OG&E 2012 Annual Report Download - page 12

Forward-Looking Statements
Except for the historical statements contained herein, the matters
discussed in this Annual Report, including those matters discussed
in “Management’s Discussion and Analysis of Financial Condition and
Results of Operations,” are forward-looking statements that are subject
to certain risks, uncertainties and assumptions. Such forward-looking
statements are intended to be identified in this document by the words
“anticipate”, “believe”, “estimate”, “expect”, “intend”, “objective”, “plan”,
“possible”, “potential”, “project” and similar expressions. Actual results
may vary materially from those expressed in forward-looking statements.
In addition to the specific risk factors discussed in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”
herein, factors that could cause actual results to differ materially from
the forward-looking statements include, but are not limited to:
•General economic conditions, including the availability of credit, access
to existing lines of credit, access to the commercial paper markets, actions
of rating agencies and their impact on capital expenditures;
•The ability of OGE Energy Corp. (“OGE Energy” and collectively, with its
subsidiaries, the “Company”) and its subsidiaries to access the capital
markets and obtain financing on favorable terms as well as inflation
rates and monetary fluctuations;
•Prices and availability of electricity, coal, natural gas and natural gas
liquids (“NGL”), each on a stand-alone basis and in relation to each
other as well as the processing contract mix between percent-of-liquids,
percent-of-proceeds, keep-whole and fixed-fee;
•Business conditions in the energy and natural gas midstream industries;
•Competitive factors including the extent and timing of the entry of
additional competition in the markets served by the Company;
•Unusual weather;
•Availability and prices of raw materials for current and future construc-
tion projects;
•Federal or state legislation and regulatory decisions and initiatives that
affect cost and investment recovery, have an impact on rate structures
or affect the speed and degree to which competition enters the
Company’s markets;
•Environmental laws and regulations that may impact the Company’s
operations;
•Changes in accounting standards, rules or guidelines;
•The discontinuance of accounting principles for certain types of rate-
regulated activities;
•The cost of protecting assets against, or damage due to, terrorism
or cyber attacks and other catastrophic events;
•Advances in technology;
•Creditworthiness of suppliers, customers and other contractual parties;
•The higher degree of risk associated with the Company’s nonregulated
business compared with the Company’s regulated utility business; and
•Other risk factors listed in the reports filed by the Company with the
Securities and Exchange Commission.
The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Introduction
The Company is an energy and energy services provider offering physical
delivery and related services for both electricity and natural gas primarily
in the south central United States. The Company conducts these activities
through three business segments: (i) electric utility, (ii) natural gas trans-
portation and storage and (iii) natural gas gathering and processing.
The electric utility segment generates, transmits, distributes and
sells electric energy in Oklahoma and western Arkansas. Its operations
are conducted through Oklahoma Gas and Electric Company (“OG&E”)
and are subject to regulation by the Oklahoma Corporation Commission
(“OCC”), the Arkansas Public Service Commission (“APSC”) and the
Federal Energy Regulatory Commission (“FERC”). OG&E was incorpo-
rated in 1902 under the laws of the Oklahoma Territory. OG&E is the
largest electric utility in Oklahoma and its franchised service territory
includes the Fort Smith, Arkansas area. OG&E sold its retail natural
gas business in 1928 and is no longer engaged in the natural gas
distribution business.
OGE Enogex Holdings, LLC (“OGE Holdings,” wholly-owned
subsidiary of OGE Energy and parent company of Enogex Holdings
LLC, and collectively, with its subsidiaries, “Enogex”) is a provider of
integrated natural gas midstream services. Enogex is engaged in the
business of gathering, processing, transporting and storing natural gas.
Most of Enogex’s natural gas gathering, processing, transportation and
storage assets are strategically located in the Arkoma and Anadarko
basins of Oklahoma and the Texas Panhandle. During the third quarter
of 2012, the operations and activities of Enogex Energy Resources LLC,
wholly-owned subsidiary of Enogex LLC (collectively with its subsidiaries,
“Enogex LLC”) (“EER”) were fully integrated with those of Enogex through
the creation of a new commodity management organization. This new
organization is intended to facilitate the execution of Enogex’s strategy
through an enhanced focus on asset optimization and active manage-
ment of its growing natural gas, NGLs and condensate positions. The
operations of EER, including asset management activities, have been
included in the natural gas transportation and storage segment and have
been restated for all prior periods presented. Enogex’s operations are
now organized into two business segments: (i) natural gas transportation
and storage and (ii) natural gas gathering and processing. At December
31, 2012, OGE Energy indirectly owns a 79.9 percent membership inter-
est in Enogex Holdings LLC, the parent company of Enogex LLC and a
majority-owned subsidiary of OGE Holdings (“Enogex Holdings”), which
in turn owns all of the membership interests in Enogex LLC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
10 OGE Energy Corp.