Piedmont Natural Gas
Piedmont Natural Gas Co. (PNY) is an energy services company that engages in the business of distributing natural gas in North Carolina, South Carolina, and Tennessee. The company has two business segments—regulated utility and non-utility activities.
Its activities include retail natural gas marketing, regulated interstate natural gas transportation, and storage and regulated intrastate natural gas transportation.
The company’s sales to the residential, commercial, industrial, and secondary market customers contributed to 46%, 26%, 15%, and 12% of its 2013 revenues, respectively.
Revenues in 2013 increased by ~14% from 2012 as a result of higher consumption of natural gas in the colder weather, growth in customer base, and passing of the cost to the wholesale customers. In 2012, revenues decreased by 21% due to lower consumption of natural gas as a result of warmer weather and lower pass-through of costs to the customers.
Operating income before depreciation and amortization increased 12% in 2013 after declining by ~7% on 2012. Margins improved in 2013 as a result of higher volume in the residential, commercial, and industrial customers and higher rate charge following the general rate increase in Tennessee.
Operating cash flows
Operating cash flows didn’t change much in 2012 and 2013. They decreased and then increased by ~2%, respectively.
Capital expenditure (or capex) increased 13% in 2013, after it more than doubled in 2012 over the previous year. In 2013, spending on capital increased on account of “system integrity projects,” while in 2012, the company spent a lump sum $529 million, primarily on the construction of power generation service delivery projects.
Long-term debt of PNY has increased steadily over the past two years. In 2013, long-term debt increased 20% following a $300 million senior notes issuance to finance capex and to repay outstanding debts. In 2012, long-term debt increase 44% as the company issued $400 million new senior notes to repay short-term debt that was previously issued to fund capex programs.
Key stocks and exchange-traded funds (or ETFs)
Other energy services companies that would benefit from increased use of CNG include Clean Energy Fuels Corp. (CLNE), AGL Resources Inc. (GAS), and Atmos Energy Corporation (or ATO). Some of these are components of the Utilities Select Sector SPDR (XLU) and the SPDR S&P 500 (SPY).