Piedmont Natural Gas Gains Customers, Profits in Second-Quarter 2012, Presses on with Growth in North Carolina

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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading natural gas services provider Piedmont Natural Gas Company (NYSE:PNY) (Charlotte, North Carolina), which primarily serves North Carolina, South Carolina and Tennessee, reported steady overall improvement for the second quarter of 2012, as the company gained residential and commercial customers, helping to offset the effects of warmer-than-expected weather. Net income for the quarter was reported to be $50.19 million, a 5.87% increase from second-quarter 2011.

Total revenues stood at $308.43 million, a 21.43% decrease from the same period last year. Lower revenues resulted primarily from lower volumes, which were attributed to weather that was 28% warmer than expected and 19% warmer than second-quarter 2011. The weather also decreased customer usage for SouthStar Energy Services (Atlanta, Gerogia), a multistate, full-service provider of natural gas supply, transportation and related services that Piedmont co-owns with AGL Resources Incorporated (NYSE:GAS) (Atlanta), which helped to reduce pre-tax income from joint ventures by $700,000.

Still, Piedmont's residential market saw a 22% increase in customers from second-quarter 2011, driven in part by new home construction, while the commercial market saw a 15% increase, driven by new construction and conversions from other providers. Altogether, the company added 2,620 new customers during the quarter. Power generation customers also yielded stronger margins.

Utility construction spending for the first half of the year totaled $220.3 million, nearly double that of the same period last year, due largely to the building of transmission and compression facilities in North Carolina.

Industrial Info is tracking $303 million in active Piedmont projects, including the $38 million construction of a 38-mile, 20-inch-diameter natural gas transmission pipeline from the terminus of the Cardinal Pipeline in Clayton, North Carolina, to Smithfield, North Carolina. The pipeline will transport up to 250 million standard cubic feet per day of natural gas to support the 230-megwatt (MW), natural gas-fired Wayne County Energy Expansion. The construction is part of the $88 million Wayne County pipeline project, for which Piedmont recently completed and put into service a power generation delivery project for Progress Energy Incorporated (NYSE:PGN) (Raleigh, North Carolina).

Other projects in North Carolina that are being tracked by Industrial Info include the $25 million construction of a natural gas compressor station in Lumberton, North Carolina. The project involves erecting buildings and installing two 3,500-HP Caterpillar engine-driven reciprocating gas packages to transport up to 350 million standard cubic feet per day of natural gas to Piedmont's proposed compressor station in Elizabethtown, North Carolina.

"All line items that are recorded are at--or better than--our expectations, with the exception of margin and SouthStar, and both continue to be negatively impacted by warm weather that we have seen this fiscal year," said Thomas Skains, the chairman, president and chief executive officer of Piedmont, in a conference call.

Piedmont executives are now expecting expenditures on power generation delivery projects to total between $250 million and $270 million for the full year. As in the previous quarter and in 2011, executives predict a 1% growth in the company's customer growth rate for full-year 2012.

"We continue to view these figures with cautious optimism, and believe they may be an indication of improving new construction markets in our service territory," Skains said of Piedmont's customer gains during the conference call. "They certainly reflect the competitive pricing dynamics of natural gas compared to other fuels. However, after several quarters of slower growth, we want to wait and see if this level of activity continues before jumping to any firm conclusions."

For more information, visit Industrial Info's North American Oil and Gas Transmission Project Database.

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