Energen Raises 2005 Earnings Guidance.BIRMINGHAM, Ala ALA aminolevulinic acid. Ala alanine. ala (a´lah) pl. a´lae [L.] a winglike process. . -- Energen Corporation (NYSE NYSE See: New York Stock Exchange :EGN EGN External Gateway Network (WorldCom) EGN East Gate News EGN European Games Network ) announced today that it is raising its earnings guidance for 2005 by 20 cents to a new range of $4.10-$4.30 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share. "Energen has completed its budgeting process for 2005, and I am pleased to announce a 20-cent increase in our earnings guidance," said Mike Warren
The amount by which analysts or investors expect the price of a security may increase. upside potential The potential price or gain that may be expected in a security or in a security average, generally stated as the dollar in today's volatile price environment, and a solid strategic plan with a proven track record." "Energen's 2005 budget assumes that NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). prices applicable to our unhedged natural gas and oil volumes will average $6.00 per thousand cubic feet (Mcf) and $32.00 per barrel, respectively. And we are assuming an average price of $0.53 per gallon for our unhedged natural gas liquids (NGL NGL - A dialect of IGL. ) production," Warren said. "This leaves a lot of potential for commodity price-driven earnings upside Upside The potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside given that current 2005 swap prices are approximately $41.00 per barrel for oil and $6.50 per Mcf for natural gas. "We plan to continue relying on Alagasco, our strong natural gas utility, to contribute moderate earnings growth and provide the majority of dividend income for our shareholders," Warren added. Included in the Company's new guidance of $4.10-$4.30 per diluted share is an estimated $0.03 per diluted share from an unidentified acquisition of $200 million in the fourth quarter of 2005. 2005 Hedge Position Energen's oil and gas acquisition and development subsidiary, Energen Resources Corporation Energen Resources Corporation is the largest subsidiary of Energen Corporation, a diversified energy company headquartered in Birmingham, Alabama. It is a growing oil and gas acquisition and development company that has approximately 1. , utilizes derivative hedge instruments to help mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. the negative earnings impact of commodity price
volatility. Energen Resources' current hedge position with respect
to its estimated 2005 production is as follows:
NYMEX-
Hedge equiv.
Commodity Vols. Estimated 2005 Production % Hedged price
--------- ---------- -------------------------- ------------- -------
$5.87
Natural per
Gas 38.5 Bcf 60.3 Bcf(a) 59.1 Bcf(b) 64%(a) 65%(b) Mcf
--------- ---------- ------------ ------------- ------ ------ -------
$34.10
per
Oil 2.3 MMBbl 3.6 MMBbl 62% barrel
--------- ---------- -------------------------- ------------- -------
$0.485
per
NGL 30.2 MMgal 80.8 MMgal(a) 79.6 MMgal(b) 37%(a) 38%(b) gallon
--------- ---------- ------------- ------------ ------ ------ -------
(a) With unidentified 4th quarter 2005 acquisition
(b) Without unidentified 4th quarter 2005 acquisition
Energen Resources' 2005 natural gas hedge position by hedge type is
as follows:
Assumed Basis Price/Mcf
Hedge Type Volumes (Bcf) Difference(a) (NYMEX equiv)
----------------------- ------------- ----------------- --------------
NYMEX Hedges 16.4 -- $5.98
----------------------- ------------- ----------------- --------------
San Juan Basin-specific 18.6 $0.78 $5.71
----------------------- ------------- ----------------- --------------
Permian Basin-specific 1.8 $0.60 $6.20
----------------------- ------------- ----------------- --------------
SNG-LA Basin-specific 1.6 $0.04 $6.13
----------------------- ------------- ----------------- --------------
(a) Assumed basis differentials have been used to calculate
NYMEX-equivalent prices.
Energen Resources' 2005 oil hedge position by hedge type is as
follows:
Assumed Sour Oil Price/Barrel
Hedge Type Volumes (MBbl) Difference(a) (NYMEX equiv)
--------------- --------------- ------------------- ------------------
NYMEX Hedges 535 -- $31.20
--------------- --------------- ------------------- ------------------
Sour Oil (WTS) 1,723 $3.99 $35.00
--------------- --------------- ------------------- ------------------
(a) Assumed sour oil differential has been used to calculate the
NYMEX-equivalent price.
Realized prices for Energen Resources' production associated with NYMEX contracts as well as for unhedged production will reflect the impact of basis differentials. For production associated with basin-specific contracts, Energen Resources will receive the contracted hedge price, regardless of basis differentials. In the tables above, the basin-specific contract prices were converted for comparability purposes to a NYMEX-equivalent price by adding to them Energen Resources' assumed basis differentials. Realized NGL prices will reflect transportation and fractionation fractionation /frac·tion·a·tion/ (frak?shun-a´shun) 1. in radiology, division of the total dose of radiation into small doses administered at intervals. 2. fees. 2005 Production Estimates Energen Resources' production in 2005 is estimated to total approximately 94 Bcfe, broken out as follows: --Natural gas: 60.3 Bcf, including 1.3 Bcf from an unidentified acquisition --Oil: 3.6 MMBbl --NGL: 80.8 MMgal, including 1.2 MMgal from an unidentified acquisition A breakdown of Energen Resources' estimated 2005 production and hedge position by region and commodity is shown below (budgeted production from an unidentified acquisition(s) is included in "Other").
San Juan Basin Permian Basin Warrior Basin Other
-------------- ------------- ------------- --------------
Volumes % Volumes % Volumes % Volumes %
Hedged Hedged Hedged Hedged
------------ -------------- ------------- ------------- --------------
Gas (Bcf) 28.9 64% 6.0 30% 16.5 87% 8.9 42%
------------ -------------- ------------- ------------- --------------
Oil (MMBbl) 0.1 64% 3.4 64% -- -- 0.1 --
------------ -------------- ------------- ------------- --------------
NGL (MMgal) 63.5 48% 16.1 -- -- -- 1.2 --
------------ -------------- ------------- ------------- --------------
------------ -------------- ------------- ------------- --------------
Total (Bcfe) 38.7 60% 28.9 52% 16.5 87% 9.8 38%
------------ -------------- ------------- ------------- --------------
Earnings Sensitivities to Commodity Price Changes While there are many factors that affect Energen Resources' financial results, the largest influences typically are the commodity prices applicable to the company's unhedged production. The Company's guidance for 2005 earnings assumes that NYMEX prices applicable to Energen Resources' unhedged production in 2005 will average $6.00 per Mcf for gas and $32.00 per barrel for oil and that NGL prices will average $0.53 per gallon. Given Energen Resources' current hedge position for 2005 and assuming prices as outlined above for its unhedged production (excluding volumes from unidentified acquisitions), the sensitivities to pricing changes applicable to Energen's earnings guidance for 2005 are as follows: Relative to the company's unhedged volumes in 2005 (excluding production from unidentified acquisitions): --Every 10-cent change in the average NYMEX price of gas from $6.00 per Mcf represents an estimated net income impact of approximately $940,000 (2.6 cents per diluted share). --Every $1.00 change in the average NYMEX price of oil from $32.00 per barrel represents an estimated net income impact of approximately $670,000 (1.8 cents per diluted share). --Every 1-cent change in average price of NGL from $0.53 per gallon represents an estimated net income impact of approximately $220,000 (0.6 cents per diluted share). Price-related events such as substantial basis differential changes could cause earnings sensitivities to be materially different from those outlined above. CAPITAL SPENDING capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. PLANS Energen Resources has incorporated into its financial objectives for 2005 an investment late in the year of $200 million in domestic producing properties. Because of the budgeted timing of the acquisition(s), any such acquisition is estimated to generate only about $1.1 million in net income in 2005. Should one or more acquisitions occur earlier in the 2005 year, they could have a positive impact on Energen Resources' production volumes and earnings. Energen Resources also is planning to invest in 2005 approximately $120 million in development capital related to its existing properties, including: --Approximately $55 million to drill in the San Juan Basin The San Juan Basin is a drainage basin and geologic structural basin in the Four Corners region of the Southwestern United States; its main portion covers around 4,600 square miles, encompassing much of northwestern New Mexico, northeastern Arizona, and parts of Colorado and Utah. some 97 wells and 34 payadds. --Approximately $45 million to drill in the Permian Basin The Permian Basin is a sedimentary basin largely contained in the western part of the U.S. state of Texas. It reaches from just south of Lubbock, Texas, to just south of Midland & Odessa, extending westward into the southeastern part of the adjacent state of New Mexico. some 52 water injection wells, 50 producing wells, and 34 payadds and to perform other development activities. --Approximately $10 million in the North Louisiana/East Texas area to drill some 22 wells and perform 31 recompletions. --Approximately $10 million in the Black Warrior Black Warrior, river, United States Black Warrior, navigable river, 178 mi (286 km) long, rising in N central Ala. and flowing generally SW to the Tombigbee River. Basin to drill some 32 infill in·fill n. 1. The use of vacant land and property within a built-up area for further construction or development, especially as part of a neighborhood preservation or limited growth program. 2. wells and to undertake other developmental activities. Energen Resources' exploration spending in 2005 is estimated to total approximately $4 million. Capital spending at Alagasco is estimated to be approximately $60 million, including some $45 million for normal system needs. Other key assumptions that support Energen's new guidance include: --Average diluted shares outstanding of 36,835,000. --Alagasco's earning a return on average equity of approximately 13.15 percent on average equity of approximately $275 million. --A DD&A rate at Energen Resources of approximately $0.95 per Mcfe and LOE LOE Ley Orgánica de Educación (Spanish) LOE Level Of Effort LOE Limited Objective Experiment LOE Letter of Explanation LOE Language Other than English. (including production taxes) of approximately $1.37 per Mcfe. Energen Corporation is a diversified diversified (di·verˑ·s energy holding company with headquarters in Birmingham, Alabama Birmingham (pronounced [ˈbɝmɪŋˌhæm]) is the largest city in the U.S. state of Alabama and is the county seat of Jefferson County. . Its two lines of business are the acquisition and development of natural gas, oil and natural gas liquids onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and natural gas distribution in central and north Alabama North Alabama is a region of the U.S. state of Alabama, generally thought to include these 12 counties: Cherokee, Colbert, DeKalb, Franklin, Jackson, Lauderdale, Lawrence, Limestone, Madison, Marshall, Morgan, and Winston, with a combined population of 953,247, or 20. . Additional information on Energen is available at www.energen.com. FORWARD-LOOKING STATEMENTS forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This release contains statements expressing expectations of future plans, objectives and performance that constitute forward-looking statements made pursuant to the Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provision of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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. |
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