News Release
Feb. 06, 2003

PACIFIC NORTHERN GAS ANNOUNCES YEAR-END EARNINGS

VANCOUVER, BRITISH COLUMBIA -- Pacific Northern Gas Ltd. (PNG) announced today that net income for 2002 was $4.6 million, compared with $5.7 million for 2001.  After providing for preferred share dividends, earnings per common share for 2002 were $1.20 compared with $1.52 for 2001.  Actual deliveries to residential and commercial customers in 2002 were lower by 0.8 petajoules, or 10 percent, compared to the forecast volumes used by the Company’s regulator to set customer rates. Some of the reduction in deliveries was due to weather, which in the peak consumption months of January, February, November and December was approximately 11 percent warmer than normal in 2002, compared to 6 percent warmer than normal in 2001.

 

Net income for the quarter ended December 31, 2002 was $1.3 million, compared with net income of $1.6 million for the quarter ended December 31, 2001.  After providing for preferred share dividends, earnings per common share in the fourth quarter were $0.34 compared with earnings per common share of $0.44 share in the corresponding period in 2001.  The decrease in net income in the fourth quarter is primarily due to weather that was approximately 10 percent warmer than normal in 2002 compared to three percent colder than normal in 2001.

 

Operating revenue in 2002 decreased to $109.1 million as compared with $138.6 million in 2001.  The decrease in operating revenues is largely due to the decrease in the commodity cost of natural gas that is passed through to customers without markup as well as a $6 million reduction in off system sales.  Operating revenues in the fourth quarter of 2002 increased to $32.9 million as compared with $31.0 million in the same period in 2001.  The increase in operating revenue in the fourth quarter is due to revenue from off-system gas sales being $5 million higher in the fourth quarter of 2002, compared to the corresponding period in 2001, offset by lower revenues from residential, commercial, and large industrial customers.

 

Operating margin in 2002 decreased to $52.2 million, as compared with $55.3 million in 2001.  The decrease in operating margin is due to actual deliveries to residential and commercial customers being lower than the delivery forecasts used by the Company’s regulator to set customer rates.  Operating margin in the fourth quarter of 2002 decreased to $13.6 million, as compared with $15.1 million in the corresponding period in 2001.  The decrease in operating margin in the fourth quarter is due to significantly warmer than normal weather and actual deliveries to residential and commercial customers being 18 percent lower than levels used in setting rates.

 

In December 2002, the Company completed a $15-million long-term financing to allow for the payment of a $10-million special dividend to common shareholders in January 2003, and to provide for new working capital. In addition to facilitating the reinstatement of dividends, this financing improved the Company’s capitalization for regulatory purposes by more closely aligning actual common equity with that allowed by the regulator.

 

The Board of Directors declared a quarterly dividend of 20 cents per share on the Company’s Class A and Class B Common Shares, payable March 20, 2003 to shareholders of record at the close of business on March 6, 2003.

 

Headquartered in Vancouver, British Columbia, Pacific Northern Gas Ltd. (TSE:PNG.A/ 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 (formerly Westcoast Energy) 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 Web site at: www.pacificnortherngas.com.

 

Annual Consolidated Results

Year ended

December 31 ($ thousand, except for per share data)

 
2002
2001
Operating revenues
109,063
138,595
Cost of sales
56,820
83,344
Operating margin
52,243
55,251
 
Net income
4,590
5,715
Net income applicable to common shares
4,253
5,377
Earnings per common share - basic
$1.20
$1.52
Earnings per common share - diluted
$1.18
$1.51
Operating cash flow
14,570
15,843

 

Fourth Quarter Consolidated Results

3 Month Period Ending

December 31 ($ thousand, except for per share data)

 

 
2002
2001
Operating revenues
32,889
30,954
Cost of sales
19,305
15,902
Operating margin
13,584
15,052
 
Net income
1,270
1,630
Net income applicable to common shares
1,186
1,545
Earnings per common share - basic
$0.34
$0.44
Earnings per common share - diluted
$0.33
$0.43
Operating cash flow
4,033
4,196

Contact: Elizabeth A. Fletcher, C.A. -- Treasurer & Comptroller
Phone: 604/691-5684
24 Hour Phone: n/a
Email: efletcher@duke-energy.com