Energen Reports 120% Increase in 3rd Quarter Results; Diversified Energy Company Sees Double-Digit EPS Growth in FY01 and FY02
BIRMINGHAM, Ala., July 25 /PRNewswire/ -- Energen Corporation (NYSE: EGN)
announced today that its earnings per diluted share (EPS) in the third quarter
of fiscal year 2001 grew 120 percent over the same period last year. "With
approximately 80 percent of our natural gas production hedged in the third
quarter, Energen's earnings were minimally affected by the significant decline
in natural gas commodity prices over the three-month period," said Mike
Warren, Energen's chairman and chief executive officer. "The solid hedge
position we have in place for fiscal year 2002 also minimizes the potential
impact of weaker natural gas commodity prices on Energen's future earnings
prospects."
"Given our substantial hedge position and assuming that New York
Mercantile Exchange (NYMEX) natural gas and oil prices for the remainder of
our fiscal year average $3 per Mcf and $26 per barrel, respectively, we
believe that Energen's EPS in fiscal year 2001 will range from $2.25 to $2.30
per diluted share," Warren said. This represents approximately 30 percent
growth in EPS over Energen's record earnings of $1.75 per diluted share in
fiscal year 2000. More than 75 percent of Energen Resources' estimated
natural gas production and more than 65 percent of its estimated oil
production are hedged for the last three months of fiscal year 2001.
For the three months ended June 30, 2001, Energen's net income totaled
$10.4 million, or 33 cents per diluted share, and compared with $4.5 million,
or 15 cents per diluted share, in the same period last year. Higher realized
sales prices for its natural gas, oil and natural gas liquids (NGL) production
continued to drive the performance of Energen's non-regulated oil and gas
acquisition and exploitation company, Energen Resources Corporation, in the
third fiscal quarter. The earnings contribution from Alabama Gas Corporation
(Alagasco), Energen's natural gas utility, was influenced negatively by a
variety of factors largely associated with the significantly colder weather
and higher natural gas prices experienced during the past winter as well as to
the impact of a general economic slow-down on industrial gas usage.
Energen Resources' net income in the third quarter of fiscal year 2001
totaled $10 million; this increase of more than 165 percent over the $3.75
million earned in the same period last year largely was due to higher realized
commodity sales prices partially offset by increased lease operating expense
(LOE). In addition, the prior-period earnings included a $2.2 million, non-
cash after-tax write-down under Statement of Financial Accounting Standards
121.
The realized sales price for Energen Resources' natural gas production in
the quarter was $3.23 per thousand cubic feet, a 25 percent increase over the
$2.58 per Mcf sales price in the same period last year. The Company's oil
production realized a price of $24.43 per barrel, up from $20.21 per barrel in
the same period last year; and Energen Resources' NGL production generated
$16.79 per barrel (40 cents per gallon) as compared with $15.84 per barrel (38
cents per gallon) in the third quarter of fiscal year 2000. Third quarter
production increased year-over-year by approximately 2 percent.
Energen Resources' 21 percent increase in LOE primarily was due to higher
field services costs and higher spot price-based production taxes.
Alagasco's utility net income of $0.6 million was down 48 percent from the
$1.1 million earned in the same period last year. Negatively affecting the
utility's current third quarter results were load loss in the large commercial
and large industrial (LC&I) sectors primarily due to a general economic
downturn, increased bad debt expense resulting from the significantly higher
natural gas prices and colder weather experienced this past winter, and higher
interest expense.
YEAR-TO-DATE EARNINGS UP 26.5%
For the first nine months of fiscal year 2001, Energen earned $71.1
million, or $2.29 per diluted share. In the same period last year,
consolidated net income was $54.8 million, or $1.81 per diluted share.
Increased realized commodity prices drove Energen Resources' 68 percent
rise in net income. In the first nine months of the fiscal year, Energen
Resources earned $39.6 million as compared with $23.5 million in the same
period last year. Energen Resources' realized natural gas prices increased 33
percent to $3.25 per Mcf; realized oil prices rose 34 percent to $23.48 per
barrel; and NGL prices rose 28 percent to $19.52 per barrel (46.5 cents per
gallon).
Alagasco's net income for the first nine months of fiscal year 2001
totaled $32 million, little changed from net income of $31.8 million in the
same period last year. In addition to the same factors that influenced the
third quarter comparison (above), LC&I load loss associated with high natural
gas prices this past winter also affected the year-to-date comparison.
12-MONTHS EARNINGS INCREASE 46%
For the 12 months ended June 30, 2001, Energen's net income totaled $69.3
million, or $2.25 per diluted share. This reflects a 46 percent increase in
diluted EPS over the prior-year 12-month period. For the 12 months ending
June 30, 2000, Energen reported net income of $46.4 million, or $1.54 per
diluted share.
Energen Resources' trailing 12 months' net income more than doubled to
$43.5 million, while Alagasco's net income for the period was unchanged at
$26.5 million.
MANAGEMENT ANTICIPATES DOUBLE-DIGIT EARNINGS GROWTH IN FY02
"The near-term pricing landscape for natural gas has changed dramatically
in the last three months," Warren said. "Previously, we had been discussing
25 to 30 percent earnings growth at Energen in fiscal year 2002 based on our
unhedged production receiving an average NYMEX price of $4.25 per Mcf.
"In a $3.50 per Mcf world, we believe Energen will be able to reach its
historic target of double-digit earnings growth in fiscal year 2002. Based on
a NYMEX average price of $3.50 per Mcf for our unhedged gas production, we now
estimate earnings of $2.45 to $2.55 per diluted share. This estimate also
assumes an average NYMEX oil price of $25 per barrel on our unhedged oil
production." Warren noted that significant changes in the commodity price of
gas impact facets of the Company's income statement other than revenue and
that this earnings range includes an allowance for such impact on Energen
Resources' depreciation rate and production taxes.
"Energen is an earnings-driven company," Warren said. "As such, we hedge
a significant portion of Energen Resources' flowing production. Immediately
following a property acquisition, for example, we typically hedge flowing
production for up to 36 months to help lock-in our targeted rates of return
for that acquisition." Warren noted that the Company also hedges up to 80
percent of its total estimated production in any given fiscal year.
Energen Resources has hedges and collars in place for approximately 29
percent of its estimated gas production in fiscal year 2002 (excluding
anticipated acquisition and exploration volumes) at an average NYMEX price of
$3.99 per Mcf. Another 29 percent of fiscal year 2002 production is subject
to physical sales contracts that feature a three-way pricing mechanism such
that the Company will receive market prices when such prices fall between
$2.90 per Mcf NYMEX and a cap of $4 per Mcf NYMEX. The Company will receive
$2.90 per Mcf NYMEX when market prices range from $2.40 per Mcf NYMEX to $2.90
per Mcf NYMEX. Should market prices fall below $2.40, Energen Resources will
receive a basin-specific premium of 25 cents to 35 cents above market.
Energen Resources' oil and natural gas liquids production in fiscal year 2002
is unhedged.
With respect to flowing production and production expected to come on line
during the year as the result of prior-year and current-year exploitation
activities, Energen estimates that every 10 cents per Mcf change in the
average NYMEX natural gas price from the $3.50 per Mcf assumption (up to $4
per Mcf) will have a $1.75 million impact on net income. Above $4 per Mcf,
the net income impact is $1 million for every 10-cent change.
Energen also estimates that for every $1 per barrel change in the average
NYMEX oil price from the $25 per barrel assumption, together with a
corresponding change in the price of natural gas liquids, the net income
impact in fiscal year 2002 should approximate $2 million.
Because Energen Resources' acquisitions are rate-of-return driven, the
relationship between acquired production and capital investment will reflect
commodity prices at the time of the transaction.
Production estimates for fiscal year 2002 total 72 Bcfe, excluding 4.4
Bcfe from anticipated acquisitions and exploration activity. Natural gas
represents more than 65 percent of this total at 47 Bcfe, with estimates for
oil and liquids production at 2.6 million barrels and 1.6 million barrels,
respectively.
"As we look to the future, we fully expect Energen Resources to remain the
dominant driver of corporate earnings growth," Warren said. "At the same
time, Alagasco should recover from a very unusual fiscal year 2001 and
continue to provide an excellent foundation for our business."
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.
Consolidated Statements of Income (Unaudited)
For the 3 months ending June 30, 2001 and 2000
(in thousands, except 3rd Quarter
per share data) 2001 2000 Change
Operating Revenues
Natural gas distribution $103,779 $69,111 $34,668
Oil and gas operations 57,933 47,456 10,477
Total operating revenues 161,712 116,567 45,145
Operating Expenses
Cost of gas 57,310 26,042 31,268
Operations & maintenance 46,471 42,540 3,931
DD&A 21,335 24,210 (2,875)
Taxes, other than income taxes 13,267 10,617 2,650
Total operating expenses 138,383 103,409 34,974
Operating Income 23,329 13,158 10,171
Other Income (Expense)
Interest expense (10,508) (9,368) (1,140)
Other, net 413 365 48
Total other expense (10,095) (9,003) (1,092)
Income Before Income Taxes 13,234 4,155 9,079
Income tax expense (benefit) 2,861 (303) 3,164
Net Income $10,373 $4,458 $5,915
Diluted Earnings Per Share $0.33 $0.15 $0.18
Basic Earnings Per Share $0.34 $0.15 $0.19
Diluted Avg. Common Shares
Outstanding 31,217 30,346 871
Basic Avg. Common Shares
Outstanding 30,830 30,081 749
Dividends Per Share $0.17 $0.165 $0.005
Consolidated Statements of Income (Unaudited)
For the 9 months ending June 30, 2001 and 2000
(in thousands, except Year to Date
per share data) 2001 2000 Change
Operating Revenues
Natural gas distribution $493,191 $313,085 $180,106
Oil and gas operations 177,898 139,947 37,951
Total operating revenues 671,089 453,032 218,057
Operating Expenses
Cost of gas 298,629 133,960 164,669
Operations & maintenance 138,185 126,404 11,781
DD&A 61,825 66,947 (5,122)
Taxes, other than income taxes 52,685 36,805 15,880
Total operating expenses 551,324 364,116 187,208
Operating Income 119,765 88,916 30,849
Other Income (Expense)
Interest expense (31,354) (28,053) (3,301)
Other, net 1,421 1,138 283
Total other expense (29,933) (26,915) (3,018)
Income Before Income Taxes 89,832 62,001 27,831
Income tax expense 18,748 7,241 11,507
Net Income $71,084 $54,760 $16,324
Diluted Earnings Per Share $2.29 $1.81 $0.48
Basic Earnings Per Share $2.32 $1.82 $0.50
Diluted Avg. Common Shares
Outstanding 31,005 30,315 690
Basic Avg. Common Shares
Outstanding 30,651 30,081 570
Dividends Per Share $0.51 $0.495 $0.015
Consolidated Statements of Income (Unaudited)
For the 12 months ending June 30, 2001 and 2000
(in thousands, except Trailing 12 Months
per share data) 2001 2000 Change
Operating Revenues
Natural gas distribution $546,267 $359,094 $187,173
Oil and gas operations 227,385 180,577 46,808
Total operating revenues 773,652 539,671 233,981
Operating Expenses
Cost of gas 318,870 149,286 169,584
Operations & maintenance 183,417 168,687 14,730
DD&A 81,951 87,759 (5,808)
Taxes, other than income taxes 62,764 44,782 17,982
Total operating expenses 647,002 450,514 196,488
Operating Income 126,650 89,157 37,493
Other Income (Expense)
Interest expense (41,070) (37,091) (3,979)
Other, net 2,058 1,483 575
Total other expense (39,012) (35,608) (3,404)
Income Before Income Taxes 87,638 53,549 34,089
Income tax expense 18,296 7,103 11,193
Net Income $69,342 $46,446 $22,896
Diluted Earnings Per Share $2.25 $1.54 $0.71
Basic Earnings Per Share $2.27 $1.55 $0.72
Diluted Avg. Common Shares
Outstanding 30,834 30,253 581
Basic Avg. Common Shares
Outstanding 30,516 30,018 498
Dividends Per Share $0.68 $0.66 $0.02
Selected Business Segment Data (Unaudited)
For the 3 months ending June 30, 2001 and 2000
(in thousands, except 3rd Quarter
sales price data) 2001 2000 Change
Natural Gas Distribution
Operating revenues
Residential $66,933 $42,684 $24,249
Commercial and industrial -
small 28,403 16,560 11,843
Transportation 7,460 8,245 (785)
Other 983 1,622 (639)
Total $103,779 $69,111 $34,668
Gas delivery volumes (MMcf)
Residential 4,975 4,261 714
Commercial and industrial -
small 2,516 2,232 284
Transportation 12,837 18,145 (5,308)
Total 20,328 24,638 (4,310)
Other data
Depreciation and amortization $7,825 $7,243 $582
Capital expenditures $13,363 $16,267 $(2,904)
Operating income $3,357 $3,287 $70
Oil and Gas Operations
Operating revenues
Natural gas $36,866 $29,764 $7,102
Oil 13,841 10,639 3,202
Natural gas liquids 6,320 5,414 906
Other 906 1,639 (733)
Total $57,933 $47,456 $10,477
Sales volume
Natural gas (MMcf) 11,400 11,521 (121)
Oil (MBbl) 567 526 41
Natural gas liquids (MBbl) 376 342 34
Average sales price
Natural gas (Mcf) $3.23 $2.58 $0.65
Oil (barrel) $24.43 $20.21 $4.22
Natural gas liquids (barrel) $16.79 $15.84 $0.95
Other data
DD&A $13,510 $16,967 $(3,457)
Capital expenditures $ 25,765 $14,804 $10,961
Exploration expense $1,533 $969 $564
Operating income $20,381 $10,469 $9,912
Selected Business Segment Data (Unaudited)
For the 9 months ending June 30, 2001 and 2000
(in thousands, except Year to Date
sales price data) 2001 2000 Change
Natural Gas Distribution
Operating revenues
Residential $333,866 $205,540 $128,326
Commercial and industrial -
small 129,939 74,629 55,310
Transportation 26,190 28,302 (2,112)
Other 3,196 4,614 (1,418)
Total $493,191 $313,085 $180,106
Gas delivery volumes (MMcf)
Residential 29,080 24,028 5,052
Commercial and industrial -
small 12,530 10,531 1,999
Transportation 39,749 52,493 (12,744)
Total 81,359 87,052 (5,693)
Other data
Depreciation and amortization $23,026 $21,380 $1,646
Capital expenditures $37,604 $40,882 $(3,278)
Operating income $56,822 $55,849 $973
Oil and Gas Operations
Operating revenues
Natural gas $113,007 $89,332 $23,675
Oil 37,953 30,356 7,597
Natural gas liquids 20,884 15,808 5,076
Other 6,054 4,451 1,603
Total $177,898 $139,947 $37,951
Sales volume
Natural gas (MMcf) 34,813 36,629 (1,816)
Oil (MBbl) 1,616 1,729 (113)
Natural gas liquids (MBbl) 1,070 1,036 34
Average sales price
Natural gas (Mcf) $3.25 $2.44 $0.81
Oil (barrel) $23.48 $17.55 $5.93
Natural gas liquids (barrel) $19.52 $15.26 $4.26
Other data
DD&A $38,799 $45,567 $(6,768)
Capital expenditures $ 91,566 $41,291 $50,275
Exploration expense $2,797 $3,523 $(726)
Operating income $64,163 $34,279 $29,884
Selected Business Segment Data (Unaudited)
For the 12 months ending June 30, 2001 and 2000
(in thousands, except Trailing 12 Months
sales price data) 2001 2000 Change
Natural Gas Distribution
Operating revenues
Residential $362,165 $230,832 $131,333
Commercial and industrial -
small 143,831 86,131 57,700
Transportation 33,200 35,943 (2,743)
Other 7,071 6,188 883
Total $546,267 $359,094 $187,173
Gas delivery volumes (MMcf)
Residential 31,121 26,160 4,961
Commercial and industrial -
small 14,091 12,149 1,942
Transportation 57,790 72,778 (14,988)
Total 103,002 111,087 (8,085)
Other data
Depreciation and amortization $30,354 $28,224 $2,130
Capital expenditures $63,794 $54,951 $8,843
Operating income $50,036 $49,633 $403
Oil and Gas Operations
Operating revenues
Natural gas $143,355 $115,030 $28,325
Oil 49,342 39,509 9,833
Natural gas liquids 27,990 18,600 9,390
Other 6,698 7,438 (740)
Total $227,385 $180,577 $46,808
Sales volume
Natural gas (MMcf) 46,264 48,367 (2,103)
Oil (MBbl) 2,192 2,440 (248)
Natural gas liquids (MBbl) 1,463 1,255 208
Average sales price
Natural gas (Mcf) $3.10 $2.38 $0.72
Oil (barrel) $22.51 $16.19 $6.32
Natural gas liquids (barrel) $19.14 $14.82 $4.32
Other data
DD&A $51,597 $59,535 $(7,938)
Capital expenditures $ 143,852 $62,689 $81,163
Exploration expense $4,152 $5,317 $(1,165)
Operating income $78,242 $40,153 $38,089
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SOURCE Energen Corporation
CONTACT: Julie S. Ryland of Energen Corporation, +1-205-326-8421/
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