OG&E 2013 Annual Report Download - page 17

OGE Energy Corp. 11
•The timing and extent of changes in the supply of natural gas, particularly
supplies available for gathering by Enable’s gathering and processing
business and transporting by Enable’s interstate pipelines, including
the impact of natural gas and NGLs prices on the level of drilling and
production activities in the regions Enable serves;
•Business conditions in the energy and natural gas midstream
industries, including the demand for natural gas, NGLs, crude oil
and midstream services;
•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
construction 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;
•Difficulty in making accurate assumptions and projections regarding
future revenues and costs associated with the Company’s equity
investment in Enable that the Company does not control;
•The risk that Enable may not be able to successfully integrate the
operations of Enogex LLC and the businesses contributed by CenterPoint
as discussed in Note 3; 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 activi-
ties through two business segments: (i) electric utility and (ii) natural gas
midstream operations. For a discussion of the change in the Company’s
business segments due to the formation of Enable, see Note 14 of
Notes to Consolidated Financial Statements. For periods prior to May 1,
2013, the Company consolidated Enogex Holdings in its Condensed
Consolidated Financial Statements.
Effective May 1, 2013, OGE Energy, the ArcLight group and
CenterPoint Energy, Inc., formed Enable Midstream Partners, LP to own
and operate the midstream businesses of OGE Energy and CenterPoint.
In the formation transaction, OGE Energy and ArcLight group contributed
Enogex LLC to Enable and the Company deconsolidated its previously
held investment in Enogex Holdings and acquired an equity interest in
Enable. The Company determined that its contribution of Enogex LLC
to Enable met the requirements of being in substance real estate and
was recorded at historical cost. The general partner of Enable is equally
controlled by CenterPoint and OGE Energy, who each have 50 percent
of the management rights. Based on the 50/50 management ownership,
with neither company having control, effective May 1, 2013, OGE Energy
began accounting for its interest in Enable using the equity method of
accounting. At December 31, 2013, OGE Energy, through its wholly owned
subsidiary OGE Holdings, holds 28.5 percent of the limited partner
interests in Enable. OGE Energy also owns a 60 percent interest in any
incentive distribution rights in Enable. Incentive distribution rights are
expected to entitle the holder to increasing percentages, up to a maxi-
mum of 50 percent of the cash distributed by Enable in excess of the
target quarterly distributions to be set in connection with Enable’s initial
public offering.
The electric utility segment generates, transmits, distributes and
sells electric energy in Oklahoma and western Arkansas. Its operations
are conducted through OG&E and are subject to regulation by the OCC,
the APSC and the FERC. OG&E was incorporated 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.
The natural gas midstream operations segment consists of the
Company’s investment in Enable. Enable is engaged in the business
of gathering, processing, transporting and storing natural gas. Enable’s
natural gas gathering and processing assets are strategically located in
four states and serve natural gas production from shale developments
in the Anadarko, Arkoma and Ark-La-Tex basins. Enable also owns an
emerging crude oil gathering business in the Bakken shale formation
that commenced initial operations in November 2013. Enable is con -
tinuing to construct additional crude oil gathering capacity in this area.
Enable’s natural gas transportation and storage assets extend from
western Oklahoma and the Texas Panhandle to Alabama and from
Louisiana to Illinois.
The Company completed a 2-for-1 stock split of the Company’s
common stock effective July 1, 2013. All share and per share amounts
within this Form 10-K reflect the effects of the stock split.