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Warm Temps Take Toll on Columbia Earnings

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&ampE 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.

Rocco Canonica

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