CenterPoint announces sale of Arkansas and Oklahoma natural gas LDC businesses to Summit Utilities for $2.150 billion in cash

• CenterPoint to receive $2.150 billion in cash, including recovery of approximately $425 million in cash of unrecovered storm-related incremental natural gas costs incurred in February 2021
• Transaction represents a landmark valuation at 38.0x 2020 earnings and 2.5x 2020 year-end rate base
• Sale proceeds will allow CenterPoint to recycle capital to fund its industry-leading 10% planned compound annual rate base growth
• Sale will not impact company’s targeted 6% - 8% annual utility non-GAAP EPS growth rate
• Sale demonstrates significantly higher market value for natural gas infrastructure assets, including CenterPoint’s remaining gas businesses

CenterPoint Energy, Inc. (NYSE: CNP) (“CenterPoint”) today announced the sale of its Arkansas and Oklahoma natural gas LDC assets to Summit Utilities for $2.150 billion in cash, including recovery of approximately $425 million in cash of unrecovered storm-related incremental natural gas costs incurred in February 2021, subject to true-up at transaction close. The assets include approximately 17,000 miles of main pipeline in Arkansas, Oklahoma, and Texarkana serving more than half a million customers residing in high-quality regulatory jurisdictions.

The proceeds of $1.725 billion in cash, after recovery of approximately $425 million in cash unrecovered storm costs, represents a 2.5x multiple of 2020 rate base and a 38.0x multiple of 2020 earnings. The transaction is anticipated to close by the end of 2021, subject to customary closing conditions, including Hart-Scott Rodino antitrust clearance and state regulatory approvals.

CenterPoint President and CEO Dave Lesar said, “I could not be more excited to share this announcement today. Summit Utilities is a seasoned operator of utility assets in the region and the ideal company to acquire these assets. We are excited that Summit has existing businesses in Arkansas and Oklahoma, which will facilitate the transition process for our employees and customers. Summit has an industry track record of being a high-quality operator and we are confident they will continue to provide safe, reliable, and low-cost natural gas service to our customers in Arkansas and Oklahoma.”

Lesar added, “This transaction reflects the hard work and determination of everyone on the CenterPoint team. This valuation represents a landmark multiple for the LDC space and is a clear testament of the premium utility assets in these two jurisdictions. These assets are a proven integral part of the energy supplies in the states in which they operate. The solid customer demand for reliable and efficient distribution of natural gas was only solidified by the recent winter storm events. We believe the price paid for these assets demonstrates that the market is significantly undervaluing the remainder of our natural gas businesses.”

“The announcement demonstrates not only our ability to efficiently recycle capital across our utility footprint, but also our ability to execute on our commitments to our shareholders. As outlined in our December 2020 Investor Day, our commitments include delivering annualized utility earnings per share growth of 6% - 8% and growing our rate base at a 10% compound annual growth rate. The ability to efficiently redeploy this capital and the eventual exit of the midstream investments will have no impact on our targeted 6% - 8% annualized earnings per share growth rate. Further, we will also be eliminating the Oklahoma and Arkansas storm-related incremental natural gas cost from our balance sheet,” said Lesar.

“We look forward to announcing our first quarter of 2021 financial results during our earnings call on May 6,” he said.

J.P. Morgan Securities LLC. and RBC Capital Markets, LLC. served as CenterPoint Energy’s financial advisors. Baker Botts L.L.P. served as CenterPoint Energy’s legal advisors.

About CenterPoint Energy, Inc.

As the only investor-owned electric and gas utility based in Texas, CenterPoint Energy, Inc. (NYSE: CNP) is an energy delivery company with electric transmission and distribution, power generation and natural gas distribution operations that serve more than 7 million metered customers in Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio, Oklahoma and Texas. As of December 31, 2020, the company owned approximately $33 billion in assets and also owned 53.7 percent of the common units representing limited partner interests in Enable Midstream Partners, LP, a publicly traded master limited partnership that owns, operates and develops strategically located natural gas and crude oil infrastructure assets. With approximately 9,500 employees, CenterPoint Energy and its predecessor companies have been in business for more than 150 years. For more information, visit CenterPointEnergy.com.

About Summit Utilities, Inc.

Summit Utilities, Inc. (Summit) owns natural gas distribution and transmission subsidiaries that operate in Arkansas, Colorado, Maine, Missouri, and Oklahoma. The company provides safe, clean and affordable natural gas to businesses and residents in five states through Colorado Natural Gas, Inc., Summit Natural Gas of Missouri, Inc., Summit Natural Gas of Maine, Inc. and Arkansas Oklahoma Gas Corporation. Each of Summit’s subsidiaries constructs and installs natural gas distribution systems with the goal of supporting economic development by providing clean-burning, safe and reliable natural gas to residential and commercial customers through exceptional customer service and commitment to community. Overall, Summit entities serve approximately 100,000 customers and operate more than 5,400 miles of pipeline in Arkansas, Colorado, Maine, Missouri and Oklahoma.

Use of Non-GAAP Measures

As included in this press release, our utility growth target of 6-8% is based on a non-GAAP utility earnings per share (“Utility EPS”), which is not a generally accepted accounting principles (“GAAP”) financial measure. This non-GAAP EPS based utility growth rate has been previously referenced by the CenterPoint Energy as the guidance-based growth rate. Generally, a non-GAAP financial measure is a numerical measure of a company’s historical or future financial performance that excludes or includes amounts that are not normally excluded or included in the most directly comparable GAAP financial measure. The Utility EPS reflects dilution and earnings as if the Company’s Series B Preferred Stock converted on their mandatory conversion date. Utility EPS considers assumptions for certain significant variables that may impact earnings, such as customer growth and usage including normal weather, throughput, recovery of capital invested, effective tax rates, financing activities and related interest rates, regulatory and judicial proceedings. In addition, the Utility EPS assumes a continued re-opening of the economy in CenterPoint Energy’s service territories throughout 2021. To the extent actual results deviate from these assumptions, the Utility EPS may not be met and our projected annual Utility EPS growth rate range may change. Utility EPS includes an allocation of corporate overhead based upon our Utility segments relative earnings contribution. Corporate overhead consists primarily of interest expense, preferred stock dividend requirements and other items directly attributable to the parent along with associated income taxes, and considers certain significant variables that may impact earnings. Utility EPS excludes (a) earnings or losses from the change in value of the Company’s 2.0% Zero-Premium Exchangeable Subordinated Notes due 2029 (“ZENS”) and related securities, (b) certain expenses associated with merger integration, and (c) Midstream Investments, including income from the Enable preferred units and a corresponding amount of debt in addition to an associated allocation of corporate overhead based on relative earnings contribution. Utility EPS also does not include other potential impacts, such as changes in accounting standards, impairments or unusual items, which could have a material impact on GAAP reported results for the applicable guidance period. CenterPoint Energy is unable to present a quantitative reconciliation of forward-looking Utility EPS because changes in the value of ZENS and related securities, future impairments and other unusual items are not estimable as they are highly variable and difficult to predict due to various factors outside of management’s control. Management evaluates CenterPoint Energy’s financial performance in part based on Utility EPS. Management believes that presenting this non-GAAP financial measure enhances an investor’s understanding of CenterPoint Energy’s overall financial performance by providing them with an additional meaningful and relevant comparison of current and anticipated future results across periods. The adjustments made in this non-GAAP financial measure exclude items that Management believes does not most accurately reflect the Company’s fundamental business performance. CenterPoint Energy’s Utility EPS non-GAAP financial measure should be considered as a supplement to, and not as a substitute for, or superior to, diluted earnings per share, which is the most directly comparable GAAP financial measure. This non-GAAP financial measure also may be different than non-GAAP financial measures used by other companies.

Forward-Looking Statements

The statements in this press release contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical fact included in this press release are forward-looking statements made in good faith by us and are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. When used in this press release, the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “projection,” “should,” “target,” “will” or other similar words are intended to identify forward-looking statements. These forward-looking statements are based upon assumptions of management which are believed to be reasonable at the time made and are subject to significant risks and uncertainties. Actual events and results may differ materially from those expressed or implied by these forward-looking statements. Forward-looking statements include, but are not limited to, statements relating to the consideration CenterPoint Energy expects to receive, the timing of closing the transaction, long-term growth strategy and investment plan, capital deployment, rate base growth, and CenterPoint Energy’s guidance basis utility earnings per share and guidance basis utility earnings per share growth target. Each forward-looking statement contained in this press release speaks only as of the date of this release. Important factors that could cause actual results to differ materially from those indicated by the provided forward-looking information include risks and uncertainties relating to: (1) the timing of the expiration or termination of the Hart-Scott-Rodino waiting period and the receipt of any consents, waivers or approvals required to be obtained pursuant to applicable antitrust or regulatory laws, (2) the occurrence of any event, change or other circumstances that could give rise to the termination of the proposed transactions or could otherwise cause the failure of the proposed transactions to close, (3) the risk that a condition to the closing of the proposed transactions may not be satisfied, (4) the outcome of any legal proceedings, regulatory proceedings or enforcement matters that may be instituted relating to the proposed transactions, (5) the timing to consummate the proposed transactions, (6) disruption from the proposed transactions making it more difficult to maintain relationships with customers, employees, regulators or suppliers, (7) the diversion of management time and attention on the proposed transactions and (8) other factors discussed in CenterPoint Energy’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and other reports CenterPoint Energy or its subsidiaries may file from time to time with the Securities and Exchange Commission (SEC).

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