Business Context and Reporting Period
This Form 8-K is a current report filed by CenterPoint Energy, Inc. and its subsidiary, CenterPoint Energy Resources Corp. (CERC), on February 1, 2016. The filing addresses the reporting of earnings guidance for 2015 and 2016 and the preparation of financial statements for the fourth quarter and full year 2015.
Key Financial Metrics
The filing does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. Instead, it focuses on an anticipated non-cash impairment charge. The Company holds a 55.4 percent equity investment in Enable Midstream Partners, LP ("Enable Midstream").
Material Changes and Unusual Items
The primary material change disclosed is the expectation of reporting non-cash impairments related to the investment in Enable Midstream in the fourth quarter and year-end 2015 results. This expectation is driven by:
- Sustained low common unit prices for Enable Midstream.
- Further price declines during the three months ended December 31, 2015.
- A market outlook for continued depressed crude oil and natural gas prices impacting the midstream industry.
Management is currently determining the specific amount of the impairment, which will be recognized if deemed "other than temporary." The fair value estimation will utilize both income and market approaches, considering factors such as Enable Midstream's unit price, forecasted results, recent comparable transactions, and the limited float of its publicly traded units.
Guidance and Outlook
On February 1, 2016, the Company reported earnings guidance for 2015 and 2016. Detailed guidance figures are contained in the Press Release attached as Exhibit 99.1, which is incorporated by reference. The filing notes that the information in the Press Release is being furnished, not filed, and will not be incorporated by reference into future registration statements unless specifically identified.
Investor Verification Checklist
- Review the attached Press Release (Exhibit 99.1) for specific 2015 and 2016 earnings guidance figures.
- Monitor upcoming fourth quarter and full-year 2015 financial statements for the final quantification of the Enable Midstream impairment charge.
- Assess the impact of depressed crude oil and natural gas prices on the midstream sector and Enable Midstream's unit price trends.
- Verify the methodology used for the fair value assessment of the 55.4 percent equity investment in Enable Midstream.