Making further strides in strengthening its balance sheet, AGL Resources Inc. reported net income of $18.9 million, or $0.29 per diluted share, for the second quarter of 2003, reflecting a 54% improvement over the $12.3 million, or $0.22 per basic and diluted share, recorded for 2Q2002.

“We continue to do our laps in a challenging race, but we were on target in every business segment during the quarter,” said Paula G. Rosput, CEO of AGL Resources. “We delivered the promised operating results and took further steps to strengthen the company financially. Moreover, we continue to be relentless in searching for new sources of value.”

The Atlanta-based energy services holding company posted consolidated earnings before interest and taxes (EBIT) for the quarter of $49.2 million, as compared with $40.2 million in 2002. The key drivers of the $9.0 million increase in EBIT compared to last year were:

The distribution operations segment, which includes Atlanta Gas Light Co. and Virginia Natural Gas, contributed $44 million of EBIT for the quarter, a $3.6 million decrease as compared to a $47.6 million EBIT contribution in the second quarter of 2002. AGL said distribution operations performed as expected with respect to growth in operating margin.

The wholesale marketing and supply arm, which is comprised primarily of Sequent Energy Management, increased its EBIT contribution by $2.7 million to $0.3 million for the quarter as compared to an EBIT loss of $2.4 million last year. This EBIT increase is primarily due to an increase in operating margin of $3.2 million to $4.1 million for the quarter as compared to $0.9 million in the prior year. AGL said the increased operating margin was the result of a 27% increase in physical volumes sold during the quarter as compared to second quarter 2002. In addition, Sequent increased the number of counterparties it conducts transactions with and continued its expansion into the Midwest and the upper Mid-Atlantic natural gas markets.

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