NiSource Profit Decreases

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Merrillville-based NiSource Inc. (NYSE: NI) is reporting third quarter net income of $31.4 million, compared to $48.1 million during the same period the previous year. Chief Executive Officer Robert Skaggs says the company is slated to complete its spinoff of Columbia Pipeline Group Inc. in the middle of next year. October 30, 2014

News Release

MERRILLVILLE, Ind. - NiSource Inc. (NYSE: NI) today announced net operating earnings from continuing operations (non-GAAP) of $45.5 million, or $0.14 per share, for the three months ended September 30, 2014, compared with $57.1 million, or $0.18 per share, for the same period in 2013. Operating earnings for the third quarter (non-GAAP) were $180.3 million compared to $183.7 million in the year-ago period.

On a GAAP basis, NiSource reported income from continuing operations of $31.5 million, or $0.10 per share, for the three months ended September 30, 2014, compared with $49.5 million, or $0.16 per share, for the same period in 2013. Operating income for the third quarter was $157.8 million compared to $176.4 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.

Earnings guidance, capital investments on track

NiSource President and CEO Robert C. Skaggs Jr. said the company's third quarter results were on plan and that it continues to expect to achieve earnings at the upper half of its full-year earnings outlook of $1.61 to $1.71 per share (non-GAAP), and that the company remains on track with its record $2.2 billion capital investment program during 2014.

"During the third quarter, NiSource's business units continued to produce strong financial results while driving solid, steady progress on a broad range of well-established, infrastructure-focused investment strategies," Skaggs said. "That performance has us on track to once again achieve our annual earnings outlook, while delivering on an extensive range of customer and stakeholder focused initiatives."

There will likely be differences between net operating earnings and GAAP earnings. Due to the unpredictability of weather and other factors, NiSource is continuing its practice of not providing GAAP earnings guidance.

Skaggs noted that details of the company's business and growth strategies were discussed during NiSource's Investor Day on September 29. A replay and copies of the Investor Day presentations are available at www.nisource.com.

Columbia Pipeline Group separation update

On September 28, NiSource announced that its Board of Directors approved, in principle, plans to separate its natural gas pipeline and related businesses into a stand-alone, publicly traded company. The separation would result in two highly focused energy infrastructure companies: NiSource Inc., a fully regulated natural gas and electric utilities company, and Columbia Pipeline Group Inc. (CPG), a pure-play natural gas pipeline, midstream and storage company. Both companies are expected to maintain investment grade credit ratings after the separation, which is expected to occur in mid-2015.

"Our team expects to execute the separation with no adverse impact on our ongoing operations or customer services," Skaggs said. "As two pure-play, highly focused and well capitalized energy infrastructure companies, both entities will be better positioned to execute on their respective investment strategies and deliver enhanced long-term growth."

The separation is subject to various conditions, including, among others, NiSource receiving a favorable legal opinion on the tax-free nature of the distribution and final NiSource board approval. NiSource shareholder approval of the transaction is not required.

In addition to the separation, Columbia Pipeline Partners LP (CPPL), a subsidiary of NiSource, filed a registration statement on Form S-1 with the U.S. Securities and Exchange Commission in connection with the proposed initial public offering of its common units.

Columbia Pipeline Group modernization, growth project inventory tops $12 billion

CPG continues to develop and execute on an extensive inventory of near- and long-term growth, modernization and midstream investment opportunities, many of which are tied to the company's strategic asset position in the Utica and Marcellus Shale production regions.

CPG expects to invest $12-$15 billion in modernization and growth projects over the next 10 years, with a number of major projects currently in active development. Key execution highlights for CPG include:

By the end of the year, CPG will make a filing with the Federal Energy Regulatory Commission to recover costs related to the second year of investments under its long-term system modernization program. The filing, which involves approximately $330 million in facilities placed in service by October 31, 2014, is anticipated to become effective in February 2015. 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.

Just this month, CPG placed into service its West Side Expansion project. This approximately $200 million project, placed in service ahead of schedule and on budget, enabled a portion of Columbia Gulf Transmission's (Columbia Gulf) system to become fully bi-directional, among other system enhancements. Fully subscribed and anchored by long-term contracts, the project will transport approximately 500,000 dekatherms per day of Marcellus Shale production to Gulf Coast and southeast markets. The approximately $25 million Giles County growth project also was placed in service this month, which supports the conversion of a large end-user's coal boilers to natural gas. Columbia Gas of Virginia (CGV) also extended its distribution system by approximately four miles to support the customer conversion.

In August, CPG confirmed details of its planned $1.75 billion investment in the Leach and Rayne XPress projects. The projects will create a major new pathway for delivering natural gas supplies to market, providing transportation capacity of about 1.5 billion cubic feet per day for Marcellus and Utica Shale gas on the Columbia Gas Transmission (Columbia Transmission) system and about 1 billion cubic feet per day on the Columbia Gulf system. The projects, expected to be placed into service by the end of 2017, include approximately 150 miles of new transmission pipeline and new compression facilities at multiple sites in Ohio and West Virginia.

CPG's WB XPress project also is advancing and expected to clear remaining conditions precedent during the fourth quarter of this year. The approximately $870 million project would transport about 1.3 billion cubic feet of Marcellus Shale production on the Columbia Transmission system to pipeline interconnects and East Coast markets, including access to the Cove Point LNG export terminal. The project is expected to be placed in service during the fourth quarter of 2018.

The company is encouraged by customer interest following the recently completed non-binding open season for the Mountaineer XPress project. The project's scope is currently being refined and discussions with potential shippers regarding capacity commitments are underway. The project would provide further transportation capacity out of the Marcellus and Utica Shale production basins.

NiSource Midstream Services (NMS) has started work on its approximately $120 million Washington County Gathering project, which is anchored by a long-term agreement with a subsidiary of Range Resources Corporation. The project will consist of gathering pipelines and compression facilities in western Pennsylvania to transport production into a nearby Columbia Transmission pipeline. The project is expected to be in service in late 2015, with additional expansion expected as gas production grows.

NMS also is expanding and