AGL Resources Inc. Reports First Quarter Results

ATLANTA, Feb. 5 -- AGL Resources Inc. (NYSE: ATG - news) today reported financial results for fiscal 1999's first quarter, which ended December 31, 1998. Consolidated net income was $15.9 million, or 28 cents per share, compared with $25.7 million, or 45 cents per share, from a year ago.

The primary factor in the lower results was a loss from the company's natural gas marketing joint venture with Sonat Inc. AGL Resources reported a net loss of $4.1 million for its 35-percent share of the joint venture compared with earnings of $2.1 million for the first quarter of last year. Those results account for 11 cents of the decrease in AGL Resources' earnings per share compared with last year.

As reported last week by Sonat Inc., the loss from the joint venture primarily was from nonrecurring charges taken when accounts were reconciled with various gas pipelines, storage facilities, and customers. Warm weather during the quarter also adversely affected the joint venture's profitability.

Walter M. Higgins, president and chief executive officer, commented, ``We were very disappointed with the results of the natural gas marketing joint venture with Sonat. Excluding those results, however, we were on track to meet financial community expectations for our operations during this period of transition to competition in Georgia's natural gas markets. We are evaluating whether to continue our investment in the energy marketing joint venture with Sonat. Our joint venture agreement provides an option to exit the business on favorable terms.''

The company also reported lower operating revenues and operating margin for the quarter. Operating revenues were down primarily because of weather that was 44 percent warmer than the prior year. Revenues for the first quarter were $323.9 million compared with $399.1 million, and operating margin was $136.9 million, down from $145.1 million, for the year-ago quarter.

As expected, operating margin was down due to the July 1, 1998 change in rate design for delivery service for Atlanta Gas Light Company's Georgia operations. Rather than being collected predominately in the winter months, as occurred under the prior rate design, the new rate design collects revenues for delivery service more evenly throughout the year. Although there is a shift of delivery service revenues among quarters, the new rate design will not affect the annual base revenue stream. The new rate design also matches much more closely the collection of revenues from utility customers with the cost of delivery service incurred by the utility.

Dividend Declared

The board of directors today declared a quarterly cash dividend on its common stock of 27 cents per share. Payment will be made on March 1, 1999, to shareholders of record on February 15, 1999.

The dividend, which remains unchanged from the previous quarter, equates to $1.08 per share on an annualized basis. The March dividend will be the 205th consecutive dividend paid.

AGL Resources Inc. is a regional energy holding company with operations in the Southeast. Atlanta Gas Light Company, the largest natural gas distributor in the Southeast and the company's primary subsidiary, serves nearly 1.5 million customers in Georgia and, through Chattanooga Gas Company, in southern Tennessee. Although natural gas distribution is AGL Resources' core business, it also is engaged in other energy-related businesses, including natural gas and power marketing, wholesale and retail propane sales, and nonutility products and services for residential, commercial, and industrial customers.

The company's home page address on the Internet is www.aglresources.com.

This press release contains forward-looking statements. AGL Resources wishes to caution readers that the assumptions, which form the basis for the forward-looking statements, include many factors that are beyond AGL Resources' ability to control or estimate precisely. Those factors include, but are not limited to, the following: changes in the price and demand for natural gas; the impact of changes in state and federal legislation and regulation on the company and the natural gas industry; the effects of competition, particularly in markets where prices and providers historically have been regulated; and financial market conditions.

                 AGL RESOURCES INC. AND SUBSIDIARY COMPANIES
                      CONSOLIDATED FINANCIAL INFORMATION
                              December 31, 1998
                                 (Unaudited)

                  Millions of Dollars, Except Per Share Data

                                             3 Months Ended
                                               December 31,
                                            1998        1997
    Operating Revenues                    $ 323.9     $ 399.1
      Cost of Gas                           187.0       254.0
    Operating Margin                        136.9       145.1

    Operating Income                      $  47.7     $  52.4

    Consolidated Net Income               $  15.9     $  25.7

    Earnings Per Common Share
      Basic and Diluted                   $  0.28     $  0.45

    Average Number of Shares
     Outstanding (millions)
      Basic                                  57.4        56.7
      Diluted                                57.7        56.8