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 WILMINGTON, Del., Aug. 6 /PRNewswire/ -- The Columbia Gas System, Inc. (NYSE: CG) today reported an after-tax loss of $2.6 million, or 6 cents a share, for the second quarter of 1993, primarily due to a writedown of its investment in its Cove Point (Md.) liquefied natural gas (LNG) terminal.
 Net income for the second quarter of 1992 was $30.7 million, or 61 cents a share.
 The $37.9 million after tax writedown in the LNG terminal was necessitated by a change in scope of the company's business plan for the facility due to the previously announced withdrawal of a bid by another company to import liquefied natural gas through the terminal.
 Both the current and prior periods benefited from not accruing estimated after-tax interest expense on prepetition debt of $36 million and $34 million, respectively, as a result of the company's bankruptcy proceedings.
 After adjusting for these, other unusual items and other items related to the company's bankruptcy proceedings in both periods, net income for the second quarter of 1993 increased by $5.7 million to $6.4 million. The principal reasons for this improvement were higher prices that Columbia's oil and gas subsidiaries received for natural gas production, increased oil and liquids production, and the effect of 1992 settlements with gas suppliers.
 The Columbia Gas System, Inc., and its principal pipeline subsidiary, Columbia Gas Transmission Corporation, have been operating as debtors in possession under Chapter 11 of the U. S. Bankruptcy Code since July 31, 1991.
 Segment Operating Results
 During the second quarter of 1993, higher wellhead prices for natural gas and increased production of oil and liquids resulted in operating income of $11.4 million for Columbia's oil and gas segment, a $9.2 million increase over the same period in 1992.
 The average price received for natural gas production during the current quarter was $2.22 per thousand cubic feet, a 46 cent increase over the same period in 1992, while the average price for oil and liquids declined 98 cents to $17.44 per barrel. Gas production of 17.6 billion cubic feet was unchanged between the two periods, but oil and liquids production increased 169,000 barrels (23 percent) to 906,000 barrels.
 Columbia's transmission segment reported a $6.9 million loss for the second quarter of 1993 as compared to income of $49.3 million for the same period in 1992. This was primarily due to a $57.5 million (pre-tax) writedown of the investment in the LNG terminal.
 Since Columbia LNG Corp., which owns the terminal, anticipates initiating only peaking and storage services at this time, the writedown in the value of the terminal, including estimated after-tax dismantling costs for its offshore facility of approximately $12 million, was required. The company plans, however, to maintain the offshore facilities for possible future imports.
 After adjusting for the previously-mentioned writedown, transmission segment operating income was $50.6 million in the second quarter, a $1.3 million increase over the same period last year. This improvement reflects the net effect of $21.8 million in charges associated with gas supplier settlements that Columbia Transmission recorded in the second quarter of 1992, offset by lower net revenues (revenues less associated gas costs) and higher operating and maintenance expense this year.
 A $13.4 million decline in net revenues in the current quarter reflects an estimated pre-tax loss of $11.8 million associated with Columbia Gas Transmission's sale of its natural gas storage inventory that will result from its adoption of the Federal Energy Regulatory Commission's Order 636 in November and lower throughput. These were partially offset by higher margins.
 Columbia's distribution segment recorded an operating loss of $300,000 in the second quarter compared to operating income of $5.2 million during the same period in 1992. Second quarter distribution results are subject to significant variations due to weather, and about $1.5 million of the period-to-period decrease is attributable to warmer temperatures in the current period. Current year operating expenses increased as planned by $7.9 million over the prior period. This was primarily due to higher labor and benefit costs, which included additional personnel requirements stemming from the FERC's Order 636, and filling vacancies in field operations that had been previously deferred. The current period also includes increased charges resulting from the implementation of two new information processing systems that are designed to enhance long-term productivity. Partially offsetting these planned increases was a $2.4 million increase in net revenues as a result of higher rates and increased nonweather-related throughput between the two periods.
 Six Months Results
 For the six months ended June 30, 1993, Columbia reported improved net income of $137.2 million, or $2.71 a share, compared to $41.5 million, or 82 cents a share for the same period in 1992. After adjusting for unusual items and bankruptcy related matters in both periods, net income for the period was $95.8 million, a $21.6 million increase over the first six months of 1992.
 The $21.6 million improvement primarily reflects the beneficial effects of colder temperatures in 1993 as compared to 1992, increased oil and gas prices and the full effect of a new rate design implemented by Columbia's transmission companies in April 1992.
 A $13.2 million after-tax effect of a reversal in rate reserves by Columbia Gas Transmission during the first quarter of 1993 partially offset the unusual items recorded in the second quarter. During the first six months of 1992, depressed energy prices led to a $83.4 million after-tax writedown in the value of the corporation's oil and gas properties. Net income was also reduced in 1992 by a $9.4 million reserve addition recorded for a settlement with a pipeline supplier.
 In the first half of 1993, the distribution companies showed a modest increase over the same period in 1992. Increased throughput due to 3 percent colder weather and increased market demand over the prior period offset planned increases in operating expenses.
 Summary of Financial and Operating Data
 Three Months Six Months
 Ended June 30 Ended June 30
 1993 1992 1993 1992
 Income Statement Data
 ($ millions)
 Total Operating Revenue 592.9 522.1 1,815.5 1,554.3
 Net Income (Loss) (2.6) 30.7 137.2 41.5
 Operating Income (Loss)
 By Segment:
 Oil and Gas 11.4 2.2 31.2 (119.8)
 Transmission (6.9)(A) 49.3 81.6 90.4
 Distribution (0.3) 5.2 111.0 106.1
 Other Energy (0.8) (0.3) 4.6 2.8
 Corporate (1.9) (1.9) (3.8) (3.9)
 Total 1.5 54.5 224.6 75.6
 Per Share Data
 Earnings (Loss) on Common
 Stock ($) (0.06) 0.61 2.71 0.82
 Dividends on Common
 Stock ($) --- --- --- ---
 Average Common Shares
 Outstanding (millions) 50.6 50.6 50.6 50.6
 Operating Data
 Oil and Gas Volumes:
 Gas Production
 (billion cubic feet) 17.6 17.6 37.2 35.3
 Oil Production
 (000 barrels) 906 737 1,755 1,484
 Transmission (billion
 cubic feet):
 Columbia Transmission
 Market Area 197.4 243.9 428.4 473.1
 Columbia Gulf
 Main-line 152.5 159.0 289.0 295.7
 Short-haul 148.9 171.7 297.9 325.6
 Eliminations (240.5) (261.9) (459.1) (480.0)
 Total Transportation 258.3 312.7 556.2 614.4
 Sales 29.4 38.1 103.3 95.4
 Total Throughput 287.7 350.8 659.5 709.8
 (A) Includes a $57.5 million writedown in the investment in Columbia LNG Corporation's Cove Point LNG facility.
 Summary of Financial and Operating Data (Continued)
 Three Months Six Months
 Ended June 30 Ended June 30
 1993 1992 1993 1992
 Distribution (billion
 cubic feet):
 Gas Sales 42.5 41.4 180.4 167.7
 Transportation 47.8 47.4 111.9 107.3
 Total Throughput 90.3 88.8 292.3 275.0
 Degree Days-Distribution
 Service Territory
 Actual 613 693 3,478 3,365
 Normal 580 569 3,525 3,548
 (Pct.) Colder (warmer) than
 normal 5.7 22 (1.3) (5)
 (Pct.) Colder (warmer) than
 prior period (11.5) 77 3.4 14
 -0- 8/6/93
 /CONTACT: H.W. Chaddock, 302-429-5261, or (financial) T.L. Hughes, 302-429-5471, both of Columbia Gas/

CO: The Columbia Gas System, Inc. ST: Delaware IN: OIL SU: ERN

MK -- PH007 -- 0208 08/06/93 09:31 EDT
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Publication:PR Newswire
Date:Aug 6, 1993

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