Northwest Natural Gas Company (NWN, Financial) filed Quarterly Report for the period ended 2009-09-30.
NW Natural is principally engaged in the distribution of natural gas.The Oregon Public Utility Commission (OPUC) has allocated to NW Natural as its exclusive service area a major portion of western Oregon including the Portland metropolitan area most of the fertile Willamette Valley and the coastal area from Astoria to Coos Bay. NW Natural also holds certificates from the Washington Utilities and Transportation Commission (WUTC) granting it exclusive rights to serve portions of three Washington counties bordering the Columbia River. Northwest Natural Gas Company has a market cap of $1.11 billion; its shares were traded at around $41.86 with a P/E ratio of 15 and P/S ratio of 1.1. The dividend yield of Northwest Natural Gas Company stocks is 4%. Northwest Natural Gas Company had an annual average earning growth of 3.2% over the past 10 years. GuruFocus rated Northwest Natural Gas Company the business predictability rank of 4-star.
Capital market environment. The volatility in capital markets during 2008 and 2009 has caused general concern over the ability of many companies to obtain financing, manage credit exposures and maintain liquidity. Our ability to fund strategic investment opportunities as well as to meet utility capital expenditure and working capital requirements is dependent upon ongoing access to capital markets. Over the last 12 months, we were able to issue long-term debt totaling $125 million at reasonable rates (see Note 5), and we were able to add two short-term credit facilities totaling $30 million to provide temporary liquidity. Our capital market strategy has continued to focus on: maintaining a strong balance sheet; ensuring ample cash resources and daily liquidity; accessing capital markets at favorable times as needed; managing critical business risks; and maintaining a balanced capital structure through the appropriate issuance of equity or long-term debt securities. If in the future we are unable to secure financing to fund certain strategic opportunities, we may look at potentially re-prioritizing the use of existing resources or consider delaying investments until market conditions improve.
Gas Storage Development. In September 2007, we entered into a joint project agreement with Pacific Gas & Electric Company (PG&E) to develop an underground natural gas storage facility near Fresno, California. At that time, we formed a wholly-owned subsidiary, Gill Ranch, to plan and develop the project and to operate the facility. In July 2008, Gill Ranch filed an application with the California Public Utilities Commission (CPUC) for a Certificate of Public Convenience and Necessity (CPCN). In October 2009, we received an order from the CPUC approving our CPCN. Gill Ranch s provision of market-based rate storage services in California will be subject to CPUC regulation including, but not limited to, service terms and conditions, tariff compliance, securities issuances, lien grants and sales of property. Our share of the total project cost is estimated to be between $160 and $180 million, representing 75 percent of the total cost of the initial development, which includes an estimated total 20 Bcf of gas storage capacity and approximately 27 miles of gas transmission pipeline. The initial development of the gas storage facility at Gill Ranch is currently scheduled to be in-service by August 2010.
We are currently in the process of hiring key staff for our gas storage businesses. While our primary focus for growing the gas storage business is on the current development at Gill Ranch, we also plan to continue expanding our interstate storage facilities at Mist, Oregon. This past quarter, we completed 3-D seismic surveys and initiated engineering work for a new 3 to 4 Bcf expansion at Mist. Pending a successful open season that will be conducted in the first quarter of 2010, we expect to move forward with the project next year and would target a 2011 in-service date. The total project cost estimates are between $45 million and $55 million. This estimated cost range includes the development of a second compression station and a pipeline gathering system at Mist that will enable future storage expansions.
For the three months ended September 30, 2009, we had a net loss of $6.7 million, or 25 cents per share, compared to a net loss of $10.1 million, or 38 cents per share, for the same period last year.
Net income was $43.7 million, or $1.64 per share, for the nine months ended September 30, 2009, compared to $36.3 million, or $1.37 per share, for the same period last year.
Read the The complete ReportNWN is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC.
NW Natural is principally engaged in the distribution of natural gas.The Oregon Public Utility Commission (OPUC) has allocated to NW Natural as its exclusive service area a major portion of western Oregon including the Portland metropolitan area most of the fertile Willamette Valley and the coastal area from Astoria to Coos Bay. NW Natural also holds certificates from the Washington Utilities and Transportation Commission (WUTC) granting it exclusive rights to serve portions of three Washington counties bordering the Columbia River. Northwest Natural Gas Company has a market cap of $1.11 billion; its shares were traded at around $41.86 with a P/E ratio of 15 and P/S ratio of 1.1. The dividend yield of Northwest Natural Gas Company stocks is 4%. Northwest Natural Gas Company had an annual average earning growth of 3.2% over the past 10 years. GuruFocus rated Northwest Natural Gas Company the business predictability rank of 4-star.
Highlight of Business Operations:
Managing the utility business in a period of gas price volatility. Natural gas commodity prices have the most significant impact on our customer rates and on our long-term competitive position against other energy sources such as oil and electricity. Over the last 15 months, daily Henry Hub spot market prices for natural gas in the U.S. ranged between a high of $13 per mmBtu in July 2008 and a low of $2 per mmBtu as recently as September 2009. Our gas acquisition strategy is designed to secure sufficient supplies of natural gas to meet the needs of our utility customers and to hedge gas prices to effectively manage costs, reduce price volatility and maintain a competitive advantage. As of October 31, 2009, gas prices were hedged for approximately 70 to 75 percent of our gas purchase volumes for the next gas contract year beginning November 1, 2009, and we believe we have sufficient contracted supplies to meet the needs of our core utility customers. In addition, we are currently hedged on gas prices for between 10 and 15 percent of our forecasted purchase volumes for the two gas contract years after October 31, 2010. Although spot gas prices were as low as $2 per mmBtu during the third quarter of 2009, the current forward price of natural gas remains at much higher levels between $5 and $7 per mmBtu over the next three years. Our Purchased Gas Adjustment (PGA) mechanism, along with gas price hedging strategies and physical gas supplies in storage, enables us to reduce earnings risk exposure due to higher gas costs. In addition to hedging gas prices over the next three years, we are also evaluating and developing other gas acquisition strategies to potentially manage gas price volatility for customers beyond three years.Capital market environment. The volatility in capital markets during 2008 and 2009 has caused general concern over the ability of many companies to obtain financing, manage credit exposures and maintain liquidity. Our ability to fund strategic investment opportunities as well as to meet utility capital expenditure and working capital requirements is dependent upon ongoing access to capital markets. Over the last 12 months, we were able to issue long-term debt totaling $125 million at reasonable rates (see Note 5), and we were able to add two short-term credit facilities totaling $30 million to provide temporary liquidity. Our capital market strategy has continued to focus on: maintaining a strong balance sheet; ensuring ample cash resources and daily liquidity; accessing capital markets at favorable times as needed; managing critical business risks; and maintaining a balanced capital structure through the appropriate issuance of equity or long-term debt securities. If in the future we are unable to secure financing to fund certain strategic opportunities, we may look at potentially re-prioritizing the use of existing resources or consider delaying investments until market conditions improve.
Gas Storage Development. In September 2007, we entered into a joint project agreement with Pacific Gas & Electric Company (PG&E) to develop an underground natural gas storage facility near Fresno, California. At that time, we formed a wholly-owned subsidiary, Gill Ranch, to plan and develop the project and to operate the facility. In July 2008, Gill Ranch filed an application with the California Public Utilities Commission (CPUC) for a Certificate of Public Convenience and Necessity (CPCN). In October 2009, we received an order from the CPUC approving our CPCN. Gill Ranch s provision of market-based rate storage services in California will be subject to CPUC regulation including, but not limited to, service terms and conditions, tariff compliance, securities issuances, lien grants and sales of property. Our share of the total project cost is estimated to be between $160 and $180 million, representing 75 percent of the total cost of the initial development, which includes an estimated total 20 Bcf of gas storage capacity and approximately 27 miles of gas transmission pipeline. The initial development of the gas storage facility at Gill Ranch is currently scheduled to be in-service by August 2010.
We are currently in the process of hiring key staff for our gas storage businesses. While our primary focus for growing the gas storage business is on the current development at Gill Ranch, we also plan to continue expanding our interstate storage facilities at Mist, Oregon. This past quarter, we completed 3-D seismic surveys and initiated engineering work for a new 3 to 4 Bcf expansion at Mist. Pending a successful open season that will be conducted in the first quarter of 2010, we expect to move forward with the project next year and would target a 2011 in-service date. The total project cost estimates are between $45 million and $55 million. This estimated cost range includes the development of a second compression station and a pipeline gathering system at Mist that will enable future storage expansions.
For the three months ended September 30, 2009, we had a net loss of $6.7 million, or 25 cents per share, compared to a net loss of $10.1 million, or 38 cents per share, for the same period last year.
Net income was $43.7 million, or $1.64 per share, for the nine months ended September 30, 2009, compared to $36.3 million, or $1.37 per share, for the same period last year.
Read the The complete ReportNWN is in the portfolios of Kenneth Fisher of Fisher Asset Management, LLC.
