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

Pacific Northern Gas Ltd.

October 27, 2005 17:40 ET

Pacific Northern Gas Reports Third Quarter Earnings and Declares Fourth Quarter Dividends

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Oct. 27, 2005) - Pacific Northern Gas Ltd. (TSX:PNG)(TSX:PNG.PR.A) announced today that net loss for the three months ended September 30, 2005 was $0.8 million, compared with $1.4 million for the corresponding period in 2004. After providing for preferred share dividends, the loss per common share in the three months ended September 30, 2005 was $0.24 compared with $0.42 for the same period in 2004. The lower net loss in 2005 is primarily the result of refunds to customers of $0.6 million which were issued in the third quarter of 2004 when permanent rates established by the British Columbia Utilities Commission were determined to be lower than interim rates implemented January 1, 2004. The third quarter of 2005 reflects a reduction in the net loss of approximately $0.1 million due to the negotiated settlement of the western system revenue requirements application.

Net income for the nine months ended September 30, 2005 was $3.3 million, compared with $2.7 million for the corresponding period in 2004. After providing for preferred share dividends, earnings per common share in the nine months ended September 30, 2005 were $0.86 compared with $0.69 for the same period in 2004. The increase in net income is primarily the result of lower operating and administrative expenses, as well as increased returns from the negotiated settlement of the western system revenue requirements application.

Operating revenues in the three months ended September 30, 2005 increased to $32.2 million as compared with $25.2 million in the corresponding period in 2004. The increase in operating revenues was primarily due to an increase of $5.9 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's reported operating revenues, but do not affect net income. Any profit or loss realized on off system gas sales is deferred for future refund to, or recovery from, the Company's sales customers.

Operating revenues in the first nine months of 2005 increased to $110.3 million as compared with $97.0 million in the first nine 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 $7.1 million in off system gas sales.

Residential deliveries were lower by 9.8 percent in the three months ended September 30, 2005 and were lower by 2.6 percent in the nine months ended September 30, 2005 relative to deliveries over the same periods in 2004. The reduction in deliveries to residential customers in the quarter is attributable to customer reaction to increased prices. Weather was not a prime contributor to reduced residential sales in the quarter, as it was 2.6 percent colder in the three months ended September 30, 2005 compared to the same quarter in 2004. However, weather was a factor in the lower level of deliveries over the nine months ended September 30, 2005, as it was 3.6 percent warmer compared to the same period in 2004.

Commercial deliveries were lower by 8.6 percent in the third quarter of 2005 and were higher by 2.0 percent in the first nine 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 nine month periods ended September 30, 2005 were lower by 10.5 percent and 4.2 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. Due to the significant increase in the commodity price of natural gas in 2005, a number of industrial customers have reduced their consumption. A deferral account is in place that recovers or refunds margin differences resulting from large industrial customers' demand varying from the forecast approved for ratemaking purposes.

The Board of Directors declared a semi-annual dividend of 84.375 cents per share on the Company's 6-3/4 percent cumulative, redeemable, preferred shares, payable January 1, 2006 to shareholders of record at the close of business on December 12, 2005.

The Board of Directors also declared a quarterly dividend of 20 cents per share on the Company's common shares, payable December 23, 2005 to shareholders of record at the close of business on December 7, 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.



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

2005 2004
Operating revenues $ 32,238 $ 25,169
Cost of sales 23,740 17,978
-------- --------
Operating margin 8,498 7,191

Net loss applicable to common shares ($ 856) ($ 1,512)
Net loss per common share - basic ($ 0.24) ($ 0.42)
Net loss per common share - diluted ($ 0.24) ($ 0.42)

Operating cash flow 1,616 761
Additions to plant, property and equipment (1,558) (3,148)
Increase (decrease) in deferred charges (390) 412
Repayment of long term debt (1,145) (1,147)
Decrease in bank indebtedness (3,217) -
Dividends paid (725) (720)


Third Quarter Consolidated Results
Nine Month Period Ended
September 30, 2005 ($ thousand, except for per share data)

2005 2004
Operating revenues $110,329 $ 96,998
Cost of sales 75,925 62,936
-------- --------
Operating margin 34,404 34,062

Net income applicable to common shares $ 3,096 $ 2,485
Earnings per common share - basic $ 0.86 $ 0.69
Earnings per common share - diluted $ 0.84 $ 0.68

Operating cash flow 10,355 9,323
Additions to plant, property and equipment (3,759) (6,101)
Increase in deferred charges (860) (1,132)
Repayment of long term debt (2,435) (2,435)
Decrease in bank indebtedness (5,837) (2,900)
Dividends paid (2,341) (2,328)


Contact Information

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