Piedmont Benefits from Shift to Natural Gas in Second-Quarter 2014, Expects $540 Million Capex for Full Year

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Researched by Industrial Info Resources (Sugar Land, Texas)--Natural gas services provider Piedmont Natural Gas Company (NYSE:PNY) (Charlotte, North Carolina), which primarily serves North Carolina, South Carolina and Tennessee, reported solid growth across the board for the second quarter of the company's 2014 fiscal year, as the number of customers grew, rates proved beneficial, and progress began on a major North Carolina pipeline project. Net income was reported to be $62.54 million, a 12.1% increase from second-quarter 2013.

Total operating revenues stood at $462.25 million, a 15.73% increase from the same period last year. Piedmont saw a 22% increase in customers when compared with second-quarter 2013, and a 17% increase when compared with the first half of 2013. Both second-quarter and first-half 2014 saw 19% increases in residential new construction. Much of the gains came from North Carolina and Tennessee, where new customers and rates added $15.4 million to the total margin.

Piedmont also saw stronger contributions from SouthStar Energy Services, a joint venture with AGL Resources (NYSE:GAS) (Atlanta, Georgia), which provided the company with a new customer base in Illinois and favorable market conditions in Georgia. Pre-tax income from all of Piedmont's joint ventures increased 15% from second-quarter 2013. The company also benefited from increased transportation services in the power generation market and stronger margin sales in the secondary market.

As part of its growing Oil & Gas Pipelines Project Database, Industrial Info is tracking progress at four Piedmont-owned facilities in North Carolina: the Battleboro, Clayton, Waynesboro and Lumberton stations. For more information on the booming industry, see June 3, 2014, article- U.S. Natural Gas Production, Proved Reserves Continue Growing.

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In April, Piedmont and Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina) announced that they would seek proposals to build what would be the second major natural gas pipeline in North Carolina, where both companies continue to see rising demand.

"Given our growing customer demand, as well as Duke's growing gas-fired power generation demand, we are seeking proposals that would both support this demand, and also enhance geographic supply diversity, reliability and security, and operational flexibility," said Thomas E. Skains, the chairman, president and chief executive officer of Piedmont, in a conference call. "We expect to receive the initial bids from pipeline operators next Wednesday [June 11], and work through the project details at the end of the year. We are excited about the prospect of brining additional natural gas infrastructure into North Carolina and to enhance economic development within the state."

Capital expenditures for utilities and contributions to joint ventures are expected to total $540 million for full-year 2014.

Skains downplayed any potential impact of the recent U.S. Environmental Protection Agency (EPA) draft rules on carbon emissions, citing an overall move toward natural gas in Piedmont's service area. For more information, see June 3, 2014, article - EPA Releases Draft Carbon Dioxide Emissions Rule for Existing Power Plants.

"I would say that in our market area, there was already a move toward natural gas generation, away from coal, and we see that continuing," Skains said of the EPA rules in the conference call. "As you know, we've been involved in a multi-year effort to build additional natural gas infrastructure to serve new, efficient gas-fired power plants in our market area, and we will continue to pursue that market, to take advantage of opportunities that exist and follow the lead of the electric utilities in our market areas."

Piedmont executives expect to see a gross customer growth rate of 1.5% for full-year 2014. They also expect utility capital expenditures and joint-venture contributions to total about $534 million in 2015 and $523 million in 2016.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.