Southern Union Co. weathered the storm of lower realized commodity prices from the company's gathering and processing segment to post 1Q2009 adjusted net earnings that beat analyst's estimates.
Adjusted net earnings for the quarter were $73.1 million, or 59 cents per share, which beat analyst predictions that ranged from 50 to 55 cents/share. Net earnings including special items were $44.1 million, or 36 cents per share, compared with $78.6 million, or 64 cents per share, in the prior year.
The Houston-based transporter, storer, gatherer, processor and distributor of natural gas said its earnings are still being impacted by Hurricane Ike's visit last September. Southern Union said Ike negatively impacted the quarter by an additional $2.1 million, or 2 cents per share, as a result of a $3.4 million reduction in transportation revenue compared to the prior year due to reduced volumes flowing after the hurricane.
In addition to creating lower volumes, Ike's rampage left a lasting impact on Southern Union's pipeline infrastructure. The company recorded a $16.1 million charge during the quarter to increase the provision for repair and abandonment costs as a result of damage to the company's Sea Robin Pipeline caused by the hurricane.
"Given the overall commodity price environment of the first quarter, we were pleased with the operational and financial results of the company," said CEO George L. Lindemann. "Our stable, fee-based businesses continue to drive results in line with our expectations and as such we are pleased to reaffirm our 2009 earnings guidance."
The company expects 2009 net earnings of $1.45-1.60 per share and adjusted net earnings of $1.75 to $1.90 per share.
"We are happy with the continued progress that we are making on our organic growth projects," said Eric D. Herschmann, president. "Trunkline LNG's Infrastructure Enhancement Project remains on track for an early third quarter in-service date. Additionally, the recent senior note offering at our Florida Gas Transmission affiliate, which will help support the Phase VIII expansion project, was very well received by the market."
Last month the Federal Energy Regulatory Commission issued a favorable draft environmental review of Florida Gas Transmission's $2.45 billion Phase VIII proposal to construct 483 miles of pipeline facilities in Alabama, Mississippi and Florida to meet expanding gas-fired power generation demand in the Sunshine State (see Daily GPI, April 20).
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