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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report May 2, 1994
I.R.S.
Commission Employer
File State of Identification
Number Registrant Incorporation Number
001-11227 Washington Energy Company Washington 91-1005304
001-11271 Washington Natural Gas Company Washington 91-1005303
815 Mercer Street, Seattle, Washington 98111
(Address of Registrant's principal executive offices)
Registrant's telephone number, including area code: (206) 622-6767
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PAGE 2
Item 5. Other Events
On May 2, 1994, Washington Energy Company made the following press release:
WASHINGTON ENERGY ANNOUNCES SECOND-QUARTER RESULTS;
CABOT OIL & GAS MERGER EXPECTED TO CLOSE TODAY
SEATTLE -- Washington Energy Company's second-quarter
results bear out the company's earlier announcement that it
expected significantly reduced earnings this year, Chairman,
Chief Executive Officer and President William P. Vititoe said
today.
The company reported today that second-quarter earnings per
share of common stock decreased 52 percent, compared to the same
quarter a year ago. The decline was primarily due to the effects
of warm winter weather and a reduced profit margin upon its
natural gas utility, lower income from the newly-formed
merchandising subsidiary and a loss from pipeline demand charges
and brokerage activities at its oil and gas exploration and
production subsidiary.
For the three months ending March 31, 1994, earnings on
common stock were $7.4 million, and earnings per share were 32
cents, compared to $15.5 million, and 67 cents per share, during
the same period a year ago.
Lower earnings reflect reduced rates that went into effect
in October 1993 for the company's Washington Natural Gas
subsidiary.
Also, weather during the quarter was approximately 7 percent
warmer than normal. A combination of warmer temperatures and
shifting by some large-volume customers between classes and to
alternative fuels lowered gas sales volumes, which were down
approximately 4 percent.
Partially offsetting the lower gas sales volumes were an
additional 21,600, or 5 percent more, customers served on average
during the quarter by Washington Natural Gas compared to a year
ago. The gas utility now serves more than 440,000 customers in
the central Puget Sound region of western Washington.
As anticipated, earnings were also affected by lower income
from the company's retail merchandise and services operation as
the business is re-established in a new subsidiary, Washington
Energy Services.
Operating income, before income taxes, of $366,000 during
the quarter for Washington Energy Resources, the oil and gas
exploration and production subsidiary, was down from $2.2 million
during the same period a year ago. The decline was due primarily
to a loss of $1.6 million from pipeline demand charges and
brokerage activities.
12-month results
Income from continuing operations, after preferred
dividends, was 28 cents on a per-share basis for the 12 months
ended March 31, 1994, down 72 percent from the same period a year
ago, primarily reflecting the impact of reduced profits for
Washington Natural Gas.
PAGE 3
By comparison, 12-month earnings on common from continuing
operations one year ago was 99 cents per share.
After discontinued operations, the company reported a loss
in earnings on common of 19 cents a share, compared to earnings
of 87 cents a share, a year ago.
Vititoe noted that the loss reflects a charge of 47 cents
per share from the loss recorded during the year on operations
and divestiture of the Unisyn Biowaste Technology operation.
Cabot Oil & Gas Merger Expected to Close
In addition, Washington Energy announced it expects to close
today the merger of its oil and gas subsidiary, Washington Energy
Resources Company, with a subsidiary of Cabot Oil & Gas
Corporation.
Washington Energy will receive 2,133,000 shares of Cabot Oil
& Gas common stock, 1,134,000 shares of 6% convertible preferred
stock of Cabot, stated at $50 value, and approximately $64
million in cash. The value announced in a press release on
Feb. 25, 1994, of $180 million, has been reduced by approximately
$23 million, to reflect a downward revision in reserves due to
lower production from newly drilled wells.
The purchase price is subject to further adjustment based on
performance of wells in a certain field over the next year.
Washington Energy Company will retain certain marketing and
pipeline capacity assets. As previously announced, the company
plans to establish a reserve for losses due to pipeline capacity
charges and other costs related to the merger.
Vititoe noted that because the company is required to
provide deferred taxes of over $20 million and will provide
reserves for contingencies of over $15 million, net of tax, as a
result of the merger and related transactions, the company
expects to record a loss of $25 to $30 million for these items
during the third quarter, ending June 30, 1994.
PAGE>
<TABLE
PAGE 4
Washington Energy Company
SUMMARY INCOME STATEMENT AND OTHER FINANCIAL DATA
(Dollars in thousands, except per share amounts)
<F>
3
Months Ended 12 Months Ended
March 31 (1) March 31
_______________________ ________________________
1994
1993 1994 1993
Washington Energy Company __________
__________ __________ __________
Operating Revenues
Utility sales of gas $ 139,440 $
132,505 $ 387,814 $ 326,768
Merchandise and other 12,021
20,976 66,509 76,704
Oil and natural gas production 8,163
7,415 31,926 23,603
Total operating revenues $ 159,624 $
160,896 $ 486,249 $ 427,075
Operating income $ 16,886 $
24,186 $ 42,795 $ 53,602
Income from continuing operations $ 7,446 $
16,190 $ 7,307 $ 21,162
Discontinued operations, net of income taxes
Loss from operations
(627) (1,230) (2,580)
Loss on disposal
(9,818)
Net income (loss) $ 7,446 $
15,563 $ (3,741) $ 18,582
Preferred dividends
26 58 104
Preferred redemption
673
Earnings (loss) on common stock $ 7,446 $
15,537 $ (4,472) $ 18,478
Earnings (loss) per common share $.32
$.67 ($.19) $.87
Dividends per common share $.25
$.35 $1.20 $1.40
Average common shares outstanding in thousands 23,443
23,037 23,283 21,277
Book value per share
$13.95 $15.34
Capitalization and Short-Term Debt
Common
$ 328,006 $ 354,486
Preferred
60,000 27,348
Long-term debt
333,260 276,540
Commercial paper and notes payable
126,642 129,290
Total capitalization and short-term debt
$ 847,908 $ 787,664
Net plant
$ 905,684 $ 816,464
Operating Income (Loss) by Business Segment
Before Income Taxes
Natural gas distribution $ 20,735 $
26,751 $ 42,572 $ 46,148
Retail merchandise and services (721)
3,405 2,952 8,780
Oil and natural gas 366
2,161 3,862 6,927
Other (754)
(67) (3,732) (757)
Total $ 19,626 $
32,250 $ 45,654 $ 61,098
(1) Results for the quarter are not indicative of what can be expected for a
full year of operations because operating revenues
and earnings are greatly affected by variations in weather conditions.
PAGE 5
Washington Energy Company
SUMMARY INCOME STATEMENT AND OTHER FINANCIAL DATA (Continued)
(Dollars in thousands)
March 31 (1) March 31
1994
1993 1994 1993
Washington Natural Gas Company __________
__________ __________ __________
Operating Revenues
Firm $ 123,513 $
116,630 $ 332,038 $ 285,741
Interruptible 15,927
15,875 55,776 41,027
Rentals and other 2,381
1,900 8,564 7,613
Total operating revenues $ 141,821 $
134,405 $ 396,378 $ 334,381
Gross utility margin - gas revenues less gas purchases $ 56,949 $
61,872 $ 172,373 $ 164,498
Net income $ 9,171 $
15,394 $ 11,128 $ 18,433
Utility gas sales (000's of therms)
Firm 241,198
247,785 640,541 600,472
Interruptible 70,551
76,262 256,555 255,873
Total sales of gas 311,749
324,047 897,096 856,345
Customers served (average)
Firm 443,243
421,631 433,023 410,677
Interruptible 1,107
1,107 1,051 1,065
Total customers 444,350
422,738 434,074 411,742
Weather % colder (+) or warmer (-) than normal (in terms
of degree days) -6.6%
2.1% -5.3% -6.3%
Degree days 1,803
1,981 4,514 4,475
(1) Results for the quarter are not indicative of what can be expected for a
full year of operations because operating revenues
and earnings are greatly affected by variations in weather conditions.
PAGE 6
Washington Energy Company
SUMMARY INCOME STATEMENT AND OTHER FINANCIAL DATA (Continued)
(In thousands, except price data)
3
Months Ended 12 Months Ended
March 31 March 31
_______________________ _______________________
1994
1993 1994 1993
Washington Energy Resources Company __________
__________ __________ __________
Production Statistics
Gas production
Revenue $ 7,386 $
4,677 $ 24,253 $ 16,601
Mcf 3,770
2,440 13,827 9,868
Price $1.96
$1.92 $1.75 $1.68
Oil production
Revenue $ 2,110 $
1,691 $ 7,570 $ 7,257
Bbl 153
92 475 387
Price $13.79
$18.38 $15.94 $18.75
Plant products and other
Revenue $ 244 $
694 $ 2,092 $ 2,641
Boe 26
55 191 224
Price $9.38
$12.62 $10.95 $11.79
Equivalent barrels production
Revenue $ 9,740 $
7,062 $ 33,915 $ 26,499
Boe 809
555 2,971 2,257
Price $12.04
$12.72 $11.42 $11.74
Brokered income (loss) and other $ (1,577) $
353 $ (1,989) $ 811
Total revenue, including sales to affiliate $ 8,163 $
7,415 $ 31,926 $ 27,310
Less sales to affiliate $ 0 $
0 $ 0 $ 3,707
Total Revenue $ 8,163 $
7,415 $ 31,926 $ 23,603
PAGE 7
Signatures
Pursuant to the Requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WASHINGTON ENERGY COMPANY
by /S/ James P. Torgerson
Senior Vice President - Finance,
Planning and Development and
Chief Financial Officer
WASHINGTON NATURAL GAS COMPANY
by /S/ James P. Torgerson
Senior Vice President - Finance,
Planning and Development and
Chief Financial Officer
May 2, 1994