Strong contributions from its core regulated natural gas and electricity businesses are expected to help KeySpan Corp. improve earnings next year in the range of $2.55 to $2.75/share, the company said Monday. The Brooklyn, NY-based company also affirmed that its 2003 earnings will range between $2.45-$2.60/share, excluding special items.

CEO Robert B. Catell said the company is projecting 5-6% growth in its core businesses, which would be “supported by continued organic growth in our low-saturated gas business, and the addition of the 250 MW generation plant at Ravenswood in our electric business.” Catell said the growth would be enhanced with the company’s increased focus on improving operational and capital efficiency.

KeySpan’s Gas Distribution segment profits are expected to add $55 million next year, similar to this year, as the business continues to add gas conversions and new customers across all of its distribution territories. Its Electric Services business also is expected to continue to provide a solid earnings contribution from contractual and load pocket operations in the New York City and Long Island regions.

Also expected to add to growth in 2004 is KeySpan’s languishing Energy Services business, which complements its core gas distribution business. The business is focused on improving performance of both Home Energy Services and Business Solutions, which are expected to return to profitability in 2004, the company said.

KeySpan’s Exploration and Production business segment also continues to benefit from favorable gas commodity prices, and production levels will rise about 10% in 2004. The company also has hedged 70% of 2004 production, at an approximate weighted average floor price of $4.25/MMBtu and ceiling price of $5.70/MMBtu.

Management reaffirmed its commitment to an annual dividend of $1.78/share, which currently provides a yield of approximately 5%. Core operations are expected to contribute $2.20-$2.30 per share, in addition to 35-45 cents/share from its exploration and production operations. Ongoing core capital expenditures in 2004 are projected to be approximately $485 million, which is $50 million less than 2003 projected levels.

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