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Press Release

Piedmont Natural Gas Reports First Quarter 2012 Results 03/09/2012

Warmer than normal weather impacts margin and net income; customer growth levels improve

CHARLOTTE, N.C., March 9, 2012 - Piedmont Natural Gas (NYSE: PNY) today announced results for its first fiscal quarter ended January 31, 2012. For the quarter, the Company reported net income of $76.2 million, or $1.05 per diluted share, compared to net income of $84.4 million, or $1.16 per diluted share for the same period in 2011.

Margin for the quarter was $220.2 million, a decrease of $9.8 million from the prior year's quarter. The decrease  was primarily attributable to weather that was 16 percent warmer than normal and 31 percent warmer than last year, resulting in lower volatility and reduced opportunities in the secondary wholesale markets and lower volume deliveries to weather sensitive retail markets.

Customer additions in the Company's residential and commercial market increased by 22 percent and 10 percent, respectively, for the quarter compared to the same period in 2011.  Residential gains were driven primarily by growth in the Company's residential new construction and conversion markets where building permits increased modestly and lower wholesale natural gas costs continued to favorably position natural gas relative to other energy sources.  Increased commercial growth reflected improvements in both commercial new construction activity and commercial conversion opportunities.  During the quarter, the Company also completed an expansion project to initiate natural gas delivery service to Duke Energy's new Dan River, Rockingham County plant in North Carolina.  

Piedmont's Chairman, President, and CEO, Thomas E. Skains, commented on the results, "Our financial results were directly impacted by unseasonably warmer than normal weather during our first fiscal quarter in 2012. At the same time, we are pleased with our customer growth for the quarter, which showed measurable improvement over last year and an increase in consumer demand for natural gas in both the residential and commercial markets.  We are also pleased with our progress on our substantial capital expansion program to serve new gas fired power generation facilities in North Carolina."

Gross utility construction expenditures during the quarter totaled $98.1 million, an increase of approximately $60 million over the first quarter of 2011.  The increase is primarily due to capital expenditures related to the Company's construction of new transmission and compression facilities to serve new natural gas fired power generation facilities in North Carolina. The Company's expansion projects that will serve Progress Energy's Wayne County complex and Progress Energy's Sutton Plant site near Wilmington, North Carolina remain on schedule for natural gas delivery service commencing in June 2012 and June 2013, respectively.  Piedmont anticipates expenditures of $260 - $280 million, including allowance for funds used during construction, during the current fiscal year for those projects.

Operations and maintenance expenses totaled $58.4 million during the first quarter of 2012, an increase of $7.3 million from the first quarter of 2011. The increase in O&M expenses for the quarter is primarily due to expected increases in pension expenses, medical coverage expenses, and contract labor expenses for ongoing internal process improvement programs.

Pre-tax income from Piedmont's joint ventures was $6.3 million compared to $7.8 million for the same period in 2011.  The decrease is primarily due to reduced customer usage related to warmer weather and the recording of a lower of cost or market storage inventory adjustment due to lower natural gas prices at SouthStar Energy Services, partially offset by quarter over quarter improvements for the Company's three other joint ventures.

Utility interest charges for the quarter were $7.2 million compared to $11 million for the same period in 2011.  The decrease is primarily due to lower interest expense resulting from the combination of an increase in the allowance for funds used during construction (AFUDC) and a decrease in interest expense on long-term debt.

DIVIDEND INCREASED FOR THIRTY-FOURTH CONSECUTIVE YEAR
As previously announced, the Board of Directors on March 8 approved an increase in the Company's quarterly dividend on Common Stock. The new quarterly dividend of 30 cents per share reflects a 3.4 percent increase and will be payable on April 13, 2012 to holders of record at the close of business on March 23, 2012.

COMPANY REAFFIRMS FISCAL YEAR 2012 EARNINGS GUIDANCE, POINTS TO LOWER END OF RANGE
As a result of substantially warmer than normal weather during the Company's first fiscal quarter, Piedmont Natural Gas reaffirms its fiscal year 2012 earnings guidance of $1.58 to $1.68 per diluted share with emphasis toward the lower end of the range. 

CONFERENCE CALL
In conjunction with the first-quarter earnings release, you are invited to listen to the conference call that will broadcast live over the Internet on Monday, March 12 at 11 a.m. Eastern Time, hosted by Chairman, President and CEO Thomas E. Skains. Log onto the web at www.piedmontng.com and click on Investor Relations, then on Presentations. The conference call will be archived on the Presentation page of the website within the Investor Relations section.

Summary of Operations
(in thousands except per share amounts and degree days)

Three Months Ended        January 31       % Increase
     2012  2011   (decrease)
     (unaudited)    
Operating Revenues   $    471,840     $    652,056       (28%)
Cost of Gas   251,603         422,050       (40%)

Margin

      220,237     230,006       (4%)
Operations and Maintenance Expenses       58,397     51,058       14%
Depreciation       26,178         25,047       5%
General Taxes       8,622         11,097       (22%)
Utility Income Taxes       47,221         51,935       (9%)
Operating Income       79,819         90,869       (12%)
Other Income (Expense), net       3,614         4,588       (21%)
Utility Interest Charges       7,206         11,017       (35%)
Net Income       76,227         84,440       (10%)
   

Average Shares of Common Stock:

   
    Basic       72,126         72,194       -%
    Diluted       72,433         72,514       -%
   
Earning Per Share of Common Stock:    
    Basic   $          1.06     $          1.17       (9%)
    Diluted   $          1.05     $          1.16       (9%)
System Throughput — Dekatherms       90,228         97,844       (8%)
Gas Customers Billed in January       983         980       -%
System Average Degree Days — Actual       1,568         2,278       (31%)
System Average Degree Days — Normal       1,869         1,865       -%
Percent Normal Degree Days       84%         122%       n/a

Forward-Looking Statement
This press release contains forward-looking statements. These statements are based on management's current expectations and information currently available and are believed to be reasonable and are made in good faith. However, the forward-looking statements are subject to future events, risks, uncertainties and other factors that could cause actual results to differ materially from those projected in the statements. Factors that may make the actual results differ from anticipated results include, but are not limited to, weather conditions, rate of customer growth, the cost and availability of natural gas, competition from other energy providers, new legislation and regulations and application of existing laws and regulations, economic and capital market conditions, the cost and availability of labor and materials and other uncertainties, all of which are difficult to predict and some of which are beyond our control. For these reasons, you should not rely on these forward-looking statements when making investment decisions. The words "expect," "believe," "project," "anticipate," "intend," "should," "could,"  "assume,"  "estimate," "forecast," "future," "indicate," "outlook," "plan," "predict," "seek," "target," "would," and variations of such words and similar expressions are intended to identify forward-looking statements. Forward-looking statements are only as of the date they are made and we do not undertake any obligation to update publicly any forward-looking statement, either as a result of new information, future events or otherwise. More information about the risks and uncertainties relating to these forward-looking statements may be found in Piedmont's latest Forms 10-K and 10-Q, which are available on the SEC's website at http://www.sec.gov/.

About Piedmont Natural Gas
Piedmont Natural Gas is an energy services company primarily engaged in the distribution of natural gas to more than one million residential, commercial and industrial utility customers in North Carolina, South Carolina and Tennessee, including 53,000 customers served by municipalities who are wholesale customers. Our subsidiaries are invested in joint venture, energy-related businesses, including unregulated retail natural gas marketing, interstate natural gas storage and intrastate natural gas transportation. More information about Piedmont Natural Gas is available on the Internet at http://www.piedmontng.com.

SOURCE Piedmont Natural Gas Company

Press Contact: David Trusty
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