AGL Resources Cuts FY12 Outlook, Sees EPS $2.45

AGL Resources Inc.

today announced preliminary diluted earnings per share adjusted for merger-related expenses of approximately $2.45 for 2012. The company's previously disclosed guidance range was $2.60 - $2.75 per diluted share for 2012, which assumed normal weather and volatility and no impact from hedge movements. Complete financial results for the company will be published on February 6, 2013. The reduction in earnings relative to prior guidance is due primarily to the following factors: * Price movements related to the company's natural gas transportation positions in its wholesale services segment resulted in approximately $22 million of mark-to-market accounting hedge losses during the fourth quarter of 2012. * The company expects these transportation hedge losses to be recovered in 2013 through 2015 (with the majority recognized in 2013) via the physical flow of natural gas and utilization of the contracted transportation capacity. * The main driver of the mark-to-market losses during the fourth quarter was significant volatility experienced at natural gas delivery points throughout the Northeast corridor related to natural gas supply constraints in the region. * Warmer than normal weather negatively impacted the distribution operations and the retail operations segments by a combined $10 million during the fourth quarter of 2012. As a reminder to the investment community, the reported earnings of AGL Resources' wholesale services business are subject to volatility due to changes in natural gas prices during the reporting period. Specifically, the company enters into contracts for natural gas transportation capacity and participates in transactions that manage natural gas commodity and transportation costs in an attempt to achieve the lowest cost to serve customers. Geographic pricing differences arise across various markets as delivered natural gas prices change. After execution of transactions to secure transportation capacity, the company often enters into forward financial contracts to hedge its positions and lock in a margin on future transportation activities. The hedging instruments are derivatives, and the company reflects changes in the derivatives' fair value in its reported operating results in the period of change, which can be in periods prior to actual utilization of the transportation capacity. AGL Resources' management will discuss fourth-quarter and full-year 2012 results in greater detail on the company's February 6, 2013 conference call. At that time, earnings per share guidance will also be provided for full-year 2013. AGL Resources does not provide or publish forecasts of quarterly earnings or other quarterly results, and this announcement is not intended to change that policy.