RICHMOND, Va., Oct. 15, 2002 — Dominion announced unaudited consolidated operating earnings for the third quarter ended September 30, 2002, of $430 million ($1.54 per share), compared with operating earnings of $344 million ($1.37 per share) for the same period in 2001.
Third quarter 2002 and 2001 reported earnings were the same as operating earnings.
Thos. E. Capps, chairman, president and chief executive officer, said:
“Our third-quarter results were very strong, especially under these very difficult market conditions. If not for the anticipated dilution from the stock offering, we would be in solid position to meet our previously stated earnings guidance of $4.90 to $4.95 per share for the full year.”
In September, the company notified the investment community of its intentions to issue additional equity to strengthen the balance sheet. Last week the company reiterated these plans and said it would offer approximately $1 billion in equity in the near future.
Updated commodity hedge position and reaffirmation of dividend
The company has hedged about 90 percent of 2002 oil and gas production, 75 percent of 2003 production, and 50 percent of 2004 production. The company has hedged about 90 percent of its power generation portfolio for 2002 and 2003 and about 85 percent for 2004.
Capps said: “With our earnings largely derived from tariff-based or hedged revenue sources, our earnings and cash flow are very stable. Accordingly, we are once again reaffirming our $2.58 per share dividend. We expect to earn $4.80 to $4.90 per share this year and $4.60 to $4.80 per share in 2003. After 2003, we expect 5 to 7 percent average annual earnings growth.”
Earnings breakdown by operating segment
Dominion Energy contributed $273 million (98 cents per share) to third-quarter 2002 earnings compared to $288 million ($1.15 per share) in the third quarter of 2001. The decrease in Dominion Energy’s third-quarter 2002 earnings resulted from a lower contribution from Dominion Energy Clearinghouse, additional nuclear outage costs and share dilution which were partially offset by customer growth, warmer weather in the electric franchise area and the recognition of a state tax benefit.
Dominion Delivery earned $111 million (40 cents per share) in its third quarter compared to $68 million (27 cents per share) for the same period in 2001. The increase in Dominion Delivery’s third-quarter earnings is primarily attributable to higher than normal temperatures, customer growth, reduced expenses and the recognition of a state tax benefit partially offset by share dilution and other factors.
Dominion Exploration & Production (E&P) contributed $90 million (32 cents per share) to third-quarter 2002 earnings, up from $78 million (31 cents per share) in the third quarter of 2001. The change in Dominion E&P’s third-quarter earnings is primarily attributable to higher production, which was offset by lower average realized prices, share dilution and other factors.
The corporate segment, including Dominion Capital, posted net expenses of $44 million (16 cents per share) for the quarter, compared to net expenses of $90 million (36 cents per share) in the third quarter of 2001. The decrease in the corporate segment’s net expenses is attributable to the elimination of goodwill amortization, the recognition of a state tax benefit and improved earnings of Dominion Capital.
Retirements at Dominion Resources
In other news, Dominion Resources announced the retirement of Edgar M. Roach, Jr. as president and chief executive officer of Dominion Delivery, effective Dec. 1. Roach will be succeeded by Admiral Jay L. Johnson, who joined Dominion two years ago as senior vice president-business excellence when he retired as the United States Chief of Naval Operations.
The company also announced the retirement of James P. O’Hanlon as president and chief operating officer of Dominion Energy, also effective Dec. 1. O’Hanlon’s responsibilities will be assumed and divided between two Dominion senior vice presidents, Paul D. Koonce and Mark E. McGettrick.
Koonce will become chief executive officer-transmission at Dominion Energy, where he will continue to oversee the company’s energy trading and will add responsibility for natural gas and electric transmission management. McGettrick will be Dominion Energy’s president and chief executive officer-generation and relinquish his position as president of Dominion Resources Services.
Also, Dominion announced Tuesday that it plans a public offering of 26.5 million shares of its common stock which, at today’s closing price of $39.35 on the New York Stock Exchange, would amount to approximately $1 billion in gross proceeds to Dominion.
Dominion has a diversified and integrated energy portfolio consisting of about 24,000-megawatts of generation, 5.7 trillion cubic feet equivalent of natural gas reserves, nearly 7,700 miles of natural gas transmission pipeline and the nation’s largest underground natural gas storage system with more than 960 billion cubic feet of storage capacity.
Dominion also serves over 3.8 million franchise natural gas and electric customers in five states. In addition, Dominion owns a managing equity interest in Dominion Fiber Ventures, LLC, owner of Dominion Telecom. For more information about Dominion, visit the company’s web site at www.dom.com.