AGL Resources Inc. GAS 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.
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