EnergySouth, Inc. Reports Fiscal 2008 Third Quarter Earnings and Announces Declaration of Dividend

  
    
  
  
    
      EnergySouth, Inc. today reported earnings for the fiscal quarter ended 
      June 30, 2008 of $2,668,000, or $0.33 per diluted share, as compared to 
      net income for the quarter ended June 30, 2007 of $1,334,000, or $0.17 
      per diluted share. Net income for the nine month periods ended June 30, 
      2008 and 2007 was $13,027,000, or $1.59 per diluted share, and 
      $12,778,000, or $1.59 per diluted share, respectively. The increase in 
      earnings of $0.16 per diluted share for the three-month period was 
      primarily driven by the expansion of the Company’s 
      midstream operations.
    
    
      Earnings from the Company’s midstream 
      operations for the three months ended June 30, 2008 were $0.31 per 
      diluted share, an increase of $0.14 per diluted share as compared to the 
      same period last year. Earnings for the nine months ended June 30, 2008 
      were $0.53 per diluted share, a decrease of $0.04 per diluted share as 
      compared to the same period last year. Earnings for each of the three 
      and nine month periods include approximately $0.15 of net gains 
      associated with storage and transportation hedge positions that are 
      required to be marked-to-market. Approximately $0.09 of the $0.15 of net 
      gains is margin not subject to price risk. Earnings also increased for 
      the current year periods as a result of increased revenues associated 
      with the commencement of operations of a third storage cavern in 
      McIntosh, Alabama on April 1, 2008 and additional revenues from 
      short-term storage agreements. These increases were offset by increased 
      operating expenses incurred as a result of the continuing expansion of 
      the midstream operations. The Company acquired assets in Mississippi in 
      November 2007 and is currently developing storage caverns at that 
      location. During the nine months ended June 30, 2008, in addition to the 
      current development activities in Mississippi, expenses also increased 
      in anticipation of the third storage cavern in McIntosh, Alabama that 
      went into service on April 1, 2008 which increased the storage capacity 
      of that facility from 6.0 Bcf to 11.4 Bcf of working gas. Additional 
      compressors which serve the third cavern, as well as existing caverns, 
      went into service in December 2007. Since the compressors are eligible 
      for a fifty percent additional first year tax depreciation allowance 
      under the Gulf Opportunity Zone Act of 2005, the Company will realize 
      tax savings of approximately $4 million. As such, the Company incurred 
      additional net interest expense of $0.06 per diluted share in the 
      current year nine month period that was previously being capitalized and 
      additional depreciation expense of $0.02 per diluted share.
    
    
      Earnings from the Company’s natural gas 
      distribution business for the quarter ended June 30, 2008 were $0.01 per 
      diluted share, an increase of $0.01 per diluted share as compared to the 
      same prior-year period. Earnings for the nine months ended June 30, 2008 
      increased $0.05 per diluted share as compared to the same prior-year 
      period. The increase in earnings was driven primarily by a decline in 
      operating expenses during the current-year period. The decrease in 
      expenses for the nine month period ended June 30, 2008 was partially 
      offset by a decrease in margins, defined as revenues less cost of gas 
      and related taxes, due primarily to a decline in consumption by 
      temperature-sensitive customers.
    
    
      Earnings from other business operations were unchanged for the three 
      months ended June 30, 2008 and decreased $0.01 per diluted share for the 
      nine months ended June 30, 2008 when compared to the same prior-year 
      periods due primarily to a decrease in merchandise sales and related 
      merchandising activities.
    
    
      The Board of Directors of EnergySouth, Inc., at a meeting held July 25, 
      2008, declared a quarterly dividend on the outstanding Common Stock of 
      $0.26 per share, to be paid October 1, 2008 to holders of record as of 
      September 15, 2008.
    
    
      EnergySouth, Inc. is a holding company which has two principal 
      wholly-owned subsidiaries, Mobile Gas Service Corporation and 
      EnergySouth Midstream, Inc. The Company’s 
      natural gas distribution business is conducted by Mobile Gas, which 
      purchases, sells, and transports natural gas to residential, commercial, 
      and industrial customers in Mobile, Alabama and surrounding areas. 
      Mobile Gas also provides merchandise sales, service, and financing. The 
      Company’s natural gas midstream operations are 
      conducted by EnergySouth Midstream, which is the general partner and 
      90.9% owner of Bay Gas Storage Company, a limited partnership that 
      provides underground storage and delivery of natural gas. EnergySouth 
      Midstream also owns 60% of Mississippi Hub, LLC, a limited liability 
      company engaged in the construction and development of natural gas 
      storage caverns. EnergySouth Services, Inc. is a wholly-owned subsidiary 
      of EnergySouth Midstream engaged in natural gas marketing, trading and 
      risk management activities, and is the general partner and 51% owner of 
      Southern Gas Transmission Company, which is engaged in the intrastate 
      transportation of natural gas.
    
    
      
        
           
        
      
      
        
          ENERGYSOUTH, INC.
        
      
      
        
          FINANCIAL RESULTS
        
      
      
        
          (in thousands, except per share data)
        
      
      
        
        
        
           
        
        
           
        
        
        
        
           
        
        
           
        
        
        
      
      
        
          Three months ended June 30,
        
        
        
        
        
        
          2008
        
        
        
        
        
        
          2007
        
      
      
        
          Operating Revenues
        
        
        
        
        
        
          $
        
        
           
        
        
          32,356
        
        
        
        
        
        
          $
        
        
           
        
        
          23,745
        
      
      
        
          Operating Expenses
        
        
        
        
        
        
          $
        
        
        
        
          25,971
        
        
        
        
        
        
          $
        
        
        
        
          20,305
        
      
      
        
          Net Income
        
        
        
        
        
        
          $
        
        
        
        
          2,668
        
        
        
        
        
        
          $
        
        
        
        
          1,334
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Basic Earnings Per Common Share
        
        
        
        
        
        
          $
        
        
        
        
          0.33
        
        
        
        
        
        
          $
        
        
        
        
          0.17
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Diluted Earnings Per Common Share
        
        
        
        
        
        
          $
        
        
        
        
          0.33
        
        
        
        
        
        
          $
        
        
        
        
          0.17
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Nine months ended June 30,
        
        
        
        
        
        
          2008
        
        
        
        
        
        
          2007
        
      
      
        
          Operating Revenues
        
        
        
        
        
        
          $
        
        
        
        
          115,599
        
        
        
        
        
        
          $
        
        
        
        
          109,335
        
      
      
        
          Operating Expenses
        
        
        
        
        
        
          $
        
        
        
        
          89,236
        
        
        
        
        
        
          $
        
        
        
        
          84,408
        
      
      
        
          Net Income
        
        
        
        
        
        
          $
        
        
        
        
          13,027
        
        
        
        
        
        
          $
        
        
        
        
          12,778
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Basic Earnings Per Common Share
        
        
        
        
        
        
          $
        
        
        
        
          1.61
        
        
        
        
        
        
          $
        
        
        
        
          1.60
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Diluted Earnings Per Common Share
        
        
        
        
        
        
          $
        
        
        
        
          1.59
        
        
        
        
        
        
          $
        
        
        
        
          1.59