News Release
July 24, 2003

PACIFIC NORTHERN GAS REPORTS SECOND QUARTER EARNINGS AND DECLARES THIRD QUARTER DIVIDENDS

VANCOUVER, BRITISH COLUMBIA -  Pacific Northern Gas Ltd. (PNG) announced today that net income for the first six months of 2003 was $3.8 million, compared with $4.2 million for the corresponding period in 2002.   After providing for preferred share dividends, earnings per common share in the first six months of 2003 were $1.00 compared with $1.14 for the first six months of 2002.  The reduction in net income is primarily due to increases in administrative and maintenance expenses.

Operating revenues in the first six months of 2003 increased to $70.3 million as compared with $59.5 million in the first six months of 2002.   The increase in operating revenues is largely due to an increase in sales of gas surplus to the needs of the Company’s sales customers (“off-system sales”) of $8.5 million in the first six months of 2003, compared with the corresponding period in 2002, as well as an increase in the commodity cost of natural gas that is passed through to customers without markup.

Operating margin in the first six months of 2003 decreased to $26.1 million, as compared with $29.2 million in the first six months of 2002.   The decrease in operating margin is due to reductions in amortization and company use gas expenses that were passed on to customers when determining 2003 rates.

Net income for the quarter ended June 30, 2003 was $0.1 million, compared with $0.9 million for the quarter ended June 30, 2002.  After providing for preferred share dividends, the loss per common share in the quarter ended June 30, 2003 was $0.01 compared with earnings of $0.23 per common share in the corresponding period in 2002.  The decrease in net income in the second quarter of 2003 is due to increased administrative and maintenance expenses incurred in the second quarter.

Deliveries to residential and commercial customers were 6 percent lower in the second quarter of 2003 compared to the same period in 2002 mainly due to weather being 16 percent warmer in 2003 than in 2002.  The reduction in deliveries did not significantly impact operating margin due to the existence of a deferral account to record the variance between actual and budgeted deliveries for these two customer classes.

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 September 23, 2003 to shareholders of record at the close of business on September 5, 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.

Second Quarter Consolidated Results 
6 Month Period  Ended
June 30, 2003 ($ thousand, except for per share data)

2003

2002

Operating revenues

70,254

59,460

Cost of sales

44,198

30,219

Operating margin

26,056

29,241

 

 

Net income applicable to common shares

3,586

4,041

Earnings per common share – basic

$1.00

$1.14

Earnings per common share – diluted

$0.99

$1.12

 

 

Operating cash flow

7,915

9,123

Additions to plant, property and equipment

(2,285)

(1,406)

Decrease (increase) in deferred charges

(3,732)

2,691

Repayment of long term debt

(1,305)

(671)

Increase (decrease) in bank indebtedness

(5,350)

Dividends paid

(11,454)

(168)

 

 


3 Month Period Ended
June 30, 2003 ($ thousand, except for per share data)

2003

2002

Operating revenues

28,571

23,370

Cost of sales

18,338

10,899

Operating margin

10,233

12,471

 

 

Net income (loss) applicable to common shares

(23)

809

Earnings (loss) per common share – basic

($0.01)

$0.23

Earnings (loss) per common share – diluted

($0.01)

$0.22

 

 

Operating cash flow

2,172

3,343

Additions to plant, property and equipment

(1,318)

(944)

Decrease (increase) in deferred charges

2,631

(149)

Repayment of long term debt

(648)

(335)

Decrease in bank indebtedness

(2,643)

(4,661)

Dividends paid

(886)

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Contact: Elizabeth A. Fletcher, C.A., Chief Financial Officer
Phone: 604/691-5684
24-Hour Phone: n/a
e-mail: efletcher@duke-energy.com