Gas Natural Inc. Reports 2011 Third Quarter Results and Announces Monthly Dividend of $0.045 per Share

- Consolidated net income improved to $130,000 in the third quarter from a net loss of $45,000 in the prior year period; Year-to-date net income increased 16.7% to $4.8 million

- Cash flows from operations nearly doubled to $12.5 million through the first nine months of 2011

- Third quarter and year-to-date full service distribution volumes increased 10.6% and 18.9%, respectively

- Board of Directors declared a monthly dividend of $0.045 per share to shareholders of record as of November 15, 2011. The dividend will be payable on November 30, 2011.

News provided by

Gas Natural Inc

Nov 14, 2011, 08:00 ET

GREAT FALLS, Mont., Nov. 14, 2011 /PRNewswire/ -- Gas Natural Inc. (NYSE Amex: EGAS), a natural gas utility company serving approximately 63,500 natural gas customers in six states, reported financial results for the third quarter ended September 30, 2011. Reported results included a new segment for Propane Operations as a result of the Company's August 1, 2011 acquisition of the net assets of Independence Oil & LP Gas, Inc., which delivered liquid propane, heating oil, and kerosene to approximately 4,500 customers in North Carolina and Virginia.

Consolidated net income for the third quarter was $130,000, or $0.02 per diluted share, compared with a net loss of $45,000, or $0.01 per diluted share, for the third quarter of 2010. The increase in net income was primarily attributable to the gain recognized as part of the Propane Operations acquisition, partially offset by a decrease in the Natural Gas Operations segment. The change in earnings per share also reflects a 2.1 million increase in weighted average outstanding shares as a result of the Company's successful equity raised in the fourth quarter of 2010.

For the nine months ended September 30, 2011, consolidated net income increased $681,000, or 16.7%, to $4.8 million compared with $4.1 million during the same period in 2010. The increase in net income was primarily due to continued customer growth, colder weather in most of the Company's service territories, and the Propane Operations acquisition gain. On a per diluted share basis, net income was $0.58 for the first nine months of 2011 compared with $0.68 in the corresponding period of 2010, a reflection of the previously noted equity raise in November 2010.

Richard M. Osborne, Gas Natural's chairman and chief executive officer, commented, "Our results were positively impacted by our new propane business which contributed over $560,000 to the bottom line, the result of a pre-tax gain on the purchase of Independence Oil & LP Gas, Inc. We continued to see strong customer growth within our Maine and North Carolina natural gas service territories. Geographic diversity remains an integral part of our strategy as we continue to grow our customer base while keeping an eye on margin expansion and bottom line results."

Natural Gas Operations Segment

Gas Natural Inc. annually distributes over 30 billion cubic feet of natural gas to approximately 63,500 customers through regulated utilities operating in Montana, Wyoming, Ohio, Pennsylvania, Maine and North Carolina. The Company acquired its Ohio and Pennsylvania operations in January 2010 and its Cut Bank, Montana utility in 2009.

		Three Months Ended September 30,		Nine Months Ended September 30,
($ in thousands)		2011	2010	2011	2010

Natural Gas Operations
Operating revenues		$ 10,349	$ 10,159	$ 65,664	$ 56,347
	Gas Purchased	4,548	4,803	38,841	32,344
Gross Margin		5,801	5,356	26,823	24,003
	Operating expenses	6,335	6,035	19,569	18,121
Operating income		(534)	(679)	7,254	5,882
	Other income (expense)	(230)	228	97	704

Income before interest and taxes		(764)	(451)	7,351	6,586
	Interest (expense)	(526)	(468)	(1,379)	(1,545)

Income before income taxes		(1,290)	(919)	5,972	5,041
	Income tax (expense)	827	593	(1,817)	(1,387)

Net Income (Loss)		$ (463)	$ (326)	$ 4,155	$ 3,654

The Natural Gas Operations segment posted a net loss of $463,000 in the 2011 third quarter compared with a net loss of $326,000 in the prior year period. The increased loss was primarily due to the accrual of the liability and resulting expense of $300,000 related to the conclusion of an arbitration case in Maine, partially offset by additional customer growth in the Company's Maine and North Carolina utilities. For the nine months ended September 30, 2011, the Natural Gas Operations segment contributed net income of $4.2 million compared with $3.7 million for the prior year period. The increase reflects customer growth and colder weather in most of the Company's service territories.

Third quarter operating loss for the Natural Gas Operations segment was $534,000 compared with $679,000 in the third quarter of 2010. Operating income as a percent of gross margin expanded 250 basis points to 27.0% in the first nine months of 2011 compared with 24.5% in the same period in 2010.

Other income in the third quarter and first nine months of 2011 was down from the corresponding periods of 2010 primarily due to the noted accrual of the liability and resulting expense related to the arbitration case.

Interest expense increased $58,000 to $526,000 for the third quarter of 2011 compared with $468,000 last year. For the year-to-date period, 2011 interest expense decreased $166,000 to $1.4 million, as a result of lower debt levels at the Ohio operations, as some outstanding debt was repaid in November 2010, and not refinanced until May 2011.

The Company reported a higher income tax benefit in the third quarter of 2011 primarily due to the increase in the pre-tax loss for the quarter. Income tax expense was $1.8 million for the nine months ended September 30, 2011, compared with $1.4 million for the corresponding period in 2010. The 2010 period included an income tax benefit due to a change in the effective state tax rate for 2010 related to the acquisition of the Ohio operations.

Full service distribution volumes delivered increased 84 MMcf to 873 MMcf in the third quarter of 2011 and were up 1,061 MMcf to 6,689 MMcf through the first nine months of 2011. Customer growth drove the increase in both periods, while the year-to-date period also benefited from colder weather.

Marketing and Production Operations Segment

The Marketing and Production segment had net income of $49,000 in the third quarter of 2011 compared with net income of $274,000 for the third quarter of 2010. The change was primarily the result of tax benefits from the true-up to the prior year's tax return of $9,000 in 2011 and $254,000 in 2010. For the nine months ended September 30, 2011, net income for the segment decreased 48.9% to $158,000 from $309,000. Lower sales, due to the widening of the unfavorable differential between the AECO and CIG Rockies natural gas indexes, and lower production volumes in 2011 were offset by an expense of $440,000 included in the nine months ended September 30, 2010 as a result of the conclusion of litigation relating to a gas supply contract.

Pipeline Operations Segment

The Pipeline Operations segment contributed net income of $47,000 and $112,000 in the third quarter and first nine months of 2011, respectively, compared with net income of $83,000 and $143,000 in the third quarter and first nine months of 2010, respectively.

Propane Operations Segment

The newly-formed Propane Operations segment contributed net income of $562,000 in the third quarter of 2011. The income is primarily the result of the pre-tax gain of $1.1 million on the net assets purchased. This segment started during the three months ended September 30, 2011, and as a result there are no comparative amounts for the same period in 2010.

Balance Sheet and Cash Management

Cash and cash equivalents at September 30, 2011, were $10.5 million, down $2.5 million from the end of 2010.

Cash provided by operating activities was $12.5 million in the first nine months of 2011 compared with $6.9 million in the same period of the prior year. The increase in cash from operations was principally due to improved working capital and timing differences related to taxes and prepayments.

Capital expenditures for the first nine months of 2011 and 2010 were $15.0 million and $4.0 million, respectively, and were primarily focused on expanding the Company's Natural Gas Operations segment. Included in the 2011 expenditures were $3.3 million related to the pipeline asset acquisition from Marathon Petroleum Company LP in April 2011. The Company expects total capital spending of approximately $19 million for 2011.

The Company maintains a revolving credit facility with $17.6 million in use at the end of the third quarter of 2011. On November 2, 2011, the Company exercised the $10 million accordion feature on the revolving credit facility to increase the maximum capacity from $20 million to $30 million. The expanded credit facility includes an annual commitment fee ranging from 0.25% to 0.45% of the unused portion of the facility and interest on the amounts outstanding at LIBOR plus 175 to 225 basis points. The other terms of the 5 year credit agreement put in place on June 29, 2007 remain unchanged.

About Gas Natural Inc.

Gas Natural Inc. distributes and sells natural gas to end-use residential, commercial, and industrial customers. It distributes approximately 30 billion cubic feet of natural gas to approximately 63,500 customers through regulated utilities operating in Montana, Wyoming, Ohio, Pennsylvania, Maine and North Carolina. The Company markets approximately 1.3 billion cubic feet of natural gas to commercial and industrial customers in Montana and Wyoming on an unregulated basis. In August 2011, the Company acquired its propane operations, delivering liquid propane, heating oil, and kerosene to approximately 4,500 customers in North Carolina and Virginia. The Company also has ownership interests in 160 natural gas producing wells and gas gathering assets and owns the Shoshone interstate and the Glacier gathering pipelines located in Montana and Wyoming. The Company's Montana public utility was originally incorporated in 1909 and is headquartered in Great Falls, Montana.

The Company's toll-free number is 800-570-5688. The Company's address is 1 First Avenue South, Great Falls, Montana 59401 and its website is www.ewst.com.

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, Gas Natural 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 ability to successfully integrate the operations of the companies it has recently acquired and consummate additional acquisitions, the Company's continued ability to make dividend payments, the Company's ability to implement its business plan, 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, the Company's ability to satisfy its debt obligations, including compliance with financial covenants, weather conditions, litigation risks, 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. Gas Natural Inc. expressly undertakes no obligation to update or revise any forward-looking statement contained herein to reflect any change in Gas Natural Inc.'s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

For more information contact:
Tom Smith	Kevin J. Degenstein
Phone: (440) 974-3770	Phone: (406) 791-7500
Email: [email protected]	Email: [email protected]

FINANCIAL TABLES FOLLOW

Gas Natural Inc. and Subsidiaries Consolidated Statements of Income (Unaudited)

	Three Months Ended		Nine Months Ended
	September 30,		September 30,
	2011	2010	2011	2010
REVENUES
Natural gas operations	$ 10,348,819	$ 10,158,766	$ 65,663,664	$ 56,347,035
Marketing and production	855,715	638,471	4,156,882	5,624,803
Pipeline operations	106,351	104,461	314,736	319,418
Propane operations	1,009,844	-	1,009,844	-
Total revenues	12,320,729	10,901,698	71,145,126	62,291,256

COST OF SALES
Natural gas purchased	4,548,224	4,803,027	38,840,724	32,343,603
Marketing and production	585,810	380,934	3,193,596	4,435,153
Propane purchased	875,305	-	875,305	-
Total cost of sales	6,009,339	5,183,961	42,909,625	36,778,756

GROSS MARGIN	6,311,390	5,717,737	28,235,501	25,512,500

OPERATING EXPENSES
Distribution, general, and administrative	4,635,388	4,192,142	13,922,684	12,459,957
Maintenance	235,635	239,152	792,827	775,634
Depreciation and amortization	1,153,430	1,018,857	3,256,977	2,984,726
Accretion	35,849	33,991	105,262	92,836
Taxes other than income	842,786	789,490	2,589,732	2,548,725
Total operating expenses	6,903,088	6,273,632	20,667,482	18,861,878

OPERATING INCOME (LOSS)	(591,698)	(555,895)	7,568,019	6,650,622

LOSS FROM UNCONSOLIDATED AFFILIATE	(2,024)	(2,760)	(85,174)	(34,882)
OTHER INCOME (EXPENSE), net	(261,625)	264,922	(29,838)	393,857
INTEREST EXPENSE	(552,341)	(492,378)	(1,458,194)	(1,614,134)
GAIN ON BARGAIN PURCHASE	1,054,861	-	1,054,861	-

INCOME (LOSS) FROM OPERATIONS BEFORE
INCOME TAXES	(352,827)	(786,111)	7,049,674	5,395,463

INCOME TAX BENEFIT (EXPENSE)	482,353	741,406	(2,285,056)	(1,311,444)

NET INCOME (LOSS)	$ 129,526	$ (44,705)	$ 4,764,618	$ 4,084,019


EARNINGS (LOSS) PER SHARE - BASIC	$ 0.02	$ (0.01)	$ 0.58	$ 0.68

EARNINGS (LOSS) PER SHARE - DILUTED	$ 0.02	$ (0.01)	$ 0.58	$ 0.68

WEIGHTED AVERAGE DIVIDENDS DECLARED
PER COMMON SHARE	$ 0.135	$ 0.135	$ 0.405	$ 0.410

WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC	8,152,487	6,072,996	8,151,370	6,040,063

WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED	8,160,048	6,072,996	8,159,326	6,048,332

Gas Natural Inc. and Subsidiaries Consolidated Balance Sheets (Unaudited)

	September 30,	December 31,
	2011	2010
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$ 10,490,103	$ 13,026,585
Marketable securities	367,500	274,950
Accounts receivable
Trade, less allowance for doubtful accounts of $480,320
and $354,719, respectively	4,360,493	9,593,840
Related parties	501,752	559,384
Unbilled gas	1,245,062	5,724,346
Note receivable - related parties, current portion	10,079	9,565
Inventory
Natural gas and propane	7,856,328	5,876,710
Materials and supplies	2,017,746	1,414,367
Prepaid income taxes	2,369,558	1,601,798
Prepayments and other	1,284,704	912,959
Recoverable cost of gas purchases	2,623,641	2,628,824
Deferred tax asset	106,601	114,362
Total current assets	33,233,567	41,737,690

PROPERTY, PLANT AND EQUIPMENT, net	90,096,562	76,134,401

OTHER ASSETS
Notes receivable - related parties, less current portion	38,040	45,665
Deferred tax assets, less current portion	-	1,804,264
Regulatory assets
Property taxes	661,147	873,197
Income taxes	452,645	452,645
Rate case costs	152,763	64,271
Debt issuance costs, net	841,440	485,244
Goodwill	14,607,952	14,607,952
Customer relationships	645,042	662,167
Investment in unconsolidated affiliate	858,642	640,216
Restricted cash	2,756,857	-
Other assets	297,291	220,224
Total other assets	21,311,819	19,855,845

TOTAL ASSETS	$ 144,641,948	$ 137,727,936

Gas Natural Inc. and Subsidiaries Consolidated Balance Sheets, Continued (Unaudited)

	September 30,	December 31,
	2011	2010
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Checks in excess of amounts on deposit	$ 155,407	$ 532,145
Line of credit	17,600,000	18,149,999
Accounts payable
Trade	6,333,431	9,200,297
Related parties	66,910	417,543
Notes payable, current portion	7,750	910,917
Notes payable - related parties, current portion	-	49,361
Accrued liabilities
Taxes other than income	2,704,611	2,961,853
Vacation	159,603	86,194
Employee benefit plans	82,585	103,257
Interest	223,880	29,810
Deferred payments received from levelized billing	2,589,624	2,916,408
Customer deposits	702,515	679,237
Property tax settlement, current portion	242,120	242,120
Related parties	23,091	413,399
Other current liabilities	580,457	1,020,733
Overrecovered gas purchases	2,262,295	1,203,191
Total current liabilities	33,734,279	38,916,464

LONG-TERM LIABILITIES
Deferred investment tax credits	181,645	197,441
Deferred tax liability	1,198,780	-
Asset retirement obligation	1,652,129	1,546,867
Customer advances for construction	865,157	949,434
Regulatory liability for income taxes	83,161	83,161
Regulatory liability for gas costs	70,454	131,443
Property tax settlement, less current portion	243,008	243,008
Total long-term liabilities	4,294,334	3,151,354

NOTES PAYABLE, less current portion	31,346,758	21,958,616

COMMITMENTS AND CONTINGENCIES (see Note 11)

STOCKHOLDERS' EQUITY
Preferred stock; $0.15 par value, 1,500,000 shares authorized,
no shares outstanding	-	-
Common stock; $0.15 par value, 15,000,000 shares authorized,
8,153,176 and 8,149,801 shares outstanding, respectively	1,222,976	1,222,470
Capital in excess of par value	41,961,754	41,910,067
Accumulated other comprehensive income	96,287	46,590
Retained earnings	31,985,560	30,522,375
Total stockholders' equity	75,266,577	73,701,502

TOTAL CAPITALIZATION	106,613,335	95,660,118

TOTAL LIABILITIES AND CAPITALIZATION	$ 144,641,948	$ 137,727,936

Gas Natural Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)
	Nine Months Ended
	2011	2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 4,764,618	$ 4,084,019
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization	3,256,977	2,738,441
Accretion	105,262	92,836
Amortization of debt issuance costs	106,748	97,975
Stock based compensation	52,193	62,829
Gain on sale of marketable securities	-	(159,520)
Loss on sale of assets	30,916	-
Loss from unconsolidated affiliate	85,174	34,882
Gain on bargain purchase	(1,054,861)	-
Investment tax credit	(15,796)	(15,796)
Deferred income taxes	2,981,256	1,098,029
Changes in assets and liabilities
Accounts receivable, including related parties	5,511,774	10,678,613
Unbilled gas	4,479,284	1,569,929
Natural gas and propane inventory	(1,853,006)	(1,399,660)
Accounts payable, including related parties	(4,083,198)	(5,704,175)
Recoverable/refundable cost of gas purchases	1,064,287	(2,704,976)
Prepayments and other	(371,745)	(579,352)
Other assets	(1,520,188)	(1,601,287)
Other current liabilities	(993,626)	(1,424,044)
Net cash provided by operating activities	12,546,069	6,868,743

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(14,968,603)	(3,957,184)
Proceeds from sale of fixed assets	43,522	-
Proceeds from sale of marketable securities	-	4,185,867
Purchase of marketable securities	(13,304)	(52,948)
Proceeds from related party note receivable	7,111	-
Purchase of Cut Bank shares and Kidron Investment	-	(206,067)
Cash acquired in acquisition	-	144,203
Purchase of Independence Oil & LP Gas, Inc.	(1,275,656)	-
Restricted cash	(1,807,425)	-
Investment in unconsolidated affiliate	(303,600)	(52,500)
Customer advances for construction	60,720	138,443
Contributions in aid of construction	2,725	(65,689)
Net cash provided by (used in) investing activities	(18,254,510)	134,125

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from lines of credit	25,200,000	28,650,000
Repayment on lines of credit	(25,749,999)	(28,700,000)
Proceeds from notes payable	18,355,215	31,316
Repayments of notes payable	(9,870,240)	(894,013)
Repayments of related party notes payable	(49,361)	-
Debt issuance costs	(462,944)	-
Restricted cash	(949,432)	-
Dividends paid	(3,301,280)	(2,458,912)
Net cash provided by (used) in financing activities	3,171,959	(3,371,609)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(2,536,482)	3,631,259

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	13,026,585	2,752,168

CASH AND CASH EQUIVALENTS, END OF PERIOD	$ 10,490,103	$ 6,383,427

Gas Natural Inc. and Subsidiaries Consolidated Statements of Cash Flows Continued (Unaudited)

	Nine Months Ended
	2011	2010

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest	$ 1,164,165	$ 1,293,779
Cash paid for income taxes	91,303	208,372

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Shares issued to purchase Ohio Companies	-	17,073,084
Capital expenditures included in accounts payable	622,642	191,457
Capitalized interest	6,342	3,372
Accrued dividends	366,893	366,741

Gas Natural Inc. and Subsidiaries Segments of Operations (Unaudited)
Three Months Ended September 30, 2011
			Marketing
		Natural Gas	and	Pipeline	Propane	Corporate and
		Operations	Production	Operations	Operations	Other	Eliminations	Consolidated

OPERATING REVENUES
	Natural gas operations	$ 11,717,686	$ -	$ -	$ -	$ -	$ (1,368,867)	$ 10,348,819
	Marketing and production	-	2,407,303	-	-	-	(1,551,588)	855,715
	Pipeline operations	-	-	106,351	-	-	-	106,351
	Propane operations	-	-	-	1,009,844	-	-	1,009,844

Total operating revenue		11,717,686	2,407,303	106,351	1,009,844	-	(2,920,455)	12,320,729

COST OF SALES
	Gas purchased	5,917,091	-	-	-	-	(1,368,867)	4,548,224
	Marketing and production	-	2,137,398	-	-	-	(1,551,588)	585,810
	Propane operations	-	-	-	875,305	-	-	875,305
Total cost of sales		5,917,091	2,137,398	-	875,305	-	(2,920,455)	6,009,339

GROSS MARGIN		$ 5,800,595	$ 269,905	$ 106,351	$ 134,539	$ -	$ -	$ 6,311,390

OPERATING INCOME (LOSS)		$ (534,116)	$ 82,182	$ 76,593	$ (154,927)	$ (61,430)	$ -	$ (591,698)

NET INCOME (LOSS)		$ (463,484)	$ 48,712	$ 47,540	$ 561,986	$ (65,228)	$ -	$ 129,526

Three Months Ended September 30, 2010
			Marketing
		Natural Gas	and	Pipeline	Propane	Corporate and
		Operations	Production	Operations	Operations	Other	Eliminations	Consolidated

OPERATING REVENUES
	Natural gas operations	$ 10,235,666	$ -	$ -	$ -	$ -	$ (76,900)	$ 10,158,766
	Marketing and production	-	2,137,068	-	-	-	(1,498,597)	638,471
	Pipeline operations	-	-	104,461	-	-	-	104,461
	Propane operations							-

Total operating revenue		10,235,666	2,137,068	104,461	-	-	(1,575,497)	10,901,698

COST OF SALES
	Gas purchased	4,879,927	-	-	-	-	(76,900)	4,803,027
	Marketing and production	-	1,879,531	-	-	-	(1,498,597)	380,934
	Propane operations							-
Total cost of sales		4,879,927	1,879,531	-	-	-	(1,575,497)	5,183,961

GROSS MARGIN		$ 5,355,739	$ 257,537	$ 104,461	$ -	$ -	$ -	$ 5,717,737

OPERATING INCOME (LOSS)		$ (678,894)	$ 52,455	$ 70,544	$ -	$ -	$ -	$ (555,895)

NET INCOME (LOSS)		$ (325,729)	$ 274,534	$ 82,563	$ -	$ (76,073)	$ -	$ (44,705)

Gas Natural Inc. and Subsidiaries Segments of Operations *(unaudited)*
Nine Months Ended September 30, 2011
			Marketing
		Natural Gas	and	Pipeline	Propane	Corporate and
		Operations	Production	Operations	Operations	Other	Eliminations	Consolidated

OPERATING REVENUES
	Natural gas operations	$ 68,019,655	$ -	$ -	$ -	$ -	$ (2,355,991)	$ 65,663,664
	Marketing and production	-	9,957,521	-	-	-	(5,800,639)	4,156,882
	Pipeline operations	-	-	314,736	-	-	-	314,736
	Propane operations	-	-	-	1,009,844	-	-	1,009,844

Total operating revenue		68,019,655	9,957,521	314,736	1,009,844	-	(8,156,630)	71,145,126

COST OF SALES
	Gas purchased	41,196,715	-	-	-	-	(2,355,991)	38,840,724
	Marketing and production	-	8,994,235	-	-	-	(5,800,639)	3,193,596
	Propane operations	-	-	-	875,305	-	-	875,305
Total cost of sales		41,196,715	8,994,235	-	875,305	-	(8,156,630)	42,909,625

GROSS MARGIN		$ 26,822,940	$ 963,286	$ 314,736	$ 134,539	$ -	$ -	$ 28,235,501

OPERATING INCOME (LOSS)		$ 7,254,934	$ 388,407	$ 188,989	$ (154,927)	$ (109,384)	$ -	$ 7,568,019

NET INCOME (LOSS)		$ 4,155,383	$ 158,119	$ 112,094	$ 561,986	$ (222,964)	$ -	$ 4,764,618

Total assets		124,288,531	4,666,306	578,135	2,957,575	72,261,411	(60,110,010)	144,641,948
Goodwill		14,607,952	-	-	-	-	-	14,607,952

Nine Months Ended September 30, 2010
			Marketing
		Natural Gas	and	Pipeline	Propane	Corporate and
		Operations	Production	Operations	Operations	Other	Eliminations	Consolidated

OPERATING REVENUES
	Natural gas operations	$ 56,581,131	$ -	$ -	$ -	$ -	$ (234,096)	$ 56,347,035
	Marketing and production	-	11,325,249	-	-	-	(5,700,446)	5,624,803
	Pipeline operations	-	-	319,418	-	-	-	319,418
	Propane operations	-	-	-	-	-	-	-

Total operating revenue		56,581,131	11,325,249	319,418	-	-	(5,934,542)	62,291,256

COST OF SALES
	Gas purchased	32,577,699	-	-	-	-	(234,096)	32,343,603
	Marketing and production	-	10,135,599	-	-	-	(5,700,446)	4,435,153
	Propane operations	-	-	-	-	-	-	-
Total cost of sales		32,577,699	10,135,599	-	-	-	(5,934,542)	36,778,756

GROSS MARGIN		$ 24,003,432	$ 1,189,650	$ 319,418	$ -	$ -	$ -	$ 25,512,500

OPERATING INCOME (LOSS)		$ 5,882,195	$ 609,916	$ 169,875	$ -	$ (11,364)	$ -	$ 6,650,622

NET INCOME (LOSS)		$ 3,653,545	$ 308,729	$ 143,283	$ -	$ (21,538)	$ -	$ 4,084,019

Total assets		110,032,010	5,463,177	726,574	-	57,041,165	(51,898,609)	121,364,317
Goodwill		13,929,745	-	-	-	-	-	13,929,745

Gas Natural Inc. and Subsidiaries Natural Gas Operations *(unaudited)*
Utility Throughput
			Three Months Ended September 30,		Nine Months Ended September 30,
(in million cubic feet (MMcf))			2011	2010	2011	2010

Full Service Distribution
	Residential		281	326	3,184	2,816
	Commercial		555	432	3,384	2,699
	Industrial		37	31	121	113
		Total full service	873	789	6,689	5,628

Transportation			1,884	1,468	6,452	5,199
Bucksport			3,604	3,636	10,393	10,726

		Total Volumes	6,361	5,893	23,534	21,553

Degree Days
		Three Months Ended		Percent (Warmer) Colder
		September 30,		2011 Compared to
	Normal	2011	2010	Normal	2010
Great Falls, MT	375	176	437	(53.07%)	(59.73%)
Cody, WY	257	112	229	(56.42%)	(51.09%)
Bangor, ME	239	134	153	(43.93%)	(12.42%)
Elkin, NC	30	60	22	100.00%	172.73%
Youngstown, OH	178	121	137	(32.02%)	(11.68%)

		Nine Months Ended		Percent (Warmer) Colder
		September 30,		2011 Compared to
	Normal	2011	2010	Normal	2010
Great Falls, MT	4,824	5,336	4,772	10.61%	11.82%
Cody, WY	4,359	4,797	4,577	10.05%	4.81%
Bangor, ME	5,046	4,994	4,058	(1.03%)	23.07%
Elkin, NC	2,484	2,474	2,298	(0.40%)	7.66%
Youngstown, OH	4,299	4,140	3,611	(3.70%)	14.65%