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.

Nov 14, 2011, 20:00 ET from Gas Natural Inc

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:  tsmith13@sprynet.com

Email:  kjdegenstein@ewst.com

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%

SOURCE Gas Natural Inc



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