Columbia Gas Loses $805 Million in Second Quarter With BC-Columbia Gas-Glance
DOVER, Del. (AP) _ Columbia Gas System Inc. posted an $805 million loss Wednesday for the second quarter, blaming the high-priced gas contracts that drove the company into bankruptcy court last month.
The loss amounted to $15.93 per share for Columbia, one of the nation’s largest natural gas suppliers. The results compared with a loss of $4.6 million or 10 cents a share a year earlier.
Columbia and its pipeline subsidiary, Columbia Gas Transmission Corp. of Charleston, W.Va., filed for protection under Chapter 11 of the federal bankrutpcy code July 31.
Before filing, Columbia Gas System said it faced a loss of $1 billion over the next decade because of contracts that forced it to pay suppliers up to five times the going rate for natural gas.
Columbia said it took a $765 million acounting charge against its after-tax earnings to cover estimated losses on the contracts. The company announced in June that it planned to take a substantial charge for that purpose, said William McLaughlin, Columbia spokesman.
The charge allows the Wilmington, Del.-based gas supplier ″to rid itself of a significant problem that has plagued the company for many years,″ McLaughlin said.
David W. Eisinger, vice president of Duff & Phelps Inc. investment research company in Chicago, said the move clears the way for Columbia to renegotiate the contracts with its producers ″so they can be competitive and Columbia can position itself for the future and hopefully emerge from bankruptcy a stronger company.″
Columbia has asked the bankruptcy court for permission to break more than 4,100 of its more than 5,000 gas purchase contracts.
For the first six months of 1991, the company lost $755.1 million or $14.95 per share, compared with net income of $43 million or 92 cents per share for the same period last year.
″I don’t think (the loss) really does much at all other than officially recognize that this overhanging liability is now reflected in the balance sheet of the company rather than having a balance sheet overstating its net worth,″ said John B. Parry of John S. Herold Inc. in Greenwich, Conn.
Parry, senior analyst with the oil and gas consulting and appraisal company, said the effect of the writedown would be to lower the company’s costs and bolster net income in future reporting periods. He said Columbia could post a profit by the fourth quarter.
Columbia’s transmission segment reported a second-quarter loss of $779.6 million. For the same quarter last year, it reported net income of $4 million. In addition to the contract charge, warmer weather contributed to the loss, the company said.
For the first six months, the transmission segment reported a loss of $763.3 million. In the first six months of 1990, it had net income of $14.8 million.