OGE Energy Corp. (NYSE:OGE) Files An 8-K Reports Third Quarter Results

OGE Energy Corp. (NYSE:OGE), the parent company of Oklahoma Gas and Electric Company (“OG&E”), and holder of 26.3 percent limited partner interest and 50 percent general partner interest in Enable Midstream Partners, LP, today reported earnings of $0.92 per diluted share for the three months ended September 30, 2016 compared to $0.55 per diluted share for the third quarter of 2015.

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OG&E, a regulated electric utility, contributed earnings of $0.80 per share in the third quarter, compared with earnings of $0.82 per share in the third quarter last year. OGE Energy’s interest in the natural gas midstream operations contributed earnings of $0.11 compared to a loss of $0.26 per share in the year-ago quarter. The holding company posted earnings of $0.01 per share compared with a loss of $0.01 in 2015.

“Both OG&E and Enable performed well in the third quarter and are on plan for the year” said OGE Energy Corp. Chairman, President and CEO Sean Trauschke. “Our focus remains on executing and completing projects in the best interests of our customers in a safe and cost efficient manner.”

Discussion of Third Quarter 2016

OGE Energy’s net income was $184 million in the third quarter, compared to $111 million in the year-ago quarter.

OG&E’s net income was $160 million compared to $163 million in the year-ago quarter. The primary drivers for the decrease in net income were higher operating and income tax expenses. These increased expenses were partially offset by higher gross margins as a result of more favorable weather compared to the third quarter of 2015, though milder than normal.

Natural Gas Midstream Operations contributed net income to OGE Energy Corp. of $23 million for the third quarter of 2016 compared to a loss of $50 million for the same period in 2015. The results for the third quarter of 2015 include a pretax charge of approximately $108 million to write off OGE’s portion of Enable’s goodwill impairment. Other factors contributing to the increased net income this quarter were lower O&M, partially offset by lower gross margin. Enable Midstream issued cash distributions to OGE of approximately $35 million in both the third quarters of 2016 and 2015.

2016 Earnings Outlook

The 2016 outlook is unchanged with OG&E projected to earn $1.44 to $1.50 per average diluted share. The OG&E guidance assumes a final Oklahoma rate order being included in 2016 results. OGE Energy consolidated earnings guidance for 2016 is $1.72 to $1.83 per average diluted share. More information regarding the Company’s 2016 earnings guidance is contained in the Company’s 2015 Form 10-K and Form 10-Q for the quarter ended September 30, 2016 as filed with the Securities and Exchange Commission.

Conference Call Webcast

OGE Energy will host a conference call for discussion of the results on Thursday, November 3, at 8 a.m. CST. The conference will be available through www.oge.com. OGE Energy Corp. is the parent company of OG&E, a regulated electric utility with approximately 832,000 customers in Oklahoma and western Arkansas.  In addition, OGE holds a 26.3 percent limited partner interest and a 50 percent general partner interest of Enable Midstream, created by the merger of OGE’s Enogex LLC midstream subsidiary and the pipeline and field services businesses of Houston-based CenterPoint Energy.

Non-GAAP Financial Measures

OG&E has included in this release the non-GAAP financial measure Gross Margin. Gross Margin is defined by OG&E as operating revenues less fuel, purchased power and certain transmission expenses. Gross margin is a non-GAAP financial measure because it excludes depreciation and amortization, and other operation and maintenance expenses. Expenses for fuel and purchased power are recovered through fuel adjustment clauses and as a result changes in these expenses are offset in operating revenues with no impact on net income. OG&E believes gross margin provides a more meaningful basis for evaluating its operations across periods than operating revenues because gross margin excludes the revenue effect of fluctuations in these expenses. Gross margin is used internally to measure performance against budget and in reports for management and the Board of Directors. OG&E’s definition of gross margin may be different from similar terms used by other companies.

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