Consolidated Natural Gas Company Reports 1994 Earnings Despite Challenging Market Conditions

Consolidated Natural Gas Company, one of the nation's largest producers, transporters, distributors, and marketers of natural gas, reported a net income of $183.2 million for 1994, or $1.97 per share. This represents a decline from 1993's net income of $205.9 million, or $2.22 per share, primarily due to factors such as warmer weather, lower wellhead prices, reduced gas and oil production, and increased operating and capital costs. Despite these challenges, the company took steps to marshal its inherent strengths, including creating CNG Energy Services Corporation and adding reserves through its "Neptune" project in the Gulf of Mexico.

Key Takeaways:

• Consolidated Natural Gas Company reported a net income of $183.2 million for 1994, down from $205.9 million in 1993.
• The company's earnings per share (EPS) for 1994 were $1.97, compared to $2.22 in 1993.
• Warmer weather, lower wellhead prices, and reduced gas and oil production were significant contributing factors to the decline in earnings.
• The company created CNG Energy Services Corporation in 1994, a "one-stop energy shop" for gas and electric utilities, independent power producers, and other energy users.
• Consolidated's exploration and production company, CNG Producing Company, added 190 billion cubic feet equivalent to the company's reserves through its "Neptune" project in the Gulf of Mexico.
• The company's reserve replacement level was 189 percent, outpacing the reserves produced in 1994.
• Consolidated's three-year average finding and development cost fell to 67 cents per thousand cubic feet equivalent, compared to 96 cents in the previous period.

Statistics:

• Pre-tax operating income from Gas Distribution operations was $159 million in 1994, down from $166.9 million in 1993.
• Gas distribution volumes were down for the year and the fourth quarter, resulting in a 2.6 percent decline in throughput to 436.1 billion cubic feet.
• Earnings per share (EPS) for Exploration and Production (E&P) were $1.98 in 1994, down from $2.11 in 1993.
• The company produced 119.5 billion cubic feet of natural gas in 1994, down from 129.5 billion cubic feet in 1993.
• Wellhead prices for natural gas averaged $2.16 per thousand cubic feet in 1994, down from $2.24 a year earlier.
• Oil wellhead prices averaged $14.45 per barrel in 1994, down from $15.66 a year earlier.

Sources:

• Consolidated Natural Gas Company, PR Newswire, February 21, 1995
• Chet Wade, Consolidated Natural Gas, 412-227-1361