Energen Reports Strong 3rd Quarter Results; Management Raises 2005 and 2006 Earnings Guidance.BIRMINGHAM Birmingham, cities, United States Birmingham (bûr`mĭnghăm') 1 City (1990 pop. 265,968), seat of Jefferson co., N central Ala., in the Jones Valley near the southern end of the Appalachian system; founded and inc. , Ala ALA aminolevulinic acid. Ala alanine. ala (a´lah) pl. a´lae [L.] a winglike process. . -- Energen Based in Birmingham, Alabama, Energen Corporation is a diversified energy company with an oil and gas acquisition and development company and a natural gas utility. Corporation (NYSE NYSE See: New York Stock Exchange : EGN EGN External Gateway Network (WorldCom) EGN East Gate News EGN European Games Network ) today announced that higher commodity prices and increased natural gas production were the dominant drivers behind the diversified diversified (di·verˑ·s energy company's 37 percent increase in earnings 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 (EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ) for the third quarter of 2005. In addition, Energen raised its 2005 earnings guidance range 7 cents to $2.30-$2.40 per diluted share (prior range was $2.23-$2.33) and its 2006 guidance range to $3.25-$3.60 per diluted share (prior range was $3.05-$3.35). Energen said that adjustments to its earnings guidance included higher commodity price assumptions applicable to unhedged production, operating cost increases, and higher expected basis differentials in the San Juan San Juan, city, Argentina San Juan (săn wän, Span. sän hwän), city (1991 pop. 353,476), capital of San Juan prov., W Argentina. It is a commercial and industrial center in an agricultural region. and Permian basins 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. . "The acquisition of producing properties with development potential remains a critical component of Energen's strategic plan; however, Energen is not dependent on acquisitions to generate near-term near-term adj. Of, for, or involving a short period of time in the near future. earnings growth," said Mike Warren
(character) underscore - _, ASCII 95. this fact, we have removed estimated acquisition-related earnings from our guidance for 2005 and 2006. "Our two lines of business continue to perform very well in 2005," Warren Warren. 1 City (1990 pop. 144,864), Macomb co., SE Mich., a suburb of Detroit; est. 1837, inc. as a city 1957. It is an important metalworking center where steel is processed. said. "The fundamentals of our 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. (ERC (database) ERC - An extended entity-relationship model. ), and of our natural gas utility, Alabama Alabama, indigenous people of North America Alabama (ăləbăm`ə), indigenous people of North America whose language belongs to the Muskogean branch of the Hokan-Siouan linguistic stock (see Native American languages). Gas Corporation (Alagasco Alabama Gas Corporation (Alagasco) is the largest natural gas utility in north and central Alabama that provides energy to 460,000 homes and businesses. Its history dates back more than 150 years and has operating divisions in Anniston, Birmingham, Gadsden, Montgomery, Opelika, ) are strong, and Energen is positioned to generate meaningful earnings growth in 2005 and 2006." Third Quarter Results For the three months ended September September: see month. 30, 2005, Energen reported net income of $19.1 million, or 26 cents per diluted share, including an $8.6 million, or 12 cents per diluted share, non-cash, after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. loss associated with the timing of mark-to-market Mark-to-market Adjustment of the book value or collateral value of a security to reflect current market value. derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. . In the third quarter of 2004, Energen's net income totaled $13.7 million, or 19 cents per diluted share, and included a net loss of $0.9 million, or 1 cent per diluted share, related to the timing of mark-to-market derivatives. Income from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. totaled $13,000 and $63,000 in the current- and prior-year third quarters, respectively. Energen Resources Corporation ERC's third quarter 2005 income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the totaled $28.1 million and compared with prior-year results of $21.6 million. Included in these numbers are after-tax losses of $8.6 million and $0.9 million, respectively, related to the timing of mark-to-market derivatives. ERC's third quarter 2005 production from continuing operations rose 5 percent from the same period last year to total 23.5 billion cubic feet (Bcf) equivalent. Natural gas production increased approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 9 percent to 16.0 Bcf, primarily due to the Company's August 2004 acquisition of coalbed methane Coalbed methane is a form of natural gas extracted from coal beds. In recent decades it has become an important source of energy in United States, Canada, and other countries. properties 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. and increased drilling in the North Louisiana/East Texas area; the Company's oil production decreased approximately 5 percent to 813,000 barrels, while natural gas liquids (NGL NGL - A dialect of IGL. ) production remained virtually unchanged at 18.1 million gallons. The Company's average sales price for its natural gas production increased 11 percent to $5.31 per thousand cubic feet (Mcf) in the third quarter of 2005 as compared with the same period a year ago; the average sales price of oil rose 23.5 percent to $35.51 per barrel barrel: see English units of measurement. ; and the average sales price of NGL production increased 18 percent to 59 cents per gallon gallon: see English units of measurement. . Average sales prices reflect the impact of all hedges, including mark-to-market derivatives, and basis differentials and are not NYMEX-equivalent prices. ERC's per-unit lease operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. (LOE LOE Ley Orgánica de Educación (Spanish) LOE Level Of Effort LOE Limited Objective Experiment LOE Letter of Explanation LOE Language Other than English. ) in the third quarter of 2005 increased 22.5 percent to $1.74 per Mcf equivalent (Mcfe) due to a 33 percent increase in per-unit production taxes resulting from higher commodity prices and to increased expenses associated with work-overs and other price increases, partially offset by lower environmental compliance costs. Per-unit depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able and amortization (DD&A) from oil and gas activities totaled 98 cents per Mcfe in the current-year third quarter, up 8 percent from the same period a year ago largely due to last year's property acquisition and to the current-period production mix that reflects a higher percentage of the Company's shorter-lived North Louisiana/East Texas production. Alabama Gas Corporation Alagasco's natural gas distribution operations generated a net loss in the three months ended September 30, 2005, of $8.8 million as compared with a net loss of $7.7 million in the third quarter last year. This difference primarily relates to the timing of rate relief under Alagasco's rate-setting mechanism. YEAR-TO-DATE Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. RESULTS For the nine months ended September 30, 2005, Energen's net income totaled $115.7 million, or $1.57 per diluted share, and compared with $96.2 million, or $1.31 per diluted share, for the same period in 2004. Income from discontinued operations totaled $118,000 and $142,000 in the current- and prior-year periods, respectively. Included in these numbers are non-cash, after-tax losses of $11.4 million, or 15 cents per diluted share, in the current year, and $2.2 million, or 3 cents per diluted share, in the prior year. These losses are related to the timing of mark-to-market derivatives, and the current year-to-date loss will reverse by the end of 2005 as the volumes to which the derivatives are associated are produced. Energen Resources Corporation ERC's year-to-date 2005 income from continuing operations increased 26 percent, with the benefits of higher commodity prices and increased production being offset partially by increased LOE and DD&A. For the nine months ended September 30, ERC's income from continuing operations totaled $83.9 million and compared with $66.6 million in the same period last year. Included in these numbers are after-tax losses of $11.4 million and $2.2 million, respectively, related to the timing of mark-to-market derivatives. ERC's production from continuing operations in the year-to-date period rose approximately 6 percent from the same period last year to total 68.2 Bcfe. Natural gas production increased 9 percent to 45.9 Bcf, primarily due to the Company's August 2004 acquisition of coalbed methane properties in the San Juan Basin and increased drilling in the North Louisiana/East Texas area; the Company's oil production declined 3 percent to 2.5 million barrels, and NGL production increased 4 percent to 52.5 million gallons. The Company's average sales price for its natural gas production in the 2005 year-to-date increased 13 percent to $5.39 per Mcf as compared with the same period a year ago; the average sales price of oil rose 23 percent to $33.75 per barrel; and the average sales price of NGL production increased approximately 23 percent to 54 cents per gallon. Average sales prices reflect the impact of all hedges, including mark-to-market derivatives, and basis differentials and are not NYMEX-equivalent prices. ERC's per-unit LOE in the 2005 year-to-date period increased 24 percent to $1.63 per Mcfe due to a 27 percent increase in per-unit production taxes resulting from higher commodity prices and to higher costs associated with work-overs, marketing and transportation, compression compression, external stress applied to an object or substance, tending to cause a decrease in volume (see pressure). Gases can be compressed easily, solids and liquids to a very small degree if at all. , ad valorem According to value. The term ad valorem is derived from the Latin ad valentiam, meaning "to the value." It is commonly applied to a tax imposed on the value of property. and other price increases. Per-unit DD&A expense from oil and gas activities totaled 96 cents per Mcfe in the current year-to-date period, up 8 percent from the same period a year ago primarily due to last year's property acquisition and to the current-period production mix that reflects a higher percentage of the Company's shorter-lived North Louisiana/East Texas production. Alabama Gas Corporation Alagasco's net income for the 2005 year-to-date totaled $31.3 million as compared with $29.1 million in the same period last year. This increase reflects the utility's ability to earn within its allowed range of return on a higher level of equity representing investment in utility plant. RESULTS FOR THE TRAILING 12 MONTHS For the 12 months ended September 30, 2005, Energen's net income totaled $147.0 million, or $2.00 per diluted share, and compared with $117.0 million, or $1.60 per diluted share, for the 12 months' period ended September 30, 2004. Income from discontinued operations totaled $134,000 in the current-year period as compared with a loss of $35,000 in the same period a year ago. ERC's income from continuing operations in the current-year 12 months' period totaled $111.3 million as compared with the $82.9 million in the same period a year ago. Production from continuing operations totaled 91.2 Bcfe, up 6 percent from production of 86.2 Bcfe in the same period last year. Average sales prices for the 12-months' period were: --Natural gas, up 15 percent to $5.30 per Mcf; --Oil, up 24 percent to $33.32 per barrel; and --NGL, up 23 percent to 53 cents per gallon. LOE increased 22 percent to $1.57 per unit period-to-period. Per-unit DD&A expense from oil and gas activities increased 7 percent to 95 cents per Mcfe. Alagasco's net income for the 12 months ended September 30, 2005, totaled $35.9 million, up approximately 5 percent from $34.3 million in the same period a year ago. For the 12 months ended September 30, 2005 (the utility's 'rate year' for rate-setting purposes), Alagasco earned a 13.3 percent return on 13-month average equity of $271 million. Under the utility's rate-setting mechanism, Alagasco cannot earn above its allowed range of return on average equity of 13.15-13.65 percent at the end of its rate year. Primarily due to increased sales to its large commercial and industrial customer group, the utility 'over-earned' its allowed return and will refund TO REFUND. To pay back by the party who has received it, to the party who has paid it, money which ought not to have been paid. 2. On a deficiency of assets, executors and administrators cum testamento annexo, are entitled to have refunded to them legacies to customers through rates that become effective December December: see month. 1, 2005, the excess amount. 2005 EARNINGS GUIDANCE Energen today raised its 2005 earnings guidance range to $2.30-$2.40 per diluted share; the new range excludes a previously estimated 1.6 cents per diluted share associated with an unidentified acquisition of $200 million. The new range assumes that commodity prices applicable to its unhedged production will approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. current NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). prices of $12.90 per Mcf for natural gas in November November: see month. and December (October October: see month. actual known) and $59.50 per barrel for oil (October, November and December); ERC's assumed price for NGL is approximately 65 percent of the oil price per barrel. With 78 percent of ERC's estimated production for the remainder of 2005 hedged hedge n. 1. A row of closely planted shrubs or low-growing trees forming a fence or boundary. 2. A line of people or objects forming a barrier: a hedge of spectators along the sidewalk. , the sensitivity of the Company's earnings to commodity price changes is minimal. ERC's significant hedge position with respect to its estimated production of 23.4 Bcfe for the remainder of 2005 (October through December) is as follows:
Last 3 Months NYMEX-equiv.
Commodity Hedge Vols. 2005 Production % Hedged price
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Natural Gas(a) 12.6 Bcf 15.8 Bcf 80% $7.19 per Mcf
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$37.68 per
Oil 0.6 MMBbl 0.8 MMBbl 78% barrel
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$0.54 per
NGL 12.8 MMgal 18.9 MMgal 68% gallon
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(a) Includes actual basis differentials, as known
Realized prices for ERC's 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, ERC 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 ERC's 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. ERC's assumed basis differentials are: --San Juan Juan (IPA: [xwan]) is a Spanish form of the given name John (q.v.). It was the 55th most popular name in the United States as of 2003. Basin BASIN Boulder Area Sustainability Information Network (Boulder, Colorado) BASIN Brothers And Sisters In Need natural gas: $2.27 per Mcf (November-December) --Permian Basin natural gas: $1.95 per Mcf (November-December) --West Texas Sour oil: $6.90 per barrel (October-December) ERC's production for 2005 is estimated to total 91.6 Bcfe. LOE is estimated to increase to $1.72 per Mcfe, reflecting a continued rise in production-related taxes, field service costs and other operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. ; and DD&A from oil and gas activities is estimated to total 98 cents per Mcfe. 2005 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 and Other Assumptions ERC's capital spending plans for 2005 include approximately $150-$160 million in development capital related to its existing properties and exploration spending of some $5-$10 million. Capital spending at Alagasco is estimated to be $65-$70 million. Other key assumptions that support Energen's guidance include: --Average diluted shares outstanding of 73.7 million. --Alagasco's earning within its allowed range of return on average equity of $270-$275 million. 2006 EARNINGS GUIDANCE With the expectation of continued commodity price strength in 2006, Energen's management has raised its earnings guidance for 2006 to a range of $3.25 to $3.60 per diluted share. To underscore that property acquisitions are not necessary in order for Energen to meet its earnings goals, this guidance range excludes the benefit of any acquisitions that could be made in 2005 or 2006. Over the long term, acquisitions remain a critical component of Energen's growth strategy, and the Company is prepared to invest approximately $1 billion over the next five years to acquire domestic producing properties with development potential. As the nation enters the 2005-2006 winter heating season, it is facing an era of unprecedented high natural gas and oil prices. To better reflect the realities of this marketplace, Energen's new 2006 guidance assumes that NYMEX prices applicable to ERC's unhedged production in 2006 will average $10 per Mcf for gas and $58 per barrel for oil and that NGL prices will average approximately 90 cents per gallon. ERC's total current hedge position with respect to its estimated 2006 production of 89 Bcfe is as follows:
Estimated 2006 NYMEX-equiv.
Commodity Hedge Vols. Production % Hedged price
----------------------------------------------------------------------
Natural Gas 38.2 Bcf 60.0 Bcf 64% $7.96 per Mcf
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$51.79 per
Oil 2.4 MMBbl 3.2 MMBbl 76% barrel
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$0.56 per
NGL 30.2 MMgal 68.6 MMgal 44% gallon
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ERC's 2006 natural gas hedge position by hedge type is as follows:
Assumed Basis Price/Mcf
Hedge Type Volumes (Bcf) Difference (NYMEX equiv)
----------------------------------------------------------------------
San Juan Basin-specific 21.0 $1.40 $7.79
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Permian Basin-specific 0.5 $1.00 $9.53
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NYMEX Hedges 16.3 NA $8.08
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Other 0.4 $0.53 $9.50
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ERC's 2006 oil hedge position by hedge type is as follows:
Assumed Sour Oil Price/Barrel
Hedge Type Volumes (MBbl) Difference (NYMEX equiv)
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NYMEX Hedges 509 -- $44.78
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Sour Oil (WTS) 1,915 $5.22 $53.65
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Given ERC's current hedge position for 2006 and assuming prices as outlined above for its unhedged production, sensitivities to pricing changes applicable to Energen's 2006 earnings guidance are as follows: --Every 10-cent change in the average NYMEX price of gas from $10 per Mcf represents an estimated net income impact of approximately $1,000,000 (1.4 cents per diluted share). --Every $1.00 change in the average NYMEX price of oil from $58 per barrel represents an estimated net income impact of approximately $365,000 (0.5 cents per diluted share). --Every 1-cent change in average price of NGL from $0.90 per gallon represents an estimated net income impact of approximately $185,000 (0.2 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. 2006 Capital Spending Plans and Other Assumptions In 2006, ERC expects to invest some $110-$120 million to develop existing properties, with exploration spending estimated to be $5-$10 million. Capital spending at Alagasco is estimated to be $60-65 million. Other key assumptions that support Energen's 2006 earnings guidance include: --Average diluted shares outstanding of 74.0 million; --Alagasco's earning within its allowed range of return on average equity of approximately $285 million; --A DD&A rate at ERC of 97 cents per Mcfe; and --LOE (including production taxes) at ERC of $2.00 per Mcfe. It is important to note that Energen, ERC and Alagasco are still formulating their formal 2006 budgets. As a result, all the variables included in the 2006 forecast are subject to modification A change or alteration in existing materials. Modification generally has the same meaning in the law as it does in common parlance. The term has special significance in the law of contracts and the law of sales. and fine-tuning In theoretical physics, fine-tuning refers to circumstances when the parameters of a model must be adjusted very precisely in order to agree with observations. Theories requiring fine-tuning are regarded as problematic in the absence of a known mechanism to explain why the as the budget is finalized See finalization. . Energen Corporation is a diversified 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 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. domestic oil and gas properties 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 dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). , 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 more complete discussion of risks and uncertainties that could affect future results of Energen and its subsidiaries is included in the Company's periodic reports filed with the Securities and Exchange Commission.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the 3 months ending September 30, 2005 and 2004
3rd Quarter
-------------------
(in thousands, except per share data) 2005 2004 Change
----------------------------------------------------------------------
Operating Revenues
Oil and gas operations $126,260 $104,181 $ 22,079
Natural gas distribution 64,421 62,162 2,259
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Total operating revenues 190,681 166,343 24,338
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Operating Expenses
Cost of gas 27,386 26,545 841
Operations & maintenance 67,818 60,780 7,038
DD&A 34,215 30,849 3,366
Taxes, other than income taxes 19,523 15,343 4,180
Accretion expense 668 613 55
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Total operating expenses 149,610 134,130 15,480
----------------------------------------------------------------------
Operating Income 41,071 32,213 8,858
----------------------------------------------------------------------
Other Income (Expense)
Interest expense (11,600) (10,515) (1,085)
Other income 822 702 120
Other expense (104) (225) 121
----------------------------------------------------------------------
Total other expense (10,882) (10,038) (844)
----------------------------------------------------------------------
Income Before Income Taxes 30,189 22,175 8,014
Income tax expense 11,116 8,498 2,618
----------------------------------------------------------------------
Income from Continuing Operations 19,073 13,677 5,396
----------------------------------------------------------------------
Discontinued Operations, Net of Taxes
Income from discontinued operations 3 55 (52)
Gain on disposal 10 8 2
----------------------------------------------------------------------
Income from Discontinued Operations 13 63 (50)
----------------------------------------------------------------------
Net Income $ 19,086 $ 13,740 $ 5,346
----------------------------------------------------------------------
Diluted Earnings Per Share
Continuing operations $ 0.26 $ 0.19 $ 0.07
Discontinued operations - - -
----------------------------------------------------------------------
Net Income $ 0.26 $ 0.19 $ 0.07
----------------------------------------------------------------------
Basic Earnings Per Share
Continuing operations $ 0.26 $ 0.19 $ 0.07
Discontinued operations - - -
----------------------------------------------------------------------
Net Income $ 0.26 $ 0.19 $ 0.07
----------------------------------------------------------------------
Diluted Avg. Common Shares Outstanding 73,878 73,401 477
----------------------------------------------------------------------
Basic Avg. Common Shares Outstanding 73,024 72,537 487
----------------------------------------------------------------------
Dividends Per Share $ 0.10 $0.09625 $0.00375
----------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the 9 months ending September 30, 2005 and 2004
Year-to-date
-------------------
(in thousands, except per share data) 2005 2004 Change
----------------------------------------------------------------------
Operating Revenues
Oil and gas operations $363,567 $295,538 $ 68,029
Natural gas distribution 429,746 410,108 19,638
----------------------------------------------------------------------
Total operating revenues 793,313 705,646 87,667
----------------------------------------------------------------------
Operating Expenses
Cost of gas 214,665 205,574 9,091
Operations & maintenance 195,127 170,126 25,001
DD&A 98,741 88,418 10,323
Taxes, other than income taxes 65,867 55,647 10,220
Accretion expense 1,965 1,635 330
----------------------------------------------------------------------
Total operating expenses 576,365 521,400 54,965
----------------------------------------------------------------------
Operating Income 216,948 184,246 32,702
----------------------------------------------------------------------
Other Income (Expense)
Interest expense (34,794) (31,527) (3,267)
Other income 1,694 2,197 (503)
Other expense (638) (1,920) 1,282
----------------------------------------------------------------------
Total other expense (33,738) (31,250) (2,488)
----------------------------------------------------------------------
Income Before Income Taxes 183,210 152,996 30,214
Income tax expense 67,619 56,943 10,676
----------------------------------------------------------------------
Income from Continuing Operations 115,591 96,053 19,538
----------------------------------------------------------------------
Discontinued Operations, Net of Taxes
Income (loss) from discontinued
operations (2) 147 (149)
Gain (loss) on disposal 120 (5) 125
----------------------------------------------------------------------
Income from Discontinued Operations 118 142 (24)
----------------------------------------------------------------------
Net Income $115,709 $ 96,195 $ 19,514
----------------------------------------------------------------------
Diluted Earnings Per Share
Continuing operations $ 1.57 $ 1.31 $ 0.26
Discontinued operations - - -
----------------------------------------------------------------------
Net Income $ 1.57 $ 1.31 $ 0.26
----------------------------------------------------------------------
Basic Earnings Per Share
Continuing operations $ 1.58 $ 1.33 $ 0.25
Discontinued operations .01 - 0.01
----------------------------------------------------------------------
Net Income $ 1.59 $ 1.33 $ 0.26
----------------------------------------------------------------------
Diluted Avg. Common Shares Outstanding 73,725 73,258 467
----------------------------------------------------------------------
Basic Avg. Common Shares Outstanding 72,998 72,449 549
----------------------------------------------------------------------
Dividends Per Share $ 0.30 $0.28125 $0.01875
----------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the 12 months ending September 30, 2005 and 2004
Trailing 12 Months
---------------------
(in thousands, except per share data) 2005 2004 Change
----------------------------------------------------------------------
Operating Revenues
Oil and gas operations $ 478,146 $382,241 $ 95,905
Natural gas distribution 546,378 525,673 20,705
----------------------------------------------------------------------
Total operating revenues 1,024,524 907,914 116,610
----------------------------------------------------------------------
Operating Expenses
Cost of gas 268,980 260,352 8,628
Operations & maintenance 259,151 229,307 29,844
DD&A 131,100 117,754 13,346
Taxes, other than income taxes 85,153 71,357 13,796
Accretion expense 2,595 2,106 489
----------------------------------------------------------------------
Total operating expenses 746,979 680,876 66,103
----------------------------------------------------------------------
Operating Income 277,545 227,038 50,507
----------------------------------------------------------------------
Other Income (Expense)
Interest expense (46,010) (42,080) (3,930)
Other income 2,408 3,533 (1,125)
Other expense (899) (3,679) 2,780
----------------------------------------------------------------------
Total other expense (44,501) (42,226) (2,275)
----------------------------------------------------------------------
Income Before Income Taxes 233,044 184,812 48,232
Income tax expense 86,201 67,752 18,449
----------------------------------------------------------------------
Income from Continuing Operations 146,843 117,060 29,783
----------------------------------------------------------------------
Discontinued Operations, Net of Taxes
Income from discontinued operations 14 172 (158)
Gain (loss) on disposal 120 (207) 327
----------------------------------------------------------------------
Income (Loss) from Discontinued
Operations 134 (35) 169
----------------------------------------------------------------------
Net Income $ 146,977 $117,025 $ 29,952
----------------------------------------------------------------------
Diluted Earnings Per Share
Continuing operations $ 2.00 $ 1.60 $ 0.4
Discontinued operations - - -
----------------------------------------------------------------------
Net Income $ 2.00 $ 1.60 $ 0.4
----------------------------------------------------------------------
Basic Earnings Per Share
Continuing operations $ 2.01 $ 1.62 $ 0.39
Discontinued operations 0.01 - 0.01
----------------------------------------------------------------------
Net Income $ 2.02 $ 1.62 $ 0.4
----------------------------------------------------------------------
Diluted Avg. Common Shares Outstanding 73,596 73,079 517
----------------------------------------------------------------------
Basic Avg. Common Shares Outstanding 72,927 72,337 590
----------------------------------------------------------------------
Dividends Per Share $ 0.3963 $ 0.3738 $ 0.0225
----------------------------------------------------------------------
SELECTED BUSINESS SEGMENT DATA (UNAUDITED)
For the 3 months ending September 30, 2005 and 2004
3rd Quarter
-------------------
(in thousands, except sales price data) 2005 2004 Change
----------------------------------------------------------------------
Oil and Gas Operations
Operating revenues
Natural gas $ 85,087 $ 69,745 $ 15,342
Oil 28,879 24,553 4,326
Natural gas liquids 10,721 9,065 1,656
Other 1,573 818 755
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Total $126,260 $104,181 $ 22,079
----------------------------------------------------------------------
Production volumes from continuing
operations
Natural gas (MMcf) 16,013 14,632 1,381
Oil (MBbl) 813 854 (41)
Natural gas liquids (Mgal) 18,109 18,158 (49)
Production volumes from continuing ops.
(MMcfe) 23,480 22,349 1,131
Total sales volume (MMcfe) 23,478 22,374 1,104
Average sales price from continuing
ops.
Natural gas (Mcf) $ 5.31 $ 4.77 $ 0.54
Oil (barrel) $ 35.51 $ 28.76 $ 6.75
Natural gas liquids (gallon) $ 0.59 $ 0.50 $ 0.09
Other data
Lease operating expense (LOE)
LOE and other $ 27,396 $ 22,068 $ 5,328
Production taxes 13,477 9,565 3,912
----------------------------------------------------------------------
Total $ 40,873 $ 31,633 $ 9,240
----------------------------------------------------------------------
DD&A $ 23,547 $ 20,864 $ 2,683
Capital expenditures $ 44,209 $288,585 $(244,376)
Exploration expense $ 74 $ 1,807 $ (1,733)
Operating income $ 52,368 $ 42,584 $ 9,784
----------------------------------------------------------------------
Natural Gas Distribution
Operating revenues
Residential $ 33,795 $ 33,860 $ (65)
Commercial and industrial - small 21,732 18,516 3,216
Transportation 9,378 8,838 540
Other (484) 948 (1,432)
----------------------------------------------------------------------
Total $ 64,421 $ 62,162 $ 2,259
----------------------------------------------------------------------
Gas delivery volumes (MMcf)
Residential 1,810 1,874 (64)
Commercial 1,791 1,570 221
Transportation 11,951 12,790 (839)
----------------------------------------------------------------------
Total 15,552 16,234 (682)
----------------------------------------------------------------------
Other data
Depreciation and amortization $ 10,668 $ 9,985 $ 683
Capital expenditures $ 17,863 $ 11,869 $ 5,994
Operating income $(11,025) $(10,130) $ (895)
----------------------------------------------------------------------
SELECTED BUSINESS SEGMENT DATA (UNAUDITED)
For the 9 months ending September 30, 2005 and 2004
Year-to-date
-------------------
(in thousands, except sales price data) 2005 2004 Change
----------------------------------------------------------------------
Oil and Gas Operations
Operating revenues
Natural gas $247,087 $200,363 $ 46,724
Oil 83,683 70,262 13,421
Natural gas liquids 28,519 22,220 6,299
Other 4,278 2,693 1,585
----------------------------------------------------------------------
Total $363,567 $295,538 $ 68,029
----------------------------------------------------------------------
Production volume from continuing
operations
Natural gas (MMcf) 45,871 42,063 3,808
Oil (MBbl) 2,480 2,558 (78)
Natural gas liquids (Mgal) 52,486 50,323 2,163
Production volumes from continuing ops.
(MMcfe) 68,247 64,599 3,648
Total sales volume (MMcfe) 68,303 64,684 3,619
Average sales price from continuing
ops.
Natural gas (Mcf) $ 5.39 $ 4.76 $ 0.63
Oil (barrel) $ 33.75 $ 27.47 $ 6.28
Natural gas liquids (gallon) $ 0.54 $ 0.44 $ 0.10
Other data
Lease operating expense (LOE)
LOE and other $ 75,511 $ 58,298 $ 17,213
Production taxes 35,550 26,255 9,295
----------------------------------------------------------------------
Total $111,061 $ 84,553 $ 26,508
----------------------------------------------------------------------
DD&A $ 67,017 $ 58,965 $ 8,052
Capital expenditures $132,718 $359,993 $(227,275)
Exploration expense $ 568 $ 1,907 $ (1,339)
Operating income $156,713 $128,321 $ 28,392
----------------------------------------------------------------------
Natural Gas Distribution
Operating revenues
Residential $276,728 $267,164 $ 9,564
Commercial and industrial - small 116,612 107,692 8,920
Transportation 32,652 29,316 3,336
Other 3,754 5,936 (2,182)
----------------------------------------------------------------------
Total $429,746 $410,108 $ 19,638
----------------------------------------------------------------------
Gas delivery volumes (MMcf)
Residential 18,992 20,743 (1,751)
Commercial 9,497 9,845 (348)
Transportation 37,634 40,571 (2,937)
----------------------------------------------------------------------
Total 66,123 71,159 (5,036)
----------------------------------------------------------------------
Other data
Depreciation and amortization $ 31,724 $ 29,453 $ 2,271
Capital expenditures $ 53,562 $ 42,090 $ 11,472
Operating income $ 61,009 $ 56,459 $ 4,550
----------------------------------------------------------------------
SELECTED BUSINESS SEGMENT DATA (UNAUDITED)
For the 12 months ending September 30, 2005 and 2004
Trailing 12 Months
-------------------
(in thousands, except sales price data) 2005 2004 Change
----------------------------------------------------------------------
Oil and Gas Operations
Operating revenues
Natural gas $323,206 $257,731 $65,475
Oil 111,830 92,339 19,491
Natural gas liquids 37,201 29,214 7,987
Other 5,909 2,957 2,952
----------------------------------------------------------------------
Total $478,146 $382,241 $95,905
----------------------------------------------------------------------
Production volumes from continuing
operations
Natural gas (MMcf) 60,972 55,998 4,974
Oil (MBbl) 3,356 3,430 (74)
Natural gas liquids (Mgal) 70,371 67,445 2,926
Production volumes from continuing ops.
(MMcfe) 91,161 86,212 4,949
Total sales volume (MMcfe) 91,225 86,328 4,897
Average sales price from continuing ops.
Natural gas (Mcf) $ 5.30 $ 4.60 $ 0.70
Oil (barrel) $ 33.32 $ 26.92 $ 6.40
Natural gas liquids (gallon) $ 0.53 $ 0.43 $ 0.10
Other data
Lease operating expense (LOE)
LOE and other $ 96,404 $ 78,177 $18,227
Production taxes 46,580 33,256 13,324
----------------------------------------------------------------------
Total $142,984 $111,433 $31,551
----------------------------------------------------------------------
DD&A $ 88,948 $ 78,662 $10,286
Capital expenditures $423,655 $346,699 $76,956
Exploration expense $ 761 $ 1,980 $(1,219)
Operating income $208,771 $160,231 $48,540
----------------------------------------------------------------------
Natural Gas Distribution
Operating revenues
Residential $349,793 $341,720 $ 8,073
Commercial and industrial - small 147,606 136,775 10,831
Transportation 43,557 39,503 4,054
Other 5,422 7,675 (2,253)
----------------------------------------------------------------------
Total $546,378 $525,673 $20,705
----------------------------------------------------------------------
Gas delivery volumes (MMcf)
Residential 23,632 26,141 (2,509)
Commercial 11,975 12,411 (436)
Transportation 51,447 54,567 (3,120)
----------------------------------------------------------------------
Total 87,054 93,119 (6,065)
----------------------------------------------------------------------
Other data
Depreciation and amortization $ 42,152 $ 39,092 $ 3,060
Capital expenditures $ 69,680 $ 57,835 $11,845
Operating income $ 70,749 $ 68,694 $ 2,055
----------------------------------------------------------------------
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