Dominion Chairman and CEO Thomas E. Capps said on Friday that he will step down as CEO within one year and that President and COO Thomas F. Farrell II will be his successor. The news came a couple days after the company released strong preliminary first quarter financial results.
Capps said he's certain that Farrell will "take Dominion to new heights." Farrell became COO in January 2004 and has been responsible for daily operations. He joined the company in 1995.
Capps joined Dominion's principal subsidiary, Virginia Power, as executive vice president in 1984 and assumed the position of president of Dominion in November 1986. In March 1989 he was elected COO. In May 1990 he was elected CEO and on Dec. 31, 1992, was elected chairman of the board, president and CEO. After the company's merger with Consolidated Natural Gas in January 2000, Capps became vice chairman, president and CEO of the combined company. He assumed the title of chairman in August 2000.
Capps' announcement followed the release of the company's preliminary first quarter earnings of $1.25 per share and preliminary operating earnings of $1.44 per share. The results fall in the upper end of Dominion's first quarter operating earnings guidance range of $1.35 to $1.45 per share.
Merrill Lynch analyst Steve Fleishman said the earnings are ahead of his estimate of $1.35/share and ahead of consensus at $1.39/share. "This is positive considering D's recent track record of quarterly earnings misses," said Fleishman.
The company also said that the emergency shutdown of Millstone nuclear unit No. 3 on Sunday is not expected to impact annual earnings guidance. Current expectations for Unit 3's resumption of service, and replacement power costs for the outage, fall well within budgeted annual estimates, Dominion said.
"Attention now turns to the May 4 earnings call where Dominion is expected to provide an update regarding 2006 guidance and key earnings drivers looking into 2007," said Fleishman. "While we believe that updated E&P production forecasts could prove a little disappointing, the continued strong pricing outlook still promises meaningful earnings upside.
"We continue to see potential for earnings in the $7/share range in 2007, with the key drivers being roll-off below market hedges at E&P and Millstone, as well as the Virginia fuel rate reset in mid-2007," he added. "Dominion has provided indications of the potential upside at E&P and in Virginia fuel, but has yet to do so for Millstone."
Regarding Capps stepping down, Fleishman said that could provide some "new strategic direction." He said Dominion stock continues to trade at a discount and strong first quarter results should "raise conviction on management's ability to execute on numbers near term."
Dominion is one of the nation's largest energy producers with 28,100 MW of generation, 6 Tcfe of proved gas reserves, 7,900 miles of natural gas transmission pipeline and 965 Bcf of gas storage capacity. It's utilities also serve retail energy customers in nine states.
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