Dominion Power 2002 Annual Report Download - page 42

Management’s Discussion and Analysis of Financial Condition
and Results of Operations, Continued
Other income decreased $37 million, reflecting to a large
extent a $27 million increase in equity losses on Dominion’s
telecommunications joint venture. The increased losses reflected
lower revenue and increased operating expenses resulting from
the expansion into several new markets in 2002. See Notes 30
and 32 to the Consolidated Financial Statements.
Operating Results—2001
Dominion Delivery contributed $1.45 per diluted share on net
income of $366 million for 2001, an increase of $27 million and
$0.02 per diluted share over 2000 results. The increase in net
income reflects slightly higher gas throughput and slightly lower
volumes of electricity delivered, as well as overall higher gas and
electric rates.
Operating revenue increased $137 million to $3.0 billion
for 2001, reflecting a full year of CNG operations for 2001. This
is reflected in higher regulated gas sales and gas transportation
and storage revenue as a result of higher overall throughput and
rates. Regulated electric sales for 2001 reflect customer growth
and comparatively higher fuel rates, partially offset by the effect
of comparatively milder weather.
Operating expenses increased $79 million to $2.2 billion
for 2001. Higher prices for commodities delivered or consumed
contributed to increased purchased gas expense. In addition,
purchased gas increased, as 2000 amounts only included 11
months of CNG operations.
Dominion Exploration & Production
2002 2001 2000
(millions, except per share amounts)
Operating revenue $1,719 $1,460 $1,330
Operating expenses 1,111 934 920
Net income contribution 380 320 255
Earnings per share contribution $ 1.34 $ 1.27 $ 1.08
Gas production (bcf) 385 283 258
Oil production (million bbls) 10 78
Average realized prices with
hedging results(1):
Gas (per mcf) $ 3.40 $ 3.80 $ 3.07
Oil (per bbl) 23.28 23.42 22.26
Average prices without hedging results:
Gas (per mcf) 3.03 3.87 3.70
Oil (per bbl) $24.44 $23.53 $23.98
(1) Average realized prices with hedging results do not include the financial
losses incurred on the economic hedges which are reported in and discussed
as part of the operating results of the Dominion Energy segment.
Operating Results—2002
Dominion Exploration & Production contributed $1.34 per
diluted share on net income of $380 million, an increase of $60
million and $0.07 per diluted share over 2001.
Operating revenue increased $259 million to $1.7 billion
for 2002, reflecting higher overall production as a result of the
full year operations of Louis Dreyfus and Dominion’s ongoing
drilling programs, partially offset by natural production
declines. Average realized gas and oil prices, including the
effects of hedging, decreased for the comparative years.
Operating expenses increased $177 million to $1.1 billion
for 2002, and reflect primarily the impact of including Louis
Dreyfus operations in 2002. The increase includes an increase
in depreciation, depletion and amortization expense of $138
million in connection with the higher levels of production noted
above, partially offset by lower depletion rates due primarily to
the inclusion of properties from the Louis Dreyfus acquisition.
Operating Results— 2001
Dominion Exploration & Production contributed $1.27 per
diluted share on net income of $320 million, an increase of $65
million and $0.19 per diluted share, as compared to 2000
results. Operating revenue increased $130 million to $1.5 billion
for 2001, reflecting a full year of CNG operations for 2001, two
months of Louis Dreyfus operations and higher average realized
gas and oil prices. The production increases reflect the addition
of Louis Dreyfus operations in the fourth quarter of 2001, offset
somewhat by natural declines at certain Dominion gas and oil
production properties.
Operating expenses increased $14 million to $934 million
for 2001, as compared to 2000, and include the acquisition of
Louis Dreyfus in the fourth quarter of 2001, as well as higher
operations and maintenance expenses associated with service
industry and contractor costs. Purchases of gas and oil for bro-
kered sales decreased in 2001.
Corporate and Other
2002 2001 2000
(millions, except per share amounts)
Net loss $ (243) $ (865) $ (647)
Earnings per share impact $(0.85) $(3.43) $(2.73)
Operating Results—2002
The net loss associated with corporate and other operations for
2002 was $243 million and $(0.85) per diluted share, a decrease
of $622 million and $2.58 per diluted share over 2001. The
decrease in net loss reflected higher operating expenses for 2001
as a result of specific charges described in Operating Results —
2001 below. In addition, the decreased net loss for 2002
included an $88 million decrease in operating expenses, due
to the discontinuance of goodwill amortization.
Operating Results—2001
The net loss associated with corporate and other operations
for 2001 was $865 million and $(3.43) per diluted share, an
increase of $218 million and $0.70 per diluted share over 2000.
These results reflect comparatively higher operating expenses
for 2001 that included the following specific items, which are
discussed in Notes 6, 8, 9, 15 and 27 to the Consolidated
Financial Statements:
40 Dominion ’02 Annual Report