COLUMBIA GAS' THIRD QUARTER RESULTS REDUCED BY SPECIAL CHARGES;
OPERATING RESULTS IMPROVE
WILMINGTON, Del., Nov. 14 /PRNewswire/ -- Special charges which overshadowed a general improvement in operating performance caused The Columbia Gas System, Inc. (NYSE: CG) to record a loss of $120.5 million, or $2.38 per share, for the third quarter, compared to net income of $900,000, or two cents per share, for the same period in 1990, it was announced today.
These special charges primarily represent accruals for estimated losses and future obligations.
Both the parent company and its primary interstate gas pipeline subsidiary, Columbia Gas Transmission Corp., filed for protection under Chapter 11 of the bankruptcy code on July 31, 1991, as a result of unmanageable losses that the transmission company faced if required to purchase gas under non-competitive contracts. Most of these contracts have now been rejected through the bankruptcy process. The companies are working closely with all interested parties to bring the bankruptcy proceedings to a conclusion as soon as possible.
Columbia System Chairman and Chief Executive Officer John H. Croom stressed, "All of the System's primary business segments are operating on a normal basis, and customers are continuing to receive high quality service."
He pointed out that during the third quarter oil production was up 30 percent, total throughput on the transmission segment increased 8 percent, and reduced operating costs and rate relief improved distribution segment results. "All of these would have resulted in a more positive earnings report for the period had it not been for the special charges," he said.
Special charges totaling approximately $125 million for the quarter included additional accruals to increase reserves related to gas supply management costs and potential environmental cleanup costs, a write-down of Canadian oil and gas properties, and the incurrence of reorganization expenses. These factors were partially offset by lower interest costs incurred by the parent company after it discontinued interest accruals following its July 31, 1991, Chapter 11 filing.
Columbia's oil and gas operations recorded an operating loss of $6.8 million in the third quarter. This compares to operating income of $12.7 million in the same period of 1990. The 30 percent increase in oil production, due in part to favorable horizontal drilling activity in the Southwest, and a slight increase in gas production were negated by the effects of lower oil and gas prices, an $8.3 million write-down of Canadian oil and gas properties and higher operating expenses.
The transmission segment's operating loss of $123.7 million in the third quarter compares to operating income of $32 million during the same quarter last year. The increase in total throughput only marginally offset the $149.5 million pre-tax charge for gas supply related matters attributable to nonrecoupable take-or-pay costs and the write-down of previously-capitalized costs associated with renegotiated contracts. Also contributing to the decrease was a charge over last year of $9.1 million relating to potential environmental cleanup costs, and the effect of a favorable U.S. Supreme Court decision concerning previously-expensed production-related costs that added $30.5 million to earnings during the third quarter of 1990.
Despite a decrease in overall throughput, the distribution segment's seasonal operating loss for the third quarter was $2.7 million less than during the same period in 1990, primarily due to higher margins generated by rate increases and to reductions in operation and maintenance costs.
NINE MONTHS RESULTS
For the nine months ended Sept. 30, 1991, the corporation had a loss of $875.6 million, or $17.33 per share, compared to net income of $43.9 million, or 94 cents per share, for the same period last year.
Oil and gas operations incurred an operating loss of $14 million in the period compared to operating income of $38.9 million last year. This loss primarily reflects write-downs for Canadian properties totaling $36.4 million and lower gas prices and production for the period.
Transmission had an operating loss of $1.2 billion for the first nine months compared to operating income of $88.5 million for the same period in 1990. The loss is primarily due to charges for gas supply matters totaling $1.3 billion recorded in the second and third quarters. Without these and other adjustments, the transmission segment's operating income improved slightly due to lower operation and maintenance expenses, increased throughput and slightly higher net revenues.
Distribution had operating income of $55.6 million in the period, an increase of $16 million over the first nine months of 1990, primarily due to the effect of rate increases. The increases were partially offset by higher operating expenses.
THE COLUMBIA GAS SYSTEM, INC.
Period ended Three Months Nine Months
Sept. 30 1991 1990 1991 1990
Income statement data
(dollars in millions)
Total operating revenues 378.8 370.5 1,791.9 1,712.0
Net income (loss) (120.5) 0.9 (875.6) 43.9
(loss) by segment:
Oil and gas (6.8) 12.7 (14.0) 38.9
Transmission (123.7) 32.0 (1,235.5) 88.5
Distribution (16.8) (19.5) 55.6 39.6
Other (1.3) (3.0) (6.8) (7.1)
Total (148.6) 22.2 (1,200.7) 159.9
Per share data:
Earnings (loss) on
common stock $(2.38) $0.02 $(17.33) $0.94
Dividends paid on
common stock --- 0.55 1.16 1.65
Average common shares
outstanding (millions) 50.6 47.7 50.5 46.9
Oil and gas volumes:
Gas production (billion
cubic feet) 18.6 18.1 54.7 55.4
(000 barrels) 873 674 2,475 1,874
Transmission (billion cubic feet):
Gas sales 49.2 32.9 63.5 52.5
LDC & end users 179.2 167.1 625.5 572.3
Short-haul 115.9 120.2 403.4 348.7
Total transportation 295.1 287.3 1,028.9 921.0
Total throughput 344.3 320.2 1,092.4 973.5
Distribution (billion cubic feet):
Gas sales 17.9 22.6 179.5 182.8
Transportation 44.7 44.4 143.6 144.8
Total throughput 62.6 67.0 323.1 327.6
Actual 122 121 3,142 3,109
Normal 101 101 3,776 3,776
Pct. colder (warmer)
than normal 21 20 (17) (18)
Pct. colder (warmer)
than prior period 1 (9) 1 (14)
/CONTACT: W.R. McLaughlin (media), 302-429-5443; or T.L. Hughes (analysts), 302-429-5471, or 302-429-5000, both of Columbia Gas/
(CG) CO: The Columbia Gas System, Inc. ST: Delaware IN: UTI SU: ERN CC -- PH043 -- 1241 11/14/91 17:19 EST