The expansion of its Cove Point liquefied natural gas (LNG) terminal on the eastern shore of Maryland helped Dominion post 2Q2009 earnings of $454 million (76 cents/share), up 52% compared with $298 million (51 cents) in 2Q2008, the Richmond, VA-based company said Friday.
The earnings increase was primarily due to higher merchant generation margins, lower outage costs, a lower effective income tax rate and higher contributions from gas transmission operations due to completion of the Cove Point expansion, Dominion said. Lower gas and oil production in the company’s exploration and production (E&P) operations, lower energy supply margins and lower sales of emission allowances partially offset the positive results.
Merchant generation margin was $66 million in 2Q2009, adding 11 cents to Dominion’s earnings per share (EPS), while outage costs of $48 million added another 8 cents to EPS.
The strong quarterly results prompted Dominion to affirm its 2009 operating earnings guidance of $3.20-3.30/share, but uncertainty in the timing and strength of an economic recovery and its impact on commodity prices led it to revise its 2010 guidance down to $3.20-3.40 from the previously announced $3.33-3.50.
“While it is certainly possible for us to earn within the original range, we think based on the uncertainties of the current environment, it is prudent to make this change,” said CEO Thomas F. Farrell II.
In July the Federal Energy Regulatory Commission (FERC) approved Dominion Cove Point LNG LP’s proposal to upgrade and expand its offshore pier at the Cove Point facility (see Daily GPI, July 17). With the expanded pier, Cove Point said it would be able to accommodate the “next generation” LNG tankers that are much larger than what it can presently accommodate at its terminal. The Dominion Resources subsidiary currently is limited to accepting cargo of up to 148,000 cubic meters at its LNG import terminal near Lusby, MD. The pier expansion would bump up the cargo limit to 267,000 cubic meters of LNG.
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