EnergySouth, Inc. Reports Fiscal 2004 First Quarter Earnings and Announces Declaration of Dividend.

Energy Editors/Business Editors

MOBILE, Ala.--(BUSINESS WIRE)--Jan. 30, 2004

The Board of Directors of EnergySouth, Inc. (NASDAQ:ENSI), at a meeting held January 30, 2004, declared a quarterly dividend on the outstanding Common Stock of $0.285 per share, to be paid April 1, 2004 to holders of record as of March 15, 2004.

Net income for EnergySouth, Inc. for the quarter ended December 31, 2003 was $4,068,000, or $0.78 per share, as compared to net income for the quarter ended December 31, 2002 of $3,374,000, or $0.66 per share. The increase in earnings of $0.12 per share is attributed to improved results from the natural gas distribution operations at EnergySouth's Mobile Gas subsidiary and continued growth in the storage operations of the Company's Bay Gas subsidiary.

Earnings from Mobile Gas' distribution business increased approximately $0.08 per share for the quarter ended December 31, 2003 when compared to the same prior year period due primarily to an increase in margins, defined as revenue less cost of gas and related gross receipts taxes. Margins for the current year fiscal quarter reflect the impact of rate adjustments under the Rate Stabilization and Equalization ratemaking methodology. Margins were also positively impacted by an increase in temperature sensitive customers' gas consumption during the current year quarter as compared to unusually low usages experienced in the first quarter of fiscal 2003. The increases in margins were partially offset by a 2.8% increase in operating and maintenance expenses and an increase in depreciation expense due to additional plant placed in service.