Dynegy Inc. (ticker: DYN, exchange: New York Stock Exchange (.N))
News Release -
29-Apr-1998
NGC Corporation Reports First Quarter Results HOUSTON--(BUSINESS WIRE)--April 29, 1998--NGC (NYSE:NGL)
Corporation reported net income for the quarter ended March 31, 1998,
of $12.3 million, or $0.07 per share on a diluted basis, compared with
$4.6 million, or $0.03 per share reported in the first quarter of
1997. Excluding certain charges in both periods as described below,
NGC's net income for the first quarter of 1998 was $18.6 million, or
$0.11 per share on a diluted basis, compared to $26.6 million or $0.16
per share in 1997.
The 1998 first quarter results include previously announced
severance charges of $9.6 million, $6.3 million after tax, or $0.04
per share, related principally to the restructuring of the Company's
natural gas liquids business. The 1997 first quarter earnings included
net charges totaling $22.0 million, $0.13 per share, primarily related
to the Company's inventory positions in liquids and crude oil, and a
reserve related to an investment in a gas storage project.
Commenting on the results, NGC Chairman and Chief Executive
Officer Chuck Watson said, "During this quarter we were pleased to see
improvement in our gas marketing and liquids marketing operations,
both in North America and the U.K. However, the fundamental
improvements in these businesses were offset by an El Nino-influenced
mild winter and lower natural gas liquids prices, the weakest in
several years. We estimate that the deterioration in market prices
impacted our operating margin by $25-30 million on a
quarter-to-quarter basis." Watson continued, "During the quarter, we
began to see the benefits from the successful integration of the
assets of Destec and Chevron into NGC and improved efficiency from the
ongoing restructuring of our liquids operation. Management remains
focused on delivering the highest returns possible to our
shareholders."
Watson added, "This year we expect to continue to strengthen our
strategic commitment to our power generation business and to exploit
the unique synergies between NGC's asset and commercial businesses. As
new regional electric markets open, we believe that our approach to
capturing market share by offering customers a full complement of
energy products and services will build profitability for NGC along
the entire value chain."
"Also, our business processes and infrastructure systems have been
scaled up and are now in line with the businesses of the larger
organization that has resulted from our expansion as a company," said
Watson.
Consolidated operating margin for the first quarter increased to
$97.0 million from the $67.3 million reported last year. The increase
reflects improved results in natural gas and natural gas liquids
marketing, the contribution from power generation as a result of the
July 1997 acquisition of Destec Energy and improved results from the
U.K., offset by lower results in the Company's gas processing business
due to the precipitous drop in average natural gas liquids prices,
experienced by industry.
Natural Gas and Power Marketing Segment
The Marketing segment reported operating margin of $23.6 million,
compared with the $19.5 million earnings reported a year ago, due to
higher unit margins as a result of improved results in the Company's
gas business, offset by a $2.4 million loss in the Company's electric
power marketing business.
NGC's U.S. gas sales volumes increased to 6.5 billion cubic feet
per day (Bcf/d) in the first quarter from 6.2 Bcf/d for the first
quarter of 1997. In addition, during the first quarter of 1998 NGC
sold 2.1 Bcf/d in Canada and 0.7 Bcf/d in the U.K.
Electric Clearinghouse, Inc. (ECI), NGC's electric power marketing
subsidiary, reported sales volumes for the quarter of 25.0 million
megawatt hours, compared with 17.4 million megawatt hours sold in the
first quarter of 1997.
Power Generation
The power generation segment contributed $16.7 million to pretax
earnings during the first quarter, $9.5 million of which is included
in operating margin. The Company also reported $7.2 million in equity
in earnings from unconsolidated affiliates from power generation.
Natural Gas Liquids, Crude Oil and Gas Transmission
For the first quarter, liquids contributed $55.5 million to
consolidated operating margin, compared with $45.7 million in last
year's first quarter. Excluding the charges mentioned above, the
liquids segment reported $69.0 million in operating margin for the
first quarter of 1997. The decline is due to the impact of lower
natural gas liquids prices on the Company's gas processing business
mitigated, in part, by more aggressive management of inventories which
contributed to much improved results in the natural gas liquids
marketing business.
Natural gas processing volumes averaged 127.5 thousand barrels per
day (Bbls/d) gross during the first quarter of 1998 compared with
128.6 thousand Bbls/d during the first quarter of 1997. Crude oil
marketing volumes increased to 195.2 thousand barrels per day from
151.9 thousand Bbls/d in the first quarter of 1997.
Global
The Company's global segment reported operating margin of $8.3
million compared to $2.1 million due primarily to its expanding gas
marketing activities in the U.K. Prior to 1997, NGC's activities in
the U.K. were conducted principally through Accord Energy Limited, a
joint venture with British Gas. Concurrent with the restructuring of
Accord in the first quarter of 1997, NGC began commercial operations
in the U.K. through a wholly owned subsidiary, NGC U.K., Ltd. This
quarter's results reflect the earnings of this subsidiary in operating
margin as well as equity earnings of $4.5 million from NGC's
restructured interest in Accord.
Other
Consolidated operating income for the first quarter of 1998 was
$19.2 million, compared to $15.8 million reported in the first quarter
of 1997. The increase is principally a result of the increased
operating margin discussed above, offset by higher general and
administrative and depreciation expenses and the $9.6 million
severance charge. The increase in general and administrative expenses
is primarily related to the start-up of NGC's wholly owned operations
in Canada and the U.K. and the Company's acquisition of Destec Energy
in June 1997.
Equity in earnings of unconsolidated affiliates increased to $15.8
million in the first quarter from $13.4 million in the first quarter
of 1997, due primarily to the contribution from Destec Energy, offset
somewhat by a lower contribution from Accord.
Interest expense increased from $14.6 million to $16 million
primarily as a result of higher debt balances associated with the
Destec acquisition. Also, in the second quarter 1997, the company
issued $200 million of preferred securities. Dividends on these
securities for the first quarter of 1998 totaled $4.2 million.
NGC Corporation is one of the country's leading marketers of
energy products and services. Its leadership position in gathering,
processing, independent power generation, transportation and marketing
of energy commodities enables the Company to offer integrated energy
solutions to customers in North America and the United Kingdom.
Working with strategic business partners, the Company seeks to expand
these services as marketing opportunities present themselves in North
America and selected countries worldwide.
More information on NGC Corporation is accessible at:
http://www.ngccorp.com/
NGC CORPORATION
Unaudited Condensed Consolidated Statement of Operations
(in thousands, except per-share amounts)
Three Months Ended
March 31,
1998 1997
Operating Revenues $3,315,569 $3,272,080
Cost of Sales 3,218,580 3,204,733
Operating Margin 96,989 67,347
Depreciation 25,532 23,348
General and Administrative Expenses 42,606 28,199
Severance Charge 9,644 --
Operating Income 19,207 15,800
Interest Expense (16,005) (14,624)
Equity in Earnings of
Unconsolidated Affiliates 15,755 13,386
Minority Interest in Income
of Subsidiary (A) (4,158) --
Other Income and (Deductions), Net 1,612 (10,133)
Income Before Income Taxes 16,411 4,429
Provision for (Benefit of)
Income Taxes 4,072 (185)
Net Income $ 12,339 $ 4,614
Basic Earnings Per Share
of Common Stock $ 0.08 $ 0.03
Diluted Earnings
Per Share of Common Stock $ 0.07 $ 0.03
Basic Shares Outstanding 151,533 150,176
Diluted Shares Outstanding 166,282 167,812
(A) Represents distributions related to $200 million of 8.316%
Company Obligated Preferred Securities sold by the Company in
the second quarter of 1997.
NGC CORPORATION
Unaudited Operating Margin by Segment
(in thousands)
Three Months Ended
March 31,
1998 1997
Natural Gas Marketing $ 26,053 $ 17,605
Electric Power Marketing (2,435) 1,923
------ ------
23,618 19,528
Power Generation 9,515 --
Natural Gas Liquids, Crude Oil
and Gas Transmission Segment:
Natural Gas Processing
Field Plants 22,616 49,327
Natural Gas Processing
Straddle Plants 5,180 3,622
Fractionation 7,252 6,082
Natural Gas Liquids Marketing 13,718 (16,335)
Crude Oil Marketing 2,709 (999)
Natural Gas Gathering
and Transmission 4,056 4,154
Other --- (178)
------ ------
55,531 45,673
Global:
Gas Sales 6,092 350
LPG Sales 2,233 1,797
----- -----
8,325 2,147
Total Operating Margin $ 96,989 $ 67,348
NGC CORPORATION
Volumetric Information
Three Months Ended
March 31,
1998 1997
Natural Gas Sales (Bcf/d):
U.S. (A) 6.5 6.2
Canada (B) 2.1 --
Electric Power Marketing:
Million Megawatt hours sold 25.0 17.4
Power Generation:
Million Megawatt Hours Generated
Gross 3.3 --
Net 2.1 --
Natural Gas Liquids Processed:
Thousand Bbls/d
Field Plants 86.7 80.3
Straddle Plants 40.8 48.3
Natural Gas Liquids Sold:
Thousand Bbls/d 431.7 424.2
Fractionation Volumes:
Thousand Bbls/d 159.4 149.6
Gas Gathering and Transmission (Bcf/d) 0.4 0.3
Crude Oil Volumes:
Thousand Bbls/d 195.2 151.9
Global Sales:
LPG Sales (MMBbls) 5.4 3.9
Gas Sales (Bcf/d) (C) 0.7 0.1
(A) Includes 0.2 Bcf/d in inter-affiliate gas sales for the
quarter ended March 31, 1997.
(B) Represents volumes sold by NGC Canada, Inc. beginning April
1, 1997. Volumes sold by NCL prior to April 1, 1997 are not
comparable.
(C) Represents volumes sold by NGC UK. Ltd. beginning March 1997.
NGC CORPORATION
Unaudited Schedule of Equity in Earnings of Unconsolidated Affiliates
(in thousands)
Three Months Ended
March 31,
1998 1997
Accord Energy Limited $ 4,500 $ 9,000
Gulf Coast Fractionators 1,189 1,373
West Texas Pipeline 1,717 1,540
Venice Energy Services 1,763 2,691
Waskom Gas Processing 418 --
Destec equity investments 7,154 --
Other, net (986) (1,218)
$ 15,755 $ 13,386
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Dynegy Inc.
