Houston-based Southern Union Co. saw earnings before interest and taxes grow nearly 68% to $87.2 million for the quarter ended June 30, compared with $52 million in the year-ago period. Net earnings for the period were $16.3 million, 10 cents/diluted share, on operating revenues of $552.4 million, compared with $17.6 million, 12 cents/diluted share on operating revenues of $195.2 million in 2005.

The company saw improvement in its transportation and storage business and the inclusion of recently acquired Sid Richardson Energy Services. The quarter also saw completion of an expansion at its Lake Charles LNG (liquefied natural gas) facility.

Earnings from continuing operations as reported is reflective of the full impact of the $1.6 billion bridge loan utilized by the company to initially fund its purchase of Sid Richardson Energy Services, completed March 1 (see NGI, Dec. 19, 2005). Southern Union expects $1.1 billion of the facility to be repaid upon closing of its announced LDC sales. Excluding the bridge loan interest and related debt cost amortization associated with the $1.1 billion expected repayment, net earnings from continuing operations would increase by $13 million to $29.3 million.

For the first six months of 2006, Southern Union reported EBIT of $238.7 million as compared with $164.1 million in the prior year. Net earnings from continuing operations were $89.7 million, 70 cents/diluted share, on operating revenues of $1.1 billion, compared with net earnings from continuing operations of $74.0 million, 59 cents/diluted share, on operating revenues of $647.3 million for the comparable 2005 period.

The increase in operating results was attributable to improvement in Southern Union’s transportation and storage segment and the inclusion of the midstream business acquired March 1. The transportation and storage segment recorded EBIT of $76 million for the quarter ended June 30, compared with $61.6 million for the same period in 2005. This improvement was derived primarily from expansions at the Trunkline LNG import facility and higher transportation and storage revenues. The midstream segment, Southern Union Gas Services, recorded EBIT of $17.9 million for the quarter.

“Our results are beginning to reflect the benefits of our ongoing transformation of Southern Union into a major provider of natural gas transportation services,” said CEO George Lindemann. “With the imminent completion of the sales of our Pennsylvania and Rhode Island distribution assets and the contribution of the midstream operations to our bottom line, the recent quarter is reflective of the ongoing strength of our business. During the quarter, we completed an important expansion of our LNG facility in Lake Charles and announced the completion of a second stage expansion shortly after quarter’s end. We are continuing to invest in our pipelines and have a number of high-growth projects under way in our Permian Basin gathering system. Our investors should also be pleased to hear that we have completed our hedging programs for 2006 and 2007 at Southern Union Gas Services with net prices of $11.03 and $10.57 per MMBtu, respectively.”

Southern Union affirmed its prior 2006 earnings guidance in the range of $1.70 to $1.90 per share, excluding projected one-time charges associated with the sale of the PG Energy division and the Rhode Island operations of New England Gas Co. The 2006 outlook includes estimated earnings contributions from Southern Union Gas Services for 10 months in 2006. The estimated 2006 results also assume that the announced sales of the Pennsylvania and Rhode Island distribution businesses are completed on or prior to Sept. 30.

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