AGL Resources reported a 32% increase in second quarter net income compared to the same period in 2001. Net income rose to $12.3 million, or $0.22/share, compared with $9.3 million, or $0.17/share, and exceeded First Call consensus estimates of $0.20/share. The key drivers were lower operation and maintenance costs and depreciation expense in the distribution operations segment, improved contributions in the energy investments segment from SouthStar Energy Services, and lower corporate interest expense. “The seas are more turbulent, but we’re still on course,” said CEO Paula G. Rosput. “Despite the challenges within our industry, we are able to stay focused on strategies that are strengthening our cash flows, balance sheet and earnings.” Distribution operations contributed earnings before interest and taxes (EBIT) of $47.5 million, a $3 million increase from the same quarter last year that was achieved despite a lower operating margin and primarily as a result of lower utility operating and maintenance costs due to operational efficiencies and synergies from the company’s acquisition and integration of Virginia Natural Gas. Depreciation expenses were lower due to a change in depreciation rates established as part of Atlanta Gas Light’s performance-based rate plan. Sequent Energy Management’s EBIT contribution in second quarter 2002 declined $0.9 million to a loss of $2.3 million, compared with a loss of $1.4 million for the same period last year. Despite increased volumes and revenue contribution, Sequent’s overall contribution was limited by lower volatility in the Southeast energy market and increased expenses for the continued implementation of the back- and mid-offices. The energy investments segment’s EBIT contribution increased $2.2 million, or about 40%, compared to the same period one year ago, due to lower wholesale gas costs relative to retail prices. The segment still had an EBIT loss of $3.3 million. AGL Resources management said it expects to meet or exceed the earnings guidance previously stated for fiscal year 2002 of $1.65 to $1.70 per share.

KeySpan Corp. reported quarterly earnings from continuing operations of $28 million, or $0.20 per share, compared to a loss of $12 million, or $0.09 per share, for the same period last year. For the six months ended June 30, KeySpan reported earnings of $241 million, or $1.71 per share, compared to $211 million, or $1.54 per share, in 2Q2001. Excluding special items related to the former Roy Kay companies, 2001 earnings from continuing operations were $18.2 million, or $0.13 per share, for the second quarter, and $246.3 million, or $1.79 per share, for the six months ended June 30. Results were in line with expectations and continue to benefit from the conversion of customers to natural gas, the reduction in operation and maintenance expenses in the gas distribution business, the positive effect of lower interest costs, and the elimination of the amortization of goodwill expense. The positive results were partially offset by a significant decrease in gas commodity prices realized by the company’s exploration and production operations compared to last year, and the extremely warm weather that impacted the gas distribution business. The company completed the sale of Midland Enterprises on July 2 and recorded as discontinued operations in the second quarter an expense of $19.7 million, or $0.14 per share, for an additional provision for state and local taxes on the sale. “Our core gas distribution business continues to grow as we convert customers to gas across our attractive Northeast territories,” said CEO Robert B. Catell. “Our core electric business added two new electric-generating plants at Glenwood Landing and Port Jefferson that went online during the quarter. These units will help address the electric needs of Long Island, while enhancing KeySpan’s strong position in the New York energy market. The closing of the sale of Midland Enterprises illustrates our commitment to strengthen our balance sheet. Based on our first half results, we anticipate that we will achieve our 2002 earnings goal.”

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