Despite warning investors last week that warm weather during the fourth quarter could negatively impact earnings by as much as 10 cents/share last week, CMS Energy has nonetheless deemed 1999 a success. Its earnings will be released in mid-January, a company spokesman said.

CEO William McCormick said, “The year 1999 was one of major growth for CMS Energy…..Panhandle was the biggest acquisition ever for CMS Energy, in strategic value as well as in dollar value. It extended our presence from [our] traditional Michigan market base to the energy production region of the central and south central U.S., where CMS has gas production, gathering and processing assets, strategically positioning CMS for future business development opportunities.”

Yet despite this rosy news, CMS did say trouble may be ahead. For October and November, warm weather resulted in lower utility natural gas sales and pipeline deliveries, including over 7 Bcf lower natural gas sales than would be experienced with normal weather. As an example, John Barnett, a CMS spokesman, said temperatures in Lansing, MI, have been 10.5% warmer than normal through October, November and the first half of December.

Analyst consensus calls for earnings of $0.73/share, according to First Call/Thomson Financial. Even with a 10 cent reduction, CMS Energy would still see a large increase in earnings/share compared to its 4Q98 result of 44 cents/share.

CMS bought Duke’s Panhandle companies in March for $2.2 billion, including assumption of $300 million of debt. The Panhandle companies comprise 10,400 miles of mainline natural gas pipeline extending from the Gulf Coast and from the Kansas/Oklahoma Midcontinent region to the upper Midwest with a combined capacity of 4.4 Bcf/d, and 85 Bcf of underground gas storage facilities. The acquisition also included the Trunkline LNG facility, the largest operating liquefied natural gas (LNG) terminal in the U.S.

An indication of CMS’ use of the Panhandle facilities is the increased LNG activity. In 1999, 27 shipments of LNG were arranged to be delivered into the Lake Charles LNG facility. Much of that gas, which was mainly imported by CMS’ marketing subsidiary CMS Marketing Service & Trade or Shell’s Coral Energy, was transported to U.S. markets by the CMS Trunkline Gas Co. (see NGI, Oct. 11).

John Norris

©Copyright 1999 Intelligence Press, Inc. All rights reserved.The preceding news report may not be republished or redistributed in wholeor in part without prior written consent of Intelligence Press, Inc.