Warm Temps Take Toll on Columbia Earnings
Second quarter temperatures that were 38% warmer than 2Q97
lowered Columbia Energy Group earnings 35%, or $12 million to $22.8
million. Despite the loss, however, CEO Oliver G. Richard III said
the company "continued to show improvements in operations," citing
reductions in operation and maintenance costs and a 57% increase
from exploration and production operations attributable to
Columbia's purchase of Appalachian Basin producer Alamco.
Operating income for the quarter was $70.9 million compared with
$84.3 million last year, a decline of $13.4 million. Operating
earnings were down 37% in the distribution segment and 9% in
transmission and storage. The marketing segment reported an
operating loss of $7.6 million, primarily reflecting increased
investment in its infrastructure and higher expenses associated
with additions to staff. In the same period last year, this segment
had a loss of $400,000. Columbia Energy's power marketing activity,
which began in December 1997, improved during the second quarter.
And gas sales volume was 347.4 Bcf, an increase of 225.7 Bcf over
2Q last year.
"We've also made important progress in building the electricity
supply part of our business," Richard added. "[T]hus far this year,
we've unveiled plans to develop with partners more than 1,500 MW of
electric power generation. Specifically, as previously announced,
we're working with Westcoast Energy on developing three gas-fired
plants in northeastern North America, and with LG&E Power Inc.
to build a 550-MW gas-fired cogeneration plant on a Reynolds Metals
site in Gregory, TX."
Richard said the highlight of the quarter was the massive
expansion of Columbia's customer-choice programs in Ohio and
Pennsylvania, which have given 85% of its utility customers the
ability to choose their gas supplier.
Columbia's net income for the first half of 1998 was $170.3
million, a decrease of $27.3 million from the same period last
year. After restating for the stock split, earnings decreased 34
cents per share to $2.04 per share. This decrease was largely due
to the record-breaking first quarter warm weather that continued
into the second quarter, making the first six months of 1998 the
warmest on record.
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