American Electric Power Co., Inc. (NYSE:AEP) Q2 2019 Earnings Conference Call - Final Transcript

Jul 25, 2019 • 09:00 am ET

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American Electric Power Co., Inc. (NYSE:AEP) Q2 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you. [Operator Instructions]. Our first question is Greg Gordon, Evercore. Please go ahead.

Executive
Nicholas K. Akins

Good morning, Greg.

Analyst
Greg Gordon

Good morning. Bette Jo, like an institution is leaving. It's very -- I'm happy for you but at the same time sad that we're going to miss you. Looking forward to seeing you. That's my question. That's it. Just kidding. No, my question is with regard [Speech Overlap]

Executive
Nicholas K. Akins

Ask her if she's going to stay longer.

Analyst
Greg Gordon

My question is with regard just a little bit more thought perhaps on what's going on, on the demand side. I mean, clearly, on the industrial side, you've been upfront on saying that things are a little bit behind plan. And you point to sort of the trade tensions and other factors.

But at the same time, it looks like the demand from the oil and gas sectors remain strong except, we're seeing signs of significant weakening and activity there in real-time. So how do you guys manage around the potential volatility in those areas in the economy if they wind up trending weaker than planned over the next several years?

Executive
Brian X. Tierney

Greg, we've always, of course, monitored load and what's going on with that. And we've tried to adjust over time our O&M spend in response to how load is impacted either by trade tariffs, the dollar or things like weather. And we saw that impact this quarter as well.

We -- you mentioned seeing slowdown in oil and gas. We're kind of seeing the opposite of that. We're seeing uptick in oil and gas right now including expansions through the end of the year. And whereas previously, we've seen things really on the upstream side. We're now starting to see things on the mid and downstream side as things -- as the infrastructure comes in to fulfill what's been happening in the producing part of that industry.

So, we're still seeing uptick in oil and gas and anticipate increases in that throughout the balance of the year. But we are subject as everyone else to what's happening with the general economy and weather. We've been very successful in responding to that over the last several years and anticipate doing the same going forward.

Executive
Nicholas K. Akins

The interesting thing is, Greg, the oil prices remain at least relatively decent and like, I guess, natural gas prices continue to be relatively low. But there's a lot of oil field activity. But also, as Brian said, the infrastructure pipeline activity continues because there's a lot of production that can't -- and that's why prices are so low in live territories. They just can't get the transmission capabilities.

So, a lot of work continues in that regard. The other part is even our industrial base is pretty diversified. And it's unusual to see several of them line up. Eight out of ten, I believe the sectors are decreasing. And you can really point to the tariff activity. So, if that gets resolved, we should be in much better shape in our territory.

That