By Tom Kleckner
OGE Energy on Thursday reported second-quarter earnings that beat Wall Street’s expectations and reflected economic growth in its service territory.
The Oklahoma City-based company, parent of Oklahoma Gas and Electric, disclosed earnings of about $100 million for the quarter ($0.50/diluted share). A year ago, the quarterly earnings were $111 million ($0.55/share).
Zacks Investment Research’s survey of financial analysts had projected earnings of 48 cents/diluted share.
CEO Sean Trauschke said the company added 8,000 more customers than it did a year ago, doubling its historic 1% load-growth rate.
“It appears our rate and economic development efforts are paying dividends,” he told analysts during a conference call, noting more than a dozen companies have announced new investments in the region. “Our rates and high reliability are often cited as factors in their decision-making process.”
Mild temperatures and severe flooding reduced OG&E’s contributions to earnings from 46 cents/share to 37 cents/share when compared to 2018’s second quarter. Oklahoma’s spring thunderstorms left 20 substations partially or fully submerged, Trauschke said.
Enable Midstream Partners, in which OGE holds a 50% general partnership interest, had earnings of 13 cents/share, up from 11 cents a year ago. The joint venture with CenterPoint Energy has contributed more than $1 billion in cash distributions to OGE since its formation in 2013.
“Both of our businesses performed well in the second quarter and are on plan for the year,” Trauschke said.
OG&E has a rate case before the Oklahoma Corporation Commission that would allow it to recover about $600 million for installing scrubbers at its Sooner Power Plant and converting two coal-fired units at its Muskogee Power Plant to natural gas.
“Once the final order is issued, this decade of environmental compliance will be complete,” Trauschke said. “It’s required hundreds of millions of investment dollars. … Since 2011, we have invested more than $6 billion in our system, and customer rates are lower than they were eight years ago.”
OGE reiterated its year-end guidance of $2.05 to $2.20/diluted share.
The company’s stock opened Thursday at $42.33. It finished the week up at $42.87 after a late 26-cent drop.
