OKLAHOMA CITY, Nov. 2, 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 $0.92 per diluted share for the three months
ended September 30, 2017 compared to
$0.92 per diluted share for the third
quarter of 2016.
OG&E, a regulated electric utility, contributed earnings of
$0.81 per share in the third quarter,
compared with earnings of $0.80 per
share in the third quarter last year. OGE Energy's interest in the
natural gas midstream operations contributed earnings of
$0.10 compared to $0.11 per share in the year-ago quarter. The
holding company posted earnings of $0.01 per share in both the third quarters of
2017 and 2016.
"Third quarter earnings were impacted primarily by cool summer
weather in our utility service territory with performance on plan
in other areas." said OGE Energy Corp. Chairman, President and CEO
Sean Trauschke. "Our focus remains
on executing and completing projects in the best interests of our
customers in a safe and cost efficient manner."
Discussion of Third Quarter 2017
OGE
Energy's net income was $183
million in the third quarter, compared to $184 million in the year-ago quarter.
OG&E's net income was $162 million compared to $160 million in the year-ago quarter. The
increase in net income was due in part to non-cash earnings used to
recover financing costs during construction of the Mustang and
Sooner plants. These earnings were partially offset by
lower gross margin as a result of mild summer weather.
Natural Gas Midstream Operations contributed net
income to OGE Energy Corp. of $21
million for the third quarter of 2017 compared to
$23 million for the same period in
2016. Higher gross margin was offset by increased operating
and interest expenses. Enable Midstream issued cash
distributions to OGE of approximately $35
million in both the third quarters of 2017 and 2016.
2017 Earnings Outlook
The Company's 2017 OG&E
earnings guidance is projected to be $1.50
to $1.52 per average diluted share, tightened and adjusted
for mild summer weather, from the previously issued guidance of
$1.58 to $1.70 per average diluted
share. The projected earnings from the natural gas midstream
business remains unchanged between $0.35 and
$0.39 per average diluted share. OGE Energy consolidated
earnings guidance for 2017 is projected to be $1.85 to $1.91 per average diluted share, from
the previously issued guidance 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 and the quarter ended
September 30, 2017 as filed with the
Securities and Exchange Commission.
Conference Call Webcast
OGE Energy will host a
conference call for discussion of the results on Thursday, November 2, at 8
a.m. CST. 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 841,000
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
September
30,
|
(In
millions)
|
|
2017
|
|
|
2016
|
Operating
revenues
|
$
|
716.8
|
|
$
|
743.9
|
Less:
|
|
|
|
|
|
Cost of
sales
|
|
255.7
|
|
|
269.8
|
Gross Margin
|
$
|
461.1
|
|
$
|
474.1
|
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
|
Nine Months
Ended
|
|
September
30,
|
September
30,
|
(Dollars in
millions)
|
2017
|
2016
|
2017
|
2016
|
Operating revenues by
classification
|
|
|
|
|
Residential
|
$
295.1
|
$
351.9
|
$
700.0
|
$
750.0
|
Commercial
|
174.2
|
188.4
|
450.6
|
434.2
|
Industrial
|
58.0
|
60.4
|
156.3
|
147.4
|
Oilfield
|
43.4
|
47.3
|
124.6
|
118.4
|
Public authorities
and street light
|
60.6
|
66.8
|
159.4
|
154.4
|
Sales for
resale
|
—
|
—
|
0.1
|
0.2
|
System sales
revenues
|
631.3
|
714.8
|
1,591.0
|
1,604.6
|
Provision for rate
refund
|
29.2
|
(21.0)
|
25.0
|
(21.0)
|
Integrated
market
|
14.0
|
13.2
|
16.8
|
33.0
|
Other
|
42.3
|
36.9
|
126.4
|
111.8
|
Total operating
revenues
|
$
716.8
|
$
743.9
|
$
1,759.2
|
$ 1,728.4
|
MWh sales by
classification (In millions)
|
|
|
|
|
Residential
|
2.9
|
3.2
|
6.9
|
7.3
|
Commercial
|
2.1
|
2.1
|
5.7
|
5.7
|
Industrial
|
0.9
|
1.0
|
2.7
|
2.8
|
Oilfield
|
0.8
|
0.8
|
2.4
|
2.4
|
Public authorities
and street light
|
0.8
|
0.9
|
2.3
|
2.4
|
Sales for
resale
|
—
|
—
|
—
|
—
|
System
sales
|
7.5
|
8.0
|
20.0
|
20.6
|
Integrated
market
|
0.6
|
0.7
|
1.4
|
1.5
|
Total
sales
|
8.1
|
8.7
|
21.4
|
22.1
|
Number of
customers
|
840,519
|
832,234
|
840,519
|
832,234
|
Weighted-average cost
of energy per kilowatt-hour (In cents)
|
|
|
|
|
Natural
gas
|
2.747
|
2.688
|
2.795
|
2.366
|
Coal
|
2.049
|
2.222
|
2.100
|
2.251
|
Total fuel
|
2.253
|
2.337
|
2.231
|
2.175
|
Total fuel and
purchased power
|
2.966
|
2.984
|
3.093
|
2.796
|
Degree
days
|
|
|
|
|
Heating -
Actual
|
4
|
3
|
1,574
|
1,714
|
Heating -
Normal
|
19
|
19
|
2,021
|
2,020
|
Cooling -
Actual
|
1,223
|
1,450
|
1,847
|
2,082
|
Cooling -
Normal
|
1,380
|
1,380
|
2,018
|
2,018
|
OGE Energy
Corp.
|
Consolidated
Statements of Income
|
(Unaudited)
|
|
|
|
|
|
|
Three Months Ended
September
30,
|
Nine Months Ended
September
30,
|
(In millions, except per share data)
|
2017
|
2016
|
2017
|
2016
|
OPERATING REVENUES
|
$
716.8
|
$
743.9
|
1,759.2
|
1,728.4
|
COST OF
SALES
|
255.7
|
269.8
|
696.5
|
645.4
|
OPERATING
EXPENSES
|
|
|
|
|
Other operation and maintenance
|
117.7
|
113.1
|
356.5
|
354.6
|
Depreciation and amortization
|
76.9
|
82.2
|
207.2
|
240.8
|
Taxes other than income
|
23.2
|
21.5
|
68.4
|
66.5
|
Total operating
expenses
|
217.8
|
216.8
|
632.1
|
661.9
|
OPERATING INCOME
|
243.3
|
257.3
|
430.6
|
421.1
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
Equity in earnings of
unconsolidated affiliates
|
33.6
|
34.5
|
98.6
|
79.5
|
Allowance for equity funds used during
construction
|
11.8
|
3.9
|
27.2
|
9.2
|
Other income
|
15.0
|
5.7
|
34.1
|
18.9
|
Other expense
|
(2.0)
|
(3.3)
|
(9.3)
|
(10.8)
|
Net other income
|
58.4
|
40.8
|
150.6
|
96.8
|
INTEREST EXPENSE
|
|
|
|
|
Interest on long-term debt
|
38.7
|
35.8
|
113.8
|
107.3
|
Allowance for borrowed funds used during
construction
|
(5.2)
|
(2.0)
|
(12.6)
|
(4.7)
|
Interest on short-term debt and other interest charges
|
2.4
|
1.6
|
6.8
|
5.1
|
Interest expense
|
35.9
|
35.4
|
108.0
|
107.7
|
INCOME BEFORE TAXES
|
265.8
|
262.7
|
473.2
|
410.2
|
INCOME TAX EXPENSE
|
82.4
|
79.1
|
149.0
|
129.9
|
NET INCOME
|
183.4
|
183.6
|
324.2
|
280.3
|
BASIC AVERAGE COMMON SHARES
OUTSTANDING
|
199.7
|
199.7
|
199.7
|
199.7
|
DILUTED AVERAGE COMMON SHARES
OUTSTANDING
|
200.1
|
199.9
|
200.0
|
199.8
|
BASIC EARNINGS PER AVERAGE COMMON SHARE
|
$
0.92
|
$
0.92
|
$
1.62
|
$
1.40
|
DILUTED EARNINGS PER
AVERAGE COMMON SHARE
|
$
0.92
|
$
0.92
|
$
1.62
|
$
1.40
|
DIVIDENDS DECLARED PER COMMON
SHARE
|
$
0.33250
|
$ 0.30250
|
$
0.93750
|
$
0.85250
|
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SOURCE OGE Energy Corp.