CenterPoint posts $391 million 3Q loss on one-time impairment charges for pipeline venture

CenterPoint Energy Inc. posted a sizable third quarter loss after the Houston-based natural gas utility took a one-time impairment charge of $862 million related to its majority stake in an Oklahoma City pipeline venture that went public a year ago.

For the period ended Sept. 30, CenterPoint reported a net third quarter loss of $391 million, 91 cents per share, compared to net income of $143 million, or 33 cents per share, in the same period a year ago. CenterPoint said it recognized a loss of $794 million for the quarter from midstream investments that consist of a 55.4% stake in Enable Midstream Partners LP, a joint venture with Oklahoma City utility giant OGE Energy Corp. and private equity shop ArcLight Capital Partners.

The loss included pre-tax impairment charges totaling $862 million composed of the company’s impairment of its investment in Enable Midstream of $250 million and the company’s share, $612 million, of impairment charges Enable Midstream recorded for goodwill and long-lived assets.

Excluding the impairment charges, third quarter net income would have been $146 million, or 34 cents per share, on revenue of $1.63 billion, down 9.4% from $1.8 billion in the third quarter of 2014. Wall Street analysts surveyed by Thomson Reuters had expected the natural gas utility operator to report third quarter earnings of 30 cents on revenue of $1.99 billion.

On a consolidated basis, CenterPoint upgraded its yearly earnings forecast for fiscal 2015 in the range of $1.05 – $1.10 per share. The Texas natural gas utility also said it is targeting annual earnings per share growth of four to six percent earnings growth through 2018, which includes the company’s midstream investments.

“We adjusted guidance towards the higher end of the range for 2015, largely due to the performance of our utility businesses,” said CenterPoint President and CEO Scott M. Prochazka. “We continue to pursue steady earnings growth as we serve the needs of our growing customer base.”

Last week, CenterPoint was among the three Arkansas-based gas utilities to announce that customers would see lower heating bills this winter due to decline natural gas prices that are trading near three-year lows in the futures market.

CenterPoint said its Arkansas customers will see lower gas bills for the second time this year because its cost of gas rate is 33% lower than last winter. That adjustment will lower a residential gas bill using 100 Ccf (hundred cubic feet) of natural gas by about 19% from a year ago, meaning a customer paying $109.12 last year will pay $88.09 in November, officials said.

CenterPoint, the state’s largest gas utility, has 430,000 residential, commercial and industrial customers across the state.

In midday trading Thursday on the Nasdaq stock exchange, CenterPoint shares rose three cents at $18.72. The company’s stock has traded in the range of $17.48 and $25.56 per share over the past 52 weeks.