NiSource Earnings Tick Upward

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Merrillville-based NiSource Inc. (NYSE: NI) is reporting second quarter net income of $78.5 million, compared to $72.4 million during the same period the previous year. The company says its system modernization continued during the quarter, increasing inventory of new pipeline projects. July 31, 2014

News Release

MERRILLVILLE, Ind. -- NiSource Inc. (NYSE: NI) today announced net operating earnings from continuing operations (non-GAAP) of $77.9 million, or $0.25 per share, for the three months ended June 30, 2014, compared with $72.8 million, or $0.23 per share, for the same period in 2013. Operating earnings for the second quarter (non-GAAP) were $219.1 million compared to $194.7 million in the year-ago period.

On a GAAP basis, NiSource reported income from continuing operations of $78.5 million, or $0.25 per share, for the three months ended June 30, 2014, compared with $72.4 million, or $0.23 per share, for the same period in 2013. Operating income for the second quarter was $219.6 million compared to $194.0 million in the year-ago period. Schedules 1 and 2 of this news release contain a reconciliation of net operating earnings and operating earnings to GAAP.

"The NiSource team continues its solid execution of our infrastructure investment-driven business plan," President and Chief Executive Officer Robert C. Skaggs, Jr. said. "During the second quarter, our system modernization and growth projects continued to progress along with a broad and steadily increasing inventory of new pipeline projects. With this strong and sustainable level of performance, we now expect to deliver net operating earnings from continuing operations at the upper half of our $1.61 to $1.71 per share 2014 guidance range."

Columbia Pipeline Group originating new growth projects, continuing to execute modernization program

NiSource's Columbia Pipeline Group (CPG) continues to make steady progress on its growth, modernization and midstream programs tied to the company's strategic asset position in the Utica and Marcellus Shale production regions. With more than $1 billion of growth projects in progress, CPG remains on track to invest more than $825 million in 2014. Looking forward, CPG's growth project inventory continues to expand, driven by the prolific supply development activity in the shale regions, as well as market opportunities associated with LNG exports, gas-fired electric generation and growing industrial demand.

Key recent execution highlights for CPG include:

-CPG began engineering and planning for the approximately $50 million Utica Access project. This new project consists of the construction of facilities to transport Utica Shale gas for Eclipse Resources Corporation to liquid trading points on the Columbia Gas Transmission (Columbia Transmission) system in West Virginia. The 200-million-cubic-feet-per-day project is expected to be in service by the end of 2016.

-Columbia Transmission also reached an agreement to provide firm transportation to serve a natural gas-fired electric generation plant in Kentucky. The roughly 70-million-cubic-feet-per-day project is expected to involve an investment of about $25 million and begin service in mid-2016. Meanwhile, CPG's 250-million-cubic-feet-per-day Warren County project is ready for service to support Virginia Electric and Power Co.'s new gas-fired electric generation plant in Virginia.

-CPG's Leach and Rayne XPress projects are in advanced stages of development. These projects are expected to provide additional transportation capacity of about 1.5 billion and 800 million cubic feet per day on the Columbia Transmission and Columbia Gulf Transmission systems, respectively, offering enhanced market access for Marcellus and Utica production. Confirmed details on these projects are expected in the next several weeks.

-Development activities surrounding Columbia Transmission's WB XPress project are proceeding well. The project would involve the transportation of about 1.3 billion cubic feet of Marcellus Shale production to pipeline interconnects and East Coast markets. Additional details on this project will be provided within the next few months.

-Columbia Transmission also remains on track with the second year of its long-term system modernization program. Under the program, CPG is investing approximately $300 million annually in improvements to system reliability, integrity and flexibility. A settlement with the company's customers addresses the initial five years of an expected 10-15 year program that exceeds $4 billion in investment.

-NiSource Midstream Services (NMS) has completed the facilities supporting the first phase of its Hickory Bend project. In addition, NMS began executing its approximately $120 million Washington County Gathering project. The project, anchored by a long-term agreement with a subsidiary of Range Resources Corporation, will consist of gathering pipelines and compression facilities in western Pennsylvania to transport production into a nearby Columbia Transmission pipeline. This project is expected to be in-service during the second half of 2015.

-NMS also continued to expand its core assets and services to support growing Appalachian shale production. The company is in advanced discussions with customers to optimize and expand its Big Pine Gathering System to support Marcellus Shale production in Western Pennsylvania. In addition to fully subscribing the existing capacity, this incremental 175-million-cubic-feet-per-day project includes additional gathering pipeline and compression facilities that are expected to begin service in the second quarter of 2015.

"The CPG team continues to originate and advance significant customer-supported growth projects." Skaggs said. "These new projects, which capitalize on our solid relationships and strategic position in the Marcellus and Utica producing regions, extend our already deep inventory of capital investment opportunities."

NIPSCO on track with environmental, modernization and transmission projects

NiSource's Indiana natural gas and electric business, Northern Indiana Public Service Co. (NIPSCO), remains on track with a broad agenda of system modernization, reliability and environmental improvements. Key execution highlights for NIPSCO include:

-On April 30, the Indiana Utility Regulatory Commission (IURC) approved NIPSCO's seven-year, $700 million natural gas modernization program. This program, which complements the in-progress $1.1 billion electric system modernization program approved in February, will address system modernization as well as system expansion in rural areas.

-Progress also continued on two major NIPSCO electric transmission projects designed to enhance region-wide system flexibility and reliability. The route has been selected for the Greentown-Reynolds project, a roughly 70-mile, 765-kilovolt line being constructed in a joint development agreement with Pioneer Transmission. Meanwhile, NIPSCO's Reynolds-Topeka project, a 100-mile, 345-kilovolt line, remains on schedule with right-of-way acquisition and permitting in process. These projects involve an investment of approximately $500 million for NIPSCO and are anticipated to be in service by the end of 2018.

-Two remaining flue gas desulfurization (FGD) projects at NIPSCO's coal-fired electric generating facilities remain on schedule and on budget. With projected completion dates of year-end 2014 and year-end 2015, the FGD investments are part of more than $850 million in environmental investments, including water quality and emission-control projects recently completed and planned at NIPSCO's electric generating facilities.

-NIPSCO also filed a plan with the IURC to continue offering its electric energy efficiency programs, including the residential energy efficiency rebate, new construction and low-income weatherization programs that are set to expire at the end of 2014.

"The NIPSCO team co