Last month, Supply Corporation placed its line in expansion project and service and I expect that Empire’s Tioga County Extension Project, which takes advantage of the relatively strong market north of the border, will be in service this quarter. Combined, those two projects will add $23.7 million in revenues in fiscal 2012. After the contracts underlying those projects have been ramped up to their full volumes, which will take about 18 months or so, annual pipeline and storage revenues will be impacted by about $36 million.
Our utility turned in a very strong performance despite the continued weak economy. Thanks to a number of revenue protecting mechanisms, things like revenue decoupling, weather normalization, 90-10 symmetrical sharing. Our utility earnings are much less sensitive to macro economic cycles. This stability not only benefits our retail customers, but our shareholders as well. Like our pipeline and storage earnings, utility earnings are not particularly sensitive to commodity price volatility, which services as a nice hedge to E&P earnings.
As we’ve said in the past, the stable predictable earnings of the regulated companies serve as the foundation for our longstanding dividend to which we remain committed.
Looking ahead, we’re expecting an even better year in fiscal 2012. In E&P segment, we’re adding six Seneca operated rig in early 2012 and plan to drill on the order of 50% more net wells in 2012 than we did in 2011. As a result, we anticipate production growth of nearly 40% and look to maintain a similar growth rate in the following years.A top priority, really the top priority in the E&P segment will be the further delineation of our Western acreage. We made good progress on this front in 2011, delineating our extensive Owl’s Nest area. As a result, beginning in January 2012, we plan to operate one or two rigs in this 90,000-acre block, which is largely owned in fee and thus royalty free. Read the rest of this transcript for free on seekingalpha.com
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