SEMCO ENERGY Reports Results for the Quarter and Nine Months Ended September 30, 2007

PORT HURON, Mich., Nov. 8 /PRNewswire-FirstCall/ -- SEMCO ENERGY, Inc. (NYSE: SEN) today announced its financial results for the quarter and nine months ended September 30, 2007. For the quarter ended September 30, 2007, the Company reported a net loss available to common shareholders of $8.9 million (or $0.25 per basic and diluted share) compared to a net loss available to common shareholders of $6.5 million (or $0.18 per basic and diluted share) for the quarter ended September 30, 2006. The net loss available to common shareholders for the third quarter of 2007 includes costs associated with the pending sale of the Company of $0.2 million, net of income taxes (or $0.01 per basic and diluted share). For the nine months ended September 30, 2007, the Company reported net income available to common shareholders of $3.2 million (or $0.09 per basic share and diluted share) compared to net income available to common shareholders of $1.2 million (or $0.03 per basic share and diluted share) for the nine months ended September 30, 2006. Net income available to common shareholders for the first nine months of 2007 includes costs associated with the pending sale of the Company of $2.4 million, net of income taxes (or $0.07 per basic share and diluted share).

The primary factors contributing to the increased net loss for the third quarter of 2007 compared to the third quarter of 2006 were (on an after-tax basis) an increase of $1.2 million in operations and maintenance expense at the Gas Distribution Business, costs of $0.2 million incurred in connection with the pending sale of the Company, a decrease of $0.2 million in gas distribution margin, an increase of $0.6 million in depreciation and property tax expense, and an inventory valuation adjustment of $0.3 million in the third quarter of 2006, offset partially by a $0.4 million decrease in financing-related costs. The primary factors contributing to the increase in net income available to common shareholders when comparing the results for the nine months ended September 30, 2007, to the results for the nine months ended September 30, 2006, include (on an after-tax basis) a $6.3 million increase in gas distribution margin, profits of $0.4 million earned by one of the Company's non-regulated businesses from the sale of natural gas, a decrease of $1.3 million in financing-related costs and a $0.4 million increase in non- operating income, offset partially by a $2.3 million increase in operations and maintenance expense at the Gas Distribution Business, costs of $2.4 million incurred in connection with the pending sale of the Company, and a $1.4 million increase in depreciation and property tax expense.

George A. Schreiber, Jr., the Company's President and Chief Executive Officer, said, "The Company's 2007 third quarter financial results were in line with our expectations. 2007 year-to-date results show a strong improvement over the same period of the last year. Significant progress was made during the past few months towards finalizing the pending sale of the Company to Cap Rock Holding Corporation. We currently expect the sale to close on or about November 9, 2007."

SEMCO ENERGY, Inc. distributes natural gas to more than 400,000 customers combined in Michigan, as SEMCO ENERGY GAS COMPANY, and in Alaska, as ENSTAR Natural Gas Company. It also owns and operates businesses involved in propane distribution, intrastate pipelines and natural gas storage.

The following is a "Safe-Harbor" statement under the Private Securities Litigation Reform Act of 1995. This release contains forward-looking statements that involve risks and uncertainties. Statements that are not historic facts, including statements about the Company's outlook, beliefs, plans, goals and expectations, are forward-looking statements. Factors that may impact forward-looking statements include, but are not limited to, the outcome of the pending transaction to sell the Company, the effects of weather, the economic climate, competition, rising commodity prices and resulting increases in working capital requirements, changing conditions in the capital markets, regulatory approval processes and rate recovery mechanisms, gas procurement opportunities, compliance with covenants and success in accomplishing financing objectives, maintaining an effective system of internal controls, success in obtaining new business, success in defending claims against the Company, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission.



                              SEMCO ENERGY, INC.
                       News Release Statistics (Unaudited)
                     (in thousands, except per share amounts)

                                      Three months ended   Nine months ended
                                          September 30,      September 30,
                                          2007     2006      2007      2006

    Statement of Operations data

      Operating revenues                $71,201  $64,192  $503,003  $432,703

      Cost of gas sold                   44,342   36,637   370,560   312,756
      Operations and maintenance         20,416   17,713    67,015    56,911
      Depreciation and amortization       7,501    7,201    22,452    21,568
      Property and other taxes            3,094    2,505     9,145     7,735

      Operating income (loss)            (4,152)     136    33,831    33,733

      Other income and (deductions)
        Interest expense                 (9,664) (10,270)  (29,188)  (31,000)
        Other                               655      664     2,730     2,027
          Total other income and
           (deductions)                  (9,009)  (9,606)  (26,458)  (28,973)

      Income tax (expense) benefit        4,904    3,582    (2,229)   (1,486)

      Net income (loss)                  (8,257)  (5,888)    5,144     3,274

      Dividends on convertible
       cumulative preferred stock           652      649     1,954     2,103

      Net income (loss) available to
       common shareholders              $(8,909) $(6,537)   $3,190    $1,171

      Earnings (loss) per share -
       basic
        Basic                            $(0.25)  $(0.18)    $0.09     $0.03
        Diluted                          $(0.25)  $(0.18)    $0.09     $0.03

      Average number of common shares
       outstanding
        Basic                            35,820   35,341    35,600    34,526
        Diluted                          35,820   35,341    35,966    34,764



                                SEMCO ENERGY, INC.
                       News Release Statistics (Unaudited)
                 (dollars in thousands, except per share amounts)

                                      Three months ended   Nine months ended
                                          September 30,      September 30,
                                          2007     2006      2007      2006

    Business Segment Information

      Operating revenues
        Gas Distribution                $69,777  $62,394  $494,624  $426,822
        Corporate and Other               3,619    4,049    14,381    12,064
        Reconciliation to Consolidated
         Financial Statements
          Intercompany eliminations      (2,195)  (2,251)   (6,002)   (6,183)
          Consolidated operating
           revenues                     $71,201  $64,192  $503,003  $432,703

      Operating income (loss)
        Gas Distribution                $(4,031)   $(931)  $35,890   $31,941
        Corporate and Other                (121)   1,067    (2,059)    1,792
          Consolidated operating income
           (loss)                       $(4,152)    $136   $33,831   $33,733

      Depreciation and amortization
       expense
        Gas Distribution                 $7,200   $6,874   $21,532   $20,578
        Corporate and Other                 301      327       920       990
          Consolidated depreciation and
           amortization expense          $7,501   $7,201   $22,452   $21,568


    Gas Distribution Operating
      Statistics

        Volumes sold (MMcf)               5,684    5,392    47,468    41,440
        Volumes transported  (MMcf)      10,412   12,767    31,111    40,042
        Number of customers at end of
         period                         409,005  408,405   409,005   408,405
        Weather statistics:
          Degree days
            Alaska                          819    1,010     6,765     6,841
            Michigan                        130      166     4,107     3,858
          Percent colder (warmer) than
           normal
            Alaska                          3.4%    13.9%     10.9%      7.1%
            Michigan                      (26.6)%   (7.2)%    (6.2)%   (12.4)%
SOURCE  SEMCO ENERGY, Inc.
    -0-                             11/08/2007
    /CONTACT:  Analysts, Thomas Connelly, Director of Investor Relations,
+1-248-458-6163, or Media, Timothy Lubbers, Director of Marketing and
Corporate Communications, +1-810-887-4208, both of SEMCO ENERGY, Inc. /
    /Web site:  http://www.semcoenergy.com /
    (SEN)

CO:  SEMCO ENERGY, Inc.; Cap Rock Holding Corporation
ST:  Michigan, Alaska
IN:  OIL UTI
SU:  ERN

LG-LA
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6742 11/08/2007 16:15 EST http://www.prnewswire.com
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding SEMCO Energy's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.