OKLAHOMA CITY, May 4, 2017 /PRNewswire/ -- OGE Energy Corp.
(NYSE: OGE), the parent company of Oklahoma Gas and Electric
Company ("OG&E"), and holder of 25.7 percent limited partner
interest and 50 percent general partner interest in Enable
Midstream Partners, LP, today reported earnings of $0.18 per diluted share for the three months
ended March 31, 2017, compared to
$0.13 per diluted share for the first
quarter of 2016.
OG&E, a regulated electric utility, contributed earnings of
$0.08 per share in the first quarter,
compared with earnings of $0.03 per
share in the first quarter last year. OGE Energy's interest in the
natural gas midstream operations contributed earnings of
$0.10 per share compared with
earnings of $0.09 per share in the
year-ago quarter. The holding company posted breakeven results
compared with earnings of $0.01 per
share in 2016.
"Despite regulatory and weather challenges, the utility is on
plan," said OGE Energy Corp. Chairman, President and CEO
Sean Trauschke. "Each day, we're
adjusting, adapting and moving forward. I could not be more proud
of the focus and determination of our team to press forward and
create value for those we serve."
Discussion of First Quarter 2017
OGE Energy's net income was $36 million in the first quarter, compared to
approximately $25 million in the
year-ago quarter.
OG&E's net income was approximately
$16 million in the first quarter,
compared to approximately $6 million
in the comparable quarter last year. The primary driver for the
increase in net income was the lower depreciation expense related
to the reduction in depreciation rates as directed in the Oklahoma
Corporation Commission's final order. These increases were
partially offset by lower gross margin due in part to milder than
normal weather.
Natural Gas Midstream Operations contributed net
income to OGE Energy Corp. of $20
million for the first quarter of 2017 compared to
$18 million for the same period in
2016. The increase is primarily due to increased gross margin and
cost controlling measures in the gathering and processing business
segment. In addition, Enable Midstream issued cash
distributions to OGE of approximately $35
million in each of the first quarters of 2017 and 2016.
2017 Earnings Outlook
The Company projects 2017 OG&E earnings guidance to be at
the low end of the earnings range of $1.58
to $1.70 per average diluted share based on the Oklahoma
Corporation Commission rate order. OGE Energy consolidated earnings
guidance for 2017 is now projected to be at the lower end of the
earnings range of $1.93 to $2.09 per
average diluted share. More information regarding the Company's
2017 earnings guidance is contained in the Company's 2016 Form 10-K
and Form 10-Q for the quarter ended March
31, 2017 as filed with the Securities and Exchange
Commission.
Conference Call Webcast
OGE Energy will host a conference call for discussion of the
results at 8 a.m. CST on Thursday, May 4. The conference will be available
through www.oge.com. OGE Energy Corp. is the parent company of
OG&E, a regulated electric utility with approximately 836,000
customers in Oklahoma and western
Arkansas. In addition, OGE holds a 25.7 percent limited
partner interest and a 50 percent general partner interest of
Enable Midstream, created by the merger of OGE's Enogex LLC
midstream subsidiary and the pipeline and field services businesses
of Houston-based CenterPoint
Energy.
Non-GAAP Financial Measures
OG&E has included in this release the non-GAAP financial
measure Gross Margin. Gross Margin is defined by OG&E as
operating revenues less fuel, purchased power and certain
transmission expenses. Gross margin is a non-GAAP financial
measure because it excludes depreciation and amortization, and
other operation and maintenance expenses. Expenses for fuel and
purchased power are recovered through fuel adjustment clauses and
as a result changes in these expenses are offset in operating
revenues with no impact on net income. OG&E believes
gross margin provides a more meaningful basis for evaluating its
operations across periods than operating revenues because gross
margin excludes the revenue effect of fluctuations in these
expenses. Gross margin is used internally to measure
performance against budget and in reports for management and the
Board of Directors. OG&E's definition of gross margin may be
different from similar terms used by other companies.
Reconciliation of Gross Margin to Revenue attributable to
OG&E
|
|
|
|
|
|
|
Three Months
Ended
March 31,
|
(In
millions)
|
|
2017
|
|
2016
|
Operating
revenues
|
$
|
456.0
|
$
|
433.1
|
Less:
|
|
|
|
|
Cost of
sales
|
|
208.7
|
|
177.9
|
Gross
Margin
|
$
|
247.3
|
$
|
255.2
|
|
|
|
|
|
|
|
Some of the matters discussed in this news release may contain
forward-looking statements that are subject to certain risks,
uncertainties and assumptions. Such forward-looking
statements are intended to be identified in this document by the
words "anticipate", "believe", "estimate", "expect", "intend",
"objective", "plan", "possible", "potential", "project" and similar
expressions. Actual results may vary materially. Factors
that could cause actual results to differ materially include, but
are not limited to: general economic conditions, including the
availability of credit, access to existing lines of credit, access
to the commercial paper markets, actions of rating agencies and
their impact on capital expenditures; the ability of the Company
and its subsidiaries to access the capital markets and obtain
financing on favorable terms as well as inflation rates and
monetary fluctuations; the ability to obtain timely and sufficient
rate relief to allow for recovery of items such as capital
expenditures, fuel costs, operating costs, transmission costs and
deferred expenditures; prices and availability of electricity,
coal, natural gas and NGLs; the timing and extent of changes in
commodity prices, particularly natural gas and NGLs, the
competitive effects of the available pipeline capacity in the
regions Enable serves, and the effects of geographic and seasonal
commodity price differentials, including the effects of these
circumstances on re-contracting available capacity on Enable's
interstate pipelines; the timing and extent of changes in the
supply of natural gas, particularly supplies available for
gathering by Enable's gathering and processing business and
transporting by Enable's interstate pipelines, including the impact
of natural gas and NGLs prices on the level of drilling and
production activities in the regions Enable serves; business
conditions in the energy and natural gas midstream industries,
including the demand for natural gas, NGLs, crude oil and midstream
services; competitive factors including the extent and timing of
the entry of additional competition in the markets served by the
Company; the impact on demand for our services resulting from
cost-competitive advances in technology, such as distributed
electricity generation and customer energy efficiency programs;
technological developments, changing markets and other factors that
result in competitive disadvantages and create the potential for
impairment of existing assets; factors affecting utility operations
such as unusual weather conditions; catastrophic weather-related
damage; unscheduled generation outages, unusual maintenance or
repairs; unanticipated changes to fossil fuel, natural gas or coal
supply costs or availability due to higher demand, shortages,
transportation problems or other developments; environmental
incidents; or electric transmission or gas pipeline system
constraints; availability and prices of raw materials for current
and future construction projects; the effect of retroactive pricing
of transactions in the SPP markets or adjustments in market pricing
mechanisms by the SPP; Federal or state legislation and regulatory
decisions and initiatives that affect cost and investment recovery,
have an impact on rate structures or affect the speed and degree to
which competition enters the Company's markets; environmental laws,
safety laws or other regulations that may impact the cost of
operations or restrict or change the way the Company operates its
facilities; changes in accounting standards, rules or guidelines;
the discontinuance of accounting principles for certain types of
rate-regulated activities; the cost of protecting assets against,
or damage due to, terrorism or cyberattacks and other catastrophic
events; creditworthiness of suppliers, customers and other
contractual parties; social attitudes regarding the utility,
natural gas and power industries; identification of suitable
investment opportunities to enhance shareholder returns and achieve
long-term financial objectives through business acquisitions and
divestitures; increased pension and healthcare costs; costs and
other effects of legal and administrative proceedings, settlements,
investigations, claims and matters; difficulty in making accurate
assumptions and projections regarding future revenues and costs
associated with the Company's equity investment in Enable that the
Company does not control; and other risk factors listed in the
reports filed by the Company with the Securities and Exchange
Commission including those listed in Risk Factors in the Company's
Form 10-K for the year ended December 31, 2016.
Note: Consolidated Statements of Income, Financial and
Statistical Data attached.
Oklahoma Gas
and Electric Company
|
Financial and
Statistical Data
|
(Unaudited)
|
|
|
|
|
Three Months
Ended
|
|
March
31,
|
(Dollars in
millions)
|
2017
|
2016
|
Operating revenues by
classification
|
|
|
Residential
|
$
192.3
|
$
178.5
|
Commercial
|
124.3
|
102.7
|
Industrial
|
44.3
|
38.2
|
Oilfield
|
38.1
|
32.3
|
Public authorities
and street light
|
44.5
|
36.1
|
Sales for
resale
|
—
|
0.1
|
System sales
revenues
|
443.5
|
387.9
|
Provision for rate
refund
|
(20.8)
|
—
|
Integrated
market
|
(3.5)
|
9.1
|
Other
|
36.8
|
36.1
|
Total operating
revenues
|
$
456.0
|
$
433.1
|
MWH sales by
classification (In millions)
|
|
|
Residential
|
2.0
|
2.1
|
Commercial
|
1.6
|
1.6
|
Industrial
|
0.8
|
0.9
|
Oilfield
|
0.8
|
0.8
|
Public authorities
and street light
|
0.7
|
0.7
|
System
sales
|
5.9
|
6.1
|
Integrated
market
|
0.3
|
0.4
|
Total
sales
|
6.2
|
6.5
|
Number of
customers
|
836,099
|
827,685
|
Weighted-average cost
of energy per kilowatt-hour - cents
|
|
|
Natural
gas
|
2.817
|
2.038
|
Coal
|
2.110
|
2.288
|
Total fuel
|
2.135
|
1.945
|
Total fuel and
purchased power
|
3.132
|
2.611
|
Degree days
(A)
|
|
|
Heating -
Actual
|
1,381
|
1,552
|
Heating -
Normal
|
1,799
|
1,798
|
Cooling -
Actual
|
57
|
12
|
Cooling -
Normal
|
13
|
13
|
OGE Energy
Corp.
|
Consolidated
Statements of Income
|
(Unaudited)
|
|
|
|
|
Three Months Ended
March 31,
|
(In millions, except per share data)
|
2017
|
2016
|
OPERATING REVENUES
|
$
456.0
|
$
433.1
|
COST OF
SALES
|
208.7
|
177.9
|
OPERATING
EXPENSES
|
|
|
Other operation and maintenance
|
124.0
|
113.9
|
Depreciation and amortization
|
55.6
|
78.5
|
Taxes other than income
|
23.9
|
24.9
|
Total operating
expenses
|
203.5
|
217.3
|
OPERATING INCOME
|
43.8
|
37.9
|
OTHER INCOME (EXPENSE)
|
|
|
Equity in earnings of
unconsolidated affiliates
|
35.6
|
28.3
|
Allowance for equity funds used during
construction
|
6.9
|
1.6
|
Other income
|
8.8
|
5.6
|
Other expense
|
(4.1)
|
(1.7)
|
Net other income (expense)
|
47.2
|
33.8
|
INTEREST EXPENSE
|
|
|
Interest on long-term debt
|
35.9
|
35.8
|
Allowance for borrowed funds used during
construction
|
(3.3)
|
(0.9)
|
Interest on short-term debt and other interest charges
|
2.4
|
1.4
|
Interest expense
|
35.0
|
36.3
|
INCOME BEFORE TAXES
|
56.0
|
35.4
|
INCOME TAX EXPENSE
|
20.0
|
10.2
|
NET INCOME
|
36.0
|
25.2
|
BASIC AVERAGE COMMON SHARES
OUTSTANDING
|
199.7
|
199.7
|
DILUTED AVERAGE COMMON SHARES
OUTSTANDING
|
200.0
|
199.7
|
BASIC EARNINGS PER AVERAGE COMMON SHARE
|
$
0.18
|
$
0.13
|
DILUTED EARNINGS PER
AVERAGE COMMON SHARE
|
$
0.18
|
$
0.13
|
DIVIDENDS DECLARED PER COMMON
SHARE
|
$
0.30250
|
$ 0.27500
|
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SOURCE OGE Energy Corp.