OGE Energy Corporation
), a distributor of natural gas and electricity primarily in the
south central United States, reported first quarter 2013 earnings
of 23 cents per share, missing the Zacks Consensus Estimate of 34
cents. Earnings were also lower than the prior-year figure of 38
cents per share.
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A regulated electric utility company, Oklahoma Gas and Electric
Company ("OG&E"), contributed earnings of 13 cents per share
in the reported quarter, flat year over year. Enogex, a midstream
natural gas business, contributed earnings of 12 cents per share,
down from 25 cents per share in the year-ago quarter. OGE Enogex
Holdings LLC posted a loss of 2 cents per share versus breakeven
results in the prior-year period.
OGE Energy's operating revenues of $901.4 million increased from
$840.7 million in the first quarter of 2012.
Electric Utility revenues were $455.5 million, up from $426.7
million in the first quarter of 2012. Natural Gas Midstream
Operations revenues were $445.9 million, up 7.7% year over year.
Sales of electricity to residential customers were 2.2 MWH versus
1.9 MWH in the year-ago period. Sales to Commercial customers
were 1.5 MWH, flat year over year. Sales to Industrial customers
were 0.9 MWH, down from 1MWH in the prior-year period.
OGE Energy's consolidated gross profit was $348 million in the
reported quarter, down from $355 million in first quarter of
Total operating expenses in the quarter under review were $273
million, up 6.2% year over year. Operating income of $75.4
million declined 23.3% year over year on the heels of higher
OG&E clocked gross profit of $243 million, up from $231
million in the comparable quarter last year, driven by revenues
associated with transmission projects, favorable weather and new
Enogex's gross margin on revenues was $105 million, down from
$124 million in the prior-year quarter. The decline reflects
lower gross margins in the processing and transportation
businesses. However, the decline was partially offset by increase
in processing and gathered volumes.
Cash and cash equivalents as of Mar 31, 2013 were $7.1 million,
up from $1.8 million as of Dec 31, 2012. Long-term debt as of Mar
31, 2013 was $2,848.7 million, approximately flat with $2,848.6
million as of Dec 31, 2012.
OGE Energy expects consolidated earnings for 2013 in the range of
$3.35 to $3.60 per average diluted share. The guidance reflects
normal weather for the remainder of 2013. However, it does not
take into account any impact from the midstream partnership with
CenterPoint Energy, Inc.
Recently, CenterPoint Energy, OGE Energy and ArcLight Capital
Partners, LLC declared the closing of a previously announced
partnership that includes CenterPoint Energy's interstate
pipelines and field services businesses and the midstream
business of Enogex LLC. The partnership will be managed by a
general partner whose governance will be shared by CenterPoint
Energy and OGE on an equal basis.
OGE Energy failed to meet the Zacks Consensus Estimate on higher
operating expenses. Currently, the company is pursuing an
aggressive energy efficiency program, investing in renewable
energy technologies and upgrading its infrastructure. Going
forward, these initiatives would help in improving the top and
However, we remain concerned about the volatility in its
commodity business and the unfavorable macro backdrop. The
company presently retains a short-term Zacks Rank #3 (Hold).
Stocks worth considering are
The AES Corporation
), both with a Zacks Rank #2 (Buy).