Stronger performance from its distribution operations, retail energy operations and wholesale services segments helped drive AGL Resources Inc.’s 1Q2010 net income to $134 million ($1.74 cents/share), an increase of 12.6% compared with $119 million ($1.55) in 1Q2009, the Atlanta-based company said.

AGL benefited from the earnings contributions of its Hampton Roads Crossing pipeline in Virginia and Magnolia pipeline in Georgia, and from a rate case settlement reached in New Jersey last year, CEO John W. Somerhalder II said during a conference call with analysts Tuesday. Subsidiary Sequent Energy Management continues to capitalize on market opportunities to grow its earnings base, and significantly colder weather helped push earnings before interest and taxes (EBIT) at Atlanta-based SouthStar Energy Services to $74 million in 1Q2010, compared with $63 million in 1Q2009, Somerhalder said.

As the first quarter opened AGL completed the $57.5 million acquisition of half of Piedmont Natural Gas’s 30% interest in SouthStar, which provides natural gas, transportation and related services to more than 500,000 residential, commercial and industrial customers under the trade names Georgia Natural Gas, Piedmont Energy, Florida Natural Gas and Ohio Natural Gas (see Daily GPI, Jan. 5). The deal increased to 85% AGL’s ownership interest in SouthStar.

AGL’s distribution operations segment contributed EBIT of $136 million in 1Q2010 compared with $130 million in 1Q2009.

AGL’s wholesale services segment, consisting primarily of Houston-based Sequent, contributed $43 million in EBIT in 1Q2010, compared to $38 million in the year-ago period. During the quarter Sequent recorded $22 million in gains associated with the instruments used to hedge its natural gas storage and transportation positions, compared to $32 million of similar gains in 1Q2009. The storage hedge gains resulted from declining natural gas prices during the quarter, while the transportation hedge gains reflect the narrowing of transportation basis spreads in the period, AGL said.

In December Sequent closed a deal involving the purchase of substantially all of Integrys Energy Services Inc.’s wholesale natural gas marketing business (see Daily GPI, Dec. 8, 2009). The transaction did not include or directly affect the retail gas and electric marketing business operated by Integrys Energy Services. The second part of the two-part transaction will include 11.5 Bcf of storage contracts.

Sequent had the largest percentage increase in NGI‘s 4Q2009 Top North American Gas Marketers Ranking, reporting a 27% jump to 3.44 Bcf/d in 4Q2009, up from 2.70 Bcf/d in 4Q2008 (see Daily GPI, March 17).

AGL reaffirmed its 2010 earnings guidance range of $2.95-3.05/share.

In April Peter Tumminello, who had been acting president of Sequent, was tapped to take over the unit by the AGL Resources board of directors (see Daily GPI, April 28). Tumminello’s predecessor, Douglas N. Schantz, in March apparently drowned in the Mississippi River in New Orleans (see Daily GPI, March 11).

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