Gas Natural Inc. Reports Second Quarter 2012 Results

MENTOR, Ohio, Aug. 14, 2012 /PRNewswire/ --Gas Natural Inc. (NYSE MKT: EGAS) ("Gas Natural" or the "Company"), a natural gas utility company serving approximately 70,000 customers in seven states, reported financial results for the second quarter ended June 30, 2012.

Consolidated net loss for the second quarter of 2012 was $724,000, or $0.09 per diluted share, compared with net income of $360,000, or $0.04 per diluted share, for the second quarter of 2011. The decline was the result of the Natural Gas Operations segment, where net income decreased by $401,000, primarily due to significantly warmer weather in most of the Company's weather sensitive service territories. Also impacting the second quarter was a net loss of $156,000 from the Propane Operations segment acquired in 2011 and increased costs in the Company's Corporate and Other segment related to completed and potential acquisitions.

Richard M. Osborne, Gas Natural's chairman and chief executive officer, commented, "We advanced our growth strategy by expanding our utility operations through customer expansion and continuing to make rate base investments as well as strategic acquisitions. Warmer temperatures did dampen our results, however, we continued to see volume growth in our Maine and North Carolina markets and we are actively expanding our systems in those service areas to meet the high customer interest in natural gas."

For the six months ended June 30, 2012, consolidated net income decreased to $2.6 million from $4.6 million in the same period in 2011, which reflects a $1.3 million decrease in net income from the Natural Gas Operations segment primarily due to significantly warmer weather in most of the Company's weather sensitive service territories. Also impacting the second quarter was a net loss of $251,000 from the Propane Operations segment.

The Company also incurred increased costs in its Corporate and Other segment related to completed and potential acquisitions of $425,000 and $616,000, respectively, during the three and six months ended June 30, 2012 compared with costs of $16,000 and $56,000, respectively, during the three and six months ended June 30, 2011. In addition, in connection with the shares of the Company's common stock sold by Mr. Osborne in July 2012, the Company incurred expenses of $255,000 during the three and six months ended June 30, 2012 compared with expenses of $46,000 during the three and six months ended June 30, 2011. On a per diluted share basis, net income was $0.31 and $0.57 for the first half of 2012 and 2011, respectively.

Recent Acquisitions and Updates

Spelman Pipeline, one of the Company's subsidiaries, has reconditioned a portion of the Ohio pipeline that the Company acquired in April 2011. The Public Utilities Commission of Ohio authorized the Company to operate Spelman as an intrastate pipeline and the Company expects to initiate transportation service in September 2012.

Gas Natural acquired the stock of Public Gas Company, Inc. (PGC) for $1.6 million from Kentucky Energy Development, LLC, on April 1, 2012. PGC is a regulated natural gas distribution company serving approximately 1,600 customers in eight counties in the eastern part of Kentucky.

On June 4, 2012 the Company attended a public foreclosure auction and was the successful bidder with a bid of $4.5 million for a leasehold interest in a pipeline corridor easement running from Searsport to Limestone, Maine ("Loring Pipeline") and various parcels of land. The acquisition was set to close 30 days after the public auction but the Company is still in negotiations regarding the leasehold interest. The purchase price provides for $2.25 million to be paid in shares of the Company's common stock or cash and the balance of the purchase price will be in the form of cash at closing. As of June 30, 2012, the Company had deposited $2.25 million in escrow.

Natural Gas Operations Segment

The Company annually distributes over 32 billion cubic feet of natural gas to approximately 70,000 customers through regulated utilities operating in Kentucky, Maine, Montana, North Carolina, Ohio, Pennsylvania, and Wyoming.

Natural Gas Operations Income Statement
		Three Months Ended June 30,				Six Months Ended June 30,
($ in thousands)		2012		2011		2012		2011
Natural Gas Operations
Operating revenue		$ 12,801		$ 17,095		$ 42,649		$ 55,315
	Gas Purchased	5,447		9,576		22,684		34,293
Gross Margin		7,354		7,519		19,965		21,022
	Operating expenses	6,992		6,617		13,721		13,233
Operating income		362		902		6,244		7,789
	Other income	295		132		409		328
Income before interest and taxes		657		1,034		6,653		8,117
	Interest expense	(593)		(467)		(1,230)		(854)
Income before income taxes		64		567		5,423		7,263
	Income tax expense	(105)		(207)		(2,111)		(2,644)
Net (Loss) Income		$ (41)		$ 360		$ 3,312		$ 4,619

The Natural Gas Operations segment reported a net loss of $41,000 in the second quarter of 2012 compared with net income of $360,000 in the same period of 2011. The change reflects warmer weather across most of the Company's weather sensitive service territories when compared with the temperature in last year's second quarter. For the six months ended June 30, 2012, the Natural Gas Operations segment contributed net income of $3.3 million compared with $4.6 million for the first half of 2011.

Operating expenses increased by $375,000 to $7.0 million in the second quarter of 2012, due to higher depreciation from increased capital expenditures and $107,000 in additional operating expenses from the PGC acquisition. As a result, operating income was $362,000, or 4.9% of gross margin, for the 2012 second quarter compared with $902,000, or 12.0% of gross margin, for the prior-year period. Operating income as a percent of gross margin was 31.3% in the first six months of 2012 compared with 37.1% in the same period in 2011.

Other Income increased in the second quarter and first half of 2012 from higher service sales. Interest expense during the second quarter and year-to-date period increased as a result of the higher average balance on the lines of credit and increased debt levels.

Full service distribution volumes delivered decreased 327 MMcf to 1,336 MMcf in the second quarter of 2012 and were down 976 MMcf to 4,836 MMcf through the first half of 2012.

Other Operating Segments

The Marketing and Production segment reported a net loss of $36,000 for the second quarter of 2012 compared with net income $24,000 for the same period in 2011. The decrease was primarily due to lower prices received for volumes produced and higher operating expenses. For the six months ended June 30, 2012, the Marketing and Production segment contributed net income of $60,000 compared with $109,000 for the six months ended June 30, 2011.

The Pipeline Operations segment contributed net income of $23,000 and $61,000 from the second quarter and first half of 2012, respectively, a slight decrease from the comparable periods in 2011.

The Propane Operations segment, acquired on August 1, 2011, reported a net loss of $156,000 in the current quarter and net loss of $251,000 for the year-to-date period.

Balance Sheet and Cash Management

Cash and cash equivalents as of June 30, 2012 were $2.5 million, down from the December 31, 2011 balance of $10.5 million.

Cash provided by operating activities decreased by $3.3 million to $12.2 million in the first six months of 2012 compared with $15.5 million in the same period of the prior year. The decrease in cash from operations was principally due to working capital changes including the recoverable cost of gas, accounts payable and accounts receivable. The Company used $2.25 million for the Loring Pipeline deposit.

Capital expenditures for first half of 2012 totaled $8.8 million compared with $10.3 million in the first half of 2011, which included $3.3 million related to the Spelman pipeline asset acquisition in April 2011. The majority of the current capital spending was focused on the growth of the Company's Natural Gas Operations segment, including expansion, maintenance, and enhancement of its gas pipeline systems. The Company used $1.6 million to purchase PGC. Capital expenditures for 2012 are expected to total between $18 million to $19 million.

The Company maintains two revolving credit facilities with $18.7 million in use at June 30, 2012 compared with $23.2 million at the end of 2011. Long-Term debt was $31.3 million at the end of the second quarter of 2012, comparable with the year-end balance of $31.4 million.

About Gas Natural Inc.

Gas Natural Inc. distributes and sells natural gas to end-use residential, commercial, and industrial customers. It distributes approximately 32 billion cubic feet of natural gas to approximately 70,000 customers through regulated utilities operating in Kentucky, Maine, Montana, North Carolina, Ohio, Pennsylvania, and Wyoming. The Company's other operations include interstate pipeline, natural gas production, propane and natural gas marketing. The Company's Montana public utility was originally incorporated in 1909. The Company's strategy for growth is to expand throughput in its Maine and North Carolina markets while looking for acquisitions that are either adjacent to its existing utilities or in under saturated markets.

The Company regularly posts information at its website: www.ewst.com.

Safe Harbor Regarding Forward-Looking Statements

The Company is including the following cautionary statement in this release to make applicable and to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, Gas Natural Inc. Forward-looking statements are all statements other than statements of historical fact, including, without limitation, those that are identified by the use of the words "anticipates," "estimates," "expects," "intends," "plans," "predicts," "believes" and similar expressions. Such statements are inherently subject to a variety of risks and uncertainties that could cause actual results to differ materially from those expressed. Factors that may affect forward-looking statements and the Company's business generally include but are not limited to the Company's ability to successfully integrate the operations of the companies it has recently acquired and consummate additional acquisitions, the Company's continued ability to make dividend payments, the Company's ability to implement its business plan, fluctuating energy commodity prices, the possibility that regulators may not permit the Company to pass through all of its increased costs to its customers, changes in the utility regulatory environment, wholesale and retail competition, the Company's ability to satisfy its debt obligations, including compliance with financial covenants, weather conditions, litigation risks, and various other matters, many of which are beyond the Company's control, the risk factors and cautionary statements made in the Company's public filings with the Securities and Exchange Commission, and other factors that the Company is currently unable to identify or quantify, but may exist in the future. Gas Natural Inc. expressly undertakes no obligation to update or revise any forward-looking statement contained herein to reflect any change in Gas Natural Inc.'s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

For more information contact:
Gas Natural Inc.	Investor Relations: Kei Advisors LLC
Thomas J. Smith, Chief Financial Officer	Deborah K. Pawlowski, Chairman & CEO
Phone: [phone]	Phone: [phone]
Email: [e-mail]	Email: [e-mail]

FINANCIAL TABLES FOLLOW

Gas Natural Inc. and Subsidiaries Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2012		2011		2012		2011
REVENUE
Natural gas operations	$ 12,801,547		$ 17,095,262		$ 42,649,632		$ 55,314,845
Marketing and production	1,040,354		1,475,665		2,947,448		3,301,167
Pipeline operations	102,093		102,061		209,877		208,385
Propane operations	561,552		-		2,470,710		-
Total revenue	14,505,546		18,672,988		48,277,667		58,824,397
COST OF SALES
Natural gas purchased	5,447,322		9,575,592		22,684,216		34,292,500
Marketing and production	850,311		1,208,379		2,245,727		2,607,786
Propane purchased	418,482		-		1,849,751		-
Total cost of sales	6,716,115		10,783,971		26,779,694		36,900,286
GROSS MARGIN	7,789,431		7,889,017		21,497,973		21,924,111
OPERATING EXPENSES
Distribution, general, and administrative	5,236,512		4,629,976		10,449,432		9,287,296
Maintenance	316,722		271,965		612,957		557,192
Depreciation and amortization	1,304,472		1,068,470		2,547,816		2,103,547
Accretion	39,554		34,803		77,634		69,413
Taxes other than income	880,306		892,981		1,817,796		1,746,946
Total operating expenses	7,777,566		6,898,195		15,505,635		13,764,394
OPERATING INCOME	11,865		990,822		5,992,338		8,159,717
LOSS FROM UNCONSOLIDATED AFFILIATE	(2,214)		(20,194)		(4,955)		(83,151)
OTHER INCOME (EXPENSE), net	231,624		178,029		350,896		333,444
ACQUISITION EXPENSE	(425,151)		(15,798)		(616,476)		(55,533)
STOCK SALE EXPENSE	(255,279)		(46,123)		(255,279)		(46,123)
INTEREST EXPENSE	(625,797)		(492,674)		(1,289,866)		(905,853)
(LOSS) INCOME BEFORE INCOME TAXES	(1,064,952)		594,062		4,176,658		7,402,501
INCOME TAX BENEFIT (EXPENSE)	340,762		(233,724)		(1,618,001)		(2,767,409)
NET(LOSS) INCOME	(724,190)		360,338		2,558,657		4,635,092
OTHER COMPREHENSIVE (LOSS) INCOME
Unrealized gain (loss) on available
for sale securities, net of tax	(15,477)		855		(6,331)		19,621
COMPREHENSIVE (LOSS) INCOME	$ (739,667)		$ 361,193		$ 2,552,326		$ 4,654,713
(LOSS) EARNINGS PER SHARE - BASIC	$ (0.09)		$ 0.04		$ 0.31		$ 0.57
AND DILUTED
WEIGHTED AVERAGE DIVIDENDS DECLARED
PER COMMON SHARE	$ 0.135		$ 0.135		$ 0.270		$ 0.270
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC	8,155,867		8,151,359		8,155,300		8,150,802
WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED	8,155,867		8,159,825		8,162,686		8,158,955

Gas Natural Inc. and Subsidiaries Condensed Consolidated Balance Sheets (Unaudited)
	June 30,		December 31,
	2012		2011
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$ 2,457,144		$ 10,504,845
Marketable securities	357,750		367,875
Accounts receivable
Trade, less allowance for doubtful accounts of $765,264
and $630,632, respectively	4,968,702		9,381,625
Related parties	559,692		519,084
Unbilled gas	1,066,851		4,232,854
Note receivable - related parties, current portion	10,620		10,256
Inventory
Natural gas and propane	3,181,995		6,967,739
Materials and supplies	2,289,304		1,958,858
Prepaid income taxes	1,071,051		1,584,869
Prepayments and other	396,434		741,101
Recoverable cost of gas purchases	3,091,693		2,627,416
Deferred tax asset	1,146,373		1,061,314
Total current assets	20,597,609		39,957,836
PROPERTY, PLANT AND EQUIPMENT, net	104,644,827		97,612,257
OTHER ASSETS
Notes receivable - related parties, less current portion	30,006		35,408
Regulatory assets
Property taxes	449,098		590,464
Income taxes	452,645		452,645
Rate case costs	202,746		205,714
Debt issuance costs, net	1,204,928		869,593
Goodwill	14,750,924		14,607,952
Customer relationships	627,917		639,333
Investment in unconsolidated affiliate	325,396		330,351
Restricted cash	1,709,304		949,907
Other assets	4,592,743		159,954
Total other assets	24,345,707		18,841,321
TOTAL ASSETS	$ 149,588,143		$ 156,411,414

Gas Natural Inc. and Subsidiaries Condensed Consolidated Balance Sheets, Continued (Unaudited)
	June 30,		December 31,
	2012		2011
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Checks in excess of amounts on deposit	$ 806,880		$ 1,027,376
Lines of credit	18,662,377		23,160,000
Accounts payable
Trade	3,496,787		8,755,623
Related parties	87,781		191,763
Notes payable, current portion	8,269		7,885
Accrued liabilities
Taxes other than income	2,149,007		3,018,964
Vacation	167,290		115,940
Employee benefit plans	282,247		140,149
Interest	114,540		30,688
Deferred payments received from levelized billing	2,311,173		2,948,188
Customer deposits	734,985		707,062
Property tax settlement, current portion	242,128		242,128
Related parties	258,862		635,192
Other current liabilities	1,946,330		1,280,670
Acquisition settlement	2,250,000		-
Overrecovered gas purchases	1,749,706		2,237,827
Total current liabilities	35,268,362		44,499,455
LONG-TERM LIABILITIES
Deferred investment tax credits	165,848		176,379
Deferred tax liability	4,752,856		2,908,167
Asset retirement obligation	1,766,715		1,689,081
Customer advances for construction	1,023,299		880,851
Regulatory liability for income taxes	83,161		83,161
Regulatory liability for gas costs	35,418		57,570
Total long-term liabilities	7,827,297		5,795,209
NOTES PAYABLE, less current portion	31,340,487		31,344,723
STOCKHOLDERS' EQUITY
Preferred stock; $0.15 par value, 1,500,000 shares authorized,
no shares issued or outstanding	-		-
Common stock; $0.15 par value, 15,000,000 shares authorized,
8,156,551 and 8,154,301 shares issued and outstanding, respectively	1,223,483		1,223,145
Capital in excess of par value	42,008,079		41,978,799
Accumulated other comprehensive income	74,074		80,405
Retained earnings	31,846,361		31,489,678
Total stockholders' equity	75,151,997		74,772,027
TOTAL CAPITALIZATION	106,492,484		106,116,750
TOTAL LIABILITIES AND CAPITALIZATION	$ 149,588,143		$ 156,411,414

Gas Natural Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows For the Six Months Ended June 30, 2012 and 2011 (Unaudited)
	2012		2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 2,558,657		$ 4,635,092
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization	2,547,816		2,103,547
Accretion	77,634		69,413
Amortization of debt issuance costs	139,388		68,667
Stock based compensation	29,618		34,943
Loss on sale of assets	2,184		39,685
Loss from unconsolidated affiliate	4,955		83,151
Investment tax credit	(10,531)		(10,531)
Deferred income taxes	1,628,532		2,721,060
Changes in assets and liabilities
Accounts receivable, including related parties	4,441,447		5,128,578
Unbilled gas	3,166,003		4,401,975
Natural gas and propane inventory	3,785,744		2,041,931
Accounts payable, including related parties	(4,843,189)		(4,397,430)
Recoverable/refundable cost of gas purchases	(952,398)		2,026,951
Prepayments and other	344,667		513,230
Other assets	209,790		(847,241)
Other liabilities	(897,090)		(3,097,367)
Net cash provided by operating activities	12,233,227		15,515,654
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(8,766,629)		(10,279,331)
Proceeds from sale of fixed assets	29,302		19,900
Proceeds from related party note receivable	5,038		4,699
Cash acquired in acquisition	502		-
Purchase of Public Gas Company, Inc.	(1,551,478)		-
Restricted cash	-		(3,403,078)
Investment in unconsolidated affiliate	-		(303,600)
Acquisition deposit	(2,250,000)		-
Customer advances for construction	142,448		72,082
Contributions in aid of construction	47,402		7,735
Net cash used in investing activities	(12,343,415)		(13,881,593)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from lines of credit	7,012,377		11,200,000
Repayment on lines of credit	(11,510,000)		(17,509,999)
Proceeds from notes payable	-		18,334,000
Repayments of notes payable	(3,852)		(9,869,533)
Repayments of related party notes payable	-		(49,361)
Debt issuance costs	(474,723)		(483,488)
Restricted cash	(759,397)		(948,836)
Dividends paid	(2,201,918)		(2,200,702)
Net cash used in financing activities	(7,937,513)		(1,527,919)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(8,047,701)		106,142
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	10,504,845		13,026,585
CASH AND CASH EQUIVALENTS, END OF PERIOD	$ 2,457,144		$ 13,132,727

Gas Natural Inc. and Subsidiaries Segments of Operations (Unaudited)
Three Months Ended June 30, 2012
				Marketing
		Natural Gas		and		Pipeline		Propane		Corporate and
		Operations		Production		Operations		Operations		Other		Consolidated
OPERATING REVENUES		$ 12,880,690		$ 2,151,601		$ 102,093		$ 561,552		$ -		$ 15,695,936
Intersegment eliminations		(79,143)		(1,111,247)		-		-		-		(1,190,390)
Total operating revenue		12,801,547		1,040,354		102,093		561,552		-		14,505,546
COST OF SALES		5,526,465		1,961,558		-		418,482		-		7,906,505
Intersegment eliminations		(79,143)		(1,111,247)		-		-		-		(1,190,390)
Total cost of sales		5,447,322		850,311		-		418,482		-		6,716,115
GROSS MARGIN		$ 7,354,225		$ 190,043		$ 102,093		$ 143,070		$ -		$ 7,789,431
OPERATING EXPENSES		6,991,710		220,317		61,882		431,539		72,118		7,777,566
OPERATING INCOME (LOSS)		$ 362,515		$ (30,274)		$ 40,211		$ (288,469)		$ (72,118)		$ 11,865
NET INCOME (LOSS)		$ (40,947)		$ (35,575)		$ 23,035		$ (156,236)		$ (514,467)		$ (724,190)

Three Months Ended June 30, 2011
				Marketing
		Natural Gas		and		Pipeline		Propane		Corporate and
		Operations		Production		Operations		Operations		Other		Consolidated
OPERATING REVENUES		$ 17,992,076		$ 3,209,966		$ 102,061		$ -		$ -		$ 21,304,103
Intersegment eliminations		(896,814)		(1,734,301)		-		-		-		(2,631,115)
Total operating revenue		17,095,262		1,475,665		102,061		-		-		18,672,988
COST OF SALES		10,472,406		2,942,680		-		-		-		13,415,086
Intersegment eliminations		(896,814)		(1,734,301)		-		-		-		(2,631,115)
Total cost of sales		9,575,592		1,208,379		-		-		-		10,783,971
GROSS MARGIN		$ 7,519,670		$ 267,286		$ 102,061		$ -		$ -		$ 7,889,017
OPERATING EXPENSES		6,617,487		187,659		53,665		-		39,384		6,898,195
OPERATING INCOME (LOSS)		$ 902,183		$ 79,627		$ 48,396		$ -		$ (39,384)		$ 990,822
NET INCOME (LOSS)		$ 359,742		$ 23,625		$ 27,752		$ -		$ (50,781)		$ 360,338

Gas Natural Inc. and Subsidiaries Segments of Operations, Continued (Unaudited)
Six Months Ended June 30, 2012
				Marketing
		Natural Gas		and		Pipeline		Propane		Corporate and
		Operations		Production		Operations		Operations		Other		Consolidated
OPERATING REVENUES		$ 42,813,840		$ 5,777,390		$ 209,877		$ 2,470,710		$ -		$ 51,271,817
Intersegment eliminations		(164,208)		(2,829,942)		-		-		-		(2,994,150)
Total operating revenue		42,649,632		2,947,448		209,877		2,470,710		-		48,277,667
COST OF SALES		22,848,424		5,075,669		-		1,849,751		-		29,773,844
Intersegment eliminations		(164,208)		(2,829,942)		-		-		-		(2,994,150)
Total cost of sales		22,684,216		2,245,727		-		1,849,751		-		26,779,694
GROSS MARGIN		$ 19,965,416		$ 701,721		$ 209,877		$ 620,959		$ -		$ 21,497,973
OPERATING EXPENSES		13,720,982		551,402		100,388		997,952		134,911		15,505,635
OPERATING INCOME (LOSS)		$ 6,244,434		$ 150,319		$ 109,489		$ (376,993)		$ (134,911)		$ 5,992,338
NET INCOME (LOSS)		$ 3,311,587		$ 59,740		$ 61,258		$ (251,077)		$ (622,851)		$ 2,558,657
As of June 30, 2012
Goodwill		$ 14,750,924		$ -		$ -		$ -		$ -		$ 14,750,924
Investment in unconsolidated affiliate		$ -		$ 325,396		$ -		$ -		$ -		$ 325,396
Total assets		$ 140,533,525		$ 6,266,724		$ 842,812		$ 2,829,273		$ 63,070,043		$ 213,542,377
Intersegment eliminations		(49,820,232)		(742,487)		(7,492)		(2,314,755)		(11,069,268)		(63,954,234)
Total assets		$ 90,713,293		$ 5,524,237		$ 835,320		$ 514,518		$ 52,000,775		$ 149,588,143

Six Months Ended June 30, 2011
				Marketing
		Natural Gas		and		Pipeline		Propane		Corporate and
		Operations		Production		Operations		Operations		Other		Consolidated
OPERATING REVENUES		$ 56,301,969		$ 7,550,218		$ 208,385		$ -		$ -		$ 64,060,572
Intersegment eliminations		(987,124)		(4,249,051)		-		-		-		(5,236,175)
Total operating revenue		55,314,845		3,301,167		208,385		-		-		58,824,397
COST OF SALES		35,279,624		6,856,837		-		-		-		42,136,461
Intersegment eliminations		(987,124)		(4,249,051)		-		-		-		(5,236,175)
Total cost of sales		34,292,500		2,607,786		-		-		-		36,900,286
GROSS MARGIN		$ 21,022,345		$ 693,381		$ 208,385		$ -		$ -		$ 21,924,111
OPERATING EXPENSES		13,233,295		387,156		95,989		-		47,954		13,764,394
OPERATING INCOME (LOSS)		$ 7,789,050		$ 306,225		$ 112,396		$ -		$ (47,954)		$ 8,159,717
NET INCOME (LOSS)		$ 4,618,867		$ 109,407		$ 64,554		$ -		$ (157,736)		$ 4,635,092
As of June 30, 2011
Goodwill		$ 14,607,952		$ -		$ -		$ -		$ -		$ 14,607,952
Investment in unconsolidated affiliate		$ -		$ 860,665		$ -		$ -		$ -		$ 860,665
Total assets		$ 129,347,991		$ 5,278,371		$ 849,911		$ -		$ 55,582,507		$ 191,058,780
Intersegment eliminations		(42,320,659)		(1,267,242)		(18,130)		-		(9,697,125)		(53,303,156)
Total assets		$ 87,027,332		$ 4,011,129		$ 831,781		$ -		$ 45,885,382		$ 137,755,624

Gas Natural Inc. and Subsidiaries Natural Gas Operations (Unaudited)
Utility Throughput
			Three Months Ended June 30,				Six Months Ended June 30,
(in million cubic feet (MMcf))			2012		2011		2012		2011
Full Service Distribution
	Residential		567		737		2,377		2,899
	Commercial		738		882		2,375		2,829
	Industrial		31		44		84		84
		Total full service	1,336		1,663		4,836		5,812
Transportation			2,380		1,883		5,332		4,568
Bucksport			3,253		2,988		6,914		6,789
		Total Volumes	6,969		6,534		17,082		17,169

Heating Degree Days
				Three Months Ended				Percent (Warmer) Colder
				June 30,				2012 Compared to
		Normal		2012		2011		Normal		2011
Great Falls, MT		1,212		1,090		1,498		(10.07%)		(27.24%)
Cody, WY		1,072		905		1,408		(15.58%)		(35.72%)
Bangor, ME		1,072		952		1,052		(11.19%)		(9.51%)
Elkin, NC		337		361		318		7.12%		13.52%
Youngstown, OH		825		669		711		(18.91%)		(5.91%)

				Six Months Ended				Percent (Warmer) Colder
				June 30,				2012 Compared to
		Normal		2012		2011		Normal		2011
Great Falls, MT		4,392		4,004		5,160		(8.83%)		(22.40%)
Cody, WY		4,102		3,643		4,685		(11.19%)		(22.24%)
Bangor, ME		4,807		4,225		4,860		(12.11%)		(13.07%)
Elkin, NC		2,454		1,977		2,414		(19.44%)		(18.10%)
Youngstown, OH		3,943		3,082		4,019		(21.84%)		(23.31%)

SOURCE Gas Natural Inc.