Coastal Corp. was able to buck the trend of poor second quarterearnings by improving refining margins, increasing its gasproduction 22% to 526 MMcf/d and raising its crude oil andcondensate production by 50% to18,063 b/d. The company reportedsecond quarter earnings of $94.6 million, or 43 cents per share, up23% (on a per share basis) from 2Q97 earnings of $79.3 million, 35cents/share.
“Our strategies have produced another record quarter of earningsfor Coastal shareholders,” said CEO David A. Arledge. “We are wellon our way to again achieving our annual growth target of at least15%. Coastal is less affected than many other energy companies byweak oil prices because our focus is on natural gas, which accountsfor 83% of our production on an energy equivalent basis,” Arledgeadded. “In fact, lower oil prices mean lower operating andfeedstock costs for our refining business.”
Coastal’s overall earnings before interest and income taxes(EBIT) for the second quarter 1998 were $208.8 million comparedwith $182.5 million for the same period in 1997. For the first halfof 1998, EBIT increased to $469.2 million, compared with $412.1million for the same period a year earlier. Refining, marketing andchemicals posted a $25.9 million increase for the quarter.Exploration and production showed a $5.3 million increase to $30.2million. Realized gas prices were up to $2.04/Mcf versus $1.89 inlast year’s second quarter. Net crude oil and condensate pricesrealized were $11.46 per barrel compared with $17.48 per barrel in2Q97. And for the first half of the year, throughput for Coastal’spipeline subsidiaries rose to 1,119.6 Bcf compared with 1,079.2 Bcffor the same period last year.
The negatives included a one-time charge of $14.6 millionrelated to a default on delivery obligations by a supplier ofelectricity to Engage Energy, the company’s joint venture marketingsubsidiary. That affected earnings in the gas segment, which camein at $99.6 million, down from $119.2 million in 2Q97.
Second quarter EBIT for the power segment was $25.8 millioncompared with $10.0 million for the same period last year. The$15.8 million increase is primarily comprised of $13.6 million inEBIT resulting from the restructuring of power purchase agreementsfor the company’s Fulton, NY, plant.
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