OGE Energy Corp. expects a planned power plant acquisition for its electric utility and improved earnings from restructured assets and higher gas prices at its Enogex unit to sustain earnings over the next several years.

The company Monday reported earnings of $1.16 a share for 2002, compared with earnings of $1.29 a share in 2001. Included in 2002 earnings is a pre-tax impairment charge of $50.1 million, or $30.7 million ($0.39 per share) after tax, primarily for the disposition of Enogex natural gas processing and compression assets that the business no longer needed. Excluding the impairment charge, earnings in 2002 were $1.55 a share, compared with $1.34 a share in 2001, when the company reported a $0.05 charge for certain natural gas assets.

For the fourth quarter, OGE reported a loss of $0.39 a share, compared with a loss of $0.08 a share in the fourth quarter of 2001. Excluding the impairment charge, the company reported breakeven results for the quarter, compared with a loss of $0.03 a share for the fourth quarter of 2001.

OG&E Energy expects 2003 earnings to be within the $1.35 – $1.45 range, which reflects a rate reduction at OG&E and improved performance at Enogex.

The outlook includes projected net income of between $112 million and $118 million at OG&E and between $14 million and $16 million at Enogex, while the holding company will likely post a net loss of approximately $14 million.

Offsetting the $25 million a year rate decrease in ensuing years the utility is currently in discussions with several parties to acquire a power plant in Oklahoma to add to rate base. The acquisition is expected to be accomplished in the second or third quarter and OG&E will issue equity to cover part of the cost.

Higher gas prices are expected to boost the number of well connects for Enogex. The company is conservatively predicting 180 well connects in 2003, up from 139 in 2002. By way of comparison in 2001 when prices hit $4.00 Enogex had 230 well connects. The company sees some upside potential in improvement to the gathering and processing functions, which have been underperforming, company officials said in their earnings teleconference.

“Absent the impairment charge of $0.39 per share, our results of $1.55 exceeded our previous guidance of $1.40 to $1.50,” said Steven E. Moore, chairman, president and CEO of OGE Energy. “We improved operating results at both OG&E and Enogex, and maintained strong cash flow in 2002. At Enogex, we took positive steps by restructuring operations, reducing risk, rationalizing assets, and paying down debt by 17%. Despite the difficult business environment, we made good progress and expect that to continue.”

OGE Energy reported revenues of $3 billion in 2002, approximately the same as in 2001. Gross margin on revenues was $904 million in 2002, compared with $879 million in 2001. Excluding the $50 million impairment charge, operating income was $286 million in 2002, compared with operating income of $271 million in 2001.

At the OG&E utility, 2002 revenues were $1.4 billion, compared with $1.5 billion in 2001. Gross margin at the utility was $692 million, compared with $690 million in 2001. OG&E contributed $1.61 in earnings per share in 2002, compared with $1.55 in 2001. Lower operation, maintenance and interest expenses were primarily responsible for the improvement in earnings.

At Enogex, 2002 operating revenues were $1.7 billion, compared with $1.6 billion in 2001. Gross margin was $211 million, compared to $189 million in 2001. Enogex earned $0.10 a share in 2002, compared with a loss of $0.01 a share for 2001, excluding impairment charges in both years. For the year, including the impairment charge of $0.38 per share, Enogex posted a loss of $0.28 a share to consolidated results, compared with a loss of $0.06 a share in 2001.

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