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ENRON CORP. REPORTS INCREASED OPERATING RESULTS IN FIRST QUARTER 1998
FOR IMMEDIATE RELEASE: Tuesday, April 14, 1998
HOUSTON -- Enron Corp. announced its 1998 first quarter earnings today and reported increased operating results in each of its core business groups. In addition, Enron's new energy services group continued investing in its growing business and executing contracts with end-users of natural gas and electricity.
Enron realized after-tax earnings of $0.65 per diluted share in the first quarter of 1998 compared to $0.57 before a non-recurring gain of $0.24 per diluted share on the sale of liquids properties in the first quarter of 1997. Enron reported total diluted earnings per share of $0.65 and $0.81 and total net income of $214 million and $222 million for the first quarter of 1998 and 1997, respectively.
"Enron's 1998 first quarter results reflect substantial earnings growth across our core business activities," said Kenneth L. Lay, chairman and CEO of Enron Corp. "Our wholesale business was particularly strong during the quarter, and we made significant progress in building our energy services business by increasing direct sales to end-use customers."
PERFORMANCE FROM CORE BUSINESSES
In the first quarter of 1998 the core business groups increased income before interest, minority interest and taxes (IBIT) by 46 percent to $498 million compared to $341 million a year ago. The core businesses realized after-tax earnings of $0.71 and $0.60 per diluted share for the first quarter of 1998 and 1997, respectively.
Core businesses include Exploration and Production (Enron Oil & Gas Company), Transportation and Distribution (Gas Pipeline Group and Portland General) and Wholesale Energy Operations and Services (Enron Capital & Trade Resources, Enron International and Enron Engineering & Construction).
Exploration and Production: Exploration and Production includes the operations of Enron Oil & Gas Company (EOG) and Enron's hedging of its exposure to commodity prices related to its majority ownership of EOG. In the 1998 first quarter, Exploration and Production generated IBIT of $43 million compared with $42 million in the first quarter of 1997. EOG continues to increase production volumes, particularly in India, and anticipates approximately 13 percent global volume growth in 1998.
Transportation and Distribution: This group includes Enron's North American interstate natural gas pipelines (Gas Pipeline Group) and its electric utility in Oregon (Portland General). Gas Pipeline Group generated IBIT of $126 million in the first quarter of 1998 compared with $135 million in the first quarter of 1997. Portland General generated IBIT of $79 million in the first quarter of 1998. No results from Portland General were included in Enron's earnings for the 1997 first quarter, as the merger of the two companies was completed in July 1997. First quarter 1998 operating margins and volumes for both groups declined slightly due to an unusually warm winter in their respective service territories.
Wholesale Energy Operations and Services: This group provides integrated energy-related products and services to wholesale customers worldwide, including the development and construction of energy-related assets (Asset Development and Construction), the management and operation of its energy-related assets and the origination of energy commodity sales and services (Cash and Physical), risk management products (Risk Management) and financial services (Finance and Investing).
Wholesale Energy Operations and Services reported a 49 percent increase in IBIT to $249 million in the first quarter of 1998 compared with $167 million in the first quarter of 1997, as each of the wholesale segment's lines of business reported strong performance.
The cash and physical business realized solid, consistent performance, reflecting both the continued operating strength of Enron's international assets and Enron's extensive North America market presence. In North America, increased earnings from power marketing offset lower profits in gas marketing where margins have narrowed due to a more competitive natural gas market. Enron continues as the leading energy marketer in North America, as physical natural gas and electricity volumes in the first quarter of 1998 increased 29 percent to 18.9 trillion British thermal units of energy equivalent per day compared to the same period in 1997.
Continued origination of risk management products and financial services in North American and European markets resulted in increased earnings in the first quarter of 1998. In addition, the 1998 first quarter results reflect increased earnings associated with Enron's energy investments. Enron's current balance of financings and investments approximated $1 billion at March 31, 1998.
PERFORMANCE FROM ENRON ENERGY SERVICES
Enron Energy Services (EES) is extending Enron's energy expertise to end-use customers. This includes sales of natural gas, electricity and energy management services directly to commercial and light industrial customers, as well as investments in related businesses.
In the first quarter of 1998, EES executed several significant commodity and services contracts with new customers. The largest customers to switch electricity providers in the recently deregulated market in California - Pacific Telesis and the University of California and California State University systems - chose EES to supply power and implement energy management services. In the first quarter of 1998, EES signed contracts representing approximately $850 million of future revenues, bringing the total to date to more than $2 billion in future revenues.
EES reported an operating loss before interest, minority interest and taxes of $27 million in the first quarter of 1998 compared to a loss of $14 million in the first quarter of 1997, or $0.06 and $0.03 per diluted share for the first quarter of 1998 and 1997, respectively. This loss primarily reflects the costs associated with developing the commodity, capital and services capability to deliver on contracts signed to date by EES.
Enron is the world's leading integrated natural gas and electricity company. The company, which owns approximately $23 billion in energy related assets, delivers physical commodities and risk management and financial services to provide energy solutions to customers around the world. Enron's internet address is www.enron.com, and the stock is traded under the ticker symbol, "ENE."
This press release includes forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although Enron believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward looking statements herein include political developments in foreign countries, the ability to penetrate new retail natural gas and electricity markets in the United States and Europe, the timing and extent of changes in commodity prices for crude oil, natural gas, electricity and interest rates, the extent of EOG's success in acquiring oil and gas properties and in discovering, developing and producing reserves, the timing and success of Enron's efforts to develop international power, pipeline and other infrastructure projects and conditions of the capital markets and equity markets during the periods covered by the forward looking statements.
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For additional information please contact:
Diane Bazelides
(713) 853-6285
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