OGE - OGE Energy Corp. An Attractive Long-Term Investment (Rating Upgrade)
2024-03-07 10:45:00 ET
Summary
- OGE Energy Corp. is a $6.8 billion utility holding company offering a 4.9% dividend.
- The company is the parent of utility OG&E. In 2022, OGE Energy divested its interest in gas transport-focused Enable Midstream, a beneficial strategic move.
- OGE Energy benefits from coal plant efficiency and from plentiful, affordable local and regional energy sources: natural gas and wind.
OGE Energy Corp. ( OGE ) generates, transmits, distributes, and sells –including at the retail level—electricity. It owns OG&E, the largest electric utility in Oklahoma. OGE Energy has streamlined and simplified its operations by jettisoning its interest in a midstream gas pipeline partnership.
It is in a good position for a number of reasons:
- Among utilities with both gas and electricity divisions, electricity usually outperforms gas
- OGE did not have a competitive advantage in gas midstream operations
- Its fuels, which have a useful diversity of characteristics (intermittent, quick-on and back-up, and baseload) are all geographically available and affordable. In particular, natural gas is less costly than in the last few years. Baseload coal operations, too, are increasingly valued and the Wyoming coal that feeds them is readily transported in by rail. Finally, Oklahoma has always had a substantial wind resource, which thus does not require long transmission distances (and infrastructure) from wind to electricity customer.