Washington Gas Energy Services, Shell Energy Sign Strategic Supply Arrangement, Will Support Growth at WGES

Washington Gas Energy Services, Inc. announced that it has entered a five-year secured supply arrangement with Shell Energy North America (US), L.P.

Under this arrangement, WGES will have the ability to purchase the majority of its power, natural gas, and related products from Shell Energy in a structure that reduces WGES' cash flow risk from collateral posting requirements, WGES said. As a result of this credit support agreement, Shell Energy will have a lien on WGES' assets, principally its retail accounts receivables and contracts.

"With this arrangement, we will be able to build upon our successful track record of reducing earnings volatility at WGES, by reducing cash flow volatility that can result from collateral obligations," said Terry D. McCallister, Chairman and Chief Executive Officer of WGL Holdings, Inc. "WGES' ability to secure customer contracts fits well with Shell Energy's expertise in commodity supply markets, and this arrangement will allow WGL Holdings, Inc. to grow WGES while reducing capital reserved to cover contingent collateral needs."