Pacific Northern Gas Ltd.
TSX : PNG
TSX : PNG.PR.A

Pacific Northern Gas Ltd.

July 27, 2005 16:30 ET

Pacific Northern Gas Reports Second Quarter Earnings and Declares Second Quarter Dividends

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - July 27, 2005) - Pacific Northern Gas Ltd. (TSX:PNG)(TSX:PNG.PR.A) announced today that net income for the three months ended June 30, 2005 was $0.1 million, compared with $0.3 million for the corresponding period in 2004. After providing for preferred share dividends, earnings per common share in the three months ended June 30, 2005 were $0.02 compared with $0.06 for the same period in 2004. The decrease in net income is primarily the result of higher gas processing and distribution maintenance expenses, offset by reductions in administrative expenses.

Net income for the six months ended June 30, 2005 was $4.1 million, compared with $4.2 million for the corresponding period in 2004. After providing for preferred share dividends, earnings per common share in the six months ended June 30, 2005 were $1.09 compared with $1.11 for the same period in 2004. The decrease in net income is primarily the result of a 12 basis point reduction in the average allowed return on equity, from 9.75 percent in 2004 to 9.63 percent in 2005, offset by lower administrative and other interest expenses.

Operating revenues in the three months ended June 30, 2005 increased to $30.3 million as compared with $28.2 million in the corresponding period in 2004. The increase in operating revenues was primarily due to an increase of $1.6 million in revenues from the sale of gas surplus to the needs of the Company's sales customers ("off system gas sales"), as well as higher gas supply costs embedded in sales customers' rates compared with the corresponding period in 2004. Natural gas commodity prices, which are passed through to the Company's sales customers without mark-up, are very volatile and result in significant variability of the Company reported operating revenues, but do not affect net income. Any profit or loss realized on off system gas sales is deferred for future recovery from, or refund to, the Company's sales customers.

Operating revenues in the first six months of 2005 increased to $78.1 million as compared with $71.8 million in the first six months of 2004. The increase in operating revenues was primarily due to higher gas supply costs embedded in sales customers' rates compared with the corresponding period in 2004, as well as an increase of $1.2 million in off system gas sales.

Operating margin in the three months ended June 30, 2005 declined to $9.8 million, as compared with $10.4 million in the same period in 2004. Operating margin in the first six months of 2005 declined to $25.9 million, as compared with $26.9 million in the first six months of 2004. The decreases in operating margin are largely a result of lower company use gas costs included in customer rates, compared to the same periods in 2004, as well as a 12 basis point reduction in allowed return on equity.

Residential deliveries were lower by seven percent in the three months ended June 30, 2005 and were lower by one percent in the six months ended June 30, 2005 relative to deliveries over the same periods in 2004. Weather was a prime contributor to reduced residential sales, as it was 8.7 percent warmer in the three months ended June 30, 2005, and 4.5 percent warmer in the six months ended June 30, 2005, compared to the same periods in 2004.

Commercial deliveries were higher by twelve percent in the second quarter of 2005 and were higher by four percent in the first six months of 2005 relative to deliveries over the same periods in 2004. Deliveries to commercial customers tend to be less temperature sensitive and a large commercial customer was added in the northeastern region during the third quarter of 2004.

Industrial deliveries for the three month and six month periods ended June 30, 2005 were lower by three percent and one percent, respectively, compared to the same periods in 2004. The reduction in industrial deliveries is primarily attributable to lower deliveries to three large industrial customers. A deferral account is in place that recovers or refunds margin differences resulting from large industrial customers' demand varying from the forecast approved for rate making purposes.

The Board of Directors declared a quarterly dividend of 20 cents per share on the Company's common shares, payable September 23, 2005 to shareholders of record at the close of business on September 8, 2005.

Headquartered in Vancouver, British Columbia, Pacific Northern Gas Ltd. (TSX:PNG)(TSX:PNG.PR.A) owns and operates natural gas transmission and distribution systems. The Company's western transmission line extends from the Duke Energy Gas Transmission system north of Prince George to tidewater at Kitimat and Prince Rupert, and provides service to 12 communities and a number of industrial facilities. In the northeast, Pacific Northern's subsidiary Pacific Northern Gas (N.E.) Ltd. provides gas distribution service in the Dawson Creek, Fort St. John and Tumbler Ridge areas. Further information is available on the Company's website at: www.png.ca.



Second Quarter Consolidated Results
Three Month Period Ended
June 30, 2005 ($ thousand, except for per share data)

2005 2004

Operating revenues $ 30,293 $ 28,245
Cost of sales 20,518 17,839
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Operating margin 9,775 10,406

Net income applicable to common shares $ 52 $ 233
Earnings per common share - basic $ 0.02 $ 0.06
Earnings per common share - diluted $ 0.01 $ 0.06

Operating cash flow $ 2,458 $ 2,479
Additions to plant, property and equipment 1,113 2,250
Increase in deferred charges (323) (541)
Repayment of long term debt (645) (643)
Decrease in bank indebtedness (2,723) -
Dividends paid (894) (889)


Second Quarter Consolidated Results
Six Month Period Ended
June 30, 2005 ($ thousand, except for per share data)

2005 2004

Operating revenues $ 78,091 $ 71,829
Cost of sales 52,185 44,958
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Operating margin 25,906 26,871

Net income applicable to common shares $ 3,952 $ 3,997
Earnings per common share - basic $ 1.09 $ 1.11
Earnings per common share - diluted $ 1.08 $ 1.09

Operating cash flow $ 8,739 $ 8,487
Additions to plant, property and equipment (2,201) (2,953)
Increase in deferred charges (470) (1,469)
Repayment of long term debt (1,290) (1,288)
Decrease in bank indebtedness (2,620) (2,900)
Dividends paid (1,616) (1,608)



Contact Information

  • Pacific Northern Gas Ltd.
    Elizabeth Fletcher
    Chief Financial Officer
    (604) 691-5684
    www.png.ca