AGL Resources Reports Third Quarter Earnings; Confirms 2001 EPS Target and Provides 2002 Guidance

AGL Resources today announced earnings of $0.17 per basic and diluted share for the third fiscal quarter ended June 30, 2001, surpassing the FirstCall consensus estimate for the quarter. The company's financial performance for the quarter reflects the continued strong operating performance from its utility and non-utility businesses.

"We know what it takes to sustain the momentum in ATG. Despite a rapidly changing energy price environment and a softening economy, we stayed absolutely focused on delivering the earnings we have promised," said Paula G. Rosput, president and chief executive officer.

For comparison purposes, the company's third quarter 2001 results reflect its acquisition of Virginia Natural Gas in October 2000. As previously announced, this transaction is earnings accretive for fiscal 2001. The VNG acquisition largely accounts for the major variances in earnings year-over- year, as the results reflect the increased seasonality of AGL Resources' earnings, as well as interest expense and goodwill amortization related to the acquisition. For the third fiscal quarter of 2001, VNG's sales from low seasonal gas usage roughly offset operating expenses for the period.

Excluding the effects of the VNG acquisition, the company's operating income increased $3.3 million in the third fiscal quarter of 2001 compared with the same period last year. The increase is due in part to the sale of the company's Utilipro subsidiary in March 2001, as this business had losses in the fiscal third quarter of 2000. In addition, Sequent Energy Management, the company's asset optimization business, also made a positive contribution, offsetting start-up expenses and low trading volatility in the quarter. Sequent continues to build its asset management and energy trading business, with a focus on creating more liquidity in the relatively untapped Southeast market.

AGL Resources generated net income of $9.3 million in third quarter 2001, compared with $13.9 million for the same period last year. Operating revenues for the quarter increased 33 percent over the prior-year quarter to $175.7 million, reflecting the acquisition of VNG.

Fiscal Year-to-Date Results

For the nine months ended June 30, 2001, core earnings (net income excluding one-time items) were $77.0 million, or $1.42 per basic and diluted share. Reported earnings of $1.55 per basic share ($1.54 per diluted share) include a $0.13 per share one-time gain related to the sale of the company's Utilipro subsidiary. These results from core earnings represent a 43 percent increase over the $53.7 million, or $0.97 per basic and diluted share, the company earned for the same period last fiscal year. Operating revenues for the nine months ended June 30, 2001, were $821.1 million, up 73 percent over the $474.2 million reported for the same period last fiscal year.

The earnings improvement for the nine months ended June 30, 2001, is primarily the result of contributions from Sequent Energy Management; lower operation and maintenance expense across the base business; and the successful integration of VNG.

Earnings Outlook

With regard to 2001 and 2002 earnings guidance, Rosput said: "In light of our strong earnings performance again this quarter, we continue to be comfortable with the current range of FirstCall estimates for fiscal 2001. For the 2002 fiscal year, we expect continued strong performance in the utility business, supplemented by earnings growth in our non-utility businesses. As a result, we are very confident that our 2002 results will beat the current FirstCall consensus estimate. Further detailed guidance for 2002 will be available in late September."

AGL Resources Inc. is a regional holding company for energy and infrastructure related businesses in the Southeast. The company is the second-largest natural gas-only distribution company in the United States and serves more than 1.8 million customers throughout Georgia; Chattanooga, Tennessee; and southeastern Virginia. AGL Resources also is engaged through subsidiaries and partnerships in other businesses, including telecommunications, retail energy marketing, wholesale energy services, and wholesale and retail propane sales. More information about the company is available on the Internet at .

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

Earnings Conference Call Webcast: The AGL Resources 2001 Third Quarter Earnings Conference Call, scheduled for Thursday, July 26, at 8:30 a.m. (ET), can be accessed via the AGL Resources website at . The call will address the company's financial results for the third quarter and nine months ended 2001, as well as the outlook for the full fiscal year. The call will be archived on the website through the close of business on Wednesday, August 1, 2001.

                    In millions, except per share data

                                         Quarter Ended   Nine Months Ended
                                            June 30,          June 30,
                                            2001     2000     2001     2000

  Operating Revenues                     $175.7   $131.8   $821.1   $474.2
  Cost of Sales                            37.0     11.6    342.1     96.9
     Operating Margin                     138.7    120.2    479.0    377.3

  Other Operating Expenses                 97.6     81.8    318.0    267.9
     Operating Income                      41.1     38.4    161.0    109.4

  Other (Loss) Income                      (3.1)    (1.8)    44.3     17.5
     Income Before Interest and Income
      Taxes                                38.0     36.6    205.3    126.9

  Interest Expense and Preferred Stock
     Interest expense                      20.4     13.3     67.5     37.9
     Dividends on preferred stock of
      subsidiary                            2.8      1.5      5.9      4.6
        Total Interest Expense and
        Stock Dividends                    23.2     14.8     73.4     42.5
     Income Before Income Taxes            14.8     21.8    131.9     84.4

  Income Taxes                              5.5      7.9     47.8     30.7
     Net Income                            $9.3    $13.9    $84.1    $53.7

  Earnings per Common Share
     Basic                                $0.17    $0.26    $1.55    $0.97
     Diluted                              $0.17    $0.26    $1.54    $0.97

  Weighted Average Number of Common
     Shares Outstanding
     Basic                                 54.6     54.2     54.3     55.5
     Diluted                               55.2     54.2     54.7     55.6


SOURCE: AGL Resources Inc.

Contact: L. Stephen Cave, Director, Investor Relations of AGL Resources,