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Quarterly Results from O&G Production Boost Peoples Energy Financials

Quarterly Results from O&G Production Boost Peoples Energy Financials

Peoples Energy has reported net income for its fiscal 2004 first quarter ended Dec. 31, about equal to the year-ago tally, but with different contributions from its various divisions. The Peoples' oil and gas production segment prospered, but gas distribution for the Chicago-based company faltered on warm winter weather.

Net income for the fiscal first quarter was $31.4 million, or $0.85 per diluted share, on 4% higher average shares outstanding, compared with $31.0 million, or $0.87 per diluted share, in the year-ago quarter. Operating income was $60.2 million, compared to $60.3 million for the same quarter last year.

Operating income for Peoples' gas distribution business was $51.5 million for the first quarter, compared to $58.3 million in the year-ago period. Operating results were negatively impacted by weather from October through December that was 7%, or 164 degree days warmer than normal, and 10%, or 241 degree days warmer, than the same period last year. Gas deliveries fell 5%, to 71 Bcf, although higher deliveries unrelated to weather helped partially offset the weather impact.

In its oil and gas production segment operating income improved $4.5 million for the quarter to $9.4 million. The increase was due primarily to higher production volumes and higher commodity prices. On a gas equivalent basis, production increased 12% compared to the prior year first quarter due primarily to the previous fiscal year's acquisitions and successful drilling program. The company's acquisition of additional Texas oil and gas properties in late December did not affect first quarter results.

Peoples gas production averaged 66.2 MMcf/d during the quarter, up from 59.7 MMcf/d in the same quarter a year earlier. Its realized gas price was $4.14/Mcf, up from $3.61/Mcf.

The company hedged 8,847,500 MMBtu through swaps at $4.07/MMBtu and 8,032,000 with collars between $4.45-$5.82/MMBtu for an overall hedge price between $4.25-$4.90/MMBtu.

Peoples' midstream services operating income increased to $3.6 million for the quarter, compared to $2.6 million in the last fiscal year's first quarter. The improvement was driven by higher operating results from wholesale marketing and asset management activities, which benefited from improved margins due to higher average prices and price volatility. These results more than offset lower hub activity.

Its retail energy services operating income rose to $3.2 million compared with $2.1 million in the year-ago quarter. The increase was due to customer growth and higher margin, partially offset by increased operating costs. Based on successful sales and marketing campaigns, total gas and electric customers are up 25% compared to Sept. 30, 2003 and almost doubled compared to the year-ago period.

Peoples Chairman Thomas M. Patrick, said "We continue to estimate that fiscal 2004 earnings per share will be in the range of $2.70-$2.85."

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