Coastal Avoids 2Q Pitfalls, Posts Record Earnings
Coastal Corp. bucked the trend of poor second-quarter earnings,
riding its heavy investment in natural gas to a 23% increase (on a
per share basis) in second quarter earnings this year over last.
The company also improved refining margins, increased gas
production 22% to 526 MMcf/d and raised its crude oil and
condensate production by 50% to18,063 b/d. Earnings were $94.6
million, or 43 cents per share, up from 2Q97 earnings of $79.3
million, 35 cents/share.
"Our strategies have produced another record quarter of earnings
for Coastal shareholders," said CEO David A. Arledge. "We are well
on our way to again achieving our annual growth target of at least
15%. Coastal is less affected than many other energy companies by
weak oil prices because our focus is on natural gas, which accounts
for 83% of our production on an energy equivalent basis," Arledge
added. "In fact, lower oil prices mean lower operating and
feedstock costs for our refining business."
Coastal's overall earnings before interest and income taxes
(EBIT) for the second quarter 1998 were $208.8 million compared
with $182.5 million for the same period in 1997. For the first half
of 1998, EBIT increased to $469.2 million, compared with $412.1
million for the same period a year earlier. Refining, marketing and
chemicals posted a $25.9 million increase for the quarter.
Exploration and production showed a $5.3 million increase to $30.2
million. Realized gas prices were up to $2.04/Mcf versus $1.89 in
last year's second quarter. Net crude oil and condensate prices
realized were $11.46 per barrel compared with $17.48 per barrel in
2Q97. And for the first half of the year, throughput for Coastal's
pipeline subsidiaries rose to 1,119.6 Bcf compared with 1,079.2 Bcf
for the same period last year.
The negatives included a one-time charge of $14.6 million
related to a default on delivery obligations by a supplier of
electricity to Engage Energy, the company's joint venture marketing
subsidiary. That affected earnings in the gas segment, which came
in at $99.6 million, down from $119.2 million in 2Q97.
Second quarter EBIT for the power segment was $25.8 million
compared with $10.0 million for the same period last year. The
$15.8 million increase is primarily comprised of $13.6 million in
EBIT resulting from the restructuring of power purchase agreements
for the company's Fulton, NY, plant.
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