atmos enerrgy 120705pres

1

1

Forward Looking Statements

The matters discussed or incorporated by reference in this presentation may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this presentation are forward-looking statements made in good faith by the Company and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. When used in this presentation or in any of the Company’s other documents or oral presentations, the words “anticipate,” “believes,” “estimate,” “expect,” “forecast,” “goal,” “intends,” “objective,” “plans” “projection,” “seek,” “strategy” or similar words are intended to identify forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in this presentation, including the Company’s acquisition of the operations of TXU Gas, the Company’s ability to continue to access the capital markets and the other factors discussed in the Company’s SEC filings. These factors include the risks and uncertainties discussed in the Company’s Form 10-K for the fiscal year ended September 30, 2005. Although the Company believes these forward-looking statements to be reasonable, there can be no assurance that they will approximate actual experience or that the expectations derived from them will be realized. The Company undertakes no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

2

Management Participants

Robert W. Best - Chairman, President & CEO

J. Patrick Reddy - Senior VP & CFO

R. Earl Fischer - Senior VP, Utility Operations

JD Woodward - Senior VP, Nonutility Operations

Mark H. Johnson – VP, Nonutility Operations

Laurie M. Sherwood - VP, Corporate Development,and Treasurer

Susan C. Kappes - VP, Investor Relations

3

Atmos Energy Today

Robert W. BestChairman, President & CEO

4

Overview

Company Profile

The nation’s largest pure-gas distribution companySolid financial foundationTrack record of creating shareholder value• Consistent earnings growth• 22 consecutive years of increasing dividends

Focused strategy over time• Maximize core natural gas utility earnings capability• Complement core utility business through select

nonutility operations• Grow through prudent acquisitions

5

OverviewScope of Operations

• Utility operates in 12 states (yellow)• Nonutility operates in 22 states (grey)

6

3.16

2.30

2.00

1.68

0.99 0.96

0.63 0.600.46

0.31

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

ATO ATG OKE SWX WGL PNY LG NWN NJR SJI

Overview

Largest Pure-Play LDC Based on Customers

(customers in millions)

7

17.4%

15.8%16.4%

14.5%

15.5%15.9%

10.0%

12.0%

14.0%

16.0%

18.0%

2001 2002 2003 2004 2005 5 Yr Avg

Overview

Return on Invested Capital (ROIC*) Remains Strong

*ROIC - Return on invested capital is calculated using the following GAAP financial measures: Income before interest expense and income taxes plus common stock dividends paid, divided by the average of the year’s beginning and ending long-term debt plus common equity. This measure is used to more precisely evaluate operational performance and management effectiveness.

8

Overview

Times Interest Earned Ratios*

2.83

2.552.75

3.05

2.592.76

1.5

2.0

2.5

3.0

3.5

2001 2002 2003 2004 2005 2006E*The times interest earned ratio measures the ability to satisfy annual interest costs

9

Overview

Weighted Average Cost of Debt Remains Low

7.46.9

6.46.0

5.6 5.7

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2001 2002 2003 2004 2005 2006E

Perc

ent

10

Overview

Total Return to Shareholders is Competitive

Five year total return 9/30/00 – 9/30/05

Source: Bloomberg

12.3%

17.2%

29.4%

38.7%

51.6%

0%

10%

20%

30%

40%

50%

60%

S&P 500

Atmos Energy

S&P 600 Gas Utils

S&P 500 Utils

Dow Jones Utils(7.2%)

(1.9%)

31.5%

75.5%

107.9%

-15%

10%

35%

60%

85%

110%

S&P 500

S&P 500 Utils

Dow Jones Utils

Atmos Energy

S&P 600 Gas Utils

One year total return 9/30/04 – 9/30/05

11

Earnings Per Share Compared to Company Guidance Reflects Management’s Commitment to Shareholders

1.721.58

1.451.54

$0.50

$0.75

$1.00

$1.25

$1.50

$1.75

$2.00

2002 2003 2004 2005 2006E

$ pe

r sha

reOverview

$1.43-$1.60$1.52-$1.58 $1.55-$1.60

$1.65-$1.75

$1.80-$1.90

12

Overview

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

'84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06E

Annual Dividend for the Years 1984 – 2006E

Note: Amounts are adjusted for mergers and acquisitions. For fiscal 2006, $1.26 is the indicated annual dividend.

$1.26

13

Overview

Dividend Payout Continues to Improve

81%

78% 77%

72%

79%

68% E1.16 1.18 1.20 1.22

1.26E

1.24

60%

65%

70%

75%

80%

85%

2001 2002 2003 2004 2005 2006E$1.00

$1.10

$1.20

$1.30

$1.40

$1.50

Payout Dividend / Share

Current Indicated Dividend Yield Approximately 4.7%Average LDC Payout Ratio = 65%

14

Kentucky: 5.4%

Pipeline & Storage: 20.2%Mid-Tex: 24.5%

Colorado-Kansas: 7.2%

Marketing: 11.8%

West Texas: 8.0%

Mississippi: 5.5%

Mid-States: 10.3%

Louisiana: 7.1%

Overview

Diversified Operating Base – Geographically and Operationally

Fiscal 2005 Operating Income: $349 MM

Residential 39.4%

Commercial 22.5%

Transportation 27.9%

Irrigation 0.8%

Public Authority & Other 2.2%

Industrial 7.2%

Fiscal 2005 Utility Throughput by

Customer Type: 411 Bcf

15

Overview

Rate Design Issues

• Seek weather normalization in key jurisdictions• Shift more revenue from the commodity charge to base rates• Seek mechanism to mitigate declining use per customer• Recover the gas cost portion of bad debt expense

Regulatory Lag Issues

• Shift capital spending to jurisdictions with more timely recovery (short-term)

• Seek mechanisms in remaining jurisdictions to reduce regulatory lag on recovering capital expenditures (long-term)

• File rate cases to maintain actual returns close to allowed returns

Regulatory Strategy Remains Key Focus

16

18.6

16.2

6.3

15.0-25.0

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

2003 2004 2005 2006-2010E

($ in Millions)

Overview

Average Annual Rate Increases in the Utility Segment

17

Overview

Atmos Utility Gross Profit per Meter

271

293299

287

305-310

$240$250$260$270$280$290$300$310$320

2002 2003 2004 2005 2006E6%

warmer1%

colder4%

warmer11%

warmerAssumes

Normal Weather

$ pe

r met

er

18

$110

$209

$0

$50

$100

$150

$200

$250

Atmos Energy Peer Group Avg.

Note: Results are based on fiscal 2005 performance for Atmos and most recent information available for the peer group. Companies in the peer group include AGL Resources, KeySpan, Laclede, New Jersey Resources, Nisource, Northwest Natural Gas, Oneok, Piedmont Natural Gas, Southwest Gas and WGL Holdings.

Overview

Impressive Utility Efficiency Metrics vs. Peers

2005 Utility O&M Expense Per Customer

730

511

0

200

400

600

800

Atmos Energy Peer Group Avg.

Customers Served per Utility Employee

19

Gas MarketingUtilizes storage and transportation assets that are leased or managed to:

• provide bundled city gate services (including base load sales, peaking sales, risk management and demand based storage services), to municipal, industrial, power generator, LDC and affiliate utility customers and

• capture time and location price differentials (arbitrage) through various trading strategies

Pipeline & StorageOwns or leases storage and pipeline assets in Texas, Kentucky and Louisiana that are utilized to provide storage and transportation services to municipal, industrial, power generator and affiliate utility customers

Includes recently acquired pipeline and storage assets from TXU Gas (6,162 miles of intrastate pipelines and 5 storage facilities). Effective 10/1/04, these pipeline operations are functionally reporting under the nonutility businesses

Other NonutilityProvides gas supply services to Atmos utility divisions and peaking power construction services

Overview

Nonutility Business Segments Complement Atmos Energy

20

Overview

86%

6%

(1)%

9%

73%

5%

19%3%

60%

17%

23%

65%

14%

21%

-5%

15%

35%

55%

75%

95%

2003 2004 2005 2006E

Pipeline & StorageNatural Gas MarketingOther NonutilityUtility

Historical and Estimated Net Income Contribution by Segment

Perc

ent

21

1986 - Trans Louisiana Gas Company

1987 - Western Kentucky Gas Company

1993 - Greeley Gas Company

1997 - United Cities Gas Company

2000 - Associated Natural Gas Company (Missouri Assets)2000 - Acquired interest in Heritage Propane Partners

(sold in Fiscal 2004)

2001 - Acquisition of remaining interest in Woodward Marketing

2001 - Louisiana Gas Service and LGSN

2002 - Mississippi Valley Gas Company

2004 – TXU Gas Company

Successful Acquisition History

Overview

22

Cash price of $1.9 billion• 26 million common shares

issued @ $24.75• $1.4 billion senior unsecured

notes – initial weighted average interest rate of 4.76%

LDC Operations• Mid-Tex Division serves about

1.5 million customers, 92% residential

• Annual customer growth of 2%• Over 550 municipalities served

Pipeline Operations• Atmos Pipeline-Texas Division• 1,800 miles of backbone

intrastate pipeline• Integrated with LDC• Working storage capacity of

39 Bcf

Overview

West Texas Division

Mid-Tex Division

Atmos Pipeline-TexasAtmos Energy Headquarters

Acquisition of TXU Gas Provided Scale and Scope in Texas

23

17%83%

13% 19%

68%

2004 - $194 MM

69%

16%15%

2006E - $373 - $387 MM

Regulated LDCRegulated PipelineNon-Regulated

Growth Through Acquisitions

Increasing Regulated Operations – Operating Income Mix

2005 - $349 MM

24

YesMeeting Our Objectives -Could We:

In progress8. Continue to grow earnings in the 4-6% range?

In progress 7. Reduce debt as a percent of capital in 3-5 years?

In progress6. Achieve better rate design on these assets?

5. Take advantage of the pipeline opportunities?

4. Operate the new business more efficiently than the prior owner?

3. Integrate the new business within one year?

2. Fund the acquisition without pressuring the stock price or losing our investment grade credit ratings?

1. Close the TXU Gas acquisition in three months?

Overview

2005 Scorecard

25

86.2

135.8

$50.0

$100.0

$150.0

2004 2005

Fiscal 2005 Net Income and EPS Experienced Substantial Increases

Overview

Net Income ($ millions)

1.58

1.72

$1.00

$1.20

$1.40

$1.60

$1.80

2004 2005

Diluted Earnings Per Share

Net income reached a record level in 200524.6 million increase in weighted average outstanding shares year over year – primarilyto help fund the TXU Gas transaction

57%

9%

26

Financial Outlook

J. Patrick ReddySenior VP and Chief Financial Officer

27

Atmos Energy Holdings, Inc.(Nonutility Businesses)


KentuckyKentucky

Atmos Energy Corporation(Natural Gas Utility Divisions)


West TexasWest Texas

Colorado-KansasColorado-Kansas

LouisianaLouisiana

Mid-StatesMid-States

Mid-Tex *Mid-Tex *

MississippiMississippi

Atmos Energy Marketing• Storage (Trading)• Transportation (Marketing)


Atmos Pipeline & Storage• Atmos Pipeline-Texas• Non-Texas Assets


Other Nonutility• Atmos Energy Services• Atmos Power Systems


* Effective 10/1/04, includes LDC and pipeline operations of former TXU Gas. Pipeline operations have functionally reported under the nonutility businesses beginning in Fiscal 2005.

Maximizing Core Utility Earnings

28

Favorable rate stabilization results in Mississippi effective 10/1/05• Establishes an earnings sharing mechanism• Provides calculated ROE plus performance adjuster, currently 9.8%• Shifts $10 million in annual margins from volumetric to customer charge• Adds about 4% more heating degree days to the WNA period• Reduces regulatory lag

Increased rates requested in Georgia• Filed for revenue increase of $4 million and rate design enhancements• Order was disappointing; currently reviewing options for “next steps”

Productive GRIP filings in the state of Texas• 2003 expenditure filings concluded; total of $8.5 million implemented in

Mid-Tex and Atmos Pipeline-Texas rates, with $6.7 million rate increase effective October 2005

• 2004 expenditure filings ongoing; expect approximately $12.5 million to be implemented in rates in first quarter of calendar 2006

o Results from Grip filings made on behalf of Mid-Tex and Atmos Pipeline-Texas Divisions, and West Texas and Lubbock jurisdictions

2005 Regulatory Activity Drives Top Line Revenue Stream for Fiscal 2006


29

Earnings Grow Despite Warmer Weather

2,587

3,4733,368

4,124

$1.00

$1.15

$1.30

$1.45

$1.60

$1.75

$1.90

2001 2002 2003 2004 20052,000

2,500

3,000

3,500

4,000

EPS Degree Days*

$1.45$1.54

$1.58$1.72

* Adjusted for WNA

$1.47


3,271

30

(25)

(20)

(15)

(10)

(5)

0MS CO / K

SMid-States

Kentucky

W. Texas

Louisiana

Mid-TexConsolidated

Actual / Normal Adjusted for WNA

Warmer Than Normal Weather is the Biggest Regulatory Challenge

22%

11%

20%

14%

% W

arm

er th

an N

orm

alMaximizing Core Utility Earnings

Fiscal 2005 Impact:

11 percent warmer than normal on a consolidated basis

Cost 29 cents per diluted share in fiscal 2005

Largest exposure is in Mid-Tex Division

31

36%51%

13%

2003–2004 Heating Season

Weather Normalized

Weather-Sensitive Margin

Nonweather-Sensitive Margin

48%35%

17%

2004–2006EHeating Seasons


Utility Margin Sensitivity Increased with TXU Gas Acquisition

32($.16)

($.12)

($.09)

($.05)

($0.16)

($0.14)

($0.12)

($0.10)

($0.08)

($0.06)

($0.04)

($0.02)

$0.005% 10% 15% 20%

Mid-Tex Division Earnings Impact of Warmer Than Normal Weather

Percent Warmer than Normal

Maximizing Core Utility EarningsEP

S Im

pact

33

Ongoing discussions with the Louisiana Commission and staff for recovery of incremental O&M, lost gas and lost marginsTotal property damage and expenses estimated between $13 million and $15 million

• Property Related:o $10.6 million damage to distribution systemso $ 0.5 million damage to 3 buildings and equipment

• $ 1.8 million of lost gas (144,000 Mcf)• $ 1.5 million of incremental O&M related costs, included in fiscal 2005 results

Property Insurance Coverage• Self-insured for $1 million, included in fiscal 2005 results• Damage from $1.0 to $5.0 million - coverage with third-party provider• Damage greater than $5.0 million – coverage through OIL

Fiscal 2006 Guidance assumes lost margin between $10 million and $12 million

• Approximately 230,000 Louisiana customers affected by Hurricane Katrina • Estimate 40,000 customers semi-permanently lost (> 9 mos. to restore service,

if at all)We fully expect recovery for these losses. However, we are unsure of the timing and therefore, have conservatively assumed no recovery in our fiscal 2006 guidance.

Hurricane Katrina Rate Relief


34


Gas Supply Hedging for Winter 2005-2006

Market 54%

Storage 22%

Hedged 24%

53.7 Bcf

47.6 Bcf

116.8 Bcf

Hedging gas supply reduces effect of high gas prices

Customers pay a blended rate for gas

Provides some protection to Atmos’ customer receivables and working capital requirements

35

Nov-05Dec-05

Jan-06Feb-06

Mar-060.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

Nov-05Dec-05

Jan-06Feb-06

Mar-06

Storage

Futures

Fixed Forwards

$10.74 Weighted Average Cost of Futures and Fixed Forwards$ 7.17 Weighted Average Cost of Storage$ 9.11 Weighted Average Blended Cost of GasHedges Plus Storage = Approximately 46% of Winter Requirements

Bill

ion

Cub

ic F

eet

(Bcf

)Maximizing Core Utility EarningsGas Supply Hedging for Winter 2005-2006

36

1.86

0.0

0.83

0.29

0.58 0.64

0.0

0.5

1.0

1.5

2.0

2001 2002 2003 2004 2005 2006E

Perc

ent


Utility Bad Debt Expense as a % of Revenues Well Below Industry Average

2006 estimated bad debt expense is $20 million

Reserve of $10 million was established as of September 30, 2005, with accruals throughout fiscal 2006

37

(in millions)

4.7

12.8

16.8

10.0

9.5

13.8

22.2

8.9

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

2005 2006E

OtherMedical & DentalPost-retirementPension

$54.4

$44.3

2006 Assumptions8.50% return on plan assets5.00% discount rate4.00% wage increase

Managing Pension, Post-Retirement & Other Benefits Expense


38

$0

$50

$100

$150

$200

$250

2001 2002 2003 2004 2005 2006E

Cap

ital E

xpen

ditu

res

$0

$50

$100

$150

$200

$250

Dep

reci

atio

n Ex

pens

e

Non-Growth Growth Depreciation


Managing Capital Expenditures at the Utility($ in millions)

$90-94

$183-189

$174$52

39



KentuckyKentucky





LouisianaLouisiana


Mid-Tex *Mid-Tex *









Nonutility Operations

40

Storage Assets

• Optimize Value(trading to capture

time and location price differentials)

Transportation Assets• Support Customer Marketing

(optimize value of capacity)

Asset Management

• Customer obligation

• Partial optionality

Proprietary

• No customer obligation

• 100% optionality

Customer Sales• Base-load• Peaking• Balancing

The portfolio of assets that AEM manages is either acquired, leased or results from various asset management transactions with 3rd parties. Also, transportation and storage assets are contracted for (proprietary). These assets are utilized to capture value and create commercial opportunities.

Atmos Energy Marketing

Proprietary

• No customer obligation

• 100% optionality

Asset Management

• Customer obligation

• Partial optionality

Customer Sales• Full Requirements• Billable Plan• Other

Business Model

41

Cash Market to prompt (arbitrage opportunity)

Cash Market = $8.00 / dthPrompt futures = $8.40 / dth

AEM buys physical at $8.00 and injects in storageAEM sells prompt futures at $8.40 / dth

Spread captured $ 0.40 / dthLess: Injection & Storage fees (0.20) / dtUnit Margin $ 0.20 / dth

StorageCapture arbitrage spreads with storage

Cash market vs. prompt futures

Prompt futures vs. forward futures

Balance of month cash vs. prompt month futures

Transportation Capture arbitrage spreads on pipeline grid

Excess transport capacityPipeline segmentation

Transportation Capture arbitrage spreads on pipeline grid

Excess transport capacityPipeline segmentation

Example:

Trading Arbitrage Opportunities (Storage and Transportation)

Trading ParametersRun flat bookNo speculative trading


42

Margin Composition


Marketing

(Bundled gas deliveries &peaking sales)

Marketing

(Bundled gas deliveries &peaking sales)

Trading

(Storage & transportationmanagement)

Trading

(Storage & transportationmanagement)

Total AEMMarginsTotal AEMMargins

Impacted by customer volume demand Sales prices are:

• Cost plus profit margin• Cost plus demand charges

Margins: More predictable

Impacted by gas price spread values in the market (arbitrage opportunity)Physical storage capabilitiesAvailable storage and transport capacity Margins: More variable

Total margins reflect:Stability from marketing margins Upside from trading around storage and transportation assets to capture arbitrage value

Margins: Stable with potential upside

2006E

$40- $42 Million

$12 - $26 Million

$52 - $68 Million

=

43



KentuckyKentucky





LouisianaLouisiana


Mid-Tex *Mid-Tex *









Nonutility Operations

44

Atmos Pipeline & Storage

Storage AssetsEast Diamond Reservoir2.2 bcf of storage in KY

Barnsley Reservoir 1.3 Bcf of storage in KY

25 % interest in Napoleonville0.4 Bcf of Salt storage in LA

5 Storage Fields in Texas39 Bcf of storage

Atmos Pipeline & Storage

Pipeline AssetsAtmos Pipeline –Texas6,162 miles of intrastate pipein Texas

Trans LA Gas Pipeline21 miles of 24” pipe in Louisiana

Ownership of Strategic Asset Base Provides Revenue Growth & Stability

Upstream pipeline services and storage-type services provided to Atmos Energy’s Mid-Tex Division, affiliates & third parties

45

Asset Description

Pipeline transports and stores gas, as well as provides other pipeline services for distribution, industrial, electric generation, cross haul and other shippers

• Approximately 6,162 miles of intrastate pipelineo Total projected transportation volume is approximately 591 Bcf

o Current average volume of approximately 1.6 Bcf/d.

o Demonstrated peak day deliveries of 3.5 Bcf/d

• The Dallas / Fort Worth Metroplex comprises approximately 75% of on-system distribution demand

Five Storage facilities (One salt cavern; four depleted reservoirs)• Working Gas Capacity: 39 Bcf• Maximum withdrawal: 1.2 Bcf/d• Maximum Injection: 270 MMcf/d

Atmos Pipeline - Texas

46

$15.0 million----

$13.7 million$1.3 millionKaty Capacity

Expansion/ Compression

----------------Devon Line/

Corridor Compression

$13.0 million

---

$13.0 million

2005

GRIP Filings *

$6.9 million

$4.0 million

$1.6 million

Actual2005

CAPEX

$73.1 million

$16.0 million

$43.4 million

Estimated 2006

$67.0 million

$20.0 million

$32.0 million

2006 Northside Loop JV with Energy

Transfer

Total:

Enbridge Line/Corridor Compression

Project

Project Update

Estimated total annual revenues are $15.0 million; of which $6.7 million are expected to occur in fiscal 2006.* Capital expenditures on a calendar year basis are Included in GRIP filings when the asset is operational


47

Financial Outlook - Nonutility OperationsNet Income by Nonutility Segment

2006E$51 - $58 million

2005$55 million

AEM AP&S Other AEM AP&S Other

$19-$24

$31-$32

$1-$2

$23

$31

$1

48

Atmos Energy expects earnings to be in the range of $1.80 - $1.90 per fully diluted share for the 2006 fiscal year

Base assumptions include:• Normal weather conditions in non-WNA jurisdictions• Continued execution of rate strategy and collections efforts• Irrigation volumes of 4.0 Bcf• Not less than $11.7 million of storage margin contribution• No material acquisitions• Average short-term interest rate @ 4.5 %• Bad debt expense of no more than $20 million• Adverse impact of Hurricane Katrina on margin between $10

million and $12 million

Financial Outlook – Consolidated

Earnings Guidance – 2006 Fiscal Year

49

56334768

140

603559

82

158

724264

87

205

86

5265

97

215

136

82

133

178

428

148-156

90-95

137-138

192-198

443-450

0

200

400

600

800

1000

1200

20012002

20032004

20052006E

Selected Income Statement Components($ in millions)

D & A $192 - $198Interest $137 - $138Income Tax $90 - $95Net Income $148 - $156

O & M $443 - $450

2006E Consolidated($ millions)

Financial Outlook - Consolidated

50

Net Income by Segment

UtilityNatural Gas Marketing Pipeline & StorageOtherTotalAvg. Diluted SharesEarnings Per Share

2005

$ 8123311

13679.0

$ 1.72

($ millions, except EPS)

2004

$ 631733

8654.4

$ 1.58


$ 97 - 9819 - 2431 - 32

1 - 2148 - 156

82.0$1.80 - $1.90

2006E2003

$ 62(1)

74

7246.5

$ 1.54

51

90

211

90-94

183-189

$0

$50

$100

$150

$200

$250

$300

$350

2005 2006E MaintenanceGrowth


Capital Expenditures – 2006 Fiscal Year

Utility CAPEX(in millions)

725

90-93

37-39

$0$20$40

$60$80

$100

$120$140

2005 2006E

Pipeline & Storage CAPEX (in millions)

Consolidated fiscal 2006 CAPEX projection is $400-$415 million

$301 $273-$283 $127-$132

$32

52

Cash flows from operationsMaintenance/Non-growth capital Dividend

Cash available for debt reductionand growth projects

2003 2005

$ 49(110)

(55)

$ (116)

$ 387 (243)

(99)

$ 45

2004

$ 271(126)

(67)

$ 78

Cash Flow($ millions)


Note: The company issued approximately $2.0 billion in debt and equity in 2004. Net cash proceeds exceeded the TXU Gas purchase price by approximately $56 million (after $43 million related to Treasury lock obligations) in anticipation of funding significant and attractive growth projects.

2006E

$ 393 - 403 (220 - 228)

(103)

$ 70 - 72

53

267149 574

214

505

156529

505

$0

$200

$400

$600

$800

$1,000

$1,200

2003 2004 2005 2006E

Atmos Energy Corp. Atmos Energy Holdings

Net Liquidity Position Is Solid With Existing Credit Lines*

1,034

416

786661

$ m

illio

nsFinancial Outlook - Consolidated

* Subject to internal borrowing strategy and collateral limitations primarily at AEH

54

Investment Grade Credit Ratings

Moody’s RatingSenior Unsecured Debt: Baa3Commercial Paper: P-3Outlook: stable

Standard & Poor’sSenior Unsecured Debt: BBBCommercial Paper: A-2Outlook: stable

FitchSenior Unsecured Debt: BBB+Commercial Paper: F-2Outlook: negative

Financing Activities

55

Summary

18.1

14.913.8

8.0

12.0

16.0

20.0

S&P 500 Peer GroupAvg.

AtmosEnergy

Compelling Valuation

4.7

5.9

3.0

6.0

9.0

12.0

Peer GroupAvg.

AtmosEnergy

S&P 500

Forward P/E Estimates 5 Year Growth Estimates

Companies in the peer group include AGL Resources, KeySpan, Laclede, New Jersey Resources, Nisource, Northwest Natural Gas, Oneok, Piedmont Natural Gas, Southwest Gas and WGL Holdings.

12.4

Source: Bloomberg

56

Summary

Company Profile

The nation’s largest pure-gas distribution companySolid financial foundationTrack record of creating shareholder value• Consistent earnings growth• 22 consecutive years of increasing dividends

Focused strategy over time• Maximize core natural gas utility earnings capability• Complement core utility business through select

nonutility operations• Grow through prudent acquisitions

57

Appendix

58

11.3

10.5-11.5 10.1

11.611.0

12.2

9.5-10.5

10.0 9.8

12.0

11.3

10.5

5.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

13.0

CO LA GA IL IA MO VA

Mid-TX/PL MS

Amarillo

LubbockW. T

X

Perc

ent

Authorized Regulatory Returns

Authorized Regulatory Return on Equity (ROE) by Division *

Consolidated GAAP Average ROE at 9/30/05 was 9.0%

* ROE not stated in state commission’s decision in Kansas, Kentucky and Tennessee

59

Storage Trading Margin - Economic Value vs. GAAP Reported Results

Atmos Energy Marketing - Storage

Reported GAAPValue

- Physical and FinancialPositions

($14.8 MM)

Reported GAAPValue


($14.8 MM)

Economic Value*(Commercial Value)(Embedded Value)


$13.1 MMStorage

Trading Margin

Embedded margindifference

$27.9 MM * Realizing Economic Value is dependent on ability toexecute – deliver physical gas & close financial hedges

At September 30, 2005

60


We commercially manage our storage assets by capturing arbitrage value through optimization strategies that create embedded (forward) value in the portfolio. We financially report the transactions for external reporting purposes in accordance with GAAP.

GAAP Reported Value is the period to period net change in fair value of the portfolio reported in the income statement that results from the process of marking to market the physical storage volumes and corresponding financial instruments in an interim period.

Economic Value is the period to period forward margin of our storage portfolio that results from the process of calculating our weighted average cost of inventory (WACOG), and our weighted average sales price of our forward financials (WASP), then multiplying the difference times inventory volumes. This margin will be realized in cash when the hedged transaction is executed or when financials are settled and then reset to stay hedged against physical volumes.

Economic Value represents the “forward” economic margin of the transactions, while GAAP reported results reflect that portion of our “forward” margin that has been recorded in the income statement. Volatility in earnings includes the impact of the accounting treatment of our storage portfolio and is reflective of relatively high price volatility of the prompt month, and the relatively low volatility of the offsetting forward months.

Trading Margin Description

61

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

$16.0

Sep-04Dec-04

Mar-05Jun-05

Sep-05

($ in

Mill

ions

)

$.25 Price Move $.50 Price Move $1 Price Move

Storage Volumes:


Storage Margin Volatility (Potential Impact of Change in GAAP Reported Spread Values)

Sep-04 Dec-04 Mar-05 Jun-05 Sep-05BCF 5.5 6.4 12.5 14.7 6.9

62


Natural Gas Marketing Segment 2005 2004 Change

Storage Activities Realized margin $28,008 ($1,900) $29,908

Unrealized margin (14,007) 357 (14,364)Total Storage Activities 14,001 (1,543) 15,544

Marketing Activities Realized margin 59,971 51,347 8,624

Unrealized margin (11,999) (3,173) (8,826)Total Marketing Activities 47,972 48,174 (202)

GROSS PROFIT $61,973 $46,631 $15,342

Ending storage balance (Bcf) 6.9 5.5 1.4

Year Ended September 30

(In thousands, except storage balances)

63


64


Northside Loop Agreement – Energy TransferJoint Venture with Energy Transfer Fuel to construct and operate approximately 45 miles of 30" pipeline extending from Justin to Frisco, in the northern part of the DFW Metroplex, creating incremental capacity of 225 MMcf/d. Initial investment approximately $45 million, contributed over a two-year period with final Atmos contribution made in April 2006 Justin to Line F segment expected in-service by end of December 2005, remaining segment by February 2006Compression is ordered and anticipated to be in-service by March 2006CAPEX: approximately $1.6 million in fiscal 2005; $43.4 million in fiscal 2006

Enbridge - Line (Corridor Compression Project)Executed agreement in May 2005 to install compression to enhance re-injection capabilities at Bethel and to transport up to 100 MMcf/d into Enbridge’s new 36” Carthage pipeline at Bethel. Start date anticipated early-2006CAPEX: approximately $4 million in fiscal 2005; $16 million in fiscal 2006. GRIP eligible in calendar 2006 filing when the line becomes operational

Devon – Line (Corridor Compression Project)Executed agreement in July 2005 to transport up to 50 MMcf/d into Enbridge. Start date anticipated early-2006

Katy Capacity Expansion (Compression Project)Signed agreements in July 2005 with 3 shippers to transport an additional 50 MMcf/d of capacity to the Katy area. Project is expected to come online in June 2006CAPEX: approximately $1.3 million in fiscal 2005 and $13.7 million fiscal 2006.

Project Update

65

Atmos Pipeline-Texas Project Map

North SideLoop

EnbridgeCompression

66

Metropolitan New Orleans AreaTLGP Transmission / TLGP Sales Points

Metropolitan New Orleans AreaTLGP Transmission / TLGP Sales Points

St. Cha

rles P

arish

Jeffe

rson

Par

ish

Orle

ans

Par

ish

N

S

EW

October 26, 2001

TLGP 24”

Bridgeline Gas(Paradis)

S39,T14S,R20E

Bridgeline Gas(Paradis)

S39,T14S,R20EFuture Interconnect

Columbia GulfFuture Interconnect

Columbia Gulf

B’line 14”

Acadian Gas PipelineS48,T13S,R21E

Acadian Gas PipelineS48,T13S,R21E

Gulf South PipelineS48,T13S,R21E

Gulf South PipelineS48,T13S,R21E

TLGP 16”

AEL 18”

Entergy Louisiana(TLGP Sales)S5,T13S,R20E

Entergy Louisiana(TLGP Sales)S5,T13S,R20E

Atmos Energy LouisianaS5,T13S,R23E

Atmos Energy LouisianaS5,T13S,R23E

S24,T13S,R23E

21 Miles of 24” TLGP Pipe.95 Miles of 12” TLGP Pipe

Storage is held on upstream pipelines

• Bridgeline

• Acadian

• Gulf South

TLGP PipelineTLGP Pipeline

Trans Louisiana Gas Pipeline

Date post:	10-Jun-2015
Category:	Economy & Finance
Upload:	finance35
View:	311 times
Download:	1 times

atmos enerrgy 120705pres

Economy & Finance