Energen Raises 2003 Earnings Guidance; New Hedges Enhance Downside Protection; Oil and Gas Price Outlook Strong.

Business Editors & Energy Writers

BIRMINGHAM, Ala.--(BUSINESS WIRE)--Dec. 12, 2002

New hedges and a strong market for oil and gas commodity prices has led Energen Corporation (NYSE:EGN) today to raise its earnings guidance for 2003 to a range of $2.25-$2.40 per share on 35.9 million diluted average shares outstanding. Energen's previous earnings guidance range for 2003 was $2.10-$2.25 per share on 35.3 million diluted average shares outstanding. In addition, Energen estimates that 2003 pre-tax cash flow will range from $7 to $7.15 per share.

"We are very pleased to be able to raise, once again, our earnings outlook for 2003," said Mike Warren, Energen's chairman and chief executive officer. "Our aggressive hedging has helped minimize our downside risk to commodity prices; at the same time, we believe we are in an excellent position to benefit from the upside potential offered by continued commodity price strength in the oil and gas markets."

Energen Resources Corporation, Energen's oil and gas acquisition and exploitation company, has capitalized on recent price strength in the natural gas commodity market by increasing its hedge position for 2003. Since Tuesday, Energen Resources has entered into hedges and basin-specific swaps for an additional 6.7 billion cubic feet (Bcf) of its 2003 gas production at an average New York Mercantile Exchange (NYMEX) equivalent price of approximately $4.33 per thousand cubic feet (Mcf).

For 2003 as a whole, Energen Resources now has 40.1 Bcf, or 78 percent of its estimated natural gas production of 51.2 Bcf hedged at an average NYMEX-equivalent price of $4.10 per Mcf.

In addition to natural gas, Energen Resources has 1.5 million barrels of oil, or 41 percent of its estimated 2003 oil production of 3.6 million barrels, hedged at an average NYMEX price of $26.26 per barrel. Estimated natural gas liquids production of 1.7 million barrels is unhedged.

Energen continues to monitor the commodity price environment and remains prepared to enter into additional oil and gas hedges, in keeping with its past hedging practices.

Key Assumptions

Key assumptions that are incorporated into Energen's new earnings guidance include:

-- The average NYMEX prices applicable to Energen Resources' unhedged production are $4 per Mcf for gas and $25 per barrel for oil.

-- Alabama Gas Corporation, Energen's natural gas utility, will earn within its allowed range of return on equity of 13.15-13.65 percent on average equity of approximately $240 million.

-- An additional $25 million of equity to be issued throughout the year and the issuance of an estimated $75 million of long-debt debt will be used to refinance existing short-term debt and further strengthen Energen's balance sheet.

-- Energen Resources' DD&A rate will average 97 cents per Mcf, and LOE (including production taxes) will average $1.06 per Mcf.

-- Capital spending at Energen Resources will total approximately $110 million for development and exploration activities; and capital spending at Alagasco will total approximately $57 million for normal system needs and new financial and mapping software.

Energen's earnings guidance, assumptions and other forward-looking statements are subject to a variety of risks and uncertainties. Please see Forward-Looking Statement disclosure at end of this release.

Earnings Sensitivity to Changes in Commodity Prices

The single largest influence on Energen's earnings in 2003 is commodity prices applicable to the unhedged production of Energen Resources. Given Energen Resources' current hedge position and assuming the NYMEX price for Energen Resources' unhedged production in 2003 averages $4 per Mcf for gas and $25 per barrel for oil, Energen's earnings' sensitivities to changes in the NYMEX price of gas and oil are as follows:

Relative to the company's unhedged volumes:

-- Every 10-cent change in the 2003 average NYMEX price of gas

from $4 per Mcf is estimated to have a net income impact of

$890,0000 (2.5 cents per diluted share).

-- Every $1 change in the 2003 average NYMEX price of oil -

together with a corresponding change in the price of NGLS -

from $25 per barrel is estimated to have a net income impact

of $1.7 million (5 cents per diluted share).

Energen's guidance for 2003 does not reflect the potential impact of Statement of Financial Accounting Standard (SFAS) 143, Accounting for Asset Retirement Obligations, which the company is required to adopt on January 1, 2003. SFAS 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. In addition, Energen's 2003 earnings may be affected by the valuation of proved reserves at December 31, 2002.

Energen Corporation is a diversified energy holding company with headquarters in Birmingham, Alabama. Its two lines of business are natural gas distribution in central and north Alabama and the acquisition, exploitation, exploration and production of natural gas, oil and natural gas liquids onshore in North America. Additional information on Energen is available at www.energen.com.

FORWARD-LOOKING STATEMENTS

This release contains statements expressing expectations of future plans, objectives and performance that constitute forward-looking statements made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Except as otherwise disclosed, the Company's forward-looking statements do not reflect the impact of possible or pending acquisitions, divestitures or restructurings. We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise. All statements based on future expectations rather than on historical facts are forward-looking statements that are dependent on certain events, risks and uncertainties that could cause actual results to differ materially from those anticipated. In addition, the Company cannot guarantee the absence of errors in input data, calculations and formulas used in its estimates, assumptions and forecasts. A discussion of risks and uncertainties, which could affect future results of Energen and its subsidiaries, is included in the Company's periodic reports filed with the Securities and Exchange Commission.