Southwest Entergy Stock Profile

Gas and oil production during the first quarter of 1998 was 9.9 billion cubic feet equivalent, even with the same period in 1997. Gas production was 8.7 Bcf for both the three months ended March 31, 1998, and 1997. The company’s sales to its gas distribution systems were 4.5 Bcf during the three months ended March 31, 1998, compared to 4.6 Bcf for the same period in 1997. The company’s oil production was 192,000 barrels during the three months ended March 31, down slightly from the 196 MBbls for the same period of 1997.

The company has taken advantage of recent attractive natural gas futures prices and hedged approximately 80 percent of its current floating price production (about 1.8 Bcf per month) through September 1998 at an average NYMEX price of $2.45 per Mcf.

Gas distribution operation income of the gas distribution segment increased 6 percent in the first quarter of 1998, as compared to the first quarter of 1997, despite weather that was 12 percent warmer than normal and 7 percent warmer than in the same period of 1997. The improvement in operating income was due to the combined effects of rate increases, customer growth and weather normalization adjustments. Rate increases and tariff changes totaling $3 million annually were implemented in late 1997 for the utility’s northeast Arkansas and Missouri systems. The utility realized growth of 2 percent during the quarter in the average number of utility customers served. Additionally, weather normalization adjustments that are now applicable to the company’s Arkansas systems offset a large part of the effect of the warmer weather. The utility systems delivered 12.7 Bcf to sales and end-use transportation customers during the three months ended March 31, down slightly from 12.9 Bcf for the same period in 1997.

The company’s average rate for its utility sales decreased during the first quarter of 1998 to $5.15 per Mcf, down from $5.25 per Mcf for the same period in 1997. The decrease reflected lower prices paid for purchases of natural gas that are passed through to customers under automatic adjustment clauses.

Energy services operating income for the energy services segment was $700,000 for both the first quarter of 1998 and 1997. The company marketed 9.8 Bcf of gas in the first three months of 1998, compared to 6.8 Bcf for the same period in 1997. The higher margins applicable to the first quarter of 1997 primarily relate to income realized from the company’s unregulated storage facilities that were utilized to take advantage of the significantly higher gas prices available at that time.