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ASSOCIATED NATURAL GAS
CORPORATION
Mid-Year Report
1994
[ASSOCIATED NATURAL GAS
TEN YEAR ANNIVERSARY LOGO
APPEARS HERE]
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TO THE SHAREHOLDERS May 23, 1994
Earnings for the Company's second fiscal quarter ended March 31, 1994
amounted to $5.9 million($.44 per share) on total revenues of $445
million, as compared to $5.6 million ($.43 per share) on total revenues
of $327 million for the like quarter in 1993. Mid year results for the
period amounted to net earnings of $11.1 million($.83 per share) on
revenues of $870 million versus $11.8 million($.91 per share) on revenues
of $692 million in the similar 1993 six-month period. Significant
increases in natural gas system throughput and off system sales(21% and
99% respectively) were offset by a substantial decrease in NGL
prices($.07 per gallon or 27%), netting to similar net earning for the
six months. Since the close of the period, average natural gas liquids
prices have increased approximately $.02 to $.03 cents per gallon in
response to oil prices firming at the new $18.00 per barrel level.
On February 1, 1994, the Company purchased from Shell Pipeline
Corporation its Hope-Houston crude oil pipeline system in south Texas,
consisting of approximately 165 miles of crude oil gathering and trunk
pipeline. Effective March 1, 1994, the Company acquired from Gulf States
Pipeline Corporation the 50% interest that it did not previously own in
the Minden/Terryville natural gas pipeline system located in Lincoln,
Jackson and Webster Parishes, Louisiana. This is a 42-mile transmission
facility with a design capacity of 75,000 MCF per day. During the first
six months of this fiscal year, the Company has closed on more than $65
million in natural gas NGLs and crude oil pipeline additions.
On February 21, 1994, the Company announced that it had signed a
definitive agreement to acquire, via merger and pooling of interests,
Grand Valley Gas Company. In a transaction calling for the exchange of
0.25 shares of Associated Natural Gas Corporation common stock for each
share of Grand Valley, approximately 1.6 million shares of the Company's
common stock will be issued at closing. Based on NGA's share price at
that date, the value of the transaction is approximately $55 million.
This purchase requires the approval of the Grand Valley shareholders,
subject to the appropriate S-4 circular and proxy, which have been filed
with the Securities and Exchange Commission. It is anticipated that this
merger will be effective on or about July 1, 1994. Grand Valley is a well-
established Salt Lake City-based natural gas marketing company, which has
dominant purchase and sales positions in the Pacific Northwest, western
Rocky Mountains, western Canada and California.
With the addition of Grand Valley, the Company will achieve a nationwide
presence which will position it for future growth in the post order 636
open access gas markets.
Respectfully Submitted,
/s/ Cortlandt S. Dietler
Cortlandt S. Dietler
Chairman/Chief Executive Officer
/s/ Donald H. Anderson
Donald H. Anderson
President
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Condensed Income Statements
(Unaudited) (In thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
-------------------- -------------------
1994 1993 1994 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Total revenues $444,745 327,116 869,993 691,525
Less operating expenses:
Gas and petroleum products purchases 407,998 297,054 799,787 631,124
Operations and general expenses 15,876 12,186 30,677 23,982
Depreciation 7,094 5,423 13,559 10,613
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Income from operations 13,777 12,453 25,970 25,806
Less other (income) expense:
Net interest expense 3,556 3,213 6,863 6,258
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Earnings before income taxes 10,221 9,240 19,107 19,548
Income taxes 4,360 3,647 8,050 7,781
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Net earnings $ 5,861 5,593 11,057 11,767
========= ======== ======== ========
Earnings per share $ 0.44 0.43 0.83 0.91
========= ======== ======== ========
Weighted average shares outstanding 13,434 12,997 13,380 12,990
</TABLE>
Condensed Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
March 31, September 30,
1994 1993
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(unaudited)
<S> <C> <C>
Assets
Current assets $234,388 225,168
Property, plant and equipment (net) 422,499 344,834
Other assets, net 36,609 28,646
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$693,496 598,648
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Liabilities and Stockholders' Equity
Current liabilities $225,009 210,336
Deferred income taxes 41,382 37,956
Long-term debt 209,000 153,000
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Total liabilities 475,391 401,292
Stockholders' equity 218,105 197,356
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$693,496 598,648
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</TABLE>
[ASSOCIATED NATURAL GAS
TEN YEAR ANNIVERSARY LOGO
APPEARS HERE]
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Comparative Operating Statistics
<TABLE>
<CAPTION>
March 31,
------------------------
1994 1993
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<S> <C> <C>
Miles of pipeline owned 9,202 7,820
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Connected wells 7,788 7,227
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Compression horsepower 211,300 174,600
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Natural gas throughput and sales (MCF per day) 1,724,000 1,139,000
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Gallons of NGLs per day 1,712,000 1,063,800
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</TABLE>
Board Of Directors:
Cortlandt S. Dietler
Donald H. Anderson
W.T. Biddle
Harold R. Logan, Jr.
Frederick R. Mayer
Michael J. Quigley
John A. Redding
Offices:
Cortlandt S. Dietler, Chairman/CEO
Donald H. Anderson, President/COO
Michael J. Quigley, Executive Vice President
Erik B. Carlson, Senior Vice President/General Counsel/Secretary
Harold R. Logan, Jr., Senior Vice President/Finance
J. Roger Grace, Vice President/Treasurer
Frederick W. Boutin, Vice President/Administration
William S. Dickey, Vice President/Corporate Planning
Sandra L. Myrick, Controller
New York Stock Exchange Symbol: NGA
Associated Natural Gas Corporation
900 Republic Plaza
370 17th Street
Denver, Colorado 80202
(303) 595-3331
FAX: (303) 595-0480
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P.O. Box 5660
Denver, CO 80217
