NGI The Weekly Gas Market Report
Despite warning investors that warm weather during the fourthquarter could negatively impact earnings by as much as 10cents/share, the CMS has nonetheless deemed 1999 a success. Itsearnings will be released in mid-January, a company spokesman said.
William McCormick, the company’s CEO, summed up CMS Energy’sactivity yesterday. “The year 1999 was one of major growth for CMSEnergy…..Panhandle was the biggest acquisition ever for CMSEnergy, in strategic value as well as in dollar value. It extendedour presence from [our] traditional Michigan market base to theenergy 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 developmentopportunities,” McCormick said.
Yet despite this rosy news, CMS did say trouble may be ahead inthe near future. For October and November, warm weather resulted inlower utility natural gas sales and pipeline deliveries, includingover 7 Bcf lower natural gas sales than would be experienced withnormal weather. As an example, John Barnett, a CMS spokesman, saidtemperatures in Lansing, MI, have been 10.5% warmer than normalthrough October, November and the first half of December.
Analyst consensus calls for earnings of $0.73/share, accordingto First Call/Thomson Financial. Even with a 10 cent reduction, CMSEnergy would still see a large increase in earnings/share comparedto 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 Panhandlecompanies comprise 10,400 miles of mainline natural gas pipelineextending from the Gulf Coast and from the Kansas/OklahomaMidcontinent region to the upper Midwest with a combined capacityof 4.4 Bcf/d, and 85 Bcf of underground gas storage facilities. Theacquisition also included the Trunkline LNG facility, the largestoperating liquefied natural gas (LNG) terminal in the U.S.
An indication of CMS’ use of the Panhandle facilities is theincreased LNG activity of the company. In 1999, 27 shipments of LNGwere arranged to be delivered into the Lake Charles LNG facility.Much of that gas, which was mainly imported by CMS’ marketingsubsidiary CMS Marketing Service & Trade or Shell’s CoralEnergy, was transported to U.S. markets by the CMS Trunkline GasCo. (see Daily GPI, Oct. 20).
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