CenterPoint Energy and OGE Energy, general partners in gas-gathering outfit Enable Midstream Partners, declined to answer questions on potential sales of their interest in the company during their respective third-quarter earnings calls Thursday.
Instead, they stuck to the companies’ line that they are “now well aligned in our desire to maximize the value of Enable.” Reports surfaced last month that the companies were pondering a sale in the face of depressed commodity prices and other economic headwinds.
A sunny CenterPoint CEO David Lesar instead gave analysts a sneak peak of the company’s future plans, saving more details for the company’s investor day on Dec. 7.
“I’m even more optimistic about where we can take this great company in the future than I was 90 days ago,” said Lesar, who only joined CenterPoint in June.
CenterPoint reported earnings during the quarter on a guidance basis of $200 million ($0.34/diluted share), compared to $241 million ($0.47/diluted share) a year ago.
Lesar shared high-level recommendations from the recently completed Business Review and Evaluation Committee’s work. They include a $3 billion increase, to $16 billion, in capital investment expected to deliver 10% annual base-rate growth; investing $950 million in wind and solar generation; operations and maintenance “cost discipline”; and improving the company’s balance sheet “optionality.”
“To eliminate any initial anxiety you may have, I want to immediately emphasize that our plan does not require any block issuance of new equity nor require a reduction to our current earnings per share,” Lesar said.
Instead, CenterPoint plans to sell “one or two” of its natural gas local distribution companies (LDCs).
“All of our gas LDCs are good assets in constructive regulatory environments, and we hate to sell any of them, but a hard capital allocation decision needed to be made, and I made it,” Lesar said.
Wall Street applauded CenterPoint’s earnings, driving the share price up to $22.80 in after-hours trading, a gain of $1.24 and 5.8%.
Weather Knocks down OGE Earnings
Like CenterPoint’s executives, OGE management begged off answering Enable-related questions during their analysts’ call, which immediately followed that of its Texas partner.
“Whatever we do [with Enable] would be focused on the OGE shareholder,” CEO Sean Trauschke said.
One analyst twice tried unsuccessfully to pry information from Trauschke, asking detailed, vague questions that left the CEO confused.
“I’m still not getting it,” he said after the second question.
“I’m just trying to get information out of you,” the analyst admitted.
The Oklahoma City-based utility reported third-quarter earnings of $177.4 million ($0.89/diluted share), compared to $250.9 million ($1.25/diluted share) a year ago. OGE blamed the loss on less favorable weather compared to the same quarter in 2019, as cooling degree days were down about 21%.
The weather calamities didn’t stop there. Trauschke said the company is still restoring service from an Oct. 26 ice storm, the worst in the company’s history, that resulted in 470,000 outages at its peak. Three waves of sleet, freezing rain and high winds damaged 178 structures on OGE’s transmission system and damaged or destroyed 1,134 poles, 1,050 crossarms and 194 transformers.
As of Thursday morning, OGE had restored power to 372,000 customers.
“It’s kind of our job to address this,” Trauschke said. “In Oklahoma, October is a summer-rate month. Instead of heat, we got an ice storm. But I believe all things even out.”
OGE’s share price climbed to $32.80 after the earnings release but finished the day down at $31.97, a 27-cent drop from the previous day’s close.
