BIRMINGHAM, Ala., May 1, 2002 /PRNewswire-FirstCall via COMTEX/ -- Energen Corporation (NYSE: EGN) today reported that its first quarter 2002 earnings were affected by oil, gas and natural gas liquids (NGL) prices that were significantly lower than in the same period a year ago. For the three months ending March 31, 2002, Energen's net income totaled $39 million, or $1.24 per diluted share, including a 7 cents per diluted share non-cash benefit associated with accounting for the company's previous hedges with Enron Corporation. In the same period last year, Energen's earnings totaled $47 million, or $1.52 per diluted share.

"As expected, lower commodity prices applicable to our natural gas, oil, and NGL production were responsible for a marked decline in the first quarter net income of Energen Resources Corporation, our oil and gas acquisition and exploitation subsidiary," said Mike Warren, Energen's chairman and chief executive officer. "The impact of commodity prices more than offset the positive impact of increased production and decreased lease operating expense.

"Our significant hedge position in the remaining nine months of the year, combined with the improved commodity price environment and generally improving economic conditions, bodes well for the company. We remain confident of our previously announced earnings outlook for the year of $1.85 to $1.95 per diluted share and believe upside potential from continued price improvement is possible," Warren said.

Energen Resources' net income in the three months ended March 31, 2002, totaled $8.7 million as compared with $19.8 million in the same period last year. Realized natural gas prices fell 29 percent, from $3.77 per thousand cubic feet (Mcf) to $2.66 per Mcf, including the non-cash accounting benefit from the former Enron hedges. At the same time, realized oil prices fell 3 percent, from $23 per barrel to $22.40 per barrel; and realized prices for NGL production fell 52 percent, from $21.42 per barrel to $10.20 per barrel.

The lower commodity-price environment also contributed to an expected increase in depreciation, depletion and amortization (DD&A) expense and to lower, price-sensitive coalbed methane operating fees.

Production increased 7 percent quarter-over-quarter, from 16.2 billion cubic feet equivalent (Bcfe) to 17.4 Bcfe. Natural gas production increased 2 percent to 11.7 Bcf, oil production grew 12 percent to 547,000 barrels and NGL production rose 35 percent to 401,000 barrels. In addition to increased production, Energen Resources benefited from a 25 percent decline in lease operating expense, from $1.53 per Mcfe to $1.14 per Mcfe.

Alagasco's net income for the quarter totaled $30.5 million, an increase of 12 percent from $27.3 million earned in the same period in 2001. This increase primarily is due to the utility earning on a higher level of equity and to the timing of revenue recovery between quarters.

12-MONTHS EARNINGS

For the 12 months ended March 31, 2002, Energen's net income totaled $49.8 million, or $1.59 per diluted share, as compared with $63.4 million, or $2.08 per diluted share, in the same period last year. Energen Resources' current- period net income of $22.8 million compared with $37.3 million in the prior- year 12 months and was negatively affected by lower realized commodity prices, a $3.3 million (11 cents per diluted share) net, non-cash accounting charge associated with its 2002 hedge position with Enron, increased DD&A expense and lower operating fees, partially offset by increased production, lower lease operating expense and increased recognition of non-conventional fuels tax credits.

Alagasco's net income for the 12-month period was largely unchanged at $27.9 million versus $27 million in the same period a year ago.

2002 EARNINGS OUTLOOK REMAINS $1.85-$1.95/DILUTED SHARE

As Energen looks ahead to the full year, the company remains comfortable with its previously announced earnings guidance for the year of $1.85 to $1.95 per diluted share on average diluted shares outstanding of 33.9 million shares. In addition, continued commodity price strength offers the prospect for upside earnings potential. Energen's guidance captures the impact of first quarter actual results and Energen Resources' April acquisition of Permian Basin oil properties and the associated issuance of just over 3 million shares of Energen common stock as partial payment for the properties.

This guidance also is based on Energen Resources' plans to invest in 2002 approximately $90 million for development well drilling and other exploitation activities and $5 million in exploration and related development. Lease operating expense in 2002 is expected to be approximately $1.19 per Mcfe, while DD&A expense is estimated to be 97 cents per Mcfe. Additionally, Energen Resources' current-year coalbed methane production is expected to generate some $13.8 million of non-conventional fuels tax credits in 2002.

Energen Resources' hedge position and underlying price assumptions for its unhedged volumes also are reflected in this earnings guidance. Energen capitalized on commodity price volatility during the month of March by entering into New York Mercantile Exchange (NYMEX) hedge contracts for a significant portion of Energen Resources' estimated gas and oil production in the last 9 months of the year.

Approximately 85 percent of Energen Resources' estimated natural gas production for the remainder of the year (34.8 Bcf) now is hedged at an average NYMEX-equivalent price of approximately $3.36 per Mcf. Included in these hedges are collars for 9.3 Bcf of production, with a floor of $3.30 per Mcf and a ceiling ranging from $4.25 to $4.62 per Mcf (the floor-price of the collars was used to calculate the total hedge price of $3.36 per Mcf). In addition to the gas hedges, approximately 40 percent of Energen Resources' estimated oil production in the last nine months of the year (2.7 million barrels) is hedged at an average NYMEX price of $25.08 per barrel. NGL production in the last nine months of the year is estimated to total 1.3 million barrels and is unhedged.

Relative to its unhedged production for the remainder of the year, Energen Resources is basing its guidance on a monthly NYMEX price of $3.30 per Mcf for gas and $23 per barrel for oil.

Alagasco's earnings outlook for 2002 remains unchanged. The utility is estimated to earn a return on average equity at December 31, 2002, of 12.4 percent on average equity of $221.7 million, resulting in an increase in the utility's net income of more than 10 percent over 2001. Capital spending at the utility in 2002 is estimated to be $64 million.

COMMODITY PRICE SENSITIVITY

The single biggest influence on Energen's earnings for the year remains the impact of commodity prices on Energen Resources' unhedged production. Because Energen Resources' 2002 production volumes and unhedged volumes vary from period-to-period, quarterly sensitivities to changes in commodity prices also vary.

For the second quarter of 2002, the company estimates that earnings will range from 25 to 30 cents per diluted share. More than 90 percent of Energen Resources' estimated gas production in the second quarter of 11.2 Bcf is hedged at an average NYMEX price $3.14 per Mcf. Given this significant hedge position and taking into account the actual NYMEX price for April, Energen's exposure during May and June to every 10-cent change in the NYMEX price of gas from the outlook assumption of $3.30 per Mcf per month is expected to be immaterial.

Energen Resources' oil production in the second quarter of 2002 is estimated to be 900,000 barrels; of that amount, 70 percent is hedged at an average NYMEX price of $25.17 per barrel. Energen's exposure during the second quarter to every $1 change in the NYMEX price of oil (together with a corresponding change in the NGL price) from the assumption of $23 per barrel per month is expected to be approximately 1 cent per diluted share.

The following tables illustrate the sensitivities that the company expects to be applicable in the third and fourth quarters of 2002. These sensitivities relate to every 10-cent change in the average NYMEX price per quarter for gas from $3.30 per Mcf and to every $1 change in the average NYMEX price per quarter for oil from $23 per barrel (together with a corresponding change in the NGL price):

    Quarter 3 - July-September 2002

                                                Natural Gas              Oil
    Production Hedged                              82 %                  52 %
    EPS (diluted) Impact                          $0.01                 $0.01


    Quarter 4 - October-December 2002


                                                Natural Gas               Oil
    Production Hedged                              82 %                    0 %
    EPS (diluted) Impact                          $0.01                  $0.02

"The underlying dynamics of supply and demand in the North American natural gas marketplace will, I believe, lead to a sustained level of natural gas prices between $3.50 and $4 per thousand cubic feet within the next 12 months," Warren said. "Volatility likely will be prevalent in the intervening months."

The continued higher pricing for natural gas is good news for Energen Resources, Warren said, and an improving national economy is good news for Alagasco, which is in an excellent position to earn within its allowed range of return on average equity of 13.15 to 13.65 percent in 2003.

Energen Resources' production in 2003 is estimated to be 83 Bcfe, including 50.5 Bcf of gas, 3.7 million barrels of oil and 1.8 million barrels of NGL. Lease operating and DD&A expenses at Energen Resources are expected to remain basically unchanged in 2003, at $1.18 per Mcfe and 98 cents per Mcfe, respectively.

Some 1.9 Bcf of Energen Resources' natural gas production in 2003 is hedged at a NYMEX-equivalent price of approximately $4 per Mcf. Assuming the NYMEX price for Energen Resources' unhedged production in 2003 averages $3.65 per Mcf for gas and $23 per barrel for oil, Energen's earnings should range from $1.90 to $2 per diluted share in 2003, with diluted shares outstanding averaging 35.3 million. This outlook assumes expiration of the non- conventional fuels tax credits at the end of 2002; pending federal energy legislation, however, could result in some form of credit extension for existing and/or new wells.

    Relative to the company's unhedged volumes:
    *  Every 10-cent change in the 2003 average NYMEX price of gas from
       $3.65 per Mcf is estimated to have a net income impact of $2.4 million
       (7 cents per diluted share).
    *  Every $1 change in the 2003 average NYMEX price of oil from $23 per
       barrel -- together with a corresponding change in the price of natural
       gas liquids -- is estimated to have a net income impact of $2.4 million
       (7 cents per diluted share).

"We believe that price and economic recovery, increased production, continued successful exploitation of existing and new properties and an adherence to risk management, including third-party hedges, will result in improved earnings in 2003," Warren said.

FIVE-YEAR OUTLOOK

Over the next five years, Energen's earnings could reasonably grow at an average compound rate of 7 to 8 percent a year. At the same time, pre-tax cash flows could achieve double-digit compound growth. Underlying this outlook are planning assumptions that natural gas prices will increase from current levels to $4 per Mcf in 2006 and that oil prices will remain relatively flat in the mid-20 dollars per barrel range.

The acquisition of producing properties with exploitation potential will continue to drive growth at Energen Resources. In the five years ending December 31, 2006, Energen Resources plans to invest a total of approximately $900 million. Approximately 60 percent of this amount reflects property acquisition investments, including the current-year acquisition of Permian Basin properties; another 35 percent represents development well drilling and other exploitation expenditures; and the remainder provides for limited exploration and related development.

Over this same five-year planning window, management expects that Alagasco's rate-setting mechanism, Rate Stabilization and Equalization, will remain intact and that the financially strong and stable utility will earn within its allowed range of return on equity. Capital spending at Alagasco over the next five years is estimated to be $275 million.

"In the final analysis, we are confident that Energen's fundamental strengths, rigorous strategic planning process and outstanding track record will enable us to generate solid results over our five-year planning window," Warren said.

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 March 31, 2002 and 2001



                                           1st Quarter
    (in thousands, except per
     share data)                       2002            2001        Change

    Operating Revenues
    Oil and gas operations          $47,859         $63,194      $(15,335)
    Natural gas distribution        196,524         270,286       (73,762)


      Total operating revenues      244,383         333,480       (89,097)


    Operating Expenses
    Cost of gas                      96,148         174,136       (77,988)
    Operations & maintenance         46,285          46,264            21
    DD&A                             24,849          20,551         4,298
    Taxes, other than income taxes   16,317          23,809        (7,492)


      Total operating expenses      183,599         264,760       (81,161)


    Operating Income                 60,784          68,720        (7,936)


    Other Income (Expense)
    Interest expense                (10,669)        (10,606)          (63)
    Other, net                           61             345          (284)


      Total other expense           (10,608)        (10,261)         (347)


    Income Before Income Taxes       50,176          58,459        (8,283)
    Income tax (benefit) expense     11,186          11,467          (281)


    Net Income                      $38,990         $46,992       $(8,002)

    Diluted Earnings Per Share        $1.24           $1.52        $(0.28)

    Basic Earnings Per Share          $1.25           $1.53        $(0.28)

    Diluted Avg. Common Shares
     Outstanding                     31,421          30,997           424

    Basic Avg. Common Shares
     Outstanding                     31,180          30,662           518

    Dividends Per Share              $0.175          $0.170        $0.005



                  Consolidated Statements of Income (Unaudited)
                 For the 12 months ending March 31, 2002 and 2001



                                        Trailing 12 Months
    (in thousands, except per
     share data)                       2002            2001        Change

    Operating Revenues
    Oil and gas operations         $209,655        $216,908       $(7,253)
    Natural gas distribution        457,652         511,599       (53,947)


      Total operating revenues      667,307         728,507       (61,200)


    Operating Expenses
    Cost of gas                     227,651         287,602       (59,951)
    Operations & maintenance        193,726         179,486        14,240
    DD&A                             96,518          84,826        11,692
    Taxes, other than income taxes   50,057          60,114       (10,057)


      Total operating expenses      567,952         612,028       (44,076)


    Operating Income                 99,355         116,479       (17,124)

    Other Income (Expense)
    Interest expense                (42,527)        (39,930)       (2,597)
    Other, net                          955           2,010        (1,055)

      Total other expense           (41,572)        (37,920)       (3,652)


    Income Before Income Taxes       57,783          78,559       (20,776)
    Income tax expense                7,950          15,132        (7,182)

    Net Income                      $49,833         $63,427      $(13,594)

    Diluted Earnings Per Share        $1.59           $2.08        $(0.49)

    Basic Earnings Per Share          $1.61           $2.09        $(0.48)

    Diluted Avg. Common Shares
     Outstanding                     31,301          30,551           750

    Basic Avg. Common Shares
     Outstanding                     31,004          30,312           692

    Dividends Per Share              $0.695          $0.675         $0.02



                    Selected Business Segment Data (Unaudited)
                 For the 3 months ending March 31, 2002 and 2001



                                            1st Quarter
    (in thousands, except
     sales price data)                 2002            2001        Change


    Oil and Gas Operations
    Operating revenues
      Natural gas                   $31,209         $43,233      $(12,024)
      Oil                            12,248          11,264           984
      Natural gas liquids             4,093           6,329        (2,236)
      Other                             309           2,368        (2,059)

        Total                       $47,859         $63,194      $(15,335)


    Sales volume
      Natural gas (MMcf)             11,730          11,466           264
      Oil (MBbl)                        547             490            57
      Natural gas liquids (MBbl)        401             296           105
    Average sales price
      Natural gas (Mcf)               $2.66           $3.77        $(1.11)
      Oil (barrel)                   $22.40          $23.00        $(0.60)
      Natural gas liquids (barrel)   $10.20          $21.42       $(11.22)
    Other data
      DD&A                          $16,619         $12,904        $3,715
      Capital expenditures         $ 21,658         $55,714      $(34,056)
      Exploration expense          $  1,668            $179        $1,489
      Operating income              $ 8,430         $24,210      $(15,780)


    Natural Gas Distribution
    Operating revenues
      Residential                  $137,411        $189,457      $(52,046)
      Commercial and industrial
        - small                      47,397          70,500       (23,103)
      Transportation                 10,642           9,213         1,429
      Other                           1,074           1,116           (42)

        Total                     $ 196,524        $270,286      $(73,762)


    Gas delivery volumes (MMcf)
      Residential                    14,294          16,875        (2,581)
      Commercial and industrial
       - small                        5,493           6,676        (1,183)
      Transportation                 15,051          13,061         1,990

        Total                        34,838          36,612        (1,774)

    Other data
     Depreciation and amortization   $8,230          $7,647          $583
      Capital expenditures         $ 13,786         $14,115         $(329)
      Operating income              $52,811         $44,873        $7,938



                    Selected Business Segment Data (Unaudited)
                 For the 12 months ending March 31, 2002 and 2001



                                       Trailing 12 Months
    (in thousands, except
     sales price data)                 2002            2001        Change


    Oil and Gas Operations
    Operating revenues
      Natural gas                  $135,194        $136,253       $(1,059)
      Oil                            53,876          46,140         7,736
      Natural gas liquids            20,190          27,084        (6,894)
      Other                             395           7,431        (7,036)

        Total                      $209,655        $216,908       $(7,253)


    Sales volume
      Natural gas (MMcf)             46,798          46,385           413
      Oil (MBbl)                      2,234           2,152            82
      Natural gas liquids (MBbl)      1,641           1,428           213
    Average sales price
      Natural gas (Mcf)               $2.89           $2.94        $(0.05)
      Oil (barrel)                   $24.12          $21.45         $2.67
      Natural gas liquids (barrel)   $12.31          $18.96        $(6.65)
    Other data
      DD&A                          $64,405         $55,054        $9,351
      Capital expenditures         $117,739        $106,404       $11,335
      Exploration expense            $5,446          $3,588        $1,858
      Operating income             $ 43,428         $68,330      $(24,902)


    Natural Gas Distribution
    Operating revenues
      Residential                  $301,311        $337,916      $(36,605)
      Commercial and industrial
        - small                     115,943         131,988       (16,045)
      Transportation                 35,651          33,984         1,667
      Other                           4,747           7,711        (2,964)

        Total                      $457,652        $511,599      $(53,947)


    Gas delivery volumes (MMcf)
      Residential                    26,381          30,407        (4,026)
      Commercial and industrial
       - small                       11,727          13,807        (2,080)
      Transportation                 55,100          63,098        (7,998)

        Total                        93,208         107,312       (14,104)

    Other data
      Depreciation and amortization $32,113         $29,772        $2,341
      Capital expenditures          $58,509         $66,697       $(8,188)
      Operating income              $57,668         $49,966        $7,702

CONTACT: Julie S. Ryland of Energen Corporation, +1-205-326-8421

URL: http://www.energen.com 
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