OGE Energy profits up 13%

Journal Record, The (Oklahoma City), Aug 7, 2003 by Journal Record staff

OGE Energy on Wednesday reported a 13 percent increase in net income for the second quarter.

Net income for the quarter totaled $32.2 million, or 41 cents per share, up from $28.4 million, or 36 cents per share, for the second quarter of 2002.

The parent company of Oklahoma Gas and Electric and Enogex reported revenues for the quarter of $852.6 million, up 16.7 percent from $730.8 million a year earlier.

Earnings for the quarter improved despite weather that was 8 percent cooler than last year and 13 percent cooler than normal. For a second consecutive quarter, better results for OGE Energy were primarily the result of higher earnings at Enogex, said Steven E. Moore, OGE Energy chairman, president and CEO.

"We see this as affirmation of the steps we are taking to improve performance," Moore said. "We also continue to pursue the acquisition of a new power plant and we look forward to signing an agreement and completing the acquisition, which will set the stage for higher earnings for shareowners and savings for customers."

The second quarter gross margin on revenues was $231 million, compared with $223 million in the year-earlier quarter. Operating income was $77 million in the second quarter, compared with operating income of $64 million a year earlier.

Net income for the first six months of 2003 totaled $31.9 million, or 40 cents per share, up from $22.1 million, or 28 cents per share, for the first six months of 2002.

Revenues for the first six months of the year totaled $1.9 billion, up from $1.3 billion a year earlier.

OG&E, the utility, posted earnings of 35 cents per share to OGE Energy's consolidated second quarter results, compared with earnings of 40 cents a share for the second quarter of 2002. Second quarter gross margin was $171 million, compared with $174 million a year earlier.

Operating income at OG&E was $55 million, compared with $57 million in the second quarter of 2002. The decrease was due, in large part, to the electric rate reduction ordered in Oklahoma in 2002 and to cooler weather partially offset by customer growth.

Electric revenues for the quarter were up 1.6 percent to $357.9 million from $352.2 million a year earlier. Electric revenues for the quarter included $137.4 million from residential; $92.8 million, commercial; $68.7 million, industrial; and $33.6 million, public authorities.

Enogex, the pipeline, posted earnings of 10 cents a share for the quarter, up from 1 cent per share for the same quarter last year. Second quarter gross margin was $60 million, up from $49 million a year earlier.

Operating income for Enogex was $22 million, up from $8 million in the second quarter last year. The increase in operating income was primarily due to increased gross margins in the natural gas transportation and storage business and lower expenses.

The holding company, OGE Energy, which only has interest expenses associated with long- and short-term debt, recorded a loss 4 cents a share in the second quarter, compared with a loss of 5 cents a share in the year-ago quarter.

OGE Energy increased its 2003 earnings projection to $1.40 to $1.50 a share, from $1.35 to $1.45 based on continued improvement in financial performance at Enogex. The outlook includes projected net income of between $112 million and $118 million at OG&E and between $18 million and $20 million at Enogex, while the holding company will likely post a net loss of $14 million.