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NW Natural Reports Results For The Quarter & Nine Months Ended September 30, 2011

Stocks in this article: NWN

Gas deliveries to industrial customers in the third quarter of 2011 were down 3 percent from 106 million therms in 2010’s third quarter, compared to 104 million therms in 2011. Margin from industrial customers was unchanged at $6.6 million for the third quarters in both 2010 and 2011.

Gas storage business update

NW Natural’s gas storage segment reported net income of $1.2 million on net operating revenues of $6.7 million in the third quarter of 2011, compared to $1.8 million and $4.9 million, respectively, in last year’s third quarter. Results in 2011 primarily reflect first-year costs at Gill Ranch Storage, including depreciation, and low storage prices in California, and lower optimization service revenues at the company’s Mist storage operations in Oregon.

Gas reserves update

NW Natural received approval in the second quarter of 2011 from the Public Utility Commission of Oregon (OPUC) to participate in a joint venture with Encana Oil & Gas (USA) Inc. to develop gas reserves on behalf of NW Natural’s utility customers. The company is expected to invest approximately $45-55 million a year over a five-year period, for a total investment of about $250 million. The investment will cover a portion of the expected drilling costs in exchange for working interests in two sections of the Jonah Field in Wyoming. The drilling area includes both future and currently producing wells. Encana began drilling in May 2011, and the company is currently receiving gas from its interests in a section of the gas field. NW Natural’s investment at Sept. 30, 2011 was $30.9 million.

O&M costs reflect Gill Ranch start-up

Operations and maintenance expense was 5 percent higher in the third quarter of 2011, compared to 2010, primarily due to operating costs at Gill Ranch Storage, which became operational in late 2010. Utility O&M expense increased 2 percent in the quarter.

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