OGE ENERGY CORP. 
By OKLAHOMA CITY, May 3, 2012 /PRNewswire/ -- OGE Energy Corp. (NYSE: OGE), the parent company of Oklahoma Gas and Electric Company (OG&E) and OGE Enogex Holdings LLC, today reported earnings of $0.38 per diluted share for the three months ended March 31, 2012 compared to $0.25 per diluted share for the first quarter of 2011.
OG&E, a regulated electric utility, contributed earnings of $0.13 per share in the first quarter, compared with earnings of $0.06 per share in the first quarter last year. Enogex, a midstream natural gas business, contributed earnings of $0.25 per share compared with earnings of $0.19 per share in the year-ago quarter. The holding company earnings were flat in the first quarter of 2012 and 2011.
"We are pleased with the performance at both of our businesses," said Pete Delaney, OGE Energy chairman and CEO. "Enogex is performing well in a difficult natural gas price environment, highlighting the strategic location of our assets and new investments in the liquids rich natural gas basins of Oklahoma and the Texas panhandle. And, the utility continues to benefit from a variety of investments that have created value for customers."
Discussion of First Quarter 2012
OGE Energy's consolidated gross margin on revenues was $355 million in the first quarter, compared with $307 million a year ago. Net income attributable to OGE Energy was $37 million in the first quarter, compared to $25 million in the year-ago quarter.
OG&E's gross margin on revenues was $231 million in the first quarter, compared with $203 million in the comparable quarter last year. The increase was primarily due to revenues associated with customer-focused investments. Net income at the utility was $12 million in the first quarter, compared with $6 million a year earlier.
Enogex's gross margin on revenues was $124 million in the first quarter, compared with $104 million in the comparable quarter last year. The increase was primarily due to higher gross margins in the transportation and processing businesses. Net income attributable to OGE Enogex Holdings increased from $19 million in the first quarter of 2011 to $25 million in the first quarter of 2012. OGE Energy's portion of EBITDA increased from $48 million in the first quarter of 2011 to $66 million in the first quarter of 2012.
2012 Outlook
OGE Energy's consolidated earnings guidance for 2012 is $3.40 to $3.60 per average diluted share. The guidance assumes approximately 99.1 million average diluted shares outstanding and normal weather for the remainder of the year, but does not reflect any impact from OG&E's pending rate case. More information regarding the Company's 2012 earnings guidance is contained in the Company's First Quarter 2012 10-Q on file with the Securities and Exchange Commission.
Conference Call Webcast
OGE Energy will host a conference call for discussion of the results and the outlook for the rest of 2012 on Thursday, May 3, at 8 a.m. CDT. The conference will be available through www.oge.com. OGE Energy is the parent company of Oklahoma Gas and Electric Company (OG&E), which serves more than 792,000 customers in a service territory spanning 30,000 square miles in Oklahoma and western Arkansas, and of OGE Enogex Holdings LLC, a midstream natural gas business with principal operations in Oklahoma.
Non-GAAP Financial Measures
Enogex has included in this release the non-GAAP financial measure EBITDA. Enogex defines EBITDA as net income attributable to Enogex Holdings before interest, income taxes and depreciation and amortization. EBITDA is a supplemental non-GAAP financial measure used by external users of the Company's financial statements such as investors, commercial banks and others, to assess:
-- the financial performance of Enogex's assets without regard to financing
methods, capital structure or historical cost basis;
-- Enogex's operating performance and return on capital as compared to
other companies in the midstream energy sector, without regard to
financing or capital structure; and
-- the viability of acquisitions and capital expenditure projects and the
overall rates of return on alternative investment opportunities.
Enogex provides a reconciliation of EBITDA to its most directly comparable financial measure as calculated and presented in accordance with GAAP. The GAAP measure most directly comparable to EBITDA is net income attributable to Enogex Holdings. The non-GAAP financial measure of EBITDA should not be considered as an alternative to GAAP net income attributable to Enogex Holdings. EBITDA is not a presentation made in accordance with GAAP and has important limitations as an analytical tool. EBITDA should not be considered in isolation or as a substitute for analysis of Enogex's results as reported under GAAP. Because EBITDA excludes some, but not all, items that affect net income and is defined differently by different companies in Enogex's industry, Enogex's definition of EBITDA may not be comparable to a similarly titled measure of other companies. To compensate for the limitations of EBITDA as an analytical tool, Enogex believes it is important to review the comparable GAAP measure and understand the differences between the measures. A reconciliation of EBITDA is below and is available on OGE Energy's website: www.oge.com.
Reconciliation of projected EBITDA to projected net income attributable to Enogex Holdings
Twelve Months Ended
(In millions) December 31, 2012
(A)(B)
------------- ------------------
Net income attributable to Enogex Holdings $176
Add:
Interest expense, net 32
Depreciation and amortization expense (C) 100
---------------------------------------- ---
EBITDA $308
====== ====
OGE Energy's Portion $250
-------------------- ----
(A) Based on midpoint of 2012
guidance.
(B) As of November 1, 2010, Enogex
Holdings' earnings are no
longer subject to tax (other
than Texas state margin taxes)
and are taxable at the
individual partner level.
(C) Includes amortization of
certain customer-based
intangible assets associated
with the acquisition from
Cordillera in November 2011,
which is included in gross
margin for financial reporting
purposes.
Reconciliation of EBITDA to net income attributable to Enogex Holdings
Three Months Ended
March 31, 2012
--------------
(In millions) 2012 2011
------------ ---- ----
Net income attributable to Enogex Holdings $49.5 $34.5
Add:
Interest expense, net 7.6 6.4
Income tax expense (A) 0.1 ---
Depreciation and amortization expense (B) 24.1 18.6
---------------------------------------- ---- ----
EBITDA $81.3 $59.5
====== ===== =====
OGE Energy's Portion $66.1 $48.4
-------------------- ----- -----
(A) As of November 1, 2010, Enogex
Holdings' earnings are no
longer subject to tax (other
than Texas state margin taxes)
and are taxable at the
individual partner level.
(B) Includes amortization of
certain customer-based
intangible assets associated
with the acquisition from
Cordillera in November 2011,
which is included in gross
margin for financial reporting
purposes.
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; prices and availability of electricity, coal, natural gas and natural gas liquids, each on a stand-alone basis and in relation to each other as well as the processing contract mix between percent-of-liquids, percent-of-proceeds, keep-whole and fixed-fee; business conditions in the energy and natural gas midstream industries; competitive factors including the extent and timing of the entry of additional competition in the markets served by the Company; unusual weather; availability and prices of raw materials for current and future construction projects; 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 and regulations that may impact the Company's operations; changes in accounting standards, rules or guidelines; the discontinuance of accounting principles for certain types of rate-regulated activities; whether OG&E can successfully implement its Smart Grid program to install meters for its customers and integrate the Smart Grid meters with its customer billing and other computer information systems; the cost of protecting assets against, or damage due to, terrorism or cyber attacks; advances in technology; creditworthiness of suppliers, customers and other contractual parties; the higher degree of risk associated with the Company's nonregulated business compared with the Company's regulated utility business and other risk factors listed in the reports filed by the Company with the Securities and Exchange Commission including those listed in Risk Factors and Exhibit 99.01 to the Company's Form 10-K for the year ended December 31, 2011.
Note: Consolidated Statements of Income, Financial and Statistical Data attached.
OGE Energy Corp.
consolidated statements of income
(unaudited) Three Months Ended
March 31
--------
2012 2011
---- ----
(In millions, except
per share data)
OPERATING REVENUES
Electric Utility operating revenues $426.7 $422.1
Natural Gas Midstream Operations
operating revenues 414.0 418.4
----- -----
Total operating revenues 840.7 840.5
COST OF GOODS SOLD (exclusive of
depreciation and amortization shown
below)
Electric Utility cost of goods sold 183.6 207.5
Natural Gas Midstream Operations cost
of goods sold 301.7 325.7
----- -----
Total cost of goods sold 485.3 533.2
----- -----
Gross margin on revenues 355.4 307.3
OPERATING EXPENSES
Other operation and maintenance 147.6 138.3
Depreciation and amortization 86.6 74.0
Impairment of assets 0.2 -
Gain on insurance proceeds (7.5) -
Taxes other than income 30.2 27.1
---- ----
Total operating expenses 257.1 239.4
----- -----
OPERATING INCOME 98.3 67.9
OTHER INCOME (EXPENSE)
Interest income - 0.1
Allowance for equity funds used during
construction 1.9 4.4
Other income 7.7 6.3
Other expense (1.9) (2.3)
---- ----
Net other income 7.7 8.5
INTEREST EXPENSE
Interest on long-term debt 39.2 35.4
Allowance for borrowed funds used
during construction (1.1) (2.3)
Interest on short-term debt and other
interest charges 2.0 1.0
---
Interest expense 40.1 34.1
---- ----
INCOME BEFORE TAXES 65.9 42.3
INCOME TAX EXPENSE 18.4 12.6
---- ----
NET INCOME 47.5 29.7
Less: Net income attributable to
noncontrolling interests 10.4 4.9
---- ---
NET INCOME ATTRIBUTABLE TO OGE ENERGY $37.1 $24.8
===== =====
BASIC AVERAGE COMMON SHARES
OUTSTANDING 98.3 97.7
DILUTED AVERAGE COMMON SHARES
OUTSTANDING 98.8 99.1
BASIC EARNINGS PER AVERAGE COMMON
SHARE
ATTRIBUTABLE TO OGE ENERGY COMMON
SHAREHOLDERS $0.38 $0.25
===== =====
DILUTED EARNINGS PER AVERAGE COMMON
SHARE
ATTRIBUTABLE TO OGE ENERGY COMMON
SHAREHOLDERS $0.38 $0.25
===== =====
DIVIDENDS DECLARED PER COMMON SHARE $0.3925 $0.3750
======= =======
OGE Energy Corp.
financial and statistical data
(unaudited) Three Months Ended
March 31
--------
2012 2011
---- ----
(In millions)
ELECTRIC UTILITY
Operating revenues by
classification
Residential $169.6 $176.8
Commercial 99.9 98.2
Industrial 44.2 44.1
Oilfield 36.6 34.9
Public authorities and street
light 39.4 38.3
Sales for resale 12.8 13.2
System sales revenues 402.5 405.5
Off-system sales revenues 8.9 9.4
Other 15.3 7.2
Total operating revenues $426.7 $422.1
======
Sales of electricity -MWH (a)
sales by classification
Residential 1.9 2.2
Commercial 1.5 1.5
Industrial 1.0 0.9
Oilfield 0.8 0.8
Public authorities and street
light 0.7 0.7
Sales for resale 0.3 0.3
---
System sales 6.2 6.4
Off-system sales 0.4 0.3
---
Total sales 6.6 6.7
===
Number of customers 792,065 784,582
Average cost of energy per KWH (b)
-cents
Natural gas 2.937 4.390
Coal 2.246 2.033
Total fuel 2.500 2.686
Total fuel and purchased power 2.735 3.048
Degree days
Heating - Actual 1,382 1,904
Heating - Normal 1,798 1,963
Cooling - Actual 61 41
Cooling - Normal 13 8
NATURAL GAS MIDSTREAM OPERATIONS
Operating revenues $429.6 $442.4
Operating income $58.7 $41.6
Net income attributable to OGE
Enogex Holdings $25.0 $18.8
Net cash provided from operating
activities $48.2 $49.2
Capital expenditures $118.5 $65.1
Gathered volumes - TBtu/d (c) 1.33 1.30
Incremental transportation volumes
-TBtu/d (d) 0.52 0.52
Total throughput volumes -TBtu/d 1.85 1.82
====
Natural gas processed - TBtu/d 0.91 0.76
Natural gas liquids sold (keep-
whole) - million gallons 37 42
Natural gas liquids sold
(purchased for resale) -million
gallons 155 112
Natural gas liquids sold (percent-
of-liquids) - million gallons 6 6
Natural gas liquids sold (percent-
of-proceeds) - million gallons 3 1
Total natural gas liquids sold -
million gallons 201 161
===
Average natural gas liquids sales
price per gallon $0.99 $1.11
Average natural gas sales price
per MMBtu (e) $2.80 $4.13
(a) Megawatt-hours.
(b) Kilowatt-hours.
(c) Trillion British thermal
units per day.
(d) Incremental transportation
volumes consist of natural gas moved
only on the transportation pipeline.
(e) Million British thermal units.
SOURCE OGE Energy Corp.
