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SAN FRANCISCO--(BUSINESS WIRE)--Today at the CAPRE Northern California Data Center Summit, RagingWire Data Centers, Inc., the nation’s premier data center provider, and its parent company NTT Communications (NTT Com), announced to a crowd of more than 400 data center professionals that it is now offering a power solution that is both 100 percent renewable and 100 percent available, backed by a 100 percent uptime service level agreement (SLA) to customers in its three data centers in Sacramento, California.

RagingWire’s Sacramento Data Center Campus, made up of the CA1, CA2, and CA3 data centers, is an ideal choice for businesses that are looking for a data center solution that has a lower cost and risk profile than Silicon Valley and the Bay Area with the convenience of driving to their data center from those locations. The campus totals 680,000 square feet with 52.7 megawatts of critical IT power and features customizable vaults, private entrances, world-class security, and popular customer amenities including Class A office space.

“It is rare that data center customers can receive critical power that is renewable, reliable, and affordable,” said Douglas Adams, CEO and President of RagingWire Data Centers. “We’re thrilled that our customers can now use power that is 100 percent renewable and 100 percent available and still pay power rates that are approximately 40 percent less than in the Bay Area and Silicon Valley.”

Recent analysis shows that RagingWire’s customers can save nearly $8 million on rent and power costs over a 7-year term by leasing data center space in Sacramento instead of in the Bay Area or Silicon Valley. In addition, Sacramento is located outside the earthquake zone, features a growing population of tech companies and professionals, and offers much lower network latency to the Bay Area than data centers located in Reno, Las Vegas or Phoenix.

RagingWire negotiated this new 100 percent renewable energy package with SMUD, Sacramento’s community-owned, not-for-profit electric service. SMUD offers power from renewable resources like wind, water, sun and biomass.

“RagingWire Data Centers is a leader in the industry and an outstanding partner,” said SMUD Chief Customer Officer Nicole Howard. “They have worked with us for many years to reduce greenhouse gas emissions in our region, and we’re proud to help them deliver a 100 percent renewable energy product to their customers while they maintain their leadership in data center value and reliability.”

When running at full capacity, RagingWire’s annual use of renewable energy across its three Sacramento data centers will result in a reduction of greenhouse gas emissions approximately equivalent to those produced by passenger vehicles driving 842 million miles, or 375 million pounds of burned coal.

This renewable energy agreement is the largest with a private sector company in SMUD’s 70-year history. SMUD was the first large California utility to have 20 percent of its power supply come from sources classified by California as renewable, and is on track to meet the state mandate requiring utilities to increase their renewable portfolio to 33 percent by 2020.

About RagingWire Data Centers

RagingWire Data Centers designs, builds, and operates mission critical data centers that deliver 100% availability, high-density power, flexible configurations, carrier neutral connectivity, and superior customer service. The company has 113 megawatts of critical IT power spread across 1.5 million square feet of data center infrastructure in Ashburn, Virginia; Dallas, Texas; and Northern California with significant growth plans in these locations and other top North American data center markets. As part of the NTT Communications group, RagingWire is one of the largest wholesale data center providers in the world with a global network of 140 data centers in 20 countries and regions operated by NTT Communications under the Nexcenter™ brand, and one of the most financially strong companies in the data center industry. For more information visit www.ragingwire.com.

About SMUD

As the nation’s sixth-largest community-owned electric service provider, SMUD has been providing low-cost, reliable electricity for more than 70 years to Sacramento County and small adjoining portions of Placer and Yolo Counties. SMUD is a recognized industry leader and award winner for its innovative energy efficiency programs, renewable power technologies, and for its sustainable solutions for a healthier environment. SMUD’s power mix is about 50 percent non-carbon emitting. For more information, visit smud.org.

VOORHEES, N.J.--(BUSINESS WIRE)--American Water Works Company, Inc. (NYSE: AWK) today reported results for the fourth quarter and year ended Dec. 31, 2017.

"This past year was one of continued solid growth for American Water and outstanding execution by our employees," said Susan Story, president and CEO of American Water. "With a strong fourth quarter finish, our 2017 adjusted EPS increased 7 percent over 2016. To meet the nationally recognized need for significantly more water infrastructure investment, we invested more capital in our water and wastewater systems -$1.4 billion- than in any other previous year. As importantly, we achieved our best ever O&M efficiency ratio in order to make this investment more affordable for our customers.

"We will continue to focus on delivering our customers the most reliable and safe water services at an affordable price in 2018 and beyond, and the recent Tax Cuts and Jobs Act will aid us even more in doing so.

“We plan to invest between $8.0 billion to $8.6 billion over the next five years," added Story. "We are also affirming our 2018 EPS guidance of $3.22 to $3.32, and remain confident in our ability to achieve our long-term EPS growth of 7 to 10 percent."

Consolidated Results

The company's three months and annual results are included in the table below:

   

For the Three Months Ended
December 31,

For the Year Ended
December 31,

2017   2016 2017   2016
Diluted earnings per share (GAAP):
Net income attributable to common stockholders $ (0.01 ) $ 0.57 $ 2.38 $ 2.62
Non-GAAP adjustments:
Impact of Freedom Industries settlement activities (0.12 ) 0.36
Income tax impact     0.05   (0.14 )
Net non-GAAP adjustment     (0.07 ) 0.22  
 
Early extinguishment of debt at the parent company 0.03
Income tax impact     (0.01 )  
Net non-GAAP adjustment     0.02    
 
Impact of re-measurement from the Tax Cuts and Jobs Act 0.70     0.70    
Total non-GAAP adjustments 0.70     0.65   0.22  
Adjusted diluted earnings per share (non-GAAP) $ 0.69   $ 0.57   $ 3.03   $ 2.84  
 

In the fourth quarter of 2017, GAAP income decreased $0.58 per diluted share compared to the prior year. This included a $0.70 per diluted share charge resulting from the non-cash, after-tax re-measurement charge associated with the impact of the change in the federal tax rate from implementation of the Tax Cuts and Jobs Act (the “TCJA”) enacted on December 22, 2017.

Adjusted earnings were $0.69 per diluted share (a non-GAAP measure) for the fourth quarter 2017, an increase of 12 cents per diluted share, or 21 percent, over the same period in 2016. This increase was primarily associated with continued growth in the Regulated Businesses driven mainly by infrastructure investment, acquisitions and organic growth. The Market-Based Businesses were up a penny with growth in the Homeowner Services Group partially offset by lower capital upgrades in the Military Services Group.

For the full year 2017, GAAP income decreased $0.24 per diluted share compared to the prior year. 2017 GAAP earnings included a $0.07 per diluted share benefit from an insurance settlement related to the Freedom Industries chemical spill, a $0.02 per diluted share charge from early extinguishment of debt at the parent company and a $0.70 per diluted share charge, resulting from the non-cash, after-tax re-measurement charge associated with the enactment of the TCJA. Included in 2016 GAAP earnings was a $0.22 per diluted share charge from the binding global agreement in principle to settle claims associated with the Freedom Industries chemical spill.

Adjusted earnings were $3.03 per diluted share for the full year of 2017, an increase of $0.19 per diluted share, or 7 percent, over the same period in 2016. This increase was primarily associated with continued growth in the Regulated Businesses driven mainly by infrastructure investment, acquisitions and organic growth, combined with growth in the Market-Based Businesses mainly from the Homeowner Services Group and Keystone. These increases were partially offset by warmer weather in 2016 compared to 2017 and two discrete tax adjustments recorded at the parent company associated with legislative changes in New York and Illinois impacting state tax apportionment.

For the full year 2017, the company made capital investments of $1.7 billion, a record level of investment, including $1.4 billion dedicated primarily to improving infrastructure in the Regulated Businesses to provide safe, clean and reliable service to its customers, and over $210 million for regulated acquisitions.

Regulated Businesses Adjusted Net Income Reconciliation (A Non-GAAP, unaudited measure)

   

For the Three Months Ended
December 31,

For the Years Ended
December 31,

2017   2016 2017   2016
Net income (GAAP) $ 113 $ 98 $ 559 $ 472
Non-GAAP adjustment:
Impact of Freedom Industries settlement activities (22 ) 65
Income tax impact     9   (26 )
Net non-GAAP adjustment     (13 ) 39  
 
Impact of the Tax Cuts and Jobs Act 6 6
       
Total net non-GAAP adjustments 6     (7 ) 39  
       
Adjusted net income $ 119   $ 98   $ 552   $ 511  
 

For the fourth quarter of 2017, adjusted net income was $119 million, compared to $98 million for the same period in 2016, an increase of approximately 21 percent. Regulated revenue increased $16 million driven by a $27 million increase from additional authorized revenue and surcharges to support infrastructure investments, acquisitions, and organic growth; partially offset by a $11 million decrease in lower demand of which $3 million is related to warmer weather during the fourth quarter of 2016. In the fourth quarter net depreciation was favorable $7 million, mainly due to the implementation of new depreciation rates in our Illinois subsidiary. O&M expense was favorable $5 million mainly due to the timing of expenditures last year and the continued focus on cost management.

For the full year 2017, adjusted net income was $552 million, compared to $511 million for the same period in 2016, an increase of 8 percent. Regulated revenue increased $87 million driven by a $133 million increase from additional authorized revenue and surcharges to support infrastructure investments, wastewater services, acquisitions, and organic growth; partially offset by a $48 million decrease in lower demand of which $15 million is related to warmer weather during 2016. This increase was partially offset by higher net depreciation and interest of $34 million associated with infrastructure investment growth partially offset by the implementation of new depreciation rates in our Illinois subsidiary. O&M expense remained relatively flat due to the continued focus on cost management.

For the full year 2017, the Company received additional annualized revenues of approximately $43 million from general rate cases and step increases and approximately $33 million in additional annualized revenues from infrastructure surcharges. The company is awaiting final orders for general rate cases in three states and filed for infrastructure surcharges in three states for a total annualized revenue request of approximately $255 million. The extent to which requested rate increases will be granted by the applicable regulatory agencies will vary.

For the full year 2017, the adjusted regulated O&M efficiency ratio (a non-GAAP financial measure) improved to 33.8 percent, compared to 34.9 percent for the full year 2016. By reducing O&M expense as a proportion of revenue, American Water is able to make investments in needed capital improvements without significantly impacting customer bills.

Market-Based Businesses Adjusted Net Income Reconciliation (A Non-GAAP, unaudited measure)

   

For the Three Months Ended
December 31,

For the Years Ended
December 31,

2017   2016 2017   2016
Net income (GAAP) $ 9 $ 13 $ 38 $ 39
Non-GAAP adjustment:
Impact of the Tax Cuts and Jobs Act 5 5
       
Adjusted net income $ 14   $ 13   $ 43   $ 39
 

For the fourth quarter of 2017, adjusted net income was $14 million, compared to $13 million for the same period in 2016. Adjusted net income was up $1 million, driven by growth in the Homeowner Services Group through customer growth and price increases for certain customers, offset by lower capital projects in the Military Services Group.

For the full year 2017, adjusted net income was $43 million, compared to $39 million for the same period in 2016, an increase of 10 percent. The increase was driven by growth in the Homeowner Services Group through customer growth and price increases for certain customers and growth at Keystone Clearwater Solutions from improving market conditions, partially offset by lower capital projects in the Military Services Group from lower military budgets and completion of a project at Fort Polk mid-year 2016.

Dividends

On Dec. 8, 2017, our Board of Directors declared a quarterly cash dividend payment of $0.415 per share payable on Mar. 1, 2018, to stockholders of record as of Feb. 7, 2018.

2018 Earnings Guidance

American Water has affirmed its 2018 earnings guidance to be in the range of $3.22 - $3.32 per diluted share. The company’s earnings forecasts are subject to numerous risks and uncertainties, including, without limitation, those described under “Forward-Looking Statements” below and under “Risk Factors” in its annual and quarterly reports filed with the Securities and Exchange Commission (“SEC”).

Non-GAAP Financial Measures

This press release includes presentations of adjusted net income for the Regulated Businesses and the Market-Based Businesses, as well as consolidated adjusted earnings per diluted share (“Adjusted EPS”). These items constitute “non-GAAP financial measures” under SEC rules. These non-GAAP financial measures are derived from American Water’s consolidated financial information but are not presented in its financial statements prepared in accordance with GAAP. Adjusted EPS is defined as GAAP earnings per diluted common share, excluding (i) the impact in the third quarter of 2017 of the insurance settlement related to the Freedom Industries chemical spill; (ii) a charge incurred in the third quarter of 2017 with respect to the early extinguishment of debt at the parent company; (iii) the non-cash, after-tax re-measurement charge in the fourth quarter of 2017 associated with the impact of the change in the federal tax rate on American Water's deferred income taxes from the enactment of the TCJA; and (iv) the impact in the fourth quarter of 2016 of the binding global agreement in principle to settle claims related to the Freedom Industries chemical spill. Adjusted net income for the Regulated Businesses and the Market-Based Businesses is defined as GAAP diluted net income, excluding, as applicable (i) the impact in the third quarter of 2017 of the insurance settlement related to the Freedom Industries chemical spill; (ii) the non-cash, after-tax re-measurement charge in the fourth quarter of 2017 associated with the impact of the change in the federal tax rate on American Water's deferred income taxes from the enactment of the TCJA; and (iii) the impact in the fourth quarter of 2016 of the binding global agreement in principle to settle claims related to the Freedom Industries chemical spill. These non-GAAP financial measures supplement the company’s GAAP disclosures and should not be considered as alternatives to the GAAP measures.

Management believes that the presentation of these non-GAAP financial measures are useful to American Water’s investors because they provide an indication of its baseline performance excluding items that are not considered by management to be reflective of ongoing operating results. Although management uses these non-GAAP financial measures internally to evaluate American Water’s results of operations, management does not intend results excluding the adjustments to represent results as defined by GAAP, and the reader should not consider them as indicators of performance. These items are derived from American Water’s consolidated financial information but are not presented in its financial statements prepared in accordance with GAAP. The company’s definition of adjusted net income or Adjusted EPS may not be comparable to the same or similar measures used by other companies, and, accordingly, these non-GAAP financial measures may have significant limitations on their use.

Set forth in this release is a table that reconciles each of adjusted net income and Adjusted EPS to its most directly comparable GAAP financial measure.

This press release also includes a presentation of adjusted regulated O&M efficiency ratio, which excludes from its calculation estimated purchased water revenues and purchased water expenses, the impact of certain activities related to the Freedom Industries chemical spill, and the allocable portion of non-O&M support services costs, mainly depreciation and general taxes. This item constitutes a “non-GAAP financial measure” under SEC rules. This item is derived from American Water’s consolidated financial information but is not presented in its financial statements prepared in accordance with GAAP. This non-GAAP financial measure supplements and should be read in conjunction with the company’s GAAP disclosures and should not be considered an alternative to any GAAP measure.

Management believes that the presentation of this measure is useful to investors because it provides a means of evaluating the company’s operating performance without giving effect to items that are not reflective of management’s ability to increase efficiency of the company’s regulated operations. In preparing operating plans, budgets and forecasts, and in assessing historical performance, management relies, in part, on trends in the company’s historical results, exclusive of estimated revenues and expenses related to purchased water, the impact of settlement activities related to the Freedom Industries chemical spill and the allocable portion of non-O&M support services costs. The company’s definition of this metric may not be comparable to the same or similar measures used by other companies, and, accordingly, this non-GAAP financial measure may have significant limitations on its use.

Set forth in this release is a table that reconciles each of the components used to calculate adjusted regulated O&M efficiency ratio to the most directly comparable GAAP financial measure.

2017 Year-end and Fourth Quarter Earnings Conference Call

The 2017 and fourth quarter earnings conference call will take place on Wednesday, Feb. 21, 2018, at 9 a.m. Eastern Standard Time. Interested parties may listen to the conference call over the Internet by logging on to the Investor Relations page of the company’s website at ir.amwater.com. Presentation slides that will be used in conjunction with the earnings conference call will also be made available online. The company recognizes its website as a key channel of distribution to reach public investors and as a means of disclosing material non-public information to comply with its obligations under SEC Regulation FD.

Following the earnings conference call, an audio archive of the call will be available through February 28, 2018. U.S. callers may access the audio archive toll-free by dialing 1-877-344-7529. International callers may listen by dialing 1-412-317-0088. The access code for replay is 10116315. The audio webcast will be available on American Water's investor relations homepage at ir.amwater.com through March 21, 2018. After that, the archived webcast will be available for one year at ir.amwater.com/event-replays.

About American Water

With a history dating back to 1886, American Water is the largest and most geographically diverse U.S. publicly-traded water and wastewater utility company. The company employs more than 6,900 dedicated professionals who provide regulated and market-based drinking water, wastewater and other related services to an estimated 15 million people in 46 states and Ontario, Canada. More information can be found by visiting amwater.com.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements in this press release including, without limitation, 2018 earnings guidance, projected long-term earnings and dividend growth, the outcome of pending acquisition activity and estimated revenues from rate cases and other government agency authorizations, are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and the Federal securities laws. In some cases, these forward-looking statements can be identified by words with prospective meanings such as “intend,” “plan,” “estimate,” “believe,” “anticipate,” “expect,” “predict,” “project,” “propose,” “assume,” “forecast,” “outlook,” “future,” “pending,” “goal,” “objective,” “potential,” “continue,” “seek to,” “may,” “can,” “will,” “should” and “could” and or the negative of such terms or other variations or similar expressions. These forward-looking statements are predictions based on American Water’s current expectations and assumptions regarding future events. They are not guarantees or assurances of any outcomes, financial results of levels of activity, performance or achievements, and readers are cautioned not to place undue reliance upon them. The forward-looking statements are subject to a number of estimates and assumptions, and known and unknown risks, uncertainties and other factors. Actual results may differ materially from those discussed in the forward-looking statements included in this press release as a result of the factors discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, and subsequent filings with the SEC, and because of factors such as: the decisions of governmental and regulatory bodies, including decisions to raise or lower customer rates; the timeliness and outcome of regulatory commissions’ actions concerning rates, capital structure, authorized return on equity, capital investment, system acquisitions, taxes, permitting and other decisions; changes in customer demand for, and patterns of use of, water, such as may result from conservation efforts; limitations on the availability of our water supplies or sources of water, or restrictions on our use thereof, resulting from allocation rights, governmental or regulatory requirements and restrictions, drought, overuse or other factors; changes in laws, governmental regulations and policies, including with respect to environmental, health and safety, water quality and emerging contaminants, public utility and tax regulations and policies, and impacts resulting from U.S., state and local elections; weather conditions and events, climate variability patterns, and natural disasters, including drought or abnormally high rainfall, prolonged and abnormal ice or freezing conditions, strong winds, coastal and intercoastal flooding, earthquakes, landslides, hurricanes, tornadoes, wildfires, electrical storms and solar flares; the outcome of litigation and similar governmental proceedings, investigations or actions, including matters related to the Freedom Industries chemical spill in West Virginia and the preliminarily approved global class action settlement agreement related to this chemical spill; our ability to appropriately maintain current infrastructure, including our operational and information technology (“IT”) systems, and manage the expansion of our business; exposure or infiltration of our critical infrastructure, operational technology and IT systems, including the disclosure of sensitive or confidential information contained therein, through physical or cyber attacks or other means; our ability to obtain permits and other approvals for projects; changes in our capital requirements; our ability to control operating expenses and to achieve efficiencies in our operations; the intentional or unintentional actions of a third party, including contamination of our water supplies or water provided to our customers; our ability to obtain adequate and cost-effective supplies of chemicals, electricity, fuel, water and other raw materials that are needed for our operations; our ability to successfully meet growth projections for our business and capitalize on growth opportunities, including our ability to, among other things, acquire and integrate water and wastewater systems into our regulated operations, and enter into contracts and other agreements with, or otherwise obtain, new customers in our market-based businesses; risks and uncertainties associated with contracting with the U.S. government, including ongoing compliance with applicable government procurement and security regulations; cost overruns relating to improvements in or the expansion of our operations; our ability to maintain safe work sites; our exposure to liabilities related to environmental laws and similar matters resulting from, among other things, water and wastewater service provided to customers, including, for example, our water service and management solutions that are focused on customers in the natural gas exploration and production market; changes in general economic, political, business and financial market conditions; access to sufficient capital on satisfactory terms and when and as needed to support operations and capital expenditures; fluctuations in interest rates; restrictive covenants in or changes to the credit ratings on us or our current or future debt that could increase our financing costs or funding requirements or affect our ability to borrow, make payments on debt or pay dividends; fluctuations in the value of benefit plan assets and liabilities that could increase our cost and funding requirements; changes in federal or state general, income and other tax laws, including any further rules, regulations, interpretations and guidance by the U.S. Department of the Treasury and state or local taxing authorities related to the enactment of the TCJA, the availability of tax credits and tax abatement programs, and our ability to utilize our U.S. federal and state income tax net operating loss carryforwards; migration of customers into or out of our service territories; the use by municipalities of the power of eminent domain or other authority to condemn our systems, or the assertion by private landowners of similar rights against us; difficulty or inability to obtain insurance, the inability to obtain insurance at acceptable rates and on acceptable terms and conditions, or an inability to obtain reimbursement under existing insurance programs for any losses sustained; the incurrence of impairment charges related to our goodwill or other assets; labor actions, including work stoppages and strikes; the ability to retain and attract qualified employees; civil disturbances or terrorist threats or acts, or public apprehension about future disturbances or terrorist threats or acts; and the impact of new, and changes to existing, accounting standards.

These forward-looking statements are qualified by, and should be read together with, the risks and uncertainties set forth above and the risk factors included in the company’s annual and quarterly SEC filings, and readers should refer to such risks, uncertainties and risk factors in evaluating such forward-looking statements. Any forward-looking statements speak only as of the date of this press release. The company does not have or undertake any obligation or intention to update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, except as otherwise required by the Federal securities laws. Furthermore, it may not be possible to assess the impact of any such factor on the company’s businesses, either viewed independently or together, or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. The foregoing factors should not be construed as exhaustive.

   
American Water Works Company, Inc. and Subsidiary Companies
Consolidated Statements of Operations

(In millions, except per share data)

 

For the Three Months Ended December 31,

For the Years Ended December 31,
2017   2016 2017   2016
(Unaudited)    
Operating revenues $ 821   $ 802   $ 3,357   $ 3,302  
Operating expenses:
Operation and maintenance 368 373 1,378 1,504
Depreciation and amortization 114 120 492 470
General taxes 67 63 259 258
Gain on asset dispositions and purchases (7 ) (2 ) (16 ) (10 )
Total operating expenses, net 542   554   2,113   2,222  
Operating income 279   248   1,244   1,080  
Other income (expense):
Interest, net (83 ) (83 ) (342 ) (325 )
Loss on early extinguishment of debt (1 ) (7 )
Other, net 6   1   17   15  
Total other income (expense) (78 ) (82 ) (332 ) (310 )
Income before income taxes 201 166 912 770
Provision for income taxes 202   65   486   302  
Net income attributable to common stockholders $ (1 ) $ 101   $ 426   $ 468  
 
Basic earnings per share: (a)
Net income attributable to common stockholders $   $ 0.57   $ 2.39   $ 2.63  
Diluted earnings per share: (a)
Net income attributable to common stockholders $ (0.01 ) $ 0.57   $ 2.38   $ 2.62  
Weighted-average common shares outstanding:
Basic 178   178   178   178  
Diluted 179   178   179   179  
Dividends declared per common share (b) $ 0.83   $ 0.75   $ 1.66   $ 1.50  
 
(a) Amounts may not calculate due to rounding.
(b) Dividends declared during the three months ended December 31, 2017 and 2016, include quarterly dividends payable December 1 and March 1.
   
American Water Works Company, Inc. and Subsidiary Companies
Consolidated Balance Sheets

(In millions, except share and per share data)

 
December 31, 2017 December 31, 2016
ASSETS
Property, plant and equipment $ 21,716 $ 19,954
Accumulated depreciation (5,470 ) (4,962 )
Property, plant and equipment, net 16,246   14,992  
Current assets:
Cash and cash equivalents 55 75
Restricted funds 27 20
Accounts receivable, net 272 269
Unbilled revenues 212 263
Materials and supplies 41 39
Other 113   118  
Total current assets 720   784  
Regulatory and other long-term assets:
Regulatory assets 1,061 1,289
Goodwill 1,379 1,345
Other 76   72  
Total regulatory and other long-term assets 2,516   2,706  
TOTAL ASSETS $ 19,482   $ 18,482  
   
American Water Works Company, Inc. and Subsidiary Companies
Consolidated Balance Sheets

(In millions, except share and per share data)

 
December 31, 2017 December 31, 2016
CAPITALIZATION AND LIABILITIES
Capitalization:
Common stock ($0.01 par value, 500,000,000 shares authorized, 182,508,564 and 181,798,555 shares issued, respectively) $ 2 $ 2
Paid-in-capital 6,432 6,388
Accumulated deficit (723 ) (873 )
Accumulated other comprehensive loss (79 ) (86 )
Treasury stock, at cost (4,064,010 and 3,701,867 shares, respectively) (247 ) (213 )
Total common stockholders' equity 5,385   5,218  
Long-term debt 6,490 5,749
Redeemable preferred stock at redemption value 8   10  
Total long-term debt 6,498   5,759  
Total capitalization 11,883   10,977  
Current liabilities:
Short-term debt 905 849
Current portion of long-term debt 322 574
Accounts payable 195 154
Accrued liabilities 630 609
Taxes accrued 33 31
Interest accrued 73 63
Other 167   112  
Total current liabilities 2,325   2,392  
Regulatory and other long-term liabilities:
Advances for construction 271 300
Deferred income taxes, net 1,551 2,596
Deferred investment tax credits 22 23
Regulatory liabilities 1,664 403
Accrued pension expense 384 419
Accrued postretirement benefit expense 40 87
Other 66   67  
Total regulatory and other long-term liabilities 3,998   3,895  
Contributions in aid of construction 1,276 1,218
Commitments and contingencies    
TOTAL CAPITALIZATION AND LIABILITIES $ 19,482   $ 18,482  
     
American Water Works Company, Inc. and Subsidiary Companies
Adjusted Regulated Operation and Maintenance Efficiency Ratio (A Non-GAAP, unaudited measure)

In millions

 
(Dollars in millions) 2017 2016 2015
Total operation and maintenance expenses $ 1,378 $ 1,504 $ 1,404
Less:
Operation and maintenance expenses—Market-Based Businesses 337 372 358
Operation and maintenance expenses—Other (50 ) (44 ) (49 )
Total operation and maintenance expenses—Regulated Businesses 1,091 1,176 1,095
Less:
Regulated purchased water expenses 128 122 117
Allocation of non-operation and maintenance expenses 29 30 35
Impact of Freedom Industries settlement activities (a) (22 ) 65    
Adjusted operation and maintenance expenses—Regulated Businesses (i) $ 956   $ 959   $ 943  
 
Total operating revenues $ 3,357 $ 3,302 $ 3,159
Less:
Operating revenues—Market-Based Businesses 422 451 434
Operating revenues—Other (23 ) (20 ) (18 )
Total operating revenues—Regulated Businesses 2,958 2,871 2,743
Less:
Regulated purchased water revenues (b) 128   122   117  
Adjusted operating revenues—Regulated Businesses (ii) $ 2,830   $ 2,749   $ 2,626  
 
Adjusted O&M efficiency ratio—Regulated Businesses (i) / (ii) 33.8 % 34.9 % 35.9 %
 
(a) Includes the impact of the binding global agreement in principle to settle claims in 2016 and a settlement with one of our general liability insurance carriers in 2017.
(b) The calculation assumes regulated purchased water revenues approximate regulated purchased water expenses.

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MIDLAND, Texas--(BUSINESS WIRE)--Concho Resources Inc. (NYSE: CXO) (the “Company” or “Concho”) today reported financial and operating results for fourth-quarter and full-year 2017.

Fourth-Quarter & Full-Year 2017 Highlights

  • For fourth quarter, delivered crude oil production of 130 MBopd and total production of 211 MBoepd, exceeding the high end of the Company’s guidance range.
  • For 2017, grew crude oil production 29% and total production 28% on a $1.7 billion capital program, excluding acquisitions, which was fully funded by cash flows from operations.
  • Reported fourth quarter net income of $267 million, or $1.79 per diluted share. Adjusted net income totaled $98 million, or $0.66 per diluted share (non-GAAP). For 2017, net income totaled $956 million, or $6.41 per diluted share, and adjusted net income was $311 million, or $2.09 per diluted share (non-GAAP).
  • Generated $513 million of EBITDAX (non-GAAP) in the fourth quarter and $1.9 billion for 2017.
  • Delivered outstanding results from the Company’s large-scale development projects in the Northern and Southern Delaware Basin and in the Midland Basin.
  • Increased estimated proved reserves 17% to 840 MMBoe, driven by a 26% increase in proved developed reserves to 588 MMBoe.
  • Achieved a 275% reserves replacement ratio at $8.68 per Boe proved developed finding costs.

2018 Outlook & Recent Events

  • For 2018, expecting crude oil production growth of approximately 20% and total production growth of 16% to 20% on a $2 billion capital program at the midpoint. The capital program is consistent with Concho’s strategy of delivering returns-based, capital-efficient growth within cash flows from operations.
  • Provided new three-year production growth outlook of 20% CAGR over the 2017 to 2020 time period.
  • Enhanced asset position and accelerated value realization with recent portfolio management actions. Divestiture proceeds of $280 million reinforce balance sheet strength and flexibility. Strategic asset trade enhances core leasehold in Midland Basin and New Mexico Shelf.

See “Supplemental Non-GAAP Financial Measures” and “Supplemental Measures” at the end of this press release for a description of non-GAAP measures adjusted net income, adjusted earnings per share and EBITDAX as well as a reconciliation of these measures to the associated GAAP measure. An explanation of how we calculate and use the reserves replacement ratio and proved developed finding costs also can be found at the end of the press release.

Tim Leach, Chairman and Chief Executive Officer, commented, “The fourth quarter was an excellent end to a great year for Concho. Our operational and financial performance demonstrated our ability to consistently execute, control costs and capitalize on opportunities that strengthen our competitive position. For the year, crude oil production exceeded our target, increasing 29% year-over-year, and our disciplined capital program was fully funded by operating cash flow. We have a powerful portfolio that continues to outperform. The depth and quality of our resource base is unmatched throughout our history and allows us to assemble multi-year programs capable of delivering premium value within cash flow. We continue to complement our development program with active portfolio management that accelerates value and improves capital efficiency. Our high-quality resource base, scale advantage and execution strength uniquely position Concho to navigate a dynamic operating environment while maximizing returns and building sustainable value for our shareholders.”

Fourth-Quarter and Full-Year 2017 Operations Summary

Production for fourth-quarter 2017 was 19 million barrels of oil equivalent (MMBoe), or an average of 211 thousand Boe per day (MBoepd), an increase of approximately 28% from fourth-quarter 2016 and 9% from third-quarter 2017. Average daily crude oil production for fourth-quarter 2017 totaled 130 thousand barrels per day (MBopd), an increase of approximately 30% from fourth-quarter 2016 and 9% from third-quarter 2017. Natural gas production for fourth-quarter 2017 totaled 487 million cubic feet per day (MMcfpd).

For full-year 2017, total production increased 28% to 70 MMBoe, or 193 MBoepd, driven by a 29% increase in crude oil production to 119 MBopd. Natural gas production for full-year 2017 was 441 MMcfpd.

During fourth-quarter 2017, Concho averaged 16 rigs, compared to 19 rigs in third-quarter 2017. The table below summarizes the Company’s gross drilling and completion activity by core area for fourth-quarter and full-year 2017.

       
Number of Number of Number of

Number of

Operated Wells Wells Operated Wells

Wells Drilled

Drilled Completed Completed
4Q17   FY17 4Q17   FY17 4Q17   FY17 4Q17   FY17
Northern Delaware Basin 38 149 20 83 30 126 14 65
Southern Delaware Basin 14 61 11 44 24 53 17 36
Midland Basin 14 58 14 58 22 78 22 75
New Mexico Shelf 5 43 4 32 15 48 5 35
Total 71 311 49 217 91 305 58 211
 

The Company is currently running 19 rigs, including eight rigs in the Northern Delaware Basin, six rigs in the Southern Delaware Basin and five rigs in the Midland Basin. Additionally, the Company is currently utilizing six completion crews.

Northern Delaware Basin

In the Northern Delaware Basin, Concho added 24 wells with at least 60 days of production as of the end of fourth-quarter 2017. The average 30-day peak and average 60-day peak rates for these wells were 1,805 Boepd (68% oil) and 1,703 Boepd (67% oil), respectively. The Company also achieved a record average lateral length of 6,685 feet during fourth-quarter 2017.

Maximizing Recovery and Returns with Large-Scale Development Projects

Concho continues to see strong performance from the Vast and Windward projects, two large-scale development projects in the Red Hills area. The Vast project includes seven wells targeting the Wolfcamp Sands and Wolfcamp A Shale, and the Windward project includes eight wells targeting the Avalon Shale. The Vast and Windward projects have produced an aggregate 3 MMBoe (71% oil) in the first four months of their production.

From these projects, Concho is collecting valuable data that helps the Company optimize lateral placement, completion design and facilities planning. In addition, both projects delivered improvements in drilling days and stages completed per day.

Southern Delaware Basin

In the Southern Delaware Basin, Concho added three wells targeting the Wolfcamp A with at least 60 days of production as of the end of fourth-quarter 2017. The average 30-day peak and average 60-day peak rates for these wells were 1,644 Boepd (71% oil) and 1,474 Boepd (71% oil), respectively, and the average lateral length of 10,354 feet set a Company record for the Southern Delaware Basin.

Optimizing Development of Stacked Resource

Concho also recently completed a large-scale, multi-well project in the Southern Delaware Basin. The Brass Monkey project, originally an eight-well project, includes 10 wells testing simultaneous development of the 3rd Bone Spring, Wolfcamp A and Wolfcamp B with an average lateral length of 9,700 feet. The average 30-day peak rate for the project was 26 MBoepd (73% oil).

Midland Basin

Concho added six wells targeting the Wolfcamp A and Wolfcamp B in the Midland Basin during fourth-quarter 2017. The average 30-day peak and average 60-day peak rates for these wells were 1,272 Boepd (82% oil) and 1,195 Boepd (83% oil), respectively, and the average lateral length of 11,656 feet set a Company record for the Midland Basin.

Improving Capital Productivity from Technology Deployed at the Mabee Ranch Project

Concho recently completed the 13-well, two-mile Mabee Ranch project located in Andrews County, Texas. The early production results are strong, as the Mabee Ranch project has achieved an initial 24-hour peak rate of approximately 15 MBoepd (85% oil). Additionally, Concho is utilizing leading-edge technologies, including fiber optic monitoring, to collect valuable proprietary data with real-time and long-term implications for full-field optimization. The Company expects to transfer these techniques to other assets across the portfolio.

Fourth-Quarter and Full-Year 2017 Financial Summary

Concho’s average realized price for crude oil and natural gas for fourth-quarter 2017, excluding the effect of commodity derivatives, was $52.84 per Bbl and $3.33 per Mcf, respectively, compared with $45.66 per Bbl and $2.93 per Mcf, respectively, for fourth-quarter 2016. For 2017, Concho’s average realized price for crude oil and natural gas, excluding the effect of commodity derivatives, was $48.13 per Bbl and $3.07 per Mcf, respectively, compared with $39.90 per Bbl and $2.23 per Mcf, respectively, for 2016.

Net income for fourth-quarter 2017 was $267 million, or $1.79 per diluted share, compared to net loss of $125 million, or $0.86 per diluted share, for fourth-quarter 2016. Adjusted net income (non-GAAP), which excludes non-cash and unusual items, for fourth-quarter 2017 was $98 million, or $0.66 per diluted share, compared with adjusted net income (non-GAAP) of $28 million, or $0.20 per diluted share, for fourth-quarter 2016.

Net income for full-year 2017 was $956 million, or $6.41 per diluted share, compared to net loss of $1.5 billion, or $10.85 per diluted share, for full-year 2016. Adjusted net income (non-GAAP), which excludes non-cash and unusual items, for full-year 2017 was $311 million, or $2.09 per diluted share, compared with adjusted net income (non-GAAP) of $111 million, or $0.81 per diluted share, for full-year 2016.

Net income for fourth-quarter and full-year 2017 reflected income tax changes related to the Tax Cuts and Jobs Act. Due to the reduction of the U.S. federal corporate income tax rate and subsequent re-measurement of the Company’s net deferred tax liability, the Company recorded a provisional non-cash decrease to its income tax provision of $398 million and a corresponding provisional reduction to its net non-current deferred tax liability. For 2018, the Company estimates an effective tax rate of approximately 25%, including state taxes, before discrete items.

EBITDAX (non-GAAP) for fourth-quarter 2017 totaled $513 million, compared to $396 million for fourth-quarter 2016. EBITDAX (non-GAAP) for full-year 2017 was $1.9 billion, compared to $1.6 billion for full-year 2016.

See “Supplemental Non-GAAP Financial Measures” at the end of this press release for a description of non-GAAP measures adjusted net income, adjusted earnings per share and EBITDAX as well as a reconciliation of these measures to the associated GAAP measures.

2017 Proved Reserves and Resource Potential

At December 31, 2017, Concho’s estimated proved reserves totaled 840 MMBoe, an increase of 17% from year-end 2016. The Company’s proved reserves are approximately 60% crude oil and 40% natural gas. Proved developed reserves totaled 588 MMBoe, an increase of 26% from year-end 2016. The Company’s proved developed reserves represent approximately 70% of total proved reserves.

During 2017, Concho added 194 MMBoe of proved reserves primarily from drilling and completion operations, resulting in a reserve replacement ratio of 275%. The Company’s proved developed finding and development cost was $8.68 per Boe for 2017.

Concho estimates current net resource potential to be approximately 10 billion Boe, including total proved reserves, an increase of 25% from year-end 2016. Concho’s current resource potential is attributable to approximately 21,000 gross horizontal drilling locations, underscoring the Company’s large-scale horizontal development potential in the Permian Basin.

For a summary of estimated proved reserves, please see “Estimated Year-End Proved Reserves” below, and for an explanation of how the Company calculates and uses the reserves replacement ratio and finding and development costs, please see “Supplemental Measures” below.

Active Portfolio Management

During first-quarter 2018, Concho completed the sale of non-core leasehold in Ward and Reeves Counties, Texas, for approximately $280 million. The leasehold covers approximately 40,000 gross (20,000 net) acres. These assets were primarily non-operated with low working interest and not conducive to long-lateral development. Proved reserves and net production associated with these assets was minimal.

Additionally, the Company recently completed a strategic trade with a large integrated oil company. For Concho, the trade enhances its core development area in Mabee Ranch in the Midland Basin and adds working interests to certain operated properties in Upton County, Texas, and in the New Mexico Shelf. In the trade, Concho conveyed its 32,000 acre checker-board leasehold position in Culberson County, Texas.

These portfolio optimization activities accelerate value, enhance Concho’s core leasehold position and further improve capital allocation.

Financial Position and Liquidity

At December 31, 2017, Concho had total long-term debt of $2.7 billion, including approximately $320 million of borrowings outstanding under its credit facility. Adjusted for divestiture proceeds received in first-quarter 2018, the Company had total long-term debt of $2.5 billion at December 31, 2017.

Outlook

High-quality acreage and scale within the Permian Basin enables Concho to efficiently allocate capital while continuing to advance manufacturing-style development with leading-edge drilling and completion techniques.

Concho expects 2018 capital spending to be at the midpoint of its capital guidance range of $1.9 billion to $2.1 billion, which reflects the Company’s current outlook for service cost inflation. The 2018 capital program is expected to be funded with cash flows from operations and generate 20% crude oil growth and 16% to 20% total production growth year-over-year. Approximately 93% of the capital program is allocated to drilling and completion activities, with approximately 65% of that capital directed towards large-scale manufacturing projects. The Company’s 2018 capital program is allocated among the following areas: Northern Delaware Basin (40%), Southern Delaware Basin (25%), Midland Basin (30%) and the New Mexico Shelf (5%).

Detailed guidance for the first quarter and full-year 2018 is provided under “2018 Guidance” at the end of the release. The Company’s capital guidance for 2018 excludes acquisitions and is subject to change without notice depending upon a number of factors, including commodity prices and industry conditions.

The Company provided a new three-year production growth outlook. Concho expects to grow total production at a compound annual growth rate of 20% from 2017 to 2020. The outlook reflects the Company’s high-quality production base and strong operating momentum. Additionally, the Company expects to deliver this growth within cash flows from operations at an average crude oil price (WTI) in the low-to-mid $50 per barrel range over the duration of the outlook.

As with the Company’s 2018 outlook, growth over the three-year period from 2017 to 2020 is the output of reinvesting high-margin cash flow into its drilling program. To facilitate execution of the program, Concho has secured sand and associated transportation logistics. The sand will be sourced from several regional mines in the Permian Basin. In addition to reducing operational risks across the supply chain, the Company expects to capture well cost savings from locking in a key component of completion operations.

Commodity Derivatives Update

The Company enters into commodity derivatives to manage its exposure to commodity price fluctuations. For 2018, Concho has crude oil swap contracts covering approximately 105 MBopd at a weighted average price of $52.98 per Bbl. Please see the table under “Derivatives Information” below for detailed information about the Company’s current derivatives positions.

Conference Call

Concho will host a conference call tomorrow, February 21, 2018, at 8:00 AM CT (9:00 AM ET) to discuss fourth quarter and full-year 2017 results. The telephone number and passcode to access the conference call are provided below:

Dial-in: (844) 263-8298
Intl. dial-in: (478) 219-0007
Participant Passcode: 2989439

To access the live webcast and view the related earnings presentation, visit Concho’s website at www.concho.com. The replay will also be available on the Company’s website under the “Investors” section.

Upcoming Conferences

The Company will participate in the following upcoming conferences:

   
Conference Date Conference Presentation Time
March 5, 2018 Raymond James 39th Annual Institutional Investors Conference 8:15 AM CT
March 26, 2018 Scotia Howard Weil 46th Annual Energy Conference 10:55 AM CT
 

The presentations will be available on the Company’s website on or prior to the day of the first conference.

Concho Resources Inc.

Concho Resources Inc. is an independent oil and natural gas company engaged in the acquisition, development, exploration and production of oil and natural gas properties. The Company’s operations are focused in the Permian Basin of Southeast New Mexico and West Texas. For more information, visit the Company’s website at www.concho.com.

Forward-Looking Statements and Cautionary Statements

The foregoing contains “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 press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Forward-looking statements contained in this press release specifically include statements, estimates, guidance and projections regarding the Company’s future financial position, operations, performance, business strategy, oil and natural gas reserves, drilling program, production, capital expenditure budget, liquidity and capital resources, the timing and success of specific projects, outcomes and effects of litigation, claims and disputes, derivative activities and sources of financing. The words “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “potential,” “could,” “may,” “foresee,” “plan,” “will,” “guidance,” “outlook,” “goal” or other similar expressions that convey the uncertainty of future events or outcomes are intended to identify forward-looking statements, which generally are not historical in nature. However, the absence of these words does not mean that the statements are not forward-looking. These statements are based on certain assumptions and analyses made by the Company based on management’s experience, expectations and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Forward-looking statements are not guarantees of performance. Although the Company believes the expectations reflected in its forward-looking statements are reasonable and are based on reasonable assumptions, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in full or at all) or will prove to have been correct. The guidance capital program and outlook presented herein are subject to change by the Company without notice and the Company has no obligation to affirm or update such information, except as required by law. Moreover, such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. These include the risk factors discussed or referenced in the Company’s most recent Annual Report on Form 10-K; Quarterly Reports on Form 10-Q and Current Reports on Forms 8-K; risks relating to declines in, or the sustained depression of, the prices the Company receives for its oil and natural gas, or future prices that are lower than those assumed; uncertainties about the estimated quantities of oil and natural gas reserves; drilling, completion and operating risks; the adequacy of the Company’s capital resources and liquidity including, but not limited to, access to additional borrowing capacity under its credit facility; the effects of government regulation, permitting and other legal requirements, including new legislation or regulation of hydraulic fracturing, climate change, derivatives reform or the export of oil and natural gas; the impact of current and potential changes to federal or state tax rules and regulations, including the Tax Cuts and Jobs Act; evolving cybersecurity risks, such as those involving unauthorized access, denial-of-service attacks, malicious software, data privacy breaches by employees, insiders or others with authorized access, cyber or phishing-attacks, ransomware, malware, social engineering, physical breaches or other actions; risks associated with acquisitions, including costs and the ability to realize expected benefits; the impact of potential changes in the Company’s credit ratings; environmental hazards, such as uncontrollable flows of oil, natural gas, brine, well fluids, toxic gas or other pollution into the environment, including groundwater contamination; difficult and adverse conditions in the domestic and global capital and credit markets; risks related to the concentration of the Company’s operations in the Permian Basin of southeast New Mexico and west Texas; disruptions to, capacity constraints in or other limitations on the pipeline systems that deliver the Company’s oil, natural gas and natural gas liquids and other processing and transportation considerations; the costs and availability of equipment, resources, services and qualified personnel required to perform the Company’s drilling completion and operating activities; potential financial losses or earnings reductions from the Company’s commodity price risk-management program; risks and liabilities associated with acquired properties or businesses; uncertainties about the Company’s ability to successfully execute its business and financial plans and strategies; uncertainties about the Company’s ability to replace reserves and economically develop its current reserves; general economic and business conditions, either internationally or domestically; competition in the oil and natural gas industry; uncertainty concerning the Company’s assumed or possible future results of operations; and other important factors that could cause actual results to differ materially from those projected.

Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law.

Cautionary Statements Regarding Resource

The Company may use the term “resource potential” and similar phrases to describe estimates of potentially recoverable hydrocarbons that SEC rules prohibit from being included in filings with the SEC. These are based on analogy to the Company’s existing models applied to additional acres, additional zones and tighter spacing and are the Company’s internal estimates of hydrocarbon quantities that may be potentially discovered through exploratory drilling or recovered with additional drilling or recovery techniques. These quantities may not constitute “reserves” within the meaning of the Society of Petroleum Engineer’s Petroleum Resource Management System or SEC rules. Such estimates and identified drilling locations have not been fully risked by Company management and are inherently more speculative than proved reserves estimates. Actual locations drilled and quantities that may be ultimately recovered from the Company’s interests could differ substantially from these estimates. There is no commitment by the Company to drill all of the drilling locations that have been attributed to these quantities. Factors affecting ultimate recovery include the scope of the Company’s ongoing drilling program, which will be directly affected by the availability of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, transportation constraints, regulatory approvals, actual drilling results, including geological and mechanical factors affecting recovery rates, and other factors. Such estimates may change significantly as development of the Company’s oil and natural gas assets provide additional data. The Company’s production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases or other factors that are beyond the Company’s control.

 
Concho Resources Inc.
Consolidated Balance Sheets
Unaudited
 
     
       
December 31,
(in millions, except share and per share amounts)   2017   2016
Assets
Current assets:
Cash and cash equivalents $ - $ 53
Accounts receivable, net of allowance for doubtful accounts:
Oil and natural gas 331 220
Joint operations and other 212 238
Inventory 14 16
Derivative instruments - 4
Prepaid costs and other   35     31  
Total current assets   592     562  
Property and equipment:
Oil and natural gas properties, successful efforts method 21,267 18,476
Accumulated depletion and depreciation   (8,460 ) (7,390 )
Total oil and natural gas properties, net 12,807 11,086
Other property and equipment, net   234     216  
Total property and equipment, net   13,041     11,302  
Funds held in escrow - 43
Deferred loan costs, net 13 11
Intangible assets, net 26 24
Other assets   60     177  
Total assets $ 13,732   $ 12,119  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable - trade $ 43 $ 28
Bank overdrafts 116 -
Revenue payable 183 132
Accrued drilling costs 330 359
Derivative instruments 277 82
Other current liabilities   216     152  
Total current liabilities   1,165     753  
Long-term debt 2,691 2,741
Deferred income taxes 687 766
Noncurrent derivative instruments 102 96
Asset retirement obligations and other long-term liabilities 172 140
Stockholders’ equity:

Common stock, $0.001 par value; 300,000,000 authorized; 149,324,849 and 146,488,685 shares issued at December 31, 2017 and 2016, respectively

- -
Additional paid-in capital 7,142 6,783
Retained earnings 1,840 884

Treasury stock, at cost; 598,049 and 429,708 shares at December 31, 2017 and 2016, respectively

 

 

(67

)  

(44

)
Total stockholders’ equity   8,915     7,623  
Total liabilities and stockholders’ equity $ 13,732   $ 12,119  
 
 
Concho Resources Inc.
Consolidated Statements of Operations
Unaudited
 
           
Three Months Ended Years Ended
December 31, December 31,
(in millions, except per share amounts)   2017   2016   2017   2016
 
Operating revenues:
Oil sales $ 631 $ 421 $ 2,092 $ 1,350
Natural gas sales   149     104     494     285  
Total operating revenues   780     525     2,586     1,635  
Operating costs and expenses:
Oil and natural gas production 115 80 408 320
Production and ad valorem taxes 59 42 199 131
Exploration and abandonments 17 23 59 77
Depreciation, depletion and amortization 298 277 1,146 1,167
Accretion of discount on asset retirement obligations 2 2 8 7
Impairments of long-lived assets - - - 1,525

General and administrative (including non-cash stock-based compensation of $17 and $16 for the three months ended December 31, 2017 and 2016, respectively, and $60 and $59 for the years ended December 31, 2017 and 2016, respectively)

64 66 244 226
Loss on derivatives 415 193 126 369
Gain on disposition of assets, net   (11 )   (9 )   (678 )   (118 )
Total operating costs and expenses   959     674     1,512     3,704  
Income (loss) from operations   (179 )   (149 )   1,074     (2,069 )
Other income (expense):
Interest expense (28 ) (42 ) (146 ) (204 )
Loss on extinguishment of debt - (28 ) (66 ) (56 )
Other, net   1     -     19     (9 )
Total other expense   (27 )   (70 )   (193 )   (269 )
Income (loss) before income taxes (206 ) (219 ) 881 (2,338 )
Income tax benefit   473     94     75     876  
Net income (loss) $ 267   $ (125 ) $ 956   $ (1,462 )
Earnings per share:
Basic net income (loss) $ 1.80 $ (0.86 ) $ 6.44 $ (10.85 )
Diluted net income (loss) $ 1.79 $ (0.86 ) $ 6.41 $ (10.85 )
 
 
Concho Resources Inc.
Consolidated Statements of Cash Flows
Unaudited
 
         
Years Ended December 31,
(in millions)   2017   2016
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net income (loss) $ 956 $ (1,462 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization 1,146 1,167
Accretion of discount on asset retirement obligations 8 7
Impairments of long-lived assets - 1,525
Exploration and abandonments, including dry holes 27 57
Non-cash stock-based compensation expense 60 59
Deferred income taxes (71 ) (864 )
Gain on disposition of assets, net (678 ) (118 )
Loss on derivatives 126 369
Net settlements received from derivatives 79 625
Loss on extinguishment of debt 66 56
Other non-cash items (1 ) 14
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Accounts receivable (126 ) 32
Prepaid costs and other (9 ) 6
Inventory - 2
Accounts payable 14 15
Revenue payable 52 (38 )
Other current liabilities   46     (68 )
Net cash provided by operating activities   1,695     1,384  
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and natural gas properties (1,581 ) (1,046 )
Acquisitions of oil and natural gas properties (908 ) (1,351 )
Additions to property, equipment and other assets (44 ) (61 )
Proceeds from the disposition of assets 803 332
Deposits on dispositions of oil and natural gas properties 29 -
Direct transaction costs for disposition of assets (18 ) -
Funds held in escrow - (43 )
Contributions to equity method investments   -     (56 )
Net cash used in investing activities   (1,719 )   (2,225 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt 2,795 600
Payments of debt (2,829 ) (1,200 )
Debt extinguishment costs (63 ) (42 )
Excess tax deficiency from stock-based compensation - (1 )
Net proceeds from issuance of common stock - 1,327
Payments for loan costs (25 ) (7 )
Purchase of treasury stock (23 ) (12 )
Increase in bank overdrafts   116     -  
Net cash provided by (used in) financing activities   (29 )   665  
Net decrease in cash and cash equivalents (53 ) (176 )
Cash and cash equivalents at beginning of period   53     229  
Cash and cash equivalents at end of period $ -   $ 53  
SUPPLEMENTAL CASH FLOWS:
Cash paid for interest $ 139 $ 232
Cash paid for income taxes $ 13 $ -
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Issuance of common stock for business combinations $ 291 $ 768
 
Concho Resources Inc.
Summary Production and Price Data
Unaudited

The following table sets forth summary information concerning production and operating data for the periods indicated:

             
Three Months Ended Years Ended
December 31, December 31,
            2017   2016   2017   2016
 
Production and operating data:
Net production volumes:
Oil (MBbl) 11,945 9,220 43,472 33,840
Natural gas (MMcf) 44,848 35,394 161,089 127,481
Total (MBoe) 19,420 15,119 70,320 55,087
 
Average daily production volumes:
Oil (Bbl) 129,837 100,217 119,101 92,459
Natural gas (Mcf) 487,478 384,717 441,340 348,309
Total (Boe) 211,083 164,337 192,658 150,511
 
Average prices per unit:
Oil, without derivatives (Bbl) $ 52.84 $ 45.66 $ 48.13 $ 39.90
Oil, with derivatives (Bbl) (a) $ 48.55 $ 50.32 $ 49.93 $ 57.90
Natural gas, without derivatives (Mcf) $ 3.33 $ 2.93 $ 3.07 $ 2.23
Natural gas, with derivatives (Mcf) (a) $ 3.39 $ 2.93 $ 3.06 $ 2.36
Total, without derivatives (Boe) $ 40.18 $ 34.70 $ 36.78 $ 29.68
Total, with derivatives (Boe) (a) $ 37.69 $ 37.55 $ 37.88 $ 41.03
 
Operating costs and expenses per Boe: (b)
Oil and natural gas production $ 5.92 $ 5.31 $ 5.80 $ 5.81
Production and ad valorem taxes $ 3.02 $ 2.80 $ 2.82 $ 2.38
Depreciation, depletion and amortization $ 15.33 $ 18.32 $ 16.29 $ 21.19
General and administrative $ 3.19 $ 4.30 $ 3.46 $ 4.09
                                   
 
(a) Includes the effect of net cash receipts from (payments on) derivatives:
                             
 
Three Months Ended Years Ended
December 31, December 31,
(in millions)   2017   2016   2017 2016
 
Net cash receipts from (payments on) derivatives:
Oil derivatives $ (50 ) $ 43 $ 79 $ 609
Natural gas derivatives   3     -   -   16
Total $ (47 ) $ 43 $ 79 $ 625
                             
 
The presentation of average prices with derivatives is a result of including the net cash receipts from (payments on) commodity derivatives that are presented in our statements of cash flows. This presentation of average prices with derivatives is a means by which to reflect the actual cash performance of our commodity derivatives for the respective periods and presents oil and natural gas prices with derivatives in a manner consistent with the presentation generally used by the investment community.
(b) Per Boe amounts calculated using dollars and volumes rounded to thousands.
 
Concho Resources Inc.
Estimated Year-End Proved Reserves
Unaudited

The table below provides a summary of changes in total proved reserves for the year ended December 31, 2017, as well as proved developed reserves at the beginning and end of the year.

       
(MMBoe)   2017  
 
Total proved reserves
Balance, January 1 720
Purchases of minerals-in-place 34
Sales of minerals-in-place (4 )
Extensions and discoveries 174
Revisions:
Other non-price related revisions (43 )
Price-related revisions 29
Production   (70 )
Balance, December 31   840
 
Proved developed reserves
Balance, January 1   466
Balance, December 31   588
 
Concho Resources Inc.
Costs Incurred
Unaudited

The table below provides the costs incurred for oil and natural gas producing activities for the periods indicated:

           
Three Months Ended Years Ended
December 31, December 31,
(in millions)   2017   2016   2017     2016
 
Property acquisition costs:
Proved $ 2 $ 725 $ 303 $ 982
Unproved 40 982 905 1,154
Exploration 296 189 1,021 701
Development   175   162   653   449
Total costs incurred for oil and natural gas properties $ 513 $ 2,058 $ 2,882 $ 3,286
 
Concho Resources Inc.
Derivatives Information
Unaudited

The table below provides data associated with the Company’s derivatives at February 20, 2018, for the periods indicated:

               
2018  
First Second Third Fourth
Quarter Quarter Quarter Quarter Total 2019 2020
 
Oil Price Swaps: (a)
Volume (Bbl) 11,038,629 10,178,170 8,944,318 8,106,007 38,267,124 27,306,500 4,026,000
Price (Bbl) $ 53.01 $ 53.30 $ 52.98 $ 52.53 $ 52.98 $ 52.95 $ 54.80
 
Oil Basis Swaps: (b)
Volume (Bbl) 10,674,000 9,492,000 8,465,000 7,757,000 36,388,000 26,064,500 8,784,000
Price (Bbl) $ (0.75 ) $ (0.81 ) $ (0.85 ) $ (0.89 ) $ (0.82 ) $ (0.97 ) $ (0.09 )
 
Natural Gas Price Swaps: (c)
Volume (MMBtu) 17,833,000 16,979,000 15,740,000 14,778,000 65,330,000 17,840,992 -
Price (MMBtu) $ 3.05 $ 3.04 $ 3.04 $ 3.03 $ 3.04 $ 2.86 $ -
                                               
 
(a) The index prices for the oil price swaps are based on the New York Mercantile Exchange (“NYMEX”) – West Texas Intermediate (“WTI”) monthly average futures price.
(b) The basis differential price is between Midland – WTI and Cushing – WTI.
(c) The index prices for the natural gas price swaps are based on the NYMEX – Henry Hub last trading day futures price.
 
Concho Resources Inc.
Supplemental Non-GAAP Financial Measures
Unaudited

The Company reports its financial results in accordance with the United States generally accepted accounting principles (GAAP). However, the Company believes certain non-GAAP performance measures may provide financial statement users with additional meaningful comparisons between current results, the results of its peers and of prior periods. In addition, the Company believes these measures are used by analysts and others in the valuation, rating and investment recommendations of companies within the oil and natural gas exploration and production industry. See the reconciliations throughout this release of GAAP financial measures to non-GAAP financial measures for the periods indicated.

Reconciliation of Net Income (Loss) to Adjusted Net Income and Adjusted Earnings per Share

The Company’s presentation of adjusted net income and adjusted earnings per share that exclude the effect of certain items are non-GAAP financial measures. Adjusted net income and adjusted earnings per share represent earnings and diluted earnings per share determined under GAAP without regard to certain non-cash and unusual items. The Company believes these measures provide useful information to analysts and investors for analysis of its operating results on a recurring, comparable basis from period to period. Adjusted net income and adjusted earnings per share should not be considered in isolation or as a substitute for earnings or diluted earnings per share as determined in accordance with GAAP and may not be comparable to other similarly titled measures of other companies.

The following table provides a reconciliation from the GAAP measure of net income (loss) to adjusted net income (non-GAAP), both in total and on a per diluted share basis, for the periods indicated:

         
Three Months Ended Years Ended
December 31, December 31,
(in millions, except per share amounts)   2017   2016   2017   2016
 
Net income (loss) - as reported $ 267 $ (125 ) $ 956 $ (1,462 )
 
Adjustments for certain non-cash and unusual items:
Loss on derivatives 415 193 126 369
Net cash receipts from (payments on) derivatives (47 ) 43 79 625
Impairments of long-lived assets - - - 1,525
Leasehold abandonments 3 20 27 60
Loss on extinguishment of debt - 28 66 56
Gain on disposition of assets and other (9 ) (9 ) (678 ) (117 )
Tax impact (133 ) (101 ) 139 (924 )
Excess tax benefit - - (6 ) -
Changes in deferred taxes for enacted tax law changes and other estimates   (398 )   (21 )   (398 )   (21 )
Adjusted net income $ 98   $ 28   $ 311   $ 111  
 
Net income (loss) per diluted share - as reported $ 1.79 $ (0.86 ) $ 6.41 $ (10.85 )
 
Adjustments for certain non-cash and unusual items per diluted share:
Loss on derivatives 2.77 1.33 0.85 2.73
Net cash receipts from (payments on) derivatives (0.32 ) 0.30 0.52 4.63
Impairments of long-lived assets - - - 11.30
Leasehold abandonments 0.02 0.14 0.18 0.44
Loss on extinguishment of debt - 0.20 0.44 0.42
Gain on disposition of assets and other (0.06 ) (0.06 ) (4.54 ) (0.86 )
Tax impact (0.89 ) (0.70 ) 0.93 (6.85 )
Excess tax benefit - - (0.04 ) -
Changes in deferred taxes for enacted tax law changes and other estimates   (2.65 )   (0.15 )   (2.66 )   (0.15 )
Adjusted net income per diluted share $ 0.66   $ 0.20   $ 2.09   $ 0.81  
 
Adjusted earnings per share:
Basic net income $ 0.67 $ 0.20 $ 2.10 $ 0.81
Diluted net income $ 0.66 $ 0.20 $ 2.09 $ 0.81
 

Reconciliation of Net Income (Loss) to EBITDAX

EBITDAX (as defined below) is presented herein and reconciled from the GAAP measure of net income (loss) because of its wide acceptance by the investment community as a financial indicator.

The Company defines EBITDAX as net income (loss), plus (1) exploration and abandonments expense, (2) depreciation, depletion and amortization expense, (3) accretion of discount on asset retirement obligations expense, (4) impairments of long-lived assets, (5) non-cash stock-based compensation expense, (6) loss on derivatives, (7) net cash receipts from (payments on) derivatives, (8) gain on disposition of assets, net, (9) interest expense, (10) loss on extinguishment of debt and (11) federal and state income tax benefit. EBITDAX is not a measure of net income (loss) or cash flows as determined by GAAP.

The Company’s EBITDAX measure provides additional information which may be used to better understand the Company’s operations. EBITDAX is one of several metrics that the Company uses as a supplemental financial measurement in the evaluation of its business and should not be considered as an alternative to, or more meaningful than, net income (loss) as an indicator of operating performance. Certain items excluded from EBITDAX are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic cost of depreciable and depletable assets. EBITDAX, as used by the Company, may not be comparable to similarly titled measures reported by other companies. The Company believes that EBITDAX is a widely followed measure of operating performance and is one of many metrics used by the Company’s management team and by other users of the Company’s consolidated financial statements. For example, EBITDAX can be used to assess the Company’s operating performance and return on capital in comparison to other independent exploration and production companies without regard to financial or capital structure, and to assess the financial performance of the Company’s assets and the Company without regard to capital structure or historical cost basis.

The following table provides a reconciliation of the GAAP measure of net income (loss) to EBITDAX (non-GAAP) for the periods indicated:

         
Three Months Ended Years Ended
December 31, December 31,
(in millions)   2017   2016   2017   2016
 
Net income (loss) $ 267 $ (125 ) $ 956 $ (1,462 )
Exploration and abandonments 17 23 59 77
Depreciation, depletion and amortization 298 277 1,146 1,167
Accretion of discount on asset retirement obligations 2 2 8 7
Impairments of long-lived assets - - - 1,525
Non-cash stock-based compensation 17 16 60 59
Loss on derivatives 415 193 126 369
Net cash receipts from (payments on) derivatives (47 ) 43 79 625
Gain on disposition of assets, net (11 ) (9 ) (678 ) (118 )
Interest expense 28 42 146 204
Loss on extinguishment of debt - 28 66 56
Income tax benefit   (473 )   (94 )   (75 )   (876 )
EBITDAX $ 513   $ 396   $ 1,893   $ 1,633  
 
Concho Resources Inc.
Supplemental Measures
Unaudited

Reserves Replacement Ratio

The Company uses the reserves replacement ratio as an indicator of the Company’s ability to replenish annual production volumes and grow its reserves, thereby providing some information on the sources of future production. The reserves replacement ratio is a statistical indicator that is limited because it typically varies widely based on the extent and timing of discoveries and property acquisitions. Its predictive and comparative value is also limited for the same reasons. In addition, since the ratio does not embed the cost or timing of future production of new reserves, it cannot be used as a measure of value creation. The reserve replacement ratio of approximately 275% was calculated by dividing net proved reserve additions of 194 MMBoe (the sum of purchases, extensions and discoveries and total revisions) by production of 70 MMBoe.

Proved Developed Finding and Development (“F&D”) Cost

Proved developed F&D cost is an indicator used to assist in an evaluation of how much it costs the Company, on a per Boe basis, to add proved reserves. The Company’s proved developed F&D cost of $8.68 is calculated by dividing the sum of exploration and development costs incurred of $1.7 billion by the change in proved developed reserves year-over-year, excluding current year production, of 192 MMBoe. This calculation does not include the future development costs required for the development of proved undeveloped reserves.

Concho Resources Inc.
2018 Guidance

For 2018, the Company is providing “gathering, processing and transportation” expense guidance. This line item includes gathering, processing and transportation expense on assets that have specific marketing arrangements with fees prior to the transfer of control of the crude oil and natural gas that we produce. Gathering, processing and transportation expense is the result of the Company’s adoption and application of the new revenue recognition standard ASU No. 2014-09, “Revenue from Contracts with Customers” (Topic 606). The majority of the Company’s gathering, processing and transportation expense continues to be recorded within the Company’s realized crude oil and natural gas price realizations.

For the first quarter of 2018, Concho expects production to average between 215 MBoepd and 219 MBoepd.

The following table summarizes the Company’s operational and financial guidance for 2018.

 
2018
Production
Total production growth 16% - 20%
Crude oil production growth 20%
 
Price realizations, excluding commodity derivatives
Crude oil differential to NYMEX ($/Bbl) ($2.00) - ($2.50)
Natural gas (per Mcf) (% of NYMEX)

90% - 100%

 
Operating costs and expenses
Lease operating expense and workover costs ($/Boe) $6.00 - $6.50
Gathering, processing and transportation $0.50 - $0.60
Oil & natural gas taxes (% of oil and natural gas revenues) 7.75%
General and administrative (“G&A”) expense ($/Boe):
Cash G&A expense $2.50 - $2.80
Non-cash stock-based compensation $0.80 - $1.00
Depletion, depreciation and amortization expense ($/Boe) $15.00 - $16.00
Exploration and other ($/Boe) $0.25 - $0.75
Interest expense ($ in millions):
Cash $110 - $120
Non-cash $6
Income tax rate 25%
 
Capital program ($ in billions) $1.9 - $2.1
 

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Thank you to everyone who told us why they love wind power last week! In just five short days, over 700 Americans used the #iheartwind hashtag to share why they support homegrown wind energy.

We heard about clean air, jobs, economic development, hope for the future, and environmental protections, among many other reasons. Here’s a final roundup of some more favorite posts:

The little bud came to visit me at work. #iheartwind

Posted by Allison Poe on Friday, February 16, 2018

Our own Felipe Betancor pictured on his first wind turbine climb in Maine: “#iheartwind because nature is the best engineer” pic.twitter.com/kauT5TknkD

— GE Renewable Energy (@GErenewables) February 15, 2018

Here's how Bill, an Operator at our Little Rock blade factory, feels about wind: "#Iheartwind because it takes care of my family." https://t.co/q5bBwQZT6e @AWEA pic.twitter.com/HWM9j3UkjX

— LM Wind Power (@LMWindPower) February 14, 2018

So many good reason to support wind energy #iheartwind pic.twitter.com/kDYP2T89hX

— Blattner Energy (@BlattnerEnergy) February 15, 2018

Southern Power employees close out #iheartwind week by sharing our top 10 reasons why we love wind! Learn more >> https://t.co/QLyPhM2wBs pic.twitter.com/oECyqWIkIT

— Southern Power (@SouthernPowerCo) February 16, 2018

@AWEA The Trusted Energy team loves #wind because it's an investment in future generations, provides affordable renewable energy, and creates jobs! #iheartwind #cleanenergy #renewables #TrustedEnergy pic.twitter.com/onVT0wOUqr

— Trusted Energy (@TrustedNRG) February 16, 2018

#iheartwind because we love admiring the beauty of clean energy. We have the best job in the world. #offshorewind #blockisland @GErenewables pic.twitter.com/wjnKkhLdfM

— Shane Watts (@watson6661) February 15, 2018

Our team at Goldthwaite Wind Energy loves #wind because "It builds rural communities! It’s green! It’s clean! It’s the future! It’s a tight knit family! Provides clean energy!" #iheartwind #cleanenergy #renewables pic.twitter.com/mG6NwrmMU1

— InvenergyLLC (@InvenergyLLC) February 16, 2018

SAN FRANCISCO--(BUSINESS WIRE)--Pacific Gas and Electric Company (PG&E) has reached California’s 2020 renewable energy goal three years ahead of schedule, and now delivers nearly 80 percent of its electricity from greenhouse-gas (GHG) free resources.

The company announced today that 33 percent of its electricity came from renewable resources including solar, wind, geothermal, biomass and small hydroelectric sources in 2017. Additionally, 78.8 percent of PG&E’s total electric power mix is from GHG-free sources including nuclear, large hydro and renewable sources of energy.

It’s the highest percentage of clean energy deliveries in PG&E’s history.

“Reducing carbon emissions, as quickly as possible, is the main objective of California’s energy policies. Creating a sustainable energy future is also the guiding vision for PG&E. We’re proud to provide our customers and communities with safe, reliable, affordable and clean energy every single day, while building the energy network of tomorrow,” said PG&E Corporation President and CEO Geisha Williams.

The milestone comes three years before California’s 2020 mandate for energy companies to reach 33 percent of retail electric deliveries from eligible renewable sources. The company is also on pace to reach California’s 2030 goal of 50 percent renewables and a separate company goal of 55 percent renewables by 2031 ahead of schedule.

The record renewable energy deliveries are mirrored by continued advancements in reliability, safety and innovation. PG&E continues to make investments to its electric infrastructure and uses advanced technology to make the power grid smarter and more resilient. Additionally, the company has increased its investment in Electric Vehicle (EV) infrastructure to help accelerate the adoption of EVs in California to improve air quality and reduce GHG emissions. Most recently, PG&E launched its new EV Charge Network program to install 7,500 EV chargers at condominiums, apartment buildings and workplaces across Northern and Central California, including at sites in disadvantaged communities.

A clean energy history, a cleaner future

PG&E has been a leader in clean energy and energy efficiency for nearly 50 years, beginning with energy conservation programs in the 1970s and continuing in the early 2000s with the first clean energy power purchase contracts.

PG&E’s diverse renewable power mix includes solar, wind, geothermal, bio-power and small, eligible-renewable hydroelectric energy. In addition, PG&E has connected more than 340,000 customers with private rooftop solar to the energy grid – representing about 20 percent of the nation’s private rooftop solar installations and approximately 3200 MWs of solar powered energy. The company owns one of the nation’s largest hydro-electric systems, as well as nuclear facility Diablo Canyon Power Plant, both of which emit no greenhouse gases.

Earlier this year, PG&E received approval to close Diablo Canyon in 2025, with plans to replace the nuclear power plant with other clean and renewable sources of energy.

About PG&E

Pacific Gas and Electric Company, a subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest combined natural gas and electric energy companies in the United States. Based in San Francisco, with more than 20,000 employees, the company delivers some of the nation’s cleanest energy to nearly 16 million people in Northern and Central California. For more information, visit www.pge.com and www.pge.com/en/about/newsroom/index.page.

HOUSTON--(BUSINESS WIRE)--ENGIE North America Inc. today announced it has acquired Infinity Renewables, a leading developer of utility-scale wind projects in the United States. The acquisition includes more than 8,000 MW of projects in various stages of development.

Headquartered in Santa Barbara, California, Infinity Renewables’ experienced team, along with its funding and development partner MAP® Renewable Energy, has successfully developed and sold nearly a dozen projects totaling over 1,600 MW, all of which are now in commercial operation.

Corporations in the U.S. are increasingly seeking clean energy sources of power, both utility-scale and decentralized, as well as services to run their facilities more reliably and efficiently with fewer carbon emissions and lower costs. ENGIE has been working to expand its offerings in North America to address these needs. Infinity Renewables will be a key piece of ENGIE’s solution set for current and future customers. ENGIE intends to retain the entire Infinity staff, including its principals who formed Infinity Renewables in 2008. The combined ENGIE and Infinity Renewables team will be working together to complete development and construction of the Infinity portfolio, and will continue to own and operate those projects following commercial operation to support the increasing demand in the U.S. for renewable energy and more broadly the United States’ transition to a cleaner electrical system.

“With Infinity Renewables, ENGIE is investing in an experienced, accomplished development team, and we look forward to working with this team to accelerate the expansion of our renewables presence within the United States,” said Frank Demaille, President and CEO of ENGIE North America. “By adding more wind energy to our other retail, solar, and biomass offerings in the U.S., we can meet customers’ renewable energy procurement goals much more comprehensively than before,” he added.

“We’re very excited to join the ENGIE family, and to contribute to the company’s transition to a low-carbon future,” said Matt Riley, CEO of Infinity Renewables. “Joining forces with a global renewable energy leader like ENGIE enables Infinity to advance its original mission, to bring more wind energy online. Working with ENGIE will benefit our key stakeholders, including landowners, communities, and purchasers of zero-carbon energy from our wind farms.”

The Infinity Renewables team will join a larger family of ENGIE businesses in North America, which span renewable and natural gas-fired power production, including a significant renewables presence in Canada with 700 MW of operating wind generation and over 2,000 MW of wind projects in various stages of development; natural gas and liquefied natural gas (LNG) deliveries; retail energy sales to homes and businesses; and a wide range of services to enhance energy efficiency and reduce carbon and cost. ENGIE serves customers ranging from Fortune 500 companies; small businesses; utilities; federal, state, provincial, and municipal governments; universities; and individuals.

About ENGIE North America Inc.
ENGIE North America Inc. manages a range of energy businesses in the United States and Canada, including low- or carbon-free electricity generation and cogeneration, natural gas and liquefied natural gas (LNG) distribution and sales, retail energy sales, and services to help customers run their facilities more efficiently and optimize energy use and expense.

About ENGIE S.A.
ENGIE is committed to taking on the major challenges of the energy revolution, towards a world more decarbonized, decentralized, and digitalized. The Group aims to become the leader of this new energy world by focusing on three key activities for the future: low carbon generation in particular from natural gas and renewable energy, energy infrastructure, and efficient solutions adapted to all its customers (individuals, businesses, territories, etc.). Innovation, digital solutions, and customer satisfaction are the guiding principles of ENGIE’s development. ENGIE is active in around 70 countries, employs 150,000 people worldwide and achieved revenues of €66.6 billion in 2016. The Group is listed on the Paris and Brussels stock exchanges (ENGI) and is represented in the main financial indices (CAC 40, BEL 20, DJ Euro Stoxx 50, Euronext 100, FTSE Eurotop 100, MSCI Europe) and non-financial indices (DJSI World, DJSI Europe and Euronext Vigeo Eiris - World 120, Eurozone 120, Europe 120, France 20, CAC 40 Governance).

Over 800 MW in four U.S. projects connected to grid

Schenectady, NY – February 7, 2018 – GE Renewable Energy (NYSE: GE) today announced it secured commitments for 2.9 gigawatts (GW) of its variably rated 2.2 MW to 2.5 MW onshore wind turbine with a 127-meter rotor in North America. Some of the largest commitments are for projects with Invenergy, Lincoln Clean Energy, and Avangrid Renewables.

Featuring the best-in-class capacity factor, the 2 MW-127 demonstrates the next step in turbine technology and efficiency. It also brings a significant improvement in Annual Energy Production (AEP) within the 2 MW range, reducing the cost of energy for customers with medium to low wind speed sites.

Pete McCabe, President & CEO of GE's Onshore Wind Business said, "We're delighted by the positive response from our customers to the GE 2 MW-127 and look forward to improving their project economics as we install this leading technology at wind farms across North America."

The 2 MW-127 builds on GE's 2 MW platform that has over 5.5 GW installed and operating today. It features the same proven performance and reliability with an even greater capacity factor while also increasing the AEP of GE's product offerings.

Today, GE's 2 MW platform wind turbines come digitally-equipped and ready to utilize GE's Predix core applications including its Asset Performance Management (APM), Cybersecurity, and Business Optimization (BO) solutions. The digital suite of apps enables improved business outcomes, including the lifecycle extension of the customers' wind farms and the improvement of overall farm economics through data driven insights and actions.

###

About GE Renewable Energy
GE Renewable Energy is a $10 billion start-up that brings together one of the broadest product and service portfolios of the renewable energy industry. Combining onshore and offshore wind, hydro and innovative technologies such as concentrated solar power and more recently turbine blades, GE Renewable Energy has installed more than 400+ gigawatts capacity globally to make the world work better and cleaner. With more than 22,000 employees present in more than 55 countries, GE Renewable Energy is backed by the resources of the world's first digital industrial company. Our goal is to demonstrate to the rest of the world that nobody should ever have to choose between affordable, reliable, and sustainable energy.
Follow us @GErenewables and www.gerenewableenergy.com

- Business Management of over 4,000 MW Installed Capacity

São Paulo, February 5 – GE Renewable Energy (NYSE: GE) today announced it has signed an agreement with ENGIE to supply 144 of its 2.5-116 turbines for the Umburanas Wind Farm Complex in upstate Bahia, Brazil. This 360MW wind installment will add to the 326.7MW under commissioning by GE Renewable Energy at the neighboring Campo Largo I wind farm, also owned by ENGIE.

Vikas Anand, General Manager, GE’s Onshore Wind Business, Americas said “Together, these two wind farms represent our largest volume of turbines in a single cluster in Brazil. It’s a great honor to be working with ENGIE and to continue to grow the wind capacity together and increase the wind energy footprint in Brazil. This newly announced project also demonstrates our continued commitment to Brazil’s Wind industry.”

GE Renewable Energy will also be providing 10 years of Operations and Maintenance at the Umburanas Wind Farm.

ENGIE’s potential in the region of Umburanas and Sento Sé exceeds 1,300 MW. The 326.7 MW Campo Largo 1 site is currently under construction and will begin commercial operations in January 2019. It will create enough energy to power a population of up to 600,000 inhabitants. The newly announced 360MW Umburanas project has also begun construction, and the first turbines are set to be delivered in 2018.

Eduardo Sattamini, president for ENGIE Brasil Energia said “We have selected GE Renewable Energy to supply turbines for both projects and we trust GE’s commitment to implement the projects according to the agreed business plan, therefore reinforcing the partnership between the two companies”.

GE’s 2.5-116 turbine for Umburanas will feature 90-meter-tall towers. This machine provides efficiency gains to the wind farm by maximizing energy production, reducing infrastructure spending and making for an even more competitive wind levelized cost of electricity (LCOE). The turbine’s energy production is increased by as much as 32% at 8.5 m/s, compared to GE’s 1.7MW.

###

About ENGIE
ENGIE is committed to sustainable growth in order to take on the major challenges of the energy revolution towards a world more decarbonized, decentralized and digitalized. The Group aims to become the leader of this new energy world by focusing on three key initiatives for the future: low carbon generation, in particular from natural gas and renewable energy, energy infrastructure and efficient solutions adapted to all its customers (individuals, businesses, territories, etc.). Customer satisfaction, innovation and digital solutions are the guiding principles of ENGIE’s development. ENGIE is active in about 70 countries, employs 150,000 people worldwide and achieved revenues of €66.6 billion in 2016. The Group is listed on the Paris and Brussels stock exchanges (ENGI) and is represented in the main financial indices (CAC 40, BEL 20, DJ Euro Stoxx 50, Euronext 100, FTSE Eurotop 100, MSCI Europe) and non-financial indices (DJSI World, DJSI Europe e Euronext Vigeo Eiris - World120, Eurozone 120, Europe 120, France 20, CAC 40 Governance).

About ENGIE Brasil
In Brazil, ENGIE is the largest private producer of power, operating an installed capacity of 11,059 MW in 31 power plants and accounting for roughly 6% of the country’s capacity. The Group has 90% of its installed capacity in Brazil coming from clean, renewable sources and with low emissions of greenhouse gases, a position reinforced by the construction of new wind farms in the Northeast and by one of the largest hydropower plants in Brazil, Jirau (3,750 MW), located on the Madeira river and inaugurated in December 2016. The Group is also present in the solar distributed generation market and offers services related to power, engineering and integration of systems working on the development of telecommunications and security systems, public lighting and urban mobility for smart cities, infrastructures and the oil & gas industry. With 2,100 employees, ENGIE had a turnover of around BRL 6 billion in the country in 2016.

About GE Renewable Energy
GE Renewable Energy is a 10 billion dollar start-up that brings together one of the broadest product and service portfolios of the renewable energy industry. Combining onshore and offshore wind, hydro and innovative technologies such as concentrated solar power, GE Renewable Energy has installed more than 400GW capacity globally to make the world work better and cleaner. With more than 22,000 employees present in more than 55 countries, GE Renewable Energy is backed by the resources of the world’s first digital industrial company.
Follow us on Twitter @GErenewables and www.gerenewableenergy.com.

ENGIE Media Contact
DFATO
Duda Hamilton | This email address is being protected from spambots. You need JavaScript enabled to view it. +55 48 99962-1257

GE Media Contact
Edelman Significa
Laura Chiavenato | This email address is being protected from spambots. You need JavaScript enabled to view it. +55 11 3066 7732
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  • Salitrillos, Enel’s first plant in Tamaulipas, will be able to generate around 400 GWh each year 
  • The investment in the construction of the facility amounts to approx. 120 million US dollars 

  • All 60 transition pieces installed
  • Transformer station will be delivered from France in spring

Together with the entire Product Development team, the Senvion Patent Department is constantly looking for innovative approaches that will make Senvion and the wind industry better, cheaper or more adaptable in the future. In this case, the Senvion colleagues have jointly managed to find a patent solution for sound emissions from the turbines in the truest sense of the word. The “Hamburger Wirtschaft” magazine has taken a close look at the innovation:

Senvion has developed an innovative procedure for reducing the operating noise of wind turbines. The innovation and patent center has selected it as ‘Patent of the Month.’

Wherever wind turbines are installed, one topic generally arises sooner or later: are the turbines too loud?

It is a fact that roughly one third of German gross electricity consumption is currently covered by renewable energy sources. In 2016, wind energy usage in particular was further expanded in Germany. According to the register of installations of the German Bundesnetzagentur for Electricity, Gas, Telecommunications, Post and Railway, new onshore wind turbines with a total power of 4,402 megawatts were commissioned. This represents a 10 percent increase on the previous year. One of the manufacturers of wind turbines is Senvion GmbH (up to 2014: REpower Systems), which has its German headquarters in Hamburg.

Less and less space is available for wind farms. To achieve more power, old turbines are being replaced with new ones and increasingly wind farms are being built closer to residential areas or nature reserves. “The importance of noise protection has increased,” says Ulrike Keltsch, head of the patent department at Senvion. In addition to residents, animals can also be disturbed by the operating noises.

In summer 2015, Senvion's Development department applied for a patent for a procedure that can reduce the sound volume of the wind turbines in operation. The noise emissions of wind turbine generators include broadband noises that form a masking noise. However, narrowband noises may also be audible under certain circumstances; for example they can be caused by a generator or a gearbox of the wind turbine. The invention consists of a noise emission control device for a wind turbine that reduces any noises that may arise by surrounding them with the broadband noises that are more pleasant for humans and animals. This is achieved by means of an active noise source that emits a masking noise in at least one spatial direction in a frequency band around the individual sound frequency.

“This control device is not yet available,” says Keltsch. “Our turbines are quiet enough for the existing wind farm sites.” Senvion's engineers frequently develop their inventions preventatively, looking to the future. However, since the requirements regarding generating volume are in-creasing, the turbines themselves will also increase in size , and Keltsch believes that it is perfectly possible that the invention will come into use. If a customer wants a noise reduction measure, for a new construction or a retrofit, prototypes of the control device would then be in-stalled and tested in an existing wind farm, Keltsch states. “We would probably have to perform two to three correction cycles before the invention is implemented perfectly,” says Keltsch. Then Senvion would talk to the suppliers, clarify the supply chain, order the necessary individual parts, and finally manufacture the product in a small production run. The invention could then be tested in practice, and be ready for operation within four to twelve weeks.

Courtesy Senvion

There is a growing trend in the international wind industry: The technological evolution of wind turbines is moving towards machines with larger rotors to better capture wind at low wind sites. France is fully participating in this movement. At the Lussac-Les-Églises wind farm Senvion completed the installation of six 3.0M122 wind turbines with rotor diameters of 122 meters, as large as the diameter of the famous Ferris wheel “London Eye”.

The wind farm, developed by Quadran Groupe Direct Energie, is located in the French department of Haute Vienne. Guirec Dufour, Construction Director at Quadran states: "Lussac-Les-Églises is a low wind site and the wind turbine 3.0M122, capturing the most energy, allows us to optimize the yield of our project. However the challenge was the transportation of the blades to the site. The Blade Lifter solution, proposed by Senvion, made this project possible.”

Each blade is measured at 60 meters and weighs 15 tons. The blades were transported over a distance of 200 kilometers, from the port of La Rochelle to Poitiers, where a transshipment area was used to equip the Blade Lifter. From there the transport went on the challenging route to Lussac-Les-Églises.

Florian Dufresne, Senvion Europe South West Logistics Coordinator explains: "The only possible route for the convoy was to cross the village of Lussac-Les-Églises. However, the total length of the semi-trailer carrying the blade, is 66 meters. With such a ground length, it is impossible to turn in the many tight corners of the village. Facing this challenge, we opted for an innovative solution: The Blade Lifter. By lifting the blade to a 30 degrees angle, the ground length could be reduced to 17 meters, which allowed the safe passage of the convoy."

Technically, the Blade Lifter can lift the blade to 50 degree angles for the passage of even longer blades. The residents of the town were impressed by the technical prowess of this equipment. Guirec Dufour adds: “Thanks to a close collaboration between the Quadran and Senvion teams, the particularities related to the use of the Blade Lifter - transshipment location, moving telecommunications and power lines, pruning - were efficiently managed. This good collaboration limited the impact of the oversized transportation on the village residents and made the commissioning of the wind farm possible without any delay.”

Installing a 122-meter rotor at 89 meters height was also a challenge. The excellent coordination of the teams, a precise planning, while integrating the environment constraints and the uncertainties of the weather conditions, were essential to successfully install the six wind turbines with such a large dimension. Samson Lecluyse, Senvion Europe South-West Project Manager states: "The construction of the Lussac-Les-Eglises wind farm was an exciting project. The complexity for this wind farm lies in the environment with high wooded obstacles, which is close to the lifting zones. Due to the very large dimension of the components, the Senvion team had to prepare the ground with a maximum of rigor and precision so that the project is realized within the deadlines defined in the planning."

The Senvion team is proud to have met all the delivery and installation challenges of this project. The Lussac-Les-Églises wind farm, with a total capacity of 15 megawatts (MW) was commissioned beginning of November 2017. It will produce enough electricity to power nearly 15,000 people (including heating) in France.

Senvion is now ready to meet other challenges, including the transport of wind turbines with even longer blades: the newly announced Senvion turbine 3.7M144 EBC has blades over 70 meters long!

Courtesy Senvion

At the Ria Blades production plant, rotor blades with a length of 74 meters are now manufactured. A completely new production process was designed for this purpose. In line with the continuous improvement approach of the production processes, an efficient robot was developed in cross-functional collaboration.

One of the most photographed monuments in Portugal is located in Lisbon at the mouth of the river Tejo in the Atlantic. The "Padrão dos Descobrimentos", a 56 meter high sailing vessel made of stone and concrete, is dedicated to sailors and explorers. The monumental mosaic of a compass is adorned on the ground in front of the monument. Wind has always been a mainstay of development in the coastal state at the south-west corner of Europe. The wind, which the Portuguese explorers capitalized on more than half a thousand years ago, is now also used by Senvion.

250 kilometers north of Padrão dos Descobrimentos, in the industrial region of Aveiro, Senvion can be found in the town of Vagos. Here, Ria Blades is located on an area of 83,000 square meters where currently 1300 colleagues are employed.

Francisco Mira, Process Engineer at Ria Blades, stands in the plant's largest manufacturing facility: "To make rotor blades of this enormous size, we had to greatly expand the site and completely redesign the manufacturing process. The concept then arose with the cooperation of different departments - production, maintenance and HSE (Health, Safety & Environment). But the close collaboration with our suppliers and partners was also essential. This was a real team effort and I am proud that we have worked hand in hand to find the best solution in the end."

At the center of the manufacturing process are two semi-automated processes. On the one hand, the stacking of the fiberglass layers of some rotor blade components. So far this process has been carried out manually in a time-consuming manner, since the positioning of the different layers required the highest precision. In Portugal, RodPack technology is used which has much better material properties than conventional glass fibers and opens up new production possibilities. Thus, in the new process, each fiberglass layer is precisely set in the right place effortlessly by the equipment. Francisco Mira explains, "RodPack was the reason why we completely changed this process." The result is that there are considerably fewer shifts and working hours needed to complete the rotor blade.

The second process is now almost completely taken over by an equipment that sands the rotor blades before painting. While the rotor blades were previously sanded with a 35 kilogram sanding machine, which had to be operated by two people, 90 percent of this work is now done by robots, which are monitored by a colleague.

"Both processes, the semi-automatic fiberglass lay-up and the sanding process are thus much faster, more efficient and physically less strenuous. What is clear with Mira, however, is that "humans are responsible for decisions and will remain indispensable. A machine remains a machine.


Originally, Francisco Mira comes from the automotive industry. Since 2015 he has been with Ria Blades. "A lot of things in the organization and the way of thinking reminds me of my previous work: precision, flexibility, lean production concepts or high quality requirements. But we are trying to absorb the experience from very different branches of industry and make it usable for us. In particular, it is decisive for us to have the ability to think 'out of the box'. This is the only way to revolutionize the manufacturing process."

Courtesy Senvion

AMSTERDAM, November 28, 2017 -- The World Bank and the Technical University of Denmark (DTU) today launched new Global Wind Atlas, a free web-based tool to help policymakers and investors identify promising areas for wind power generation, virtually anywhere in the world. 

The Global Wind Atlas is expected to help governments save millions of dollars by avoiding the need for early-stage, national-level wind mapping. It will also provide commercial developers with an easily accessible platform to compare resource potential between areas in one region or across countries.

The new tool is based on the latest modeling technologies, which combine wind climate data with high-resolution terrain information—factors that can influence the wind, such as hills or valleys—and provides wind climate data at a 1km scale. This yields more reliable information on wind potential. The tool also provides access to high-resolution global and regional maps and geographic information system (GIS) data, enabling users to print poster maps and utilize the data in other applications.

The Global Wind Atlas was unveiled at an event at the Wind Europe Conference in Amsterdam, following the successful launch of the Global Solar Atlas earlier in the year.

Solar and wind are proving to be the cleanest, least-cost options for power generation in many countries. These tools will help governments assess their resource potential and understand how solar and wind can fit into their energy mix. An example of how good data can help boost renewable energy is Vietnam where solar maps from the Global Solar Atlas laid the groundwork for the installation of five solar measurement stations across the country.

“There is great scope in many countries for the clean, low-cost power that wind provides, but they have been hampered by a lack of good data,” said Riccardo Puliti, Senior Director and Head of the World Bank’s Energy & Extractives Global Practice. “By providing high quality resource data at such a detailed level for free, we hope to mobilize more private investment for accelerating the scale-up of technologies like wind to meet urgent energy needs.”

The work was funded by the Energy Sector Management Assistance Program(ESMAP), a multi-donor trust fund administered by the World Bank, in close partnership with DTU Wind Energy.

“The partnership between DTU Wind Energy and the World Bank allows us to reach a broader audience, especially in developing countries while remaining at the forefront of wind energy research. We are excited by the scientific advances that the new Global Wind Atlas incorporates, and look forward to seeing how this data can enable countries to advance wind projects,” said Peter Hauge Madsen, Head of DTU Wind Energy.

While the data powering the Global Wind Atlas is the most recent and most accurate currently available, it is not fully validated in many developing countries due to the lack of ground-based measurement data from high precision meteorology masts and LiDARs. ESMAP has funded a series of World Bank projects over the last four years to help fill this gap, with wind measurement campaigns under implementation in Bangladesh, Ethiopia, Nepal, Malawi, Maldives, Pakistan, Papua New Guinea, and Zambia. All measurement data is published via https://energydata.info, a World Bank Group data sharing platform.

Courtesy The World Bank

WIND POWER CONTINUES TO SET RECORDS

On May 16, 2017, the state of California set a new record—that day, it generated 42% of its electricity from wind and solar, and peaked at 72% that afternoon. In addition to this wind power record, wind farms by themselves accounted for 18% of the state’s needs. But renewable energy’s popularity doesn’t just extend to California. According to the Global Wind Energy Council, the total generating capacity of wind farms around the world is now greater than all of the world’s nuclear power plants combined.

So what’s driving this growth? One answer is innovation. The “levelized cost of electricity” (LCOE)—a key number that measures electricity’s costs—has fallen 58% over the past six years. Additionally, the use of  wind turbine management software—like GE’s Predix—has let operators run their wind farms more efficiently, lowering maintenance costs and saving money. In fact, GE estimates that by deploying its Digital Wind Farm solutions and wind turbine software, the wind industry could save as much as $10 billion a year. One thing’s for sure: with 30,000 GE wind turbines deployed across the globe and capable of generating more than 57 GW of electricity, wind energy isn’t going anywhere.

Learn more about GE’s wind power software and Digital Wind Farms by contacting us today.

Read the full story at https://www.ge.com/reports/wind-blows-innovation-dropping-costs-drive-renewables-growth/

Courtesy GE Renewable Energy

ENERCON is developing two new types of converter for its 3 megawatt platform (EP3). E-126 EP3 and E-138 EP3 are designed for sites with moderate and low winds respectively, and are scheduled to go into production in late 2018 and late 2019. As well as promising much improved performance and efficiency, the two new converters will benefit from optimised processes for production, transport and logistics, and installation. ENERCON will be introducing the two converter types for the first time at the Brazil Windpower event in Rio de Janeiro (29 to 31 August).

The machines are ENERCON’s response to new challenges facing converter technology in the important 3 MW segment. “We are increasing overall performance significantly”, says Arno Hildebrand, Director of System Engineering at ENERCON’s research and development arm, WRD. The greater efficiency will come mainly from an increase in swept area and in nominal power. The E-126 EP3 will have a rotor diameter of 127 metres and a nominal power of 3.5 MW, and is being designed for sites with moderate wind conditions in Class IIA (IEC). The E-138 EP3 will also have a nominal power of 3.5 MW, but with a rotor diameter of 138 metres it is intended for use at low-wind sites in Class IIIA (IEC).

“At sites with moderate wind speeds of 8.0 m/s at hub height, the yield of the new E-126 EP3 will therefore be more than 13 percent higher than that of our existing E-115 model”, says Hildebrand. Annual energy yields of more than 14.5 million kilowatt hours (kWh) are forecast for a typical Wind Class IIA site with speeds of 8.0 m/s at a hub height of 135 metres. As for the E-138 EP3 – a completely new type of converter, and the first low-wind turbine to feature in ENERCON’s EP3 portfolio – the developers calculate that, at a typical low-wind site with average speeds of 7.0 m/s at a hub height of 131 metres, annual energy yields in excess of 13.2 million kWh can be achieved.

Not only that, but the two converter types will be consistently streamlined for efficiency. Every single process – from production to transport and logistics, installation and commissioning – will be optimised. The E-126 EP3 and E-138 EP3 will be available with a choice of hybrid or tubular steel towers with hub heights of between 81 and 160 metres. Installation of the E-126 EP3 prototype is scheduled for as early as the third quarter of 2018; it will enter series production later that year. ENERCON plans to erect the E-138 EP3 prototype in the fourth quarter of 2018, then introduce a few pre-series machines in 2019 before full production begins towards the end of 2019.

Courtesy ENERCON

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Grid List

In Conversation with, Mr. Narayan Kumar, Development Director, Acciona Wind Power India

 

1.What is current installed capacity of your company and how has been your journey so far?

ACCIONA is one of the foremost Spanish business corporations with a global footprint. We are leaders in development and management of infrastructure, renewable energy, water and services.

ACCIONA's has been in India for close to a decade, with primary presence in renewable energy. ACCIONA was the first Spanish company to install and operate a wind farm in India. We have operating wind farms with a capacity of around 175 MW.

2.What is your current order book position and what are the projects that you are currently bidding for?

Acciona India is an Independent Power Producer. Unlike Original Equipment Manufacturers (OEMs), we don’t maintain an order book. We are focused on development of both solar and wind energy investments in India.  Currently we are evaluating opportunities at both the national level as well as in different states to participate in auctions for both PV and wind space.

3.What is the impact of Reverse bidding on the wind energy sector?

Wind energy sector in India is at cross roads because of introduction of reverse bidding since February 2017. It would have been ideal if the industry had been provided with a 12-15 month period for transition from feed-in-tariffs to competitive based reverse bidding. Now that the reverse bidding has been introduced, this has created a sense of uncertainty in the industry and is bound to affect capacity addition for 15-18 months. We need to evaluate the sustainability of tariffs of around INR 3.40 – Rs 3.50 / kWh.

It’s interesting to see how future bids will play out since we are reading reports about one of the winning bidders from the Feb 2017 auction already backing out from its commitments. We have also witnessed the same trend in the PV space as well. There is perhaps the need for the industry to think through their bid strategy and evaluate pricing on rational, sustainable, long-term basis.

4.What are your growth plans for the next couple of years?

Acciona India has aggressive plans to increase our footprint in both wind and PV. It would be difficult to share specific numbers at this time. We are evaluating several greenfield as well as brownfield growth opportunities. We are long-term investors and are guided by the sustainability of returns. 

5.Would you like to add anything else about wind sector?

When India’s first ever auction of wind projects worth 1 GW capacity early this year threw up record low tariffs, none of realised that it would become a flashpoint for the resentment of power distribution companies (discoms) against generators in the days ahead. But that is exactly what we are seeing today.

Discoms have stopped signing power purchase agreements (PPAs) with wind power generators, leaving a big question mark hanging over the future of 3 GW of assets underconstruction. If the logjam is not broken soon, the government’s renewable power capacity addition could get off track, compromising effortsto rein in emissions and fight climate change.

Discoms believe that they were paying very high tariffs to IPPs and are reneging on their signed commitments. Discoms’ refusal to sign PPAs has forced the Centre to intervene and asked for signed commitments to be honoured. Such blatant change of tack has serious repercussions on the country’s renewable energy programme as well as India’s perception with global investors. The Ministry of New and Renewable Energy (MNRE) has already cautioned discoms that if PPAs are not signed, there would be no further wind capacity addition either in 2017-18or 2018-19.

Even if wind auctionsrestart at this stage as is widely envisaged, the projects would be commissioned only over the next 15 to 18 months.In such a case there would be no wind capacity addition in 2017-18 and a major part of 2018-19. This would mean that most atates would not be able to meet their non-solar RPO obligations.

This would also throw a spanner in the plans of OEMs who have made large investments in capacity as well as inventory. They will go through a difficult phase on this account, though this is expected to be temporary.

Re-Powering – A growthopportunity

Repowering is something which needs to be absolutely encouraged. Vintage turbines occupy some of the best wind sites across India. Policies or guidelines may require changes as we have not made a big headway into repowering.

Again it’s perhaps premature to comment as there are issues like existing substation capacity, current PPAs, disposal of old turbines and current owners of land who are reluctant to give up their land etc.

Power being a concurrent subject; it’s possible to have a state repowering policy. The bottom line is, repowering can bring in about a capacity addition on an estimate of 1 GW every year for the next 2-3 years. This can possibly increase if grid connectivity and substation capacity can be augmented.

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Thank you to everyone who told us why they love wind power last week! In just five short days, over 700 Americans used the #iheartwind hashtag to share why they support homegrown wind energy.

We heard about clean air, jobs, economic development, hope for the future, and environmental protections, among many other reasons. Here’s a final roundup of some more favorite posts:

The little bud came to visit me at work. #iheartwind

Posted by Allison Poe on Friday, February 16, 2018

Our own Felipe Betancor pictured on his first wind turbine climb in Maine: “#iheartwind because nature is the best engineer” pic.twitter.com/kauT5TknkD

— GE Renewable Energy (@GErenewables) February 15, 2018

Here's how Bill, an Operator at our Little Rock blade factory, feels about wind: "#Iheartwind because it takes care of my family." https://t.co/q5bBwQZT6e @AWEA pic.twitter.com/HWM9j3UkjX

— LM Wind Power (@LMWindPower) February 14, 2018

So many good reason to support wind energy #iheartwind pic.twitter.com/kDYP2T89hX

— Blattner Energy (@BlattnerEnergy) February 15, 2018

Southern Power employees close out #iheartwind week by sharing our top 10 reasons why we love wind! Learn more >> https://t.co/QLyPhM2wBs pic.twitter.com/oECyqWIkIT

— Southern Power (@SouthernPowerCo) February 16, 2018

@AWEA The Trusted Energy team loves #wind because it's an investment in future generations, provides affordable renewable energy, and creates jobs! #iheartwind #cleanenergy #renewables #TrustedEnergy pic.twitter.com/onVT0wOUqr

— Trusted Energy (@TrustedNRG) February 16, 2018

#iheartwind because we love admiring the beauty of clean energy. We have the best job in the world. #offshorewind #blockisland @GErenewables pic.twitter.com/wjnKkhLdfM

— Shane Watts (@watson6661) February 15, 2018

Our team at Goldthwaite Wind Energy loves #wind because "It builds rural communities! It’s green! It’s clean! It’s the future! It’s a tight knit family! Provides clean energy!" #iheartwind #cleanenergy #renewables pic.twitter.com/mG6NwrmMU1

— InvenergyLLC (@InvenergyLLC) February 16, 2018