OKLAHOMA CITY, Aug. 8, 2019 /PRNewswire/ -- OGE Energy
Corp. (NYSE: OGE), the parent company of Oklahoma Gas and Electric
Company ("OG&E") and holder of 25.5 percent limited partner
interest and 50 percent general partner interest in Enable
Midstream Partners, LP (NYSE: ENBL), today reported earnings of
$0.50 per diluted share for the three
months ended June 30, 2019, compared
to $0.55 per diluted share for the
second quarter of 2018.
- OG&E, a regulated electric utility, contributed earnings of
$0.37 per share in the second
quarter, compared with earnings of $0.46 per share in the second quarter last
year.
- Natural Gas Midstream Operations contributed earnings of
$0.13 per share compared with
earnings of $0.11 per share in the
second quarter last year.
- The holding company and other operations posted breakeven
results in the second quarter, compared with a loss of $0.02 per share in the second quarter last
year.
"Both of our businesses performed well in the second quarter and
are on plan for the year," said Sean
Trauschke, OGE Energy Chairman, President and CEO. "We
continue to focus on all aspects of our operations creating value
for our customers, communities and shareholders."
Discussion of Second Quarter 2019
OGE
Energy's net income was approximately $100 million in the second quarter, compared to
approximately $111 million in the
year-ago quarter.
OG&E's net income was approximately
$75 million in the second quarter,
compared to approximately $92 million
in the comparable quarter last year. The primary driver for the
decrease in net income was lower gross margin as a result of milder
weather.
Natural Gas Midstream Operations contributed
net income to OGE Energy Corp. of approximately $27 million for the second quarter of 2019
compared to net income of approximately $22
million for the same period in 2018. The increase was
in part due to higher volumes in the gathering and processing
segments. Enable Midstream issued cash distributions to OGE of
approximately $35 million in each of
the second quarters of 2019 and 2018. In addition, Enable
announced an increase in the quarterly distribution rate from
$0.3180 to $0.3305 per common unit payable August 27, 2019.
2019 Earnings Outlook
The Company reaffirms its 2019
consolidated earnings guidance between approximately $412 million and $442
million of net income, or $2.05 to $2.20 per
average diluted share. More information regarding the
Company's 2019 earnings guidance is contained in the Company's 2018
Form 10-K and Form 10-Q for the period ending June 30, 2019, 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, August 8, at 8
a.m. CDT. The conference will be available through
www.ogeenergy.com. OGE Energy Corp. is the parent company of
OG&E, a regulated electric utility with approximately 854,000
customers in Oklahoma and western
Arkansas. In addition, OGE holds a
25.5 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 cost of
sales. Cost of sales, as reflected on the income statement,
includes 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.
Further, gross margin is not intended to replace operating revenues
as determined in accordance with GAAP as an indicator of operating
performance.
Reconciliation of
Gross Margin to Revenue attributable to OG&E
|
|
|
|
Three Months
Ended
June 30,
|
(In
millions)
|
|
2019
|
|
|
2018
|
Operating
revenues
|
$
|
513.7
|
|
$
|
567.0
|
Less:
|
|
|
|
|
|
Cost of
sales
|
|
178.7
|
|
|
208.7
|
Gross
Margin
|
$
|
335.0
|
|
$
|
358.3
|
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, 2018.
Note: Consolidated Statements of Income, Financial and
Statistical Data attached.
OGE Energy
Corp.
|
Consolidated
Statements of Income
|
(Unaudited)
|
|
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30,
|
June
30,
|
(In millions, except per share data)
|
2019
|
2018
|
2019
|
2018
|
OPERATING
REVENUES
|
|
|
|
|
Revenues from
contracts with customers
|
$
501.1
|
$
547.7
|
$
978.5
|
$ 1,025.6
|
Other
revenues
|
12.6
|
19.3
|
25.2
|
34.1
|
Operating
revenues
|
$
513.7
|
$
567.0
|
$
1,003.7
|
$ 1,059.7
|
COST OF
SALES
|
178.7
|
208.7
|
391.3
|
419.2
|
OPERATING
EXPENSES
|
|
|
|
|
Other operation and maintenance
|
119.8
|
117.2
|
238.8
|
229.9
|
Depreciation and amortization
|
84.3
|
80.9
|
166.7
|
159.7
|
Taxes other than income
|
20.9
|
22.5
|
47.2
|
46.6
|
Operating
expenses
|
225.0
|
220.6
|
452.7
|
436.2
|
OPERATING INCOME
|
110.0
|
137.7
|
159.7
|
204.3
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
Equity in earnings of
unconsolidated affiliates
|
35.8
|
29.3
|
66.5
|
63.2
|
Allowance for equity funds used during
construction
|
1.2
|
6.3
|
2.7
|
13.3
|
Other net periodic
benefit expense
|
(0.3)
|
(5.2)
|
(7.3)
|
(10.0)
|
Other income
|
5.0
|
4.7
|
11.7
|
10.1
|
Other expense
|
(4.4)
|
(3.3)
|
(10.1)
|
(7.7)
|
Net other income
|
37.3
|
31.8
|
63.5
|
68.9
|
INTEREST EXPENSE
|
|
|
|
|
Interest on long-term debt
|
31.8
|
39.7
|
64.4
|
79.3
|
Allowance for borrowed funds used during
construction
|
(0.6)
|
(2.8)
|
(1.6)
|
(6.5)
|
Interest on short-term debt and other interest charges
|
4.7
|
4.0
|
7.7
|
6.7
|
Interest expense
|
35.9
|
40.9
|
70.5
|
79.5
|
INCOME BEFORE TAXES
|
111.4
|
128.6
|
152.7
|
193.7
|
INCOME TAX
EXPENSE
|
11.2
|
17.9
|
5.4
|
28.0
|
NET INCOME
|
$
100.2
|
$
110.7
|
$
147.3
|
$
165.7
|
BASIC AVERAGE COMMON SHARES
OUTSTANDING
|
200.2
|
199.7
|
200.1
|
199.7
|
DILUTED AVERAGE COMMON SHARES
OUTSTANDING
|
200.6
|
200.5
|
200.5
|
200.3
|
BASIC EARNINGS PER AVERAGE COMMON SHARE
|
$
0.50
|
$
0.55
|
$
0.74
|
$
0.83
|
DILUTED EARNINGS PER
AVERAGE COMMON SHARE
|
$
0.50
|
$
0.55
|
$
0.73
|
$
0.83
|
Oklahoma Gas
and Electric Company
|
Financial and
Statistical Data
|
(Unaudited)
|
|
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30,
|
June
30,
|
(Dollars in
millions)
|
2019
|
2018
|
2019
|
2018
|
Operating revenues by
classification:
|
|
|
|
|
Residential
|
$
186.6
|
$
226.2
|
$
382.0
|
$
428.3
|
Commercial
|
119.8
|
140.9
|
220.1
|
246.6
|
Industrial
|
54.3
|
58.5
|
107.9
|
110.4
|
Oilfield
|
49.9
|
46.7
|
100.1
|
89.5
|
Public authorities
and street light
|
45.8
|
53.0
|
87.3
|
96.5
|
Sales for
resale
|
0.1
|
—
|
0.1
|
0.1
|
System sales
revenues
|
456.5
|
525.3
|
897.5
|
971.4
|
Provision for rate
refund
|
(0.5)
|
(16.5)
|
(0.6)
|
(19.7)
|
Integrated
market
|
10.3
|
13.2
|
17.0
|
21.8
|
Transmission
|
39.8
|
40.2
|
75.9
|
76.0
|
Other
|
7.6
|
4.8
|
13.9
|
10.2
|
Total operating
revenues
|
$
513.7
|
$
567.0
|
$
1,003.7
|
$
1,059.7
|
MWh sales by
classification (In millions)
|
|
|
|
|
Residential
|
2.0
|
2.3
|
4.4
|
4.7
|
Commercial
|
1.5
|
1.9
|
2.9
|
3.3
|
Industrial
|
1.2
|
1.1
|
2.3
|
2.1
|
Oilfield
|
1.2
|
1.0
|
2.4
|
2.0
|
Public authorities
and street light
|
0.7
|
0.8
|
1.4
|
1.5
|
System
sales
|
6.6
|
7.1
|
13.4
|
13.6
|
Integrated
market
|
0.3
|
0.3
|
0.6
|
0.6
|
Total
sales
|
6.9
|
7.4
|
14.0
|
14.2
|
Number of
customers
|
853,500
|
845,244
|
853,500
|
845,244
|
Weighted-average cost
of energy per kilowatt-hour (In cents)
|
|
|
|
Natural
gas
|
2.113
|
2.338
|
2.527
|
2.475
|
Coal
|
2.067
|
2.058
|
1.993
|
2.028
|
Total fuel
|
1.909
|
2.047
|
2.118
|
2.058
|
Total fuel and
purchased power
|
2.471
|
2.721
|
2.672
|
2.827
|
Degree days
(A)
|
|
|
|
|
Heating -
Actual
|
197
|
328
|
2,277
|
2,208
|
Heating -
Normal
|
204
|
203
|
2,004
|
2,001
|
Cooling -
Actual
|
481
|
776
|
481
|
786
|
Cooling -
Normal
|
626
|
625
|
639
|
638
|
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SOURCE OGE Energy Corp.