Statement Of Income Alternative
Statement Of Income Alternative (USD $) | ||||
In Thousands, except Per Share data | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Operating Revenues | ||||
Oil and gas operations | $198,537 | $231,780 | $387,657 | $456,675 |
Natural gas distribution | 107,683 | 109,486 | 402,669 | 406,237 |
Total operating revenues | 306,220 | 341,266 | 790,326 | 862,912 |
Operating Expenses | ||||
Cost of gas | 50,837 | 55,869 | 202,906 | 217,258 |
Operations and maintenance | 88,500 | 93,427 | 176,887 | 179,979 |
Depreciation, depletion and amortization | 56,407 | 44,114 | 110,985 | 86,530 |
Taxes, other than income taxes | 15,168 | 29,868 | 41,628 | 64,773 |
Accretion expense | 1,163 | 1,055 | 2,299 | 2,100 |
Total operating expenses | 212,075 | 224,333 | 534,705 | 550,640 |
Operating Income | 94,145 | 116,933 | 255,621 | 312,272 |
Other Income (Expense) | ||||
Interest expense | (9,788) | (10,258) | (19,569) | (21,380) |
Other income | 2,817 | 486 | 1,522 | 730 |
Other expense | (170) | (452) | (360) | (1,048) |
Total other expense | (7,141) | (10,224) | (18,407) | (21,698) |
Income Before Income Taxes | 87,004 | 106,709 | 237,214 | 290,574 |
Income tax expense | 32,003 | 39,831 | 86,631 | 107,008 |
Net Income | $55,001 | $66,878 | $150,583 | $183,566 |
Diluted Earnings Per Average Common Share | 0.76 | 0.93 | 2.09 | 2.55 |
Basic Earnings Per Average Common Share | 0.77 | 0.93 | 2.1 | 2.56 |
Dividends Per Common Share | 0.125 | 0.12 | 0.25 | 0.24 |
Diluted Average Common Shares Outstanding | 71,904 | 72,055 | 71,888 | 72,054 |
Basic Average Common Shares Outstanding | 71,644 | 71,585 | 71,642 | 71,611 |
Statement Of Financial Position
Statement Of Financial Position Classified (USD $) | ||
In Thousands | Jun. 30, 2009
| Dec. 31, 2008
|
Current Assets | ||
Cash and cash equivalents | $38,402 | $13,177 |
Accounts receivable, net of allowance for doubtful accounts of $13,343 at June 30, 2009, and $12,868 at December 31, 2008 | 294,276 | 414,362 |
Inventories, at average cost | ||
Storage gas inventory | 55,157 | 77,243 |
Materials and supplies | 17,210 | 13,541 |
Liquified natural gas in storage | 3,260 | 3,219 |
Regulatory asset | 46,508 | 41,714 |
Income tax receivable | 7,745 | 50,476 |
Prepayments and other | 12,700 | 29,309 |
Total current assets | 475,258 | 643,041 |
Property, Plant and Equipment | ||
Oil and gas properties, successful efforts method | 3,276,013 | 2,959,665 |
Less accumulated depreciation, depletion and amortization | 880,314 | 793,465 |
Oil and gas properties, net | 2,395,699 | 2,166,200 |
Utility plant | 1,196,836 | 1,166,967 |
Less accumulated depreciation | 496,684 | 480,601 |
Utility plant, net | 700,152 | 686,366 |
Other property, net | 15,457 | 15,082 |
Total property, plant and equipment, net | 3,111,308 | 2,867,648 |
Other Assets | ||
Regulatory asset | 102,192 | 97,511 |
Long-term derivative instruments | 52,031 | 140,603 |
Deferred charges and other | 27,515 | 26,601 |
Total other assets | 181,738 | 264,715 |
TOTAL ASSETS | 3,768,304 | 3,775,404 |
Current Liabilities | ||
Notes payable to banks | 95,000 | 62,000 |
Accounts payable | 116,437 | 224,309 |
Accrued taxes | 56,178 | 42,183 |
Customers' deposits | 21,288 | 22,081 |
Amounts due customers | 4,475 | 15,124 |
Accrued wages and benefits | 16,775 | 24,966 |
Regulatory liability | 7,989 | 25,363 |
Royalty payable | 13,122 | 12,275 |
Deferred income taxes | 39,476 | 41,969 |
Other | 23,894 | 39,831 |
Total current liabilities | 394,634 | 510,101 |
Long-term debt | 561,176 | 561,631 |
Deferred Credits and Other Liabilities | ||
Asset retirement obligation | 75,868 | 66,151 |
Pension and other postretirement liabilities | 67,118 | 67,474 |
Regulatory liability | 150,563 | 147,514 |
Long-term derivative instruments | 13,636 | 8,821 |
Deferred income taxes | 494,439 | 482,058 |
Other | 19,829 | 18,364 |
Total deferred credits and other liabilities | 821,453 | 790,382 |
Commitments and Contingencies | 0 | 0 |
Shareholders' Equity | ||
Preferred stock, cumulative $0.01 par value, 5,000,000 shares authorized | 0 | 0 |
Common shareholders' equity | ||
Common stock, $0.01 par value; 150,000,000 shares authorized, 74,549,165 shares issued at June 30, 2009, and 74,521,957 shares issued at December 31, 2008 | 745 | 745 |
Premium on capital stock | 458,662 | 454,778 |
Capital surplus | 2,802 | 2,802 |
Retained earnings | 1,538,947 | 1,405,970 |
Accumulated other comprehensive income (loss), net of tax | ||
Unrealized gain on hedges | 141,294 | 200,867 |
Pension and postretirement plans | (30,033) | (31,050) |
Deferred compensation plan | 3,145 | 2,948 |
Treasury stock, at cost; 2,998,492 shares at June 30, 2009, and 2,977,947 shares at December 31, 2008 | (124,521) | (123,770) |
Total shareholders' equity | 1,991,041 | 1,913,290 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $3,768,304 | $3,775,404 |
1_Statement Of Financial Positi
Statement Of Financial Position Classified (Parenthetical) (USD $) | ||
In Thousands, except Share data | Jun. 30, 2009
| Dec. 31, 2008
|
Accounts receivable, allowance for doubtful accounts | $13,343 | $12,868 |
Preferred stock cumulative, par value | 0.01 | 0.01 |
Preferred stock cumulative, shares authorized | 5,000,000 | 5,000,000 |
Common stock, par value | 0.01 | 0.01 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 74,549,165 | 74,521,957 |
Treasury stock, shares | 2,998,492 | 2,977,947 |
Statement Of Cash Flows Indirec
Statement Of Cash Flows Indirect (USD $) | ||
In Thousands | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Operating Activities | ||
Net income | $150,583 | $183,566 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation, depletion and amortization | 110,985 | 86,530 |
Deferred income taxes | 45,759 | 59,892 |
Change in derivative fair value | (118) | 3,788 |
Gain on sale of assets | (472) | (10,374) |
Other, net | 5,919 | 4,137 |
Net change in: | ||
Accounts receivable, net | 95,530 | (1,292) |
Inventories | 18,376 | 21,493 |
Accounts payable | (68,422) | (6,180) |
Amounts due customers | (10,599) | (10,698) |
Income tax receivable | 42,731 | 0 |
Other current assets and liabilities | 6,530 | (15,501) |
Net cash provided by operating activities | 396,802 | 315,361 |
Investing Activities | ||
Additions to property, plant and equipment | (200,264) | (182,052) |
Acquisitions, net of cash acquired | (185,680) | (15,516) |
Proceeds from sale of assets | 939 | 15,710 |
Other, net | (1,675) | (715) |
Net cash used in investing activities | (386,680) | (182,573) |
Financing Activities | ||
Payment of dividends on common stock | (17,606) | (17,308) |
Issuance of common stock | 184 | 126 |
Payment of long-term debt | (548) | (443) |
Net change in short-term debt | 33,000 | (131,000) |
Tax benefit on stock compensation | 73 | 16,836 |
Net cash provided by (used in) financing activities | 15,103 | (131,789) |
Net change in cash and cash equivalents | 25,225 | 999 |
Cash and cash equivalents at beginning of period | 13,177 | 8,687 |
Cash and Cash Equivalents at End of Period | $38,402 | $9,686 |
Notes to Financial Statements
Notes to Financial Statements | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Notes to Financial Statements [Abstract] | |
1. BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION The unaudited condensed financial statements and notes should be read in conjunction with the financial statements and notes thereto for the years ended December31, 2008, 2007 and 2006 included in the 2008 Annual Report of Energen Corporation (the Company) and Alabama Gas Corporation (Alagasco) on Form 10-K. Alagasco has a September30 fiscal year for rate-setting purposes (rate year) and reports on a calendar year for the Securities and Exchange Commission and all other financial accounting reporting purposes. The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.Accordingly, they do not include all of the disclosures required for complete financial statements. The Companys natural gas distribution business is seasonal in character and influenced by weather conditions. Results of operations for interim periods are not necessarily indicative of the results that may be expected for the year. All adjustments to the unaudited financial statements that are, in the opinion of management, necessary for a fair statement of the results for the interim periods have been recorded. Such adjustments consisted of normal recurring items. Certain reclassifications were made to conform prior years financial statements to the current-quarter presentation. The Company has evaluated subsequent events through August7, 2009, which represents the date the consolidated condensed financial statements were issued. |
2. REGULATORY MATTERS | 2. REGULATORY MATTERS Alagasco is subject to regulation by the Alabama Public Service Commission (APSC) which established the Rate Stabilization and Equalization (RSE) rate-setting process in 1983. RSEs current extension is for a seven-year period through December31, 2014. RSE will continue after December31, 2014, unless, after notice to the Company and a hearing, the APSC votes to modify or discontinue the RSE methodology. Alagascos allowed range of return on average equity remains 13.15 percent to 13.65 percent throughout the term of the order. Under RSE, the APSC conducts quarterly reviews to determine, based on Alagascos projections and year-to-date performance, whether Alagascos return on average equity at the end of the rate year will be within the allowed range of return. Reductions in rates can be made quarterly to bring the projected return within the allowed range; increases, however, are allowed only once each rate year, effective December1, and cannot exceed 4 percent of prior-year revenues. Alagasco did not have a reduction in rates related to the return on average equity for the rate year ended 2008. A $24.7 million and $12 million annual increase in revenues became effective December1, 2008 and 2007, respectively. At September30, 2008, RSE limited the utilitys equity upon which a return is permitted to 57 percent of total capitalization. The equity upon which a return is permitted will be phased down to 55 percent by September30, 2009. Under the inflation-based Cost Control Measurement (CCM) established by the APSC, if the percentage change in operations and maintenance (OM) expense on an aggregate basis falls within a range of 0.75 points above or below the percentage change in the Consumer Price Index For All Urban Consumers (Index Range), no adjustment is required. If the change in OM expense on an aggregate basis exceeds the Index Range, three-quarters of the difference is returned to customers. To the extent the change is less than the Index Range, the utility benefits by one-half of the difference through future rate adjustments. The OM expense base for measurement purposes will be set at the prior years actual OM expense amount unless the Company exceeds the top of the Index Range in two successive years, in which case the base for the following year will be set at the top of the Index Range. Certain items that fluctuate based on situations demonstrated to be beyond Alagascos control may be excluded from the CCM calculation. In the rate year ended September30, 2008, the increase in OM expense was below the Index Range; as a result the utility benefited by $2.9 million pre-tax with the related impact to rates effective December1, 2008. Alagascos rate schedules for natural gas distribution charges contain a Gas Supply Adjustment (GSA) rider, established in 1993, which permits the pass-through to customers of changes in the cost of gas supply. Alagascos tariff provides a temperature adjustment mechanism that is designed to moderate the impact of departures from normal temperatures on Alagascos earnings. The temperature adjustment applies primarily to residential, small commercial and small industrial custo |
3. DERIVATIVE COMMODITY INSTRUMENTS | 3. DERIVATIVE COMMODITY INSTRUMENTS Energen Resources Corporation, Energens oil and gas subsidiary, applies Statement of Financial Accounting Standard (SFAS) No.133, Accounting for Derivative Instruments and Hedging Activities, as amended which requires all derivatives to be recognized on the balance sheet and measured at fair value. If a derivative is designated as a cash flow hedge, the effectiveness of the hedge, or the degree that the gain (loss) for the hedging instrument offsets the loss (gain) on the hedged item, is measured at each reporting period. The effective portion of the gain or loss on the derivative instrument is recognized in other comprehensive income (OCI) as a component of shareholders equity and subsequently reclassified as operating revenues when the forecasted transaction affects earnings. The ineffective portion of a derivatives change in fair value is required to be recognized in operating revenues immediately. All derivative transactions are included in operating activities on the consolidated condensed statements of cash flows. Energen Resources periodically enters into derivative commodity instruments that qualify as cash flow hedges under SFAS No.133 to hedge its exposure to price fluctuations on oil, natural gas and natural gas liquids production. In addition, Alagasco periodically enters into cash flow derivative commodity instruments to hedge its exposure to price fluctuations on its gas supply. Such instruments may include natural gas and crude oil over-the-counter (OTC) swaps, collars and basis hedges with major energy derivative product specialists. The counterparties to the commodity instruments are investment banks and energy-trading firms. The Company is at risk for economic loss based upon the creditworthiness of its counterparties. The following counterparties, Morgan Stanley Capital Group, Inc., J Aron Company, Merrill Lynch Commodities, Inc. and Citibank, N.A., represented approximately 31 percent, 25 percent, 21 percent and 18 percent, respectively, of Energen Resources gain on fair value of derivatives. Energen Resources was in a net gain position with all of its counterparties at June30, 2009. The current policy of the Company is to not enter into agreements that require the posting of collateral. The Company has a few older agreements, none of which have active positions as of June30, 2009, which include collateral posting requirements based on the amount of exposure and counterparty credit ratings. The majority of the Companys counterparty agreements include provisions for net settlement of transactions payable on the same date and in the same currency. Most, but not all, of the agreements include various contractual set-off rights which may be exercised by the non-defaulting party in the event of an early termination due to a default. The Company may also enter into derivative transactions to hedge its exposure to price fluctuations that do not qualify for cash flow hedge accounting but are considered by management to represent valid economic hedges and are accounted for as mark-to-market transactions. These economic hedges may include, but are not limited to, basis hedges without |
4. RECONCILIATION OF EARNINGS PER SHARE (EPS) | 4. RECONCILIATION OF EARNINGS PER SHARE (EPS) (in thousands, except per share amounts) Three months ended June30, 2009 Three months ended June30, 2008 Net Income Shares PerShare Amount Net Income Shares PerShare Amount Basic EPS $ 55,001 71,644 $ 0.77 $ 66,878 71,585 $ 0.93 Effect of dilutive securities Performance share awards 107 184 Stock options 105 212 Non-vested restricted stock 48 74 Diluted EPS $ 55,001 71,904 $ 0.76 $ 66,878 72,055 $ 0.93 (in thousands, except per share amounts) Six months ended June30, 2009 Six months ended June30, 2008 Net Income Shares PerShare Amount Net Income Shares PerShare Amount Basic EPS $ 150,583 71,642 $ 2.10 $ 183,566 71,611 $ 2.56 Effect of dilutive securities Performance share awards 104 176 Stock options 97 198 Non-vested restricted stock 45 69 Diluted EPS $ 150,583 71,888 $ 2.09 $ 183,566 72,054 $ 2.55 For the three months and six months ended June30, 2009, the Company had 426,245 and 964,737, respectively, options that were excluded from the computation of diluted EPS, as their effect was non-dilutive. For the three months and six months ended June30, 2008, the Company had 186,700 options that were excluded from the computation of diluted EPS. |
5. SEGMENT INFORMATION | 5. SEGMENT INFORMATION The Company principally is engaged in two business segments: the development, acquisition, exploration and production of oil and gas in the continental United States (oil and gas operations) and the purchase, distribution and sale of natural gas in central and north Alabama (natural gas distribution). Three months ended June30, Six months ended June30, (in thousands) 2009 2008 2009 2008 Operating revenues Oil and gas operations $ 198,537 $ 231,780 $ 387,657 $ 456,675 Natural gas distribution 107,683 109,486 402,669 406,237 Total $ 306,220 $ 341,266 $ 790,326 $ 862,912 Operating income (loss) Oil and gas operations $ 91,449 $ 119,087 $ 172,595 $ 240,582 Natural gas distribution 3,242 (1,472 ) 84,081 73,016 Eliminations and corporate expenses (546 ) (682 ) (1,055 ) (1,326 ) Total $ 94,145 $ 116,933 $ 255,621 $ 312,272 Other income (expense) Oil and gas operations $ (4,896 ) $ (6,964 ) $ (12,164 ) $ (14,162 ) Natural gas distribution (2,147 ) (3,263 ) (6,152 ) (7,523 ) Eliminations and other (98 ) 3 (91 ) (13 ) Total $ (7,141 ) $ (10,224 ) $ (18,407 ) $ (21,698 ) Income before income taxes $ 87,004 $ 106,709 $ 237,214 $ 290,574 (in thousands) June30,2009 December31,2008 Identifiable assets Oil and gas operations $ 2,739,180 $ 2,650,136 Natural gas distribution 1,030,017 1,126,587 Subtotal 3,769,197 3,776,723 Eliminations and other (893 ) (1,319 ) Total $ 3,768,304 $ 3,775,404 |
6. COMPREHENSIVE INCOME (LOSS) | 6. COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss) consisted of the following: Three months ended June30, (in thousands) 2009 2008 Net income $ 55,001 $ 66,878 Other comprehensive income (loss): Current period change in fair value of derivative instruments, net of tax of ($29.6) million and ($202.9) million (48,347 ) (331,094 ) Reclassification adjustment for derivative instruments, net of tax of ($26.3) million and $28.6 million (42,910 ) 46,623 Pension and postretirement plans, net of tax of $0.3 million and $0.3 million 508 516 Comprehensive loss $ (35,748 ) $ (217,077 ) Six months ended June30, (in thousands) 2009 2008 Net income $ 150,583 $ 183,566 Other comprehensive income (loss): Current period change in fair value of derivative instruments, net of tax of $16.3 million and ($271.7) million 26,647 (443,263 ) Reclassification adjustment for derivative instruments, net of tax of ($52.8) million and $37.7 million (86,220 ) 61,569 Pension and postretirement plans, net of tax of $0.5 million and $0.6 million 1,017 1,031 Comprehensive income (loss) $ 92,027 $ (197,097 ) Accumulated other comprehensive income (loss) consisted of the following: (in thousands) June30,2009 December31,2008 Unrealized gain on hedges, net of tax of $86.6 million and $123.1 million $ 141,294 $ 200,867 Pension and postretirement plans, net of tax of ($16.2) million and ($16.7) million (30,033 ) (31,050 ) Accumulated other comprehensive income $ 111,261 $ 169,817 |
7. STOCK COMPENSATION | 7. STOCK COMPENSATION 1997 Stock Incentive Plan The 1997 Stock Incentive Plan provided for the grant of incentive stock options, non-qualified stock options, or a combination thereof to officers and key employees. Options granted under the Plan provide for the purchase of Company common stock at not less than the fair market value on the date the option is granted. The sale or transfer of the shares is limited during certain periods. All outstanding options vest within three years from date of grant and expire 10 years from the grant date. The Company granted 538,492 non-qualified option shares during the first quarter of 2009 with a grant-date fair value of $8.83. 2004 Stock Appreciation Rights Plan The Energen 2004 Stock Appreciation Rights Plan provided for the payment of cash incentives measured by the long-term appreciation of Company stock. These awards are liability awards which settle in cash and are re-measured each reporting period until settlement and have a three year vesting period. The Company granted 305,257 and 3,292 awards during the first quarter of 2009. These awards had fair values of $17.73 and $17.09, respectively, as of June30, 2009. Petrotech Incentive Plan The Energen Resources Petrotech Incentive Plan provided for the grant of stock equivalent units. These awards are liability awards which settle in cash and are re-measured each reporting period until settlement. In the first quarter of 2009, Energen Resources awarded 900 Petrotech units with a two year vesting period and a fair value of $39.16 as of June30, 2009. Energen Resources also awarded 2,911 Petrotech units with a three year vesting period and a fair value of $38.68 as of June30, 2009. 1997 Deferred Compensation Plan During the three months and six months ended June30, 2009, the Company had noncash purchases of approximately $16,000 and $0.6 million, respectively, of Company common stock in conjunction with tax withholdings on its non-qualified deferred compensation plan and other stock compensation. The Company utilized internally generated cash flows in payment of the related tax withholdings. |
8. EMPLOYEE BENEFIT PLANS | 8. EMPLOYEE BENEFIT PLANS The Company accounts for defined benefit pension plans and other postretirement benefit plans (benefit plans) in accordance with SFAS No.158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No.87, 88, 106 and 132 (R). SFAS No.158 requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position effective for fiscal years ending after December15, 2008. The Company previously used a September30 valuation date for its benefit plans. During the fourth quarter of 2008, the Company changed the measurement date to December31 using the alternative method. The Company recognized a one-time reduction to retained earnings of $1.8 million pre-tax and an increase to the current and noncurrent regulatory assets of Alagasco totaling approximately $0.1 million and $1.4 million pre-tax, respectively. The increase to regulatory assets which total $1.5 million will be recovered in rates over the average remaining service lives of each plan. The components of net pension expense for the Companys two defined benefit non-contributory pension plans and certain nonqualified supplemental pension plans were: Three months ended June30, Six months ended June30, (in thousands) 2009 2008 2009 2008 Components of net periodic benefit cost: Service cost $ 1,835 $ 1,790 $ 3,670 $ 3,580 Interest cost 3,016 2,950 6,032 5,900 Expected long-term return on assets (3,501 ) (3,289 ) (7,001 ) (6,578 ) Actuarial loss 997 1,071 1,994 2,142 Prior service cost amortization 145 230 289 460 Termination benefit charge 145 - 145 - Net periodic expense $ 2,637 $ 2,752 $ 5,129 $ 5,504 The Company is not required to make pension contributions in 2009 but expects to make discretionary contributions of approximately $15 million through year-end. For the three months and six months ended June30, 2009, the Company made benefit payments aggregating $48,000 and $3.7 million, respectively, to retirees from the nonqualified supplemental retirement plans and expects to make additional benefit payments of approximately $0.2 million through the remainder of 2009. In the second quarter of 2009, the Company recognized a termination benefit charge of $145,000 to provide for early retirement of certain non-highly compensated employees. The Company recognized a settlement charge of $0.7 million in the fourth quarter of 2008 for the payment of lump sums from a defined benefit pension plan. This charge represented an acceleration of the unamortized actuarial losses as required under SFAS No.88, Employers Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits. The components of net periodic postretirement benefit expense for the Companys postretirement benefit plans were: Threemonthsended June30, Six months ende |
9. COMMITMENTS AND CONTINGENCIES | 9. COMMITMENTS AND CONTINGENCIES Commitments and Agreements: Certain of Alagascos long-term gas procurement contracts for the supply, storage and delivery of natural gas include fixed charges of approximately $91 million through October 2015. Alagasco also is committed to purchase minimum quantities of gas at market-related prices or to pay certain costs in the event the minimum quantities are not taken. These purchase commitments are approximately 106 Bcf through April 2015. Alagasco purchases gas as an agent for certain of its large commercial and industrial customers. Alagasco has in certain instances provided commodity-related guarantees to the counterparties in order to facilitate these agency purchases. Liabilities existing for gas delivered to customers subject to these guarantees are included in the consolidated balance sheets. In the event the customer for whom the guarantee was entered fails to take delivery of the gas, Alagasco can sell such gas for the customer, with the customer liable for any resulting loss. Although the substantial majority of purchases under these guarantees are for the customers current monthly consumption and are at current market prices, in some instances, the purchases are for an extended term at a fixed price. At June 30, 2009, the fixed price purchases under these guarantees had a maximum term outstanding through June 2010 and an aggregate purchase price of $10.2 million with a market value of $9.2 million. Legal Matters: Energen and its affiliates are, from time to time, parties to various pending or threatened legal proceedings. Certain of these lawsuits include claims for punitive damages in addition to other specified relief. Based upon information presently available, and in light of available legal and other defenses, contingent liabilities arising from threatened and pending litigation are not considered material in relation to the respective financial positions of Energen and its affiliates. It should be noted, however, that Energen and its affiliates conduct business in jurisdictions in which the magnitude and frequency of punitive and other damage awards may bear little or no relation to culpability or actual damages, thus making it difficult to predict litigation results. Legacy Litigation During recent years, numerous lawsuits have been filed against oil production companies in Louisiana for restoration of oilfield properties. These suits are referred to in the industry as legacy litigation because they usually involve operations that were conducted on the affected properties many years earlier. Energen Resources is or has been a party to several legacy litigation lawsuits, most of which result from the operations of predecessor companies. Based upon information presently available, and in light of available legal and other defenses, contingent liabilities arising from legacy litigation in excess of the Companys accrued provision for estimated liability are not considered material to the Companys financial position. Other Various other pending or threatened legal proceedings are in progress currently, and the Company has accrued a provision for estimated liability. En |
10. FINANCIAL INSTRUMENTS | 10. FINANCIAL INSTRUMENTS The stated value of cash and cash equivalents, trade receivables (net of allowance), and short-term debt approximates fair value due to the short maturity of the instruments. The fair value of Energens long-term debt, including the current portion, with a carrying value of $562,009,000 would be $540,978,000 at June30, 2009. The fair value of Alagascos fixed-rate long-term debt, including the current portion, with a carrying value of $207,009,000 would be $193,976,000 at June30, 2009. The fair values were based on market prices of similar issues having the same remaining maturities, redemption terms and credit rating. |
11. REGULATORY ASSETS AND LIABILITIES | 11. REGULATORY ASSETS AND LIABILITIES The following table details regulatory assets and liabilities on the balance sheets: (in thousands) June30, 2009 December31, 2008 Current Noncurrent Current Noncurrent Regulatory assets: Pension and postretirement assets $ 132 $ 70,703 $ 132 $ 72,560 Accretion and depreciation for asset retirement obligation - 13,773 - 13,145 Gas supply adjustment 13,308 - 11,173 - Risk management activities 32,496 13,636 27,653 8,821 RSE adjustment 511 - 2,688 - Enhanced stability reserve - 4,038 - 2,917 Other 61 42 68 68 Total regulatory assets $ 46,508 $ 102,192 $ 41,714 $ 97,511 Regulatory liabilities: RSE adjustment $ 137 $ - $ 137 $ - Unbilled service margin 7,818 - 25,192 - Asset removal costs, net - 131,931 - 129,579 Asset retirement obligation - 17,526 - 17,024 Risk management activities - 215 - - Other 34 891 34 911 Total regulatory liabilities $ 7,989 $ 150,563 $ 25,363 $ 147,514 |
12. ACQUISITION AND DISPOSITIONS OF OIL AND GAS PROPERTIES | 12. ACQUISITION AND DISPOSITIONS OF OIL AND GAS PROPERTIES On June30, 2009, Energen completed the purchase of certain oil properties in the Permian Basin from Range Resources Corporation (Range Resources) for a cash price of $182 million (subject to closing adjustments). This sale has an effective date of May1, 2009. Energen acquired proved reserves of approximately 15.2million barrels of oil equivalents. Of the proved reserves acquired, an estimated 24 percent are undeveloped. Approximately 76 percent of the proved reserves are oil, 16 percent are natural gas liquids and natural gas comprises the remaining 8 percent. Energen Resources used its short-term credit facilities and internally generated cash flows to finance the acquisition. The acquisition qualifies as a business under SFAS No.141(R), Business Combinations. As such, the Company estimated the fair value of this property as of the acquisition date, as defined in SFAS No.141(R) to be the date on which the acquirer obtains control of the acquiree, which for this acquisition is June30, 2009 (the closing date). SFAS No.157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Further, SFAS No.157 emphasizes that fair value measurements utilize assumptions of market participants. The Company used a discounted cash flow model and made market assumptions as to future commodity prices, projections of estimated quantities of oil and natural gas reserves, expectations for timing and amount of future development and operating costs, projections of future rates of production, expected recovery rates and risk adjusted discount rates. These assumptions represent Level 3 inputs under SFAS No.157. In applying these accounting principles the Company estimated the fair value of these properties on the acquisition date to be approximately $186.8million, which the Company concludes approximates the fair value that would be paid by a typical market participant. This measurement resulted in no goodwill being recognized. The acquisition related costs have been expensed as incurred in operations and maintenance expense on the consolidated income statement in accordance with the provisions of SFAS No.141(R). The following table summarizes the consideration paid for Range Resources and the amounts of the assets acquired and liabilities assumed recognized as of June30, 2009. The purchase price allocation is preliminary and subject to adjustment as the final closing statement is not complete. (in thousands) June30,2009 Consideration given to Range Resources Cash $ 181,837 Recognized amounts of identifiable assets acquired and liabilities assumed Property developed properties $ 182,979 Unproved leasehold properties 3,800 Accounts receivable 5,262 Inventory and other 455 Asset retirement obligation (6,590 ) Environmental liabilities (3,124 ) Accounts payable (945 ) Total identifiable net assets $ 181,837 Summarized below are the consolida |
13. RECENTLY ISSUED ACCOUNTING STANDARDS | 13. RECENTLY ISSUED ACCOUNTING STANDARDS As of January1, 2008, the Company adopted the provisions of SFAS No.157 as permitted by FASB Staff Position (FSP) 157-2, Effective Date of FASB Statement No.157, for financial assets and liabilities. SFAS No.157 defines fair value, establishes criteria to be considered when measuring fair value and expands disclosures about fair value measurements. As of January1, 2009, the Company adopted the provisions of SFAS No.157 related to non-financial assets and liabilities with no impact to the Companys consolidated financial statements or the results of operations. The FASB issued SFAS No.160, Noncontrolling Interests in Consolidated Financial Statements an amendment of ARB No.51, in December 2007. SFASNo. 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parents ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFASNo. 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December15, 2008. This Standard did not have an effect on the consolidated financial statements or the results of operations of the Company. In December 2007, the FASB issued SFAS No.141 (revised 2007), Business Combinations, which was issued to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. Under SFAS No.141R, a company is required to recognize the assets acquired, liabilities assumed, contractual contingencies, and any contingent consideration measured at their fair value at the acquisition date.SFAS No.141R was effective January1, 2009 and has been applied to an acquisition made during the second quarter of 2009 (see Note 12, Acquisition and Dispositions of Oil and Gas Properties). In March 2008, the FASB issued SFAS No.161, Disclosures About Derivative Instruments and Hedging Activities an amendment of FASB Statement No.133. SFAS No.161 expands quarterly disclosure requirements in SFAS No.133 about an entitys derivative instruments and hedging activities. SFAS No.161 is effective for years beginning after November1, 2008. The additional disclosures for derivative instruments required under SFAS No.161 are included in Note 3, Derivative Commodity Instruments. In June 2008, the FASB issued FSP Emerging Issues Task Force (EITF) No.03-06-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, which addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and need to be included in the calculation of EPS under the two-class method as described in SFAS No.128, Earnings per Share |
Document Information
Document Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Document Information [Text Block] | |
Document Type | 10-Q |
Amendment Flag | false |
Amendment Description | N.A. |
Document Period End Date | 2009-06-30 |
Entity Information
Entity Information (USD $) | |||
6 Months Ended
Jun. 30, 2009 | Aug. 03, 2009
| Jun. 30, 2008
| |
Entity [Text Block] | |||
Trading Symbol | EGN | ||
Entity Registrant Name | ENERGEN CORP | ||
Entity Central Index Key | 0000277595 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 71,712,913 | ||
Entity Public Float | $5,462,223,417 |