Dominion Power 2000 Annual Report Download - page 35

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Texas gas fields. Selected financial information relevant to
Dominion Exploration & Production is as follows:
Year ended December 31, 2000 1999 1998
All
(millions) Total CNG Other
Operating revenue $1,369 $998 $371 $256 $164
Operating expenses 931 670 261 212 135
Operating income 438 328 110 44 29
2000 Compared to 1999
Operating revenue and income were higher as a result of increased
production and higher oil and gas prices. The 2000 results of opera-
tions reflect the addition of CNG’s operations and new property
acquisitions, as well as increased production from existing properties.
CNG’s exploration and production operations acquired in early 2000
contributed $998 million to the segment’s total Operating revenue and
income, including brokered gas and oil sales of $306 million.
Natural gas production from operations other than CNG rose
to 115 Bcfe in 2000, compared to 109 Bcfe in 1999. The increase was
primarily due to a full year of operations from properties acquired
by Dominion during 1999. Property additions in 1999 included the
purchase of Remington Energy Ltd. (Remington), a natural gas
exploration and production company headquartered in Calgary,
Alberta, Canada and gas producing properties in the San Juan
Basin of New Mexico.
Operating expenses increased primarily due to the addition of
CNG’s operations and a full year of Remington’s operations. Operat-
ing expenses attributable to CNG’s operations also included $296
million for the cost of gas and oil purchased for brokered sales.
1999 Compared to 1998
Oil and gas production revenues increased primarily due to
increased natural gas production. Natural gas production rose to
109 Bcfe in 1999, compared to 69 Bcfe in 1998. At December 31,
1999, proved reserves totaled 1,234 Bcfe, an increase of 618 Bcfe
over 1998. The 1999 increase in production and reserves resulted
primarily from the development of existing acreage, a full year’s
operations at Dominion Energy Canada, Ltd. and the acquisition of
Remington and gas producing properties in the San Juan Basin
of New Mexico.
Operating expenses increased primarily due to increased natural
gas operations.
Dominion Capital
Selected financial information relevant to DCI is as follows:
(millions) Year ended December 31, 2000 1999 1998
Other revenue $433 $473 $409
Operating expenses 218 208 199
Operating income 215 265 210
2000 Compared to 1999
Operating income decreased primarily due to decreased contribu-
tions from financial services businesses. Mortgage volumes were
$2.1 billion in 2000, down from $2.4 billion in 1999. As a result of the
sale and restructuring of loans, the commercial finance operations
portfolio decreased to $676 million at the end of 2000 compared to
$2.0 billion at the end of 1999. For additional information, see Note
6 to the Consolidated Financial Statements.
1999 Compared to 1998
Operating income increased primarily due to increased contribu-
tions from financial services businesses. Mortgage lending vol-
umes were $2.4 billion, up from $2.1 billion in 1998. The commercial
finance operations portfolio increased to $2.0 billion compared to
$1.7 billion at the end of 1998.
Liquidity and Capital Resources
Internal Sources of Liquidity
Cash flow from operating activities provided approximately $1.3 bil-
lion during 2000 and $1.2 billion in 1999 and 1998. Cash requirements
not met by the timing or amount of cash flow from operations are
generally satisfied with proceeds from the short-term borrowings,
sales of securities in the case of major acquisitions and additional
long-term debt financings.
External Sources of Liquidity
During 2000, Dominion issued a combination of common stock and
short-term and long-term debt, totaling $10.5 billion. As discussed
below, these issuances were used primarily to finance the acquisi-
tion of CNG and the pending acquisition of Millstone Nuclear
Power Station (Millstone), support financial services operations
and for other general corporate purposes including the repayment
of approximately $7.0 billion of long-term debt and preferred
securities. See Notes 15 and 16 to the Consolidated Financial State-
ments for information on Dominion’s short-term borrowings and
long-term debt as of December 31, 2000.
CNG Acquisition and Related Financing
On January 28, 2000, Dominion acquired the outstanding shares of
CNG’s common stock for $6.4 billion, consisting of approximately 87
million shares of Dominion common stock and approximately $2.9
billion in cash. In addition, in connection with the acquisition,
Dominion shareholders exchanged approximately 33 million shares
of Dominion common stock for $1.4 billion. Dominion initially
financed the CNG acquisition with bridge financing consisting of
a $3.5 billion commercial paper program backed by a short-term
credit facility and $1 billion of short-term, privately placed money
market notes.
During 2000, Dominion issued the following securities whose
proceeds were used primarily to refinance a portion of the bridge
financing:
•$700 million of 10-year fixed rate 8.125% notes;
•$700 million of 5-year fixed rate 7.625% notes;