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Duke's Diversity Yields Better Earnings

Duke's Diversity Yields Better Earnings

Duke Energy credited a diverse portfolio for insulating it from the energy industry's downturn. The company reported 1998 third quarter basic earnings of $1.18/share, up 42% from 83 cents/share for the same quarter in 1997. Duke posted earnings of $423.8 million for the third quarter, compared to $298.4 million for the same quarter in 1997. Overall earnings before interest and taxes (EBIT) for the third quarter of 1998 was $870.9 million versus $632.2 million for the third quarter of 1997.

The company cited two main factors for the increase. In Electric Operations, overall electric sales rose 7.8%. In Energy Services, EBIT rose 110% from last year's quarter. In that unit, improved results from Duke Energy's Global Asset Development and Duke Energy Trading and Marketing more than offset lower margins posted by Duke Energy Field Services due to lower natural gas liquids prices.

"During the third quarter, we continued to execute our strategy to develop regional centers of energy assets. We also leveraged Duke Energy's strong, diverse portfolio of assets," said Richard B. Priory, CEO. "In the energy business, many external forces can affect revenues. The diversity of our portfolio provides some offsets so that negative factors for one line of business can be positive for another."

EBIT at Duke's gas transmission operations rose 32% to $177.7 million, versus $134.6 million for last year's quarter. Earnings were affected by the resolution of Texas Eastern Transmission's gas supply realignment costs, which added $39 million to third quarter results. Also in the quarter, Texas Eastern received approval from the Federal Energy Regulatory Commission for its Customer Rate Initiative plan that will reduce customer rates and will make the pipeline more competitive in the future. "With these legal and regulatory issues behind us in our Natural Gas Transmission area, we can now focus our total efforts on providing better results to customers and shareholders," said Priory.

In Energy Services, EBIT for the quarter was $78.8 million compared to $37.5 million reported for last year's quarter. Although lower gas liquids prices resulted in lower margins for Duke Field Services, other business units showed better results.

In Electric Operations, warm summer weather led to an increase of overall electric sales. Sales to residential customers accounted for much of the increase, rising 13% for the quarter. Commercial and general service usage rose 8%. Industrial sales fell 1.8% for the quarter.

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ISSN © 2577-9877 | ISSN © 1532-1266
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