CNG Posts 2Q Loss After Large Merger Charges
Consolidated Natural Gas paid a hefty price during the second
quarter for its proposed merger with Dominion Resources. The
company took a one-time $165.3 million, $1.12/share, charge related
primarily to cash-out of stock options and awards to about 700
employees and took another $6.3 million charge, $0.04/share, for a
workforce reduction related to the merger. CNG reported a second
quarter loss from continuing operations of $80 million, or 83 cents
a diluted share, compared with income of $46.8 million, or 49 cents
a diluted share, a year earlier. The comparison was made worse by a
$13.9 million, or $0.15/share, gain in 2Q98 related to a favorable
regulatory decision. Excluding special items for both periods,
income from continuing operations was 33 cents a diluted share in
2Q99, compared to 34 cents in 2Q98. Wall Street consensus had CNG
pegged quite a bit higher at $0.39/share.
CNG said the merger costs were expected, however. "Our
fundamental, basic business remains sound," said CEO George A.
Davidson, Jr. "Our oil and gas production continues to increase and
our regulated businesses remain solid. We bring a strong business
into our merger with Dominion Resources, a merger which we expect
to close as soon as the end of 1999." The $6.4 billion ($66.60/CNG
share) merger already has been approved by shareholders of both
companies and the Pennsylvania Public Utility Commission.
CNG said it's gas production rose 18%, or 7.2 Bcf, to 46.6 Bcf
from 2Q98, and its oil production jumped 45% to 2.8 million bbl.
Pretax operating income for exploration and production was $31.8
million in the second quarter of 1999, up from $28.2 million a year
earlier. The average wellhead price for CNG's gas production was
$2.18/Mcf, down 13 cents from a year earlier. Its average oil price
was $12.21/bbl, down 50 cents from a year earlier.
Pretax operating income for the company's four local gas
utilities was $2.9 million, down from $14.5 million a year earlier.
Workforce reduction costs related to a previously announced
restructuring reduced 1999 operating results by $7.8 million. The
weather was 20% warmer than normal, compared to 18% warmer than
normal in 2Q98. Distribution throughput was 74.7 Bcf, compared with
72.1 Bcf a year earlier.
Pretax operating income for the company's interstate gas
pipeline and storage business was $37.7 million, down from $46.2
million a year earlier. The 1998 figure included $13.9 million for
the favorable resolution of a regulatory contingency. Transmission
throughput was 112.8 Bcf, down from 119.7 Bcf a year earlier.
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