Enron Corp. announced first quarter earnings and reportedincreased operating results in each of its core business groups.The company also reported another loss for Enron Energy Servicesdue to start-up costs.
Enron realized after-tax earnings of $0.65 per diluted share inthe first quarter of 1998 compared to $0.57 before a non-recurringgain of $0.24 per diluted share on the sale of liquids propertiesin the first quarter of 1997. Enron reported total diluted earningsper share of $0.65 and $0.81 and total net income of $214 millionand $222 million for the first quarter of 1998 and 1997,respectively.
“Enron’s 1998 first quarter results reflect substantial earningsgrowth across our core business activities,” said Kenneth L. Lay,CEO. “Our wholesale business was particularly strong during thequarter, and we made significant progress in building our energyservices business by increasing direct sales to end-use customers.”
In the first quarter of 1998 core business groups increasedincome before interest, minority interest and taxes (IBIT) by 46%to $498 million compared to $341 million a year ago. The corebusinesses realized after-tax earnings of $0.71 and $0.60 perdiluted share for the first quarter of 1998 and 1997, respectively.Among core business results:
Exploration and Production includes Enron Oil & Gas andhedging of exposure to commodity prices related to Enron’s majorityownership of EOG. In the 1998 first quarter, Exploration andProduction generated IBIT of $43 million compared with $42 millionin the first quarter of 1997. EOG anticipates approximately 13%global volume growth in 1998.
Transportation and Distribution includes Enron’s North Americaninterstate gas pipelines (Gas Pipeline Group) and its electricutility in Oregon (Portland General). Gas Pipeline Group generatedIBIT of $126 million in the first quarter of 1998 compared with$135 million in the first quarter of 1997. Portland Generalgenerated IBIT of $79 million in the first quarter of 1998. Noresults from Portland General were included for the 1997 firstquarter as the merger was completed in July 1997. First quarter1998 operating margins and volumes for both groups declinedslightly due to an unusually warm winter in their respectiveservice territories.
Enron Energy Services (EES) is extending Enron’s energyexpertise to end-use customers, including sales of gas, electricityand energy management services directly to commercial and lightindustrial customers, as well as investments in related businesses.
In the first quarter of 1998, EES executed several commodity andservices contracts with new customers. The largest customers toswitch electricity providers in the recently deregulated market inCalifornia-Pacific Telesis and the University of California andCalifornia State University systems-chose EES to supply power andimplement energy management services. In the first quarter of 1998,EES signed contracts representing about $850 million of futurerevenues, bringing the total to date to more than $2 billion infuture revenues.
However, EES reported an operating loss before interest,minority interest and taxes of $27 million in the first quarter of1998 compared to a loss of $14 million in the first quarter of1997, or $0.06 and $0.03 per diluted share for the first quarter of1998 and 1997, respectively. This loss primarily reflects the costsassociated with developing the commodity, capital and servicescapability to deliver on contracts signed to date by EES.
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