Duke Earnings Soar on Wholesale Energy Activities

Duke Energy earnings jumped 23% during the second quarter to 54 cents/share led by a 128% quarterly increase in EBIT (earnings before interest and taxes) from wholesale energy operations. Duke's Energy Services division, which includes North American Wholesale Energy, International Energy and Other Energy Services business segments, posted EBIT of $328 million for the quarter, a 58% increase over 2Q2000.

"Looking at the full year, we are confident that we will deliver results at least at the high range of our stated annual goal of 10% to 15% growth, with upside potential," said CEO Richard B. Priory. "We are creating regional energy businesses that take advantage of continued worldwide energy-demand growth. Our intense focus on portfolio management and operational excellence is driving our ability to deliver greater than 30% annual EBIT growth in our competitive Energy Services businesses."

The company's revenues for the quarter grew 43% to $15.6 billion, due to continued expansion of wholesale gas and power sales and gas transmission growth in the eastern United States. For the first half of 2001, Duke earned $1.14 a share, an 18% increase. The company's competitive businesses contributed 61% of EBIT in the first half of 2001. Year-to-date EBIT from North American Wholesale was $599 million, a 212% increase from $192 million in 2000.

Duke Energy North America's EBIT growth was fueled by expansion in its wholesale energy asset portfolio, which now has more than 12,600 MW of merchant power generation in operation or under construction, compared to 8,400 MW a year ago. During the quarter, DENA delivered five new merchant energy facilities comprising 2,800 MW -- the most by any energy company, according to Duke. A sixth facility is scheduled to come on line during the third quarter. For summer 2002, DENA will deliver another 10 generation facilities, totaling 6,700 MW.

Duke Energy International delivered EBIT of $68 million for second quarter 2001 versus $87 million for 2Q2000. Field Services reported EBIT of $84 million, an increase of 17%. Year-to-date EBIT for Duke Energy Field Services increased 44%, due to the combination of Duke Energy's gas gathering and processing businesses with Phillips Petroleum's processing and marketing business and the acquisition of assets from Conoco in March 2000.

Duke's gas transmission segment reported second quarter EBIT of $142 million compared to $128 million in the same period last year. Transmission benefited from the earnings of Market Hub Partners, a gas storage business acquired last September, and higher earnings from the Maritimes & Northeast Pipeline. The segment also broke ground on the 1.1 Bcf/d, 753-mile Gulfstream pipeline project across the Gulf of Mexico from Alabama to Florida.

Duke's regulated business segment, comprised of Duke Power and Electric Transmission, reported revenue of $1.2 billion, which was basically flat. The segment reported EBIT of $361 million, a 9% decrease due to increased nuclear outage costs, unfavorable weather and the impact of the slowing economy on sales to industrial customers.

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