Energen (EGN) 10-Q 3 Nov 09 2009 Q3 Quarterly report Financial data

Statement Of Income Alternative

Statement Of Income Alternative (USD $)
In Thousands, except Per Share data	3 Months Ended Sep. 30, 2009	3 Months Ended Sep. 30, 2008	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Operating Revenues
Oil and gas operations	$218,501	$247,753	$606,158	$704,428
Natural gas distribution	68,788	82,452	471,457	488,689
Total operating revenues	287,289	330,205	1,077,615	1,193,117
Operating Expenses
Cost of gas	29,377	35,901	232,283	253,159
Operations and maintenance	97,963	88,168	274,850	268,147
Depreciation, depletion and amortization	61,323	47,111	172,308	133,641
Taxes, other than income taxes	15,471	27,266	57,099	92,039
Accretion expense	1,306	1,081	3,605	3,181
Total operating expenses	205,440	199,527	740,145	750,167
Operating Income	81,849	130,678	337,470	442,950
Other Income (Expense)
Interest expense	(10,017)	(10,319)	(29,586)	(31,699)
Other income	2,536	725	4,058	1,455
Other expense	(229)	(2,009)	(589)	(3,057)
Total other expense	(7,710)	(11,603)	(26,117)	(33,301)
Income Before Income Taxes	74,139	119,075	311,353	409,649
Income tax expense	27,018	46,011	113,649	153,019
Net Income	$47,121	$73,064	$197,704	$256,630
Diluted Earnings Per Average Common Share	0.65	1.01	2.75	3.56
Basic Earnings Per Average Common Share	0.66	1.02	2.76	3.58
Dividends Per Common Share	0.125	0.12	0.375	0.36
Diluted Average Common Shares Outstanding	71,996	72,116	71,878	72,129
Basic Average Common Shares Outstanding	71,651	71,590	71,641	71,604

Statement Of Financial Position

Statement Of Financial Position Classified (USD $)
In Thousands	9 Months Ended Sep. 30, 2009	9 Months Ended Dec. 31, 2008
Current Assets
Cash and cash equivalents	$14,853	$13,177
Accounts receivable, net of allowance for doubtful accounts of $13,052 at September 30, 2009, and $12,868 at December 31, 2008	263,291	414,362
Inventories, at average cost
Storage gas inventory	61,307	77,243
Materials and supplies	20,087	13,541
Liquified natural gas in storage	3,096	3,219
Regulatory asset	42,580	41,714
Income tax receivable	3,654	50,476
Prepayments and other	13,137	29,309
Total current assets	422,005	643,041
Property, Plant and Equipment
Oil and gas properties, successful efforts method	3,308,876	2,959,665
Less accumulated depreciation, depletion and amortization	926,688	793,465
Oil and gas properties, net	2,382,188	2,166,200
Utility plant	1,192,381	1,166,967
Less accumulated depreciation	481,201	480,601
Utility plant, net	711,180	686,366
Other property, net	16,650	15,082
Total property, plant and equipment, net	3,110,018	2,867,648
Other Assets
Regulatory asset	102,841	97,511
Long-term derivative instruments	16,325	140,603
Deferred charges and other	33,605	26,601
Total other assets	152,771	264,715
TOTAL ASSETS	3,684,794	3,775,404
Current Liabilities
Notes payable to banks	5,000	62,000
Accounts payable	107,266	224,309
Accrued taxes	47,462	42,183
Customers' deposits	19,965	22,081
Amounts due customers	24,268	15,124
Accrued wages and benefits	19,095	24,966
Regulatory liability	7,778	25,363
Royalty payable	14,018	12,275
Deferred income taxes	26,462	41,969
Other	30,691	39,831
Total current liabilities	302,005	510,101
Long-term debt	560,996	561,631
Deferred Credits and Other Liabilities
Asset retirement obligation	77,598	66,151
Pension and other postretirement liabilities	62,889	67,474
Regulatory liability	153,151	147,514
Long-term derivative instruments	10,224	8,821
Deferred income taxes	512,095	482,058
Other	16,874	18,364
Total deferred credits and other liabilities	832,831	790,382
Commitments and Contingencies	-	-
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, 74,577,060 shares issued at September 30, 2009, and 74,521,957 shares issued at December 31, 2008	746	745
Premium on capital stock	460,036	454,778
Capital surplus	2,802	2,802
Retained earnings	1,577,099	1,405,970
Accumulated other comprehensive income (loss), net of tax
Unrealized gain on hedges	102,161	200,867
Pension and postretirement plans	(32,762)	(31,050)
Deferred compensation plan	3,221	2,948
Treasury stock, at cost; 2,993,065 shares at September 30, 2009, and 2,977,947 shares at December 31, 2008	(124,341)	(123,770)
Total shareholders' equity	1,988,962	1,913,290
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$3,684,794	$3,775,404

1_Statement Of Financial Positi

Statement Of Financial Position Classified (Parenthetical) (USD $)
In Thousands, except Share data	Sep. 30, 2009	Dec. 31, 2008
Accounts receivable, allowance for doubtful accounts	$13,052	$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	74,577,060	74,521,957
Treasury stock, shares	2,993,065	2,977,947

Statement Of Cash Flows Indirec

Statement Of Cash Flows Indirect (USD $)
In Thousands	9 Months Ended Sep. 30, 2009	9 Months Ended Sep. 30, 2008
Operating Activities
Net income	$197,704	$256,630
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	172,308	133,641
Deferred income taxes	74,196	140,967
Change in derivative fair value	(913)	(1,642)
Gain on sale of assets	(5,392)	(10,753)
Other, net	(13,735)	(2,018)
Net change in:
Accounts receivable, net	97,965	42,640
Inventories	9,513	(12,899)
Accounts payable	(61,026)	(19,219)
Amounts due customers	8,072	(16,140)
Accrued taxes	52,109	(33,406)
Other current assets and liabilities	788	(24,339)
Net cash provided by operating activities	531,589	453,462
Investing Activities
Additions to property, plant and equipment	(266,674)	(317,861)
Acquisitions, net of cash acquired	(185,645)	(16,099)
Proceeds from sale of assets	7,426	16,216
Other, net	(1,450)	(1,939)
Net cash used in investing activities	(446,343)	(319,683)
Financing Activities
Payment of dividends on common stock	(26,575)	(25,963)
Issuance of common stock	464	208
Payment of long-term debt	(776)	(10,676)
Net change in short-term debt	(57,000)	(111,000)
Tax benefit on stock compensation	317	16,912
Net cash used in financing activities	(83,570)	(130,519)
Net change in cash and cash equivalents	1,676	3,260
Cash and cash equivalents at beginning of period	13,177	8,687
Cash and Cash Equivalents at End of Period	$14,853	$11,947

1. BASIS OF PRESENTATION

1. BASIS OF PRESENTATION
	9 Months Ended Sep. 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 November3, 2009, which represents the date the consolidated condensed financial statements were issued.

2. REGULATORY MATTERS

2. REGULATORY MATTERS
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
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. As of September30, 2009, Alagasco had a $1.5 million pre-tax reduction in revenues to bring the return on average equity to midpoint within the allowed range of return. 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, 2009, RSE limited the utilitys equity upon which a return is permitted to 55 percent, subject to certain adjustments. 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 OM expense fell within the Index Range for the rate year ended September30, 2009. 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

3. DERIVATIVE COMMODITY INSTRUM

3. DERIVATIVE COMMODITY INSTRUMENTS
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
3. DERIVATIVE COMMODITY INSTRUMENTS	3. DERIVATIVE COMMODITY INSTRUMENTS Energen Resources Corporation, Energens oil and gas subsidiary, recognizes all derivatives on the balance sheet and measures all derivatives 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 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, 22 percent, 22 percent and 19 percent, respectively, of Energen Resources net gain on fair value of derivatives. Energen Resources was in a net gain position with all of its counterparties at September30, 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 September30, 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 a corresponding New York Mercantile Exchange hedge and hedges on non-operated or other properties for which all of the necessary information to qua

4. RECONCILIATION OF EARNINGS P

4. RECONCILIATION OF EARNINGS PER SHARE (EPS)
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
4. RECONCILIATION OF EARNINGS PER SHARE (EPS)	4. RECONCILIATION OF EARNINGS PER SHARE (EPS) (in thousands, except per share amounts) Three months ended September30, 2009 Three months ended September30, 2008 Net Income Shares PerShare Amount Net Income Shares PerShare Amount Basic EPS $ 47,121 71,651 $ 0.66 $ 73,064 71,590 $ 1.02 Effect of dilutive securities Performance share awards 107 209 Stock options 188 227 Non-vested restricted stock 50 90 Diluted EPS $ 47,121 71,996 $ 0.65 $ 73,064 72,116 $ 1.01 (in thousands, except per share amounts) Nine months ended September30,2009 Nine months ended September30,2008 Net Income Shares PerShare Amount Net Income Shares PerShare Amount Basic EPS $197,704 71,641 $ 2.76 $256,630 71,604 $ 3.58 Effect of dilutive securities Performance share awards 103 202 Stock options 88 234 Non-vested restricted stock 46 89 Diluted EPS $197,704 71,878 $ 2.75 $256,630 72,129 $ 3.56 For the three months and nine months ended September30, 2009, the Company had 198,710 and 969,487, respectively, options that were excluded from the computation of diluted EPS, as their effect was non-dilutive. For the three months and nine months ended September30, 2009, the Company had 6,150 shares of non-vested restricted stock that were excluded from the computation of diluted EPS, as their effect were non-dilutive. For the three months and nine months ended September30, 2008, the Company had no options or shares of non-vested restricted stock that were excluded from the computation of diluted EPS.

5. SEGMENT INFORMATION

5. SEGMENT INFORMATION
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
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 September30, Nine months ended September30, (in thousands) 2009 2008 2009 2008 Operating revenues Oil and gas operations $ 218,501 $ 247,753 $ 606,158 $ 704,428 Natural gas distribution 68,788 82,452 471,457 488,689 Total $ 287,289 $ 330,205 $ 1,077,615 $ 1,193,117 Operating income (loss) Oil and gas operations $ 97,682 $ 137,270 $ 270,277 $ 377,852 Natural gas distribution (15,237 ) (5,891 ) 68,844 67,125 Eliminations and corporate expenses (596 ) (701 ) (1,651 ) (2,027 ) Total $ 81,849 $ 130,678 $ 337,470 $ 442,950 Other income (expense) Oil and gas operations $ (5,343 ) $ (7,672 ) $ (17,507 ) $ (21,834 ) Natural gas distribution (2,149 ) (3,949 ) (8,301 ) (11,472 ) Eliminations and other (218 ) 18 (309 ) 5 Total $ (7,710 ) $ (11,603 ) $ (26,117 ) $ (33,301 ) Income before income taxes $ 74,139 $ 119,075 $ 311,353 $ 409,649 (in thousands) September30,2009 December31,2008 Identifiable assets Oil and gas operations $ 2,657,751 $ 2,650,136 Natural gas distribution 1,023,477 1,126,587 Subtotal 3,681,228 3,776,723 Eliminations and other 3,566 (1,319 ) Total $ 3,684,794 $ 3,775,404

6. COMPREHENSIVE INCOME

6. COMPREHENSIVE INCOME (LOSS)
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
6. COMPREHENSIVE INCOME (LOSS)	6. COMPREHENSIVE INCOME (LOSS) Comprehensive income (loss) consisted of the following: Three months ended September30, (in thousands) 2009 2008 Net income $ 47,121 $ 73,064 Other comprehensive income (loss): Current period change in fair value of derivative instruments, net of tax of ($0.5) million and $232.3 million (774 ) 379,007 Reclassification adjustment for derivative instruments, net of tax of ($23.5) million and $22.9 million (38,358 ) 37,333 Pension and postretirement plans, net of tax of ($1.5) million and ($0.9) million (2,729 ) (1,710 ) Comprehensive income $ 5,260 $ 487,694 Nine months ended September30, (in thousands) 2009 2008 Net income $ 197,704 $ 256,630 Other comprehensive income (loss): Current period change in fair value of derivative instruments, net of tax of $15.9 million and ($39.4) million 25,872 (64,256 ) Reclassification adjustment for derivative instruments, net of tax of ($76.4) million and $60.6 million (124,578 ) 98,902 Pension and postretirement plans, net of tax of ($0.9) million and ($0.4) million (1,712 ) (680 ) Comprehensive income $ 97,286 $ 290,596 (in thousands) September30,2009 December31,2008 Unrealized gain on hedges, net of tax of $62.6 million and $123.1 million $ 102,161 $ 200,867 Pension and postretirement plans, net of tax of ($17.6) million and ($16.7) million (32,762 ) (31,050 ) Accumulated other comprehensive income $ 69,399 $ 169,817

7. STOCK COMPENSATION

7. STOCK COMPENSATION
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
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. In August 2009, the Company granted 4,750 non-qualified option shares with grant-date fair value of $15.00. Additionally, the 1997 Stock Incentive Plan provided for the grant of restricted stock. In August 2009, 6,150 shares of restricted stock were awarded. These awards were valued based on the quoted market price of the Companys common stock at the date of grant and have a three year vesting period. 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 $19.98 and $19.28, respectively, as of September30, 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 2,911 Petrotech units with a three year vesting period. These awards had a fair value of $42.48 and $42, respectively, as of September30, 2009. During the third quarter of 2009, Energen Resources awarded 938 Petrotech units with a three year vesting period and a fair value of $42 as of September30, 2009. 1997 Deferred Compensation Plan During the nine months ended September30, 2009, the Company had noncash purchases of approximately $0.6 million 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
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
8. EMPLOYEE BENEFIT PLANS	8. EMPLOYEE BENEFIT PLANS As of December31, 2008, the Company measures the funded status of its employee benefit plans as of the date of its year-end statement of financial position. Previously, the Company 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 September30, Nine months ended September30, (in thousands) 2009 2008 2009 2008 Components of net periodic benefit cost: Service cost $ 1,835 $ 1,790 $ 5,505 $ 5,370 Interest cost 3,016 2,950 9,048 8,851 Expected long-term return on assets (3,501 ) (3,289 ) (10,502 ) (9,867 ) Actuarial loss 997 1,071 2,991 3,212 Prior service cost amortization 145 230 434 689 Termination benefit charge - - 145 - Net periodic expense $ 2,492 $ 2,752 $ 7,621 $ 8,255 In September 2009, the Company made discretionary contributions of $15 million to the assets of a defined benefit qualified pension plan. The Company is not required to make any additional contributions during 2009. For the three months and nine months ended September30, 2009, the Company made benefit payments aggregating $0.2 million and $3.8 million, respectively, to retirees from the nonqualified supplemental retirement plans and expects to make additional benefit payments of approximately $50,000 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 components of net periodic postretirement benefit expense for the Companys postretirement benefit plans were: Threemonthsended September30, Nine months ended September30, (in thousands) 2009 2008 2009 2008 Components of net periodic benefit cost: Service cost $ 453 $ 409 $ 1,360 $ 1,228 Interest cost 1,212 1,229 3,637 3,685 Expected long-term return on assets (885 ) (1,384 ) (2,657 ) (4,150 ) Actuarial loss (gain) 57 (195 ) 171 (586 ) Transition amortization 479 479 1,438 1,438 Net periodic expense $ 1,316 $ 538 $ 3,949

9. COMMITMENTS AND CONTINGENCIE

9. COMMITMENTS AND CONTINGENCIES
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
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 $131 million through September 2024. 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 98 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 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 September30, 2009, the fixed price purchases under these guarantees had a maximum term outstanding through September 2010 and an aggregate purchase price of $7.3 million with a market value of $7.4 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. Enviro

10. FINANCIAL INSTRUMENTS

10. FINANCIAL INSTRUMENTS
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
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 $561,781,000 approximates $578,946,000 at September30, 2009. The fair value of Alagascos fixed-rate long-term debt, including the current portion, with a carrying value of $206,781,000 approximates $206,166,000 at September30, 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 LIABI

11. REGULATORY ASSETS AND LIABILITIES
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
11. REGULATORY ASSETS AND LIABILITIES	11. REGULATORY ASSETS AND LIABILITIES The following table details regulatory assets and liabilities on the balance sheets: September30, 2009 December31, 2008 (in thousands) Current Noncurrent Current Noncurrent Regulatory assets: Pension and postretirement assets $ 132 $ 74,527 $ 132 $ 72,560 Accretion and depreciation for asset retirement obligation - 14,087 - 13,145 Gas supply adjustment 16,186 - 11,173 - Risk management activities 25,939 10,224 27,653 8,821 RSE adjustment 93 - 2,688 - Enhanced stability reserve - 3,814 - 2,917 Other 230 189 68 68 Total regulatory assets $ 42,580 $ 102,841 $ 41,714 $ 97,511 Regulatory liabilities: RSE adjustment $ 1,645 $ - $ 137 $ - Unbilled service margin 6,100 - 25,192 - Asset removal costs, net - 134,496 - 129,579 Asset retirement obligation - 17,777 - 17,024 Other 33 878 34 911 Total regulatory liabilities $ 7,778 $ 153,151 $ 25,363 $ 147,514

12. ASSET RETIREMENT OBLIGATION

12. ASSET RETIREMENT OBLIGATIONS
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
12. ASSET RETIREMENT OBLIGATIONS	12. ASSET RETIREMENT OBLIGATIONS The Company recognizes a liability for the fair value of asset retirement obligations (ARO) in the periods incurred. Subsequent to initial measurement, liabilities are accreted to their present value and capitalized costs are depreciated over the estimated useful life of the related assets. Upon settlement of the liability, the Company may recognize a gain or loss for differences between estimated and actual settlement costs. The ARO fair value liability is recognized on a discounted basis incorporating an estimate of performance risk specific to the Company. During the nine months ended September30, 2009, Energen Resources recognized amounts representing expected future costs associated with site reclamation, facilities dismantlement, and plug and abandonment of wells as follows: (in thousands) Balance of ARO as of December31, 2008 $ 66,151 Liabilities incurred 8,226 Liabilities settled (384 ) Accretion expense 3,605 Balance of ARO as of September30, 2009 $ 77,598 The Company recognizes conditional obligations if such obligations can be reasonably estimated and a legal requirement to perform an asset retirement activity exist. Alagasco recorded a conditional asset retirement obligation on a discounted basis of $17.8 million and $17 million to purge and cap its gas pipelines upon abandonment as a regulatory liability as of September30, 2009 and December31, 2008, respectively. The costs associated with asset retirement obligations are currently either being recovered in rates or are probable of recovery in future rates. Alagasco accrues removal costs on certain gas distribution assets over the useful lives of its property, plant and equipment through depreciation expense in accordance with rates approved by the APSC. The accumulated asset removal costs of $134.5 million and $129.6 million for September30, 2009 and December31, 2008, respectively, are included as regulatory liabilities in deferred credits and other liabilities on the balance sheets.

13. ACQUISITION AND DISPOSITION

13. ACQUISITION AND DISPOSITIONS OF OIL AND GAS PROPERTIES
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
13. ACQUISITION AND DISPOSITIONS OF OIL AND GAS PROPERTIES	13. ACQUISITION AND DISPOSITIONS OF OIL AND GAS PROPERTIES In September 2009, Energen Resources recorded a $4.9 million pre-tax gain in other operating revenues from the sale of certain oil properties in the Permian Basin. The Company received approximately $6.5 million pre-tax in cash from the sale of this property. 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 combination, and as such, the Company estimated the fair value of this property as of the June30, 2009 acquisition date, the date on which the acquirer obtained control of the acquiree. The fair value is 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). Fair value measurements also 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. The Company estimates the fair value of these properties to be approximately $186.6million, 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. 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 will be complete during the fourth quarter of 2009. (in thousands) Consideration given to Range Resources Cash (net) $ 181,198 Recognized amounts of identifiable assets acquired and liabilities assumed Proved developed properties $ 182,762 Unproved leasehold properties 3,800 Accounts receivable 4,919 Inventory and other 455 Asset retirement obligation (6,590 ) Environmental liabilities (3,124 ) Accounts payable (1,024 ) Total identifiable net assets $ 181,198 Summarized below are the consolidated

14. RECENTLY ISSUED ACCOUNTING

14. RECENTLY ISSUED ACCOUNTING STANDARDS
	9 Months Ended Sep. 30, 2009 USD / shares
Notes to Financial Statements [Abstract]
14. RECENTLY ISSUED ACCOUNTING STANDARDS	14. RECENTLY ISSUED ACCOUNTING STANDARDS As of January1, 2008, the Company adopted new accounting guidance on fair value measurements for financial assets and liabilities. This new guidance 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 guidance related to non-financial assets and liabilities with no impact to the Companys consolidated financial statements or the results of operations. On January1, 2009, the Company adopted new accounting guidance which 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. This standard also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. This standard did not have an effect on the consolidated financial statements or the results of operations of the Company. On January1, 2009, the Company adopted revised accounting guidance for 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 this guidance, 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.This guidance has been applied to an acquisition made during the second quarter of 2009 (see Note 13, Acquisition and Dispositions of Oil and Gas Properties). On January1, 2009, the Company adopted new accounting guidance expanding quarterly disclosure requirements about an entitys derivative instruments and hedging activities. The additional disclosures for derivative instruments are included in Note 3, Derivative Commodity Instruments. On January1, 2009, the Company adopted a newly issued accounting standard which addresses whether instruments granted in share-based payment transactions are participating securities. This accounting standard requires us to include all unvested stock awards which contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, in the number of shares outstanding in our basic and diluted EPS calculations. This standard did not have a material impact on the consolidated financial statements or the results of operations of the Company. On June30, 2009, the Company adopted accounting guidance which requires disclosures about fair value of financial instruments in interim financial statements as well as in annual financial statements. The implementation of this accounting guidance did not have a material impact on the consolidated financial statements or the results of operations. On June30, 2009, the Company adop

Document Information

Document Information
	9 Months Ended Sep. 30, 2009 USD / shares
Document Information [Text Block]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2009-09-30

Entity Information

Entity Information (USD $)
	9 Months Ended Sep. 30, 2009	Oct. 30, 2009
Entity [Text Block]
Trading Symbol	EGN
Entity Registrant Name	ENERGEN CORP
Entity Central Index Key	0000277595
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		71,753,041