Energy, Inc. Announces Results for the 4th Quarter and Year Ended December 31, 2009

GREAT FALLS, Mont., March 31 /PRNewswire-FirstCall/ -- Energy, Inc. (NYSE Amex: EGAS), a natural gas utility company, today filed its Form 10-K with the Securities and Exchange Commission for the year ended December 31, 2009.  For the year ended December 31, 2009, consolidated net income was $6.8 million or $1.58 per diluted share, compared to $3.3 million (unaudited) or $0.77 per diluted share (unaudited) in the twelve months ended December 31, 2008. Results were positively impacted by the tax benefit realized from the reduction of the valuation allowance on our deferred tax asset and customer growth in our Maine market.

Consolidated net income for the quarter ended December 31, 2009 was $4.3 million or $1.00 per diluted share, compared to net income of $773,000 or $0.18 per diluted share, for the same period in 2008.

Our results for the quarter ended December 31, 2009 include a net $2.5 million income tax benefit related primarily to the valuation allowance associated with the deferred tax asset resulting from the acquisition of our Frontier Natural Gas and Bangor Natural Gas properties in the fall of 2007.  The net tax benefit includes $2.8 million of income in the Corporate and Other segment and a $300,000 loss in the Natural Gas Operations segment.

The Natural Gas Operations segment continues to see customer growth as we expand our facilities to meet the strong demand for natural gas service, and contributed net income of approximately $1.7 million for the fourth quarter of 2009 compared to net income of $610,000 for the same quarter of 2008.  Volumes in the Natural Gas Operations segment for the quarter were 7,311 MMcf as compared to 6,271 MMcf for the same quarter in 2008. The increase in volumes is due primarily to sales growth in our Maine market.  

The Pipeline Operations segment contributed net income of $10,000 for the fourth quarter of 2009 compared to $35,000 for the same quarter in 2008.

The Marketing and Production segment returned a net loss of $119,000 compared to net income of $488,000 for the same quarter of 2008.  Included in the results of the Marketing and Production segment is a loss of $687,000 ($423,000 net of income tax), on our equity investment in Kykuit Resources due to the write-off of drilling costs relating to dry holes.  Marketing volumes for the quarter were 515 MMcf as compared to 653 MMcf in the 4th quarter 2008.  

The Corporate and Other segment returned net income of $2.7 million for the quarter compared to a net loss of $360,000 for the same quarter of 2008.  Included in the results of the Corporate and Other segment for 2009 is a $2.8 million tax benefit relating to the deferred tax asset associated with the Frontier and Bangor acquisitions.  In December 2009, we completed a study of these items and based on our updated earnings projections and more complete data from the seller's tax returns, we determined that the portion of the valuation allowance related to the federal taxes is no longer needed.  We also completed a final true-up of the gross deferred tax asset and the state portion of the valuation allowance, which resulted in the $300,000 expense in the Natural Gas Operations segment, discussed above.  

The Natural Gas Operations segment contributed net income of $3.9 million for the year ended December 31, 2009 compared to $2.3 million (unaudited) for 2008.  For the year, the Natural Gas Operations segment distributed 24.8 Bcf of natural gas as compared to 23.9 Bcf in calendar year 2008 (unaudited).  Once again, the primary reason for the increase is sales growth in our Maine market.  We experienced 6.6% overall customer growth in 2009, ending the year with a total of 39,080 customers for our utilities, including the 1,500 from the acquisition of Cut Bank Gas Company.  This does not include the Ohio and Pennsylvania customers we acquired in January 2010.

The Marketing and Production segment contributed net income of $558,000 in 2009 compared to $1.5 million (unaudited) in 2008.  Marketing operations moved 2.4 Bcf of natural gas during the year as compared to 2.4 Bcf of natural gas in 2008. The reduction in net income for this segment was primarily the result of the loss on equity investment in Kykuit Resources, much lower prices received for volumes produced and lower production volumes.

The Pipeline Operations segment contributed net income of $156,000 for the year ended December 31, 2009, compared to $107,000 (unaudited) in 2008.  

The Corporate and Other segment contributed $2.2 million compared to a loss of $584,000 (unaudited) in 2008.  This contribution to income reflects the previously mentioned deferred tax benefit.

For the year ended December 31, 2009, capital expenditures were approximately $8.9 million, compared to $7.0 million (unaudited) in 2008.

"2009 was a positive year for our Company. We continue to execute on our operational and cost control strategies as we realize the value in our utility footprint. We continue to see meaningful rate base addition projects in all of our jurisdictions. Our capital spending over the previous year's is paying our shareholders with increased earnings and cash flows and solidly upholding our current dividend program," said Richard M. Osborne, Chairman and CEO of Energy, Inc. "We will continue to pursue organic growth prospects, as well as, acquisitions that complement our existing platform."

The Company closed the acquisition of Cut Bank Gas Company in Cut Bank, Montana on November 2, 2009. The acquisition added approximately 1,500 customers to our Montana utility with operations consolidated in our Great Falls office.

On January 5, 2010, the Company completed the acquisition of three gas utilities with operations in Ohio and western Pennsylvania which added approximately 23,000 gas customers to the Company. The gas companies acquired were Northeast Ohio Natural Gas Corp., Orwell Natural Gas Company, and Brainard Gas Corp.

About Energy, Inc.

We distribute and sell approximately 29.0 billion cubic feet of natural gas to approximately 62,000 end-use residential, commercial, and industrial customers through regulated utilities operating in Montana, Wyoming, Ohio, Pennsylvania, North Carolina and Maine. We market approximately 2.4 billion cubic feet of natural gas to commercial and industrial customers in Montana and Wyoming on an unregulated basis. We also have a majority ownership interest in 160 natural gas producing wells and gas gathering assets. In addition, we own the Shoshone interstate and the Glacier gathering pipelines located in Montana and Wyoming. Our Montana public utility was originally incorporated in 1909 and is headquartered in Great Falls, Montana.

Safe Harbor Regarding Forward-Looking Statements

The company is including the following cautionary statement in this release to make applicable and to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, Energy, Inc. Forward-looking statements are all statements other than statements of historical fact, including, without limitation, those that are identified by the use of the words "anticipates," "estimates," "expects," "intends," "plans," "predicts," "believes" and similar expressions. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those expressed. Factors that may affect forward-looking statements and the company's business generally include but are not limited to the company's continued ability to make dividend payments, the company's ability to implement its business plan, the company's ability to successfully integrate the operations of the companies it has recently acquired and consummate additional acquisitions; fluctuating energy commodity prices, the possibility that regulators may not permit the company to pass through all of its increased costs to its customers, changes in the utility regulatory environment, wholesale and retail competition, weather conditions, litigation risks, risks associated with contracts accounted for as derivatives and various other matters, many of which are beyond the company's control, the risk factors and cautionary statements made in the company's public filings with the Securities and Exchange Commission, and other factors that the company is currently unable to identify or quantify, but may exist in the future. Energy, Inc. expressly undertakes no obligation to update or revise any forward-looking statement contained herein to reflect any change in Energy, Inc.'s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

For additional information or clarification regarding Energy, Inc., please contact: Kevin Degenstein, President and Chief Operating Officer.

The company's toll-free number is (800) 570-5688. The company's web site is www.ewst.com. The company's address is 1 First Avenue South, Great Falls, Montana 59401.

SOURCE Energy, Inc.