
funds used during
construction - (0.7) - -
Other income 6.8 4.3 15.4 17.4
Other expense (7.8) (8.7) (31.6) (23.7)
---- ---- ----- -----
Net other income (expense) 1.3 (4.4) (9.5) (4.2)
INTEREST EXPENSE
Interest on long-term debt 29.6 21.4 103.0 87.8
Allowance for borrowed funds
used during construction (1.6) (1.6) (4.0) (4.0)
Interest on short-term
debt and other interest
charges 7.0 (4.3) 21.0 6.4
--- ---- ---- ---
Interest expense 35.0 15.5 120.0 90.2
---- ---- ----- ----
INCOME BEFORE TAXES 26.4 53.7 332.6 360.9
INCOME TAX EXPENSE 4.6 16.1 101.2 116.7
--- ---- ----- -----
NET INCOME $21.8 $37.6 $231.4 $244.2
===== ===== ====== ======
BASIC AVERAGE COMMON SHARES
OUTSTANDING 93.0 91.8 92.4 91.7
DILUTED AVERAGE COMMON SHARES
OUTSTANDING 93.4 92.6 92.8 92.5
BASIC EARNINGS PER AVERAGE
COMMON SHARE $0.23 $0.41 $2.50 $2.66
===== ===== ===== =====
DILUTED EARNINGS PER AVERAGE
COMMON SHARE $0.23 $0.40 $2.49 $2.64
===== ===== ===== =====
OGE Energy Corp.
financial and statistical data
(unaudited) Three Months Ended Twelve Months Ended
December 31 December 31
----------- -----------
2008 2007 2008 2007
---- ---- ---- ----
(In millions)
ELECTRIC UTILITY
Operating revenues
by classification
Residential $134.1 $155.1 $751.2 $706.4
Commercial 94.0 108.9 479.0 450.1
Industrial 41.4 55.7 219.8 221.4
Oilfield 31.6 37.2 151.9 140.9
Public authorities
and street light 36.6 44.5 190.3 181.4
Sales for resale 12.8 19.3 64.9 68.8
Provision for rate refund (0.2) - (0.4) 0.1
---- --- ---- ---
System sales revenues 350.3 420.7 1,856.7 1,769.1
Off-system sales revenues 9.9 1.8 68.9 35.1
Other 9.7 8.8 33.9 30.9
--- --- ---- ----
Total operating revenues $369.9 $431.3 $1,959.5 $1,835.1
====== ====== ======== ========
Sales of electricity - MWH (a)
sales by classification
Residential 2.0 2.0 9.0 8.7
Commercial 1.6 1.5 6.5 6.3
Industrial 0.9 1.0 4.0 4.2
Oilfield 0.7 0.7 2.9 2.8
Public authorities
and street light 0.7 0.7 3.0 3.0
Sales for resale 0.3 0.3 1.4 1.4
--- --- --- ---
System sales 6.2 6.2 26.8 26.4
Off-system sales 0.4 0.1 1.4 0.7
--- --- --- ---
Total sales 6.6 6.3 28.2 27.1
=== === ==== ====
Number of customers 770,088 762,234 770,088 762,234
Average cost of energy
per KWH (b) - cents
Natural gas 5.213 6.628 8.455 6.872
Coal 1.182 1.252 1.153 1.143
Total fuel 2.308 3.657 3.337 3.173
Total fuel and
purchased power 2.626 3.912 3.710 3.523
Degree days
Heating
Actual 1,358 1,249 3,394 3,175
Normal 1,403 1,403 3,650 3,631
Cooling
Actual 58 141 2,081 2,221
Normal 61 61 1,912 1,911
NATURAL GAS
PIPELINE
Operating revenues (before
intercompany eliminations) (c) $192.1 $556.2 $1,103.2 $2,065.2
Operating income (c) $24.4 $42.9 $185.2 $163.5
Net income (c) $9.5 $22.2 $91.2 $86.2
Net cash provided from
operating activities (c) $105.2 $38.8 $242.0 $107.8
Capital expenditures (c) $125.3 $69.3 $331.5 $165.9
New well connects (includes
wells behind CRP's (d) (e) 68 79 357 374
New well connects (excludes
wells behind CRP's) (e) 48 41 203 178
Gathered volumes - Tbtu/d (f) 1.24 1.10 1.16 1.05
Incremental
transportation volumes -
Tbtu/d 0.35 0.44 0.41 0.47
---- ---- ---- ----
Total throughput
volumes - Tbtu/d 1.59 1.54 1.57 1.52
==== ==== ==== ====
Natural gas processed - Tbtu/d 0.69 0.62 0.66 0.57
Natural gas liquids sold (keep-
whole) - million gallons 27 74 181 252
Natural gas liquids sold (purchase
for resale) - million gallons 76 34 222 117
Natural gas liquids sold (percent-
of-liquids) - million gallons 7 4 23 16
--- --- --- ---
Total natural gas liquids
produced - million gallons 110 112 426 385
=== === === ===
Average sales price per gallon $0.668 $1.206 $1.255 $1.048
Estimated realized keep-
whole spreads (g) $3.53 $7.28 $6.15 $5.35
(a) Megawatt-hours.
(b) Kilowatt-hours.
(c) No results for OGE Energy Resources, Inc. ("OERI") for the three
and twelve months ended December 31, 2008 are included
because, as of January 1, 2008, Enogex distributed the stock
of OERI to OGE Energy.
(d) Central receipt points.
(e) As reported to management by third parties.
(f) Trillion British thermal units per day.
(g) 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.
