OKLAHOMA CITY, Feb. 22, 2018 /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 $3.10 per average diluted share in 2017, compared
with earnings of $1.69 per average
diluted share in 2016. Consolidated earnings per average
diluted share for 2017 include a $1.18 per share gain due to the remeasurement of
deferred taxes as a result of 2017 tax reform at its unregulated
midstream investment.
In 2017, OG&E, a regulated electric utility, reported net
income of $306 million and
contributed $1.53 per diluted share,
compared with $284 million, or
$1.42 per diluted share in 2016.
OGE Energy Holdings, which is primarily Natural Gas Midstream
Operations, received cash distributions from Enable Midstream of
approximately $141 million and
contributed earnings of $324 million,
or $1.62 per diluted share in 2017,
compared to earnings of $54 million,
or $0.27 per diluted share in 2016.
The holding company posted a loss of $11
million or $0.05 per diluted
share compared to breakeven results in 2016. Federal tax
reform legislation passed in December of 2017 increased Enable
Midstream earnings by $245 million or
$1.23 per diluted share and decreased
earnings at the holding company $11
million or $0.05 per diluted
share due to the remeasurement of deferred taxes.
"I'm proud of the performance and execution of OG&E and
Enable in 2017," said OGE Energy Corp. Chairman, President and CEO
Sean Trauschke.
"Operationally, the utility outpaced 2016 which was the best in
company history and Enable's results highlight their financial and
operational strength as commodity prices improve."
Fourth Quarter results
For the three months ended Dec. 31,
2017, OGE Energy reported earnings of $1.48 per diluted share including a $1.18 per diluted share resulting from tax
reform, compared with $0.29 per
diluted share in the fourth quarter of 2016. Excluding the
impact of tax reform, the increase is primarily due to higher
earnings from the Enable Midstream business partially offset by
lower utility earnings.
Discussion of 2017 results
OG&E reported gross margin of $1.36 billion in 2017, which was approximately
$16 million lower than 2016. The
decrease in gross margin for the year was due in part from lower
revenues due to unfavorable weather partially offset by new
customer growth. Offsetting lower gross margin were lower
depreciation and amortization expense as a result of the
March 2017 Oklahoma rate order and an
increase in other income primarily from higher allowance for funds
used during construction associated with the Mustang Energy Center
and environmental compliance projects. As a result,
OG&E's net income increased from $284
million in 2016 to $306
million in 2017.
OGE Energy Holdings (primarily Natural Gas Midstream
Operations) contributed earnings to OGE of approximately
$324 million for 2017 compared to
$54 million for 2016. Excluding
tax reform, Enable earnings were higher due to increased margins,
volumes and pricing primarily in the gathering and processing
segment.
2018 Outlook
OG&E is projected to earn $1.43 to $1.53 per
average diluted share. The Company projects the earnings
contribution from its ownership interest in Enable Midstream to be
approximately $0.48 to $0.52 per average diluted share.
Additionally, OGE Energy consolidated earnings guidance for 2018 is
$1.90 to $2.05 per average diluted share. The
guidance assumes approximately 200 million average diluted shares
outstanding and normal weather for the year. More information
regarding the Company's 2018 earnings guidance and the Company's
2017 financial results is contained in the Company's Form 10-K
filed with the Securities and Exchange Commission.
Conference Call Webcast
OGE Energy will host a live webcast for discussion of the
results of 2017 and the 2018 outlook on Thursday, February 22, 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
842,000 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 Partners LP, 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
|
|
|
OG&E
Year Ended
December 31,
|
(Dollars in
Millions)
|
|
2017
|
|
|
2016
|
Operating
revenues
|
$
|
2,261.1
|
|
$
|
2,259.2
|
Cost of
sales
|
|
897.6
|
|
|
880.1
|
Gross
Margin
|
$
|
1,363.5
|
|
$
|
1,379.1
|
|
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, including, but not limited to,
those described in this Form 10-K; 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, 2017.
Note: Consolidated Statements of Income, Financial and
Statistical Data attached.
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|
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Oklahoma Gas
and Electric Company
|
|
|
Financial and
Statistical Data
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Year
Ended
|
|
December
31,
|
December
31,
|
(Dollars in
millions)
|
2017
|
2016
|
2017
|
2016
|
Operating revenues by
classification:
|
|
|
|
|
Residential
|
$
184.1
|
$
201.9
|
$
884.1
|
$
951.9
|
Commercial
|
137.7
|
139.5
|
588.3
|
573.7
|
Industrial
|
44.3
|
47.2
|
200.6
|
194.6
|
Oilfield
|
34.9
|
38.5
|
159.5
|
156.9
|
Public authorities
and street light
|
48.6
|
49.9
|
208.0
|
204.3
|
Sales for
resale
|
0.1
|
0.1
|
0.2
|
0.3
|
System sales
revenues
|
449.7
|
477.1
|
2,040.7
|
2,081.7
|
Provision for rate
refund
|
1.8
|
(12.7)
|
26.8
|
(33.6)
|
Integrated
market
|
6.7
|
16.3
|
23.5
|
49.3
|
Other
|
43.7
|
50.1
|
170.1
|
161.8
|
Total operating
revenues
|
$
501.9
|
$
530.8
|
$
2,261.1
|
$ 2,259.2
|
MWh sales by
classification (In millions)
|
|
|
|
|
Residential
|
1.2
|
2.0
|
8.8
|
9.3
|
Commercial
|
1.9
|
1.9
|
7.6
|
7.6
|
Industrial
|
0.9
|
0.8
|
3.6
|
3.6
|
Oilfield
|
0.8
|
0.8
|
3.2
|
3.2
|
Public authorities
and street light
|
0.8
|
0.8
|
3.1
|
3.2
|
Sales for
resale
|
—
|
—
|
—
|
—
|
System
sales
|
5.6
|
6.3
|
26.3
|
26.9
|
Integrated
market
|
0.4
|
1.5
|
1.8
|
3.0
|
Total
sales
|
6.0
|
7.8
|
28.1
|
29.9
|
Number of
customers
|
841,830
|
833,582
|
841,830
|
833,582
|
Weighted-average cost
of energy per kilowatt-hour (In cents)
|
|
|
|
|
Natural
gas
|
2.940
|
3.012
|
2.821
|
2.488
|
Coal
|
1.971
|
2.152
|
2.069
|
2.213
|
Total fuel
|
2.139
|
2.429
|
2.211
|
2.199
|
Total fuel and
purchased power
|
2.905
|
2.979
|
3.049
|
2.842
|
Degree days
(A)
|
|
|
|
|
Heating -
Actual
|
1,303
|
1,086
|
2,877
|
2,800
|
Heating -
Normal
|
1,329
|
1,329
|
3,349
|
3,349
|
Cooling -
Actual
|
97
|
165
|
1,944
|
2,247
|
Cooling -
Normal
|
74
|
74
|
2,092
|
2,092
|
|
|
|
OGE Energy
Corp.
|
Consolidated
Statements of Income
|
(Unaudited)
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
Year Ended
December 31,
|
(In millions, except per share data)
|
2017
|
2016
|
2017
|
2016
|
OPERATING REVENUES
|
$
501.9
|
$
530.8
|
2,261.1
|
2,259.2
|
COST OF
SALES
|
201.1
|
234.7
|
897.6
|
880.1
|
OPERATING
EXPENSES
|
|
|
|
|
Other operation and maintenance
|
123.8
|
111.0
|
480.3
|
465.6
|
Depreciation and amortization
|
76.3
|
81.8
|
283.5
|
322.6
|
Taxes other than income
|
21.0
|
21.1
|
89.4
|
87.6
|
Total operating
expenses
|
221.1
|
213.9
|
853.2
|
875.8
|
OPERATING INCOME
|
79.7
|
82.2
|
510.3
|
503.3
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
Equity in earnings of
unconsolidated affiliates
|
32.6
|
22.3
|
131.2
|
101.8
|
Allowance for equity funds used during
construction
|
12.5
|
5.0
|
39.7
|
14.2
|
Other income
|
12.3
|
7.1
|
46.4
|
26.0
|
Other expense
|
(4.8)
|
(6.1)
|
(14.1)
|
(16.9)
|
Net other income
|
52.6
|
28.3
|
203.2
|
125.1
|
INTEREST EXPENSE
|
|
|
|
|
Interest on long-term debt
|
39.8
|
35.9
|
153.6
|
143.2
|
Allowance for borrowed funds used during
construction
|
(5.4)
|
(2.8)
|
(18.0)
|
(7.5)
|
Interest on short-term debt and other interest charges
|
1.4
|
1.3
|
8.2
|
6.4
|
Interest expense
|
35.8
|
34.4
|
143.8
|
142.1
|
INCOME BEFORE TAXES
|
96.5
|
76.1
|
569.7
|
486.3
|
INCOME TAX (BENEFIT) EXPENSE
|
(198.3)
|
18.2
|
(49.3)
|
148.1
|
NET INCOME
|
294.8
|
57.9
|
619.0
|
338.2
|
BASIC AVERAGE COMMON SHARES
OUTSTANDING
|
199.7
|
199.7
|
199.7
|
199.7
|
DILUTED AVERAGE COMMON SHARES
OUTSTANDING
|
199.8
|
200.0
|
200.0
|
199.9
|
BASIC EARNINGS PER AVERAGE COMMON SHARE
|
$
1.48
|
$
0.29
|
$
3.10
|
$
1.69
|
DILUTED EARNINGS PER
AVERAGE COMMON SHARE
|
$
1.48
|
$
0.29
|
$
3.10
|
$
1.69
|
DIVIDENDS DECLARED PER COMMON
SHARE
|
$
0.33250
|
$ 0.30250
|
$
1.27000
|
$ 1.15500
|
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SOURCE OGE Energy Corp.