Exhibit 99.1
Contact: Patrick Kane
(412) 553-7833
Equitable Resources Reports
First Quarter Earnings of $0.59 per Share
PITTSBURGH, April 27, 2006/ PRNewswire-FirstCall/ — Equitable Resources, Inc. (NYSE: EQT) today announced first quarter 2006 earnings per diluted share (EPS) of $0.59. This compares with EPS of $0.60 from continuing operations, and EPS of $0.61 including discontinued operations, reported for the first quarter 2005.
Quarterly Results by Business
Equitable Utilities
Equitable Utilities had operating income for the first quarter of $61.0 million compared to $62.4 million reported for the same period last year. Overall net operating revenues were $98.9 million compared to $99.3 million for the first quarter 2005. Distribution net operating revenues were $54.1 million, 19% lower than last year’s $66.8 million, as weather was 13% warmer than normal and 10% warmer than last year, measured by heating degree days. Use per heating degree day was also lower than the previous year due to conservation, consistent with high commodity prices.
Pipeline net operating revenues increased by $8.6 million over the first quarter 2005 to $25.1 million. Equitrans received final approval of its rate case in the quarter, resulting in net operating revenues of $8.1 million at Pipeline and $1.1 million at Marketing. Provisions of the rate increase were implemented in September 2004, subject to refund, so a large percentage of incremental revenues and expenses had been reserved pending final regulatory approval. Net operating revenues in Marketing were $19.7 million, $3.7 million higher than the first quarter 2005, primarily attributable to storage asset optimization resulting from high gas price volatility in the quarter.
Operating expenses increased year over year to $37.8 million from $36.9 million. Higher operating expenses attributable to the rate case settlement totaled $2.3 million. Excluding the reserve adjustment of $1.7 million related to the rate case, operating expenses decreased slightly.
Equitable Supply
Equitable Supply had operating income for the quarter of $72.0 million, 10% higher than the $65.4 million earned in the same period last year. Total revenues were $122.4 million, $9.1 million higher than total operating revenue of $113.3 million in 2005, primarily due to a 7% increase in the average well-head sales price and an 11% increase in gathering revenues as higher gathering rates offset lower gathered volumes. Production revenues increased $6.4 million quarter over quarter to $95.5 million in 2006 from $89.1 million in 2005 and gathering revenues were $2.7 million higher at $26.9 million, compared with $24.2 million in 2005. Sales volumes were unchanged as the volumes from recent drilling offset the 0.9 Bcf from wells that were sold in May 2005 and the natural decline of production from base wells. Excluding property dispositions, sales volumes were up by 5%. The Company expects to sell between 76 and 77 Bcf of natural gas in 2006. Gathered volumes declined by 5.9 Bcf or 18%, primarily due to the
transfer of certain regulated gathering facilities to Equitable Utilities for segment reporting purposes, third-party customer volume shut-ins caused by extended unexpected maintenance projects on interstate pipelines and the sale of certain non-core gathering assets in May 2005. These factors were partially offset by increased gathered volumes for Equitable Supply production in the quarter.
Operating expenses for the quarter were $50.5 million compared to $47.9 million last year. Production taxes were $2.8 million higher than last year, selling, general and administrative expenses were $0.7 million higher, and depreciation, depletion and amortization expenses were $0.5 million higher. Partially offsetting the higher expenses was a reduction in lease operating expenses of $0.8 million.
During the quarter, the Company drilled 133 wells, compared with the 66 wells for the same period in 2005. The Company expects to drill 550 wells in 2006.
Other Business
Peoples Gas and Hope Gas Acquisition
On March 2, 2006, Equitable announced that it has entered into a definitive agreement to acquire Dominion Resources’ natural gas distribution and midstream assets in Pennsylvania and its natural gas distribution assets in West Virginia for approximately $970 million, subject to adjustments, in a cash transaction. The Company expects to receive the required regulatory approvals by the end of 2006. Equitable will finance the transaction through a combination of equity and debt issuances and possibly asset sales.
2006 Earnings Guidance
The Company reiterates its 2006 earnings guidance of $1.90 - $2.00 per diluted share, excluding expenses associated with the purchase of Peoples Gas and Hope Gas.
Hedging
The approximate volumes and prices of Equitable’s hedges for the last nine months of 2006 through 2008 are:
Swaps | | 2006** | | 2007 | | 2008 | |
Total Volume (Bcf) | | 44 | | 56 | | 54 | |
Average Price per Mcf (NYMEX)* | | $ | 4.77 | | $ | 4.74 | | $ | 4.64 | |
| | | | | | | | | | |
Collars | | 2006** | | 2007 | | 2008 | |
Total Volume (Bcf) | | 5 | | 7 | | 7 | |
Average Floor Price per Mcf (NYMEX)* | | $ | 7.35 | | $ | 7.35 | | $ | 7.35 | |
Average Cap Price per Mcf (NYMEX)* | | $ | 10.84 | | $ | 10.84 | | $ | 10.84 | |
* The above price is based on a conversion rate of 1.05 MMbtu/Mcf
** April through December
Operating Income Reconciliation
The Company reports operating income by segment in this press release. Both interest and income taxes are controlled on a consolidated, corporate-wide basis, and are not allocated to the segments.
The following table reconciles operating income by segment as reported in this press release to the consolidated operating income reported in the Company’s financial statements:
| | Three Months Ended
March 31, | |
| | 2006 | | 2005 | |
Operating income (thousands): | | | | | |
Equitable Utilities | | $ | 61,022 | | $ | 62,377 | |
Equitable Supply | | 71,983 | | 65,353 | |
Unallocated expenses | | (5,348 | ) | (534 | ) |
Operating Income | | $ | 127,657 | | $ | 127,196 | |
The 2006 unallocated expenses are primarily due to executive compensation. Other segment financial measures identified in this press release are reconciled to the most comparable financial measures calculated in accordance with GAAP on the attached operational and financial reports.
Equitrans Rate Case Revenue and Expense Detail
| | Three Months Ended
March 31, 2006 | |
| | Reserve
Adjustment | | Current
Period | | Total | |
Net Operating Revenue (thousands): | | | | | | | |
Pipeline | | $ | 6,112 | | $ | 1,983 | | $ | 8,095 | |
Marketing | | 921 | | 166 | | 1,087 | |
Operating Expenses | | (1,655 | ) | (646 | ) | (2,301 | ) |
| | | | | | | | | | |
Equitable’s teleconference with securities analysts, which begins at 10:30 a.m. Eastern Time today, will be broadcast live via Equitable’s website, http://www.eqt.com and will be available for replay for a seven day period.
Equitable Resources is an integrated energy company with emphasis on Appalachian area natural-gas supply, transmission and distribution. For information please visit www.eqt.com.
Forward - - Looking Statements
Disclosures in this press release contain forward-looking statements. Statements that do not relate strictly to historical or current facts are forward-looking. Without limiting the generality of the foregoing, forward-looking statements contained in this press release specifically include the expectations of plans, strategies, objectives and growth and anticipated financial and operational performance of the Company and its subsidiaries, including guidance regarding the Company’s drilling program, production volumes, capital expenditures and earnings and the pending acquisition of Peoples Gas and Hope Gas and the financing of that acquisition. A variety of factors could cause the Company’s actual results to differ materially from the anticipated results or other expectations expressed in the Company’s forward-looking statements. The risks and uncertainties that may affect the operations, performance and results of the Company’s business and forward-looking statements include, but are not limited to those set forth under Item 1A, “Risk Factors” of the Company’s Form 10-K for the year ended December 31, 2005.
Any forward-looking statement speaks only as of the date on which such statement is made and the Company undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
(Thousands except per share amounts)
| | Three Months Ended | |
| | March 31, | |
| | 2006 | | 2005 | |
| | | | | |
Operating revenues | | $ | 430,119 | | $ | 401,276 | |
Cost of sales | | 208,817 | | 188,731 | |
Net operating revenues | | 221,302 | | 212,545 | |
| | | | | |
Operating expenses: | | | | | |
Operation and maintenance | | 23,604 | | 23,843 | |
Production | | 16,119 | | 14,170 | |
Selling, general and administrative | | 29,705 | | 23,627 | |
Office consolidation impairment charges | | — | | 519 | |
Depreciation, depletion and amortization | | 24,217 | | 23,190 | |
Total operating expenses | | 93,645 | | 85,349 | |
| | | | | |
Operating income | | 127,657 | | 127,196 | |
| | | | | |
Equity in earnings of nonconsolidated investments | | 174 | | 89 | |
| | | | | |
Other income, net | | — | | 1,138 | |
| | | | | |
Interest expense | | 12,957 | | 12,187 | |
| | | | | |
Income from continuing operations before income taxes | | 114,874 | | 116,236 | |
Income taxes | | 42,515 | | 41,445 | |
| | | | | |
Income from continuing operations | | 72,359 | | 74,791 | |
Income from discontinued operations, net of tax of $1,051 | | — | | 1,615 | |
| | | | | |
Net income | | $ | 72,359 | | $ | 76,406 | |
| | | | | |
Earnings per share of common stock: | | | | | |
Basic: | | | | | |
Weighted average common shares outstanding | | 119,579 | | 121,424 | |
Income from continuing operations | | $ | 0.61 | | $ | 0.62 | |
Income from discontinued operations | | — | | 0.01 | |
Net income | | $ | 0.61 | | $ | 0.63 | |
| | | | | |
Diluted: | | | | | |
Weighted average common shares outstanding | | 121,789 | | 124,350 | |
Income from continuing operations | | $ | 0.59 | | $ | 0.60 | |
Income from discontinued operations | | — | | 0.01 | |
Net income | | $ | 0.59 | | $ | 0.61 | |
(A) Due to the seasonal nature of the Company’s natural gas distribution and energy marketing business, and the volatility of gas and oil commodity prices, the interim statements for the three month period are not indicative of results for a full year.
EQUITABLE UTILITIES
OPERATIONAL AND FINANCIAL REPORT
| | Three Months Ended
March 31, | |
| | 2006 | | 2005 | |
| | | | | |
OPERATIONAL DATA | | | | | |
Heating degree days (30-year average: 2,930) | | 2,538 | | 2,834 | |
| | | | | |
Residential sales and transportation volume (MMcf) | | 10,205 | | 12,373 | |
Commercial and industrial volume (MMcf) | | 9,083 | | 10,783 | |
Total throughput (MMcf) - Distribution | | 19,288 | | 23,156 | |
| | | | | |
Net Operating Revenues (thousands): | | | | | |
Distribution (regulated) | | | | | |
Residential | | $ | 36,519 | | $ | 43,161 | |
Commercial & industrial | | 16,079 | | 21,242 | |
Other | | 1,507 | | 2,389 | |
Total distribution operations | | 54,105 | | 66,792 | |
Pipeline (regulated) | | 25,069 | | 16,466 | |
Marketing | | 19,679 | | 16,012 | |
Total | | $ | 98,853 | | $ | 99,270 | |
| | | | | |
Operating expenses as a % of net operating revenues | | 38.27 | % | 37.16 | % |
| | | | | |
Operating income (thousands): | | | | | |
Distribution (regulated) | | $ | 27,286 | | $ | 38,327 | |
Pipeline (regulated) | | 14,198 | | 8,419 | |
Marketing | | 19,538 | | 15,631 | |
Total | | $ | 61,022 | | $ | 62,377 | |
| | | | | |
Capital expenditures (thousands) | | $ | 15,454 | | $ | 9,787 | |
| | | | | |
FINANCIAL DATA (Thousands) | | | | | |
Distribution revenues (regulated) | | $ | 221,709 | | $ | 203,730 | |
Pipeline revenues (regulated) | | 25,397 | | 16,466 | |
Marketing revenues | | 105,397 | | 96,105 | |
Less: intrasegment revenues | | (17,805 | ) | (17,233 | ) |
Total operating revenues | | 334,698 | | 299,068 | |
| | | | | |
Purchased gas costs | | 235,845 | | 199,798 | |
Net operating revenues | | 98,853 | | 99,270 | |
| | | | | |
Operating expenses: | | | | | |
Operating and maintenance | | 13,615 | | 13,946 | |
Selling, general and administrative | | 17,062 | | 16,315 | |
Depreciation, depletion and amortization | | 7,154 | | 6,632 | |
Total operating expenses | | 37,831 | | 36,893 | |
| | | | | |
Operating income | | $ | 61,022 | | $ | 62,377 | |
EQUITABLE SUPPLY
OPERATIONAL AND FINANCIAL REPORT
| | Three Months Ended
March 31, | |
| | 2006 | | 2005 | |
| | | | | |
OPERATIONAL DATA | | | | | |
| | | | | |
Capital expenditures (thousands) | | $ | 53,912 | | $ | 88,631 | |
| | | | | |
Production: | | | | | |
| | | | | |
Total sales volumes (MMcfe) | | 18,329 | | 18,328 | |
Average (well-head) sales price ($/Mcfe) | | $ | 5.09 | | $ | 4.74 | |
| | | | | |
Company usage, line loss (MMcfe) | | 1,253 | | 1,231 | |
| | | | | |
Natural gas inventory usage, net (MMcfe) | | — | | (51 | ) |
| | | | | |
Natural gas and oil production (MMcfe) | | 19,582 | | 19,508 | |
| | | | | |
Lease operating expense excluding production tax ($/Mcfe) | | $ | 0.28 | | $ | 0.32 | |
Production taxes ($/Mcfe) | | $ | 0.55 | | $ | 0.41 | |
Production depletion ($/Mcfe) | | $ | 0.62 | | $ | 0.62 | |
| | | | | |
Gathering: | | | | | |
Gathered volumes (MMcfe) | | 27,282 | | 33,152 | |
Average gathering fee ($/Mcfe) | | $ | 0.99 | | $ | 0.73 | |
Gathering and compression expense ($/Mcfe) | | $ | 0.36 | | $ | 0.30 | |
Gathering and compression depreciation ($/Mcfe) | | $ | 0.14 | | $ | 0.10 | |
| | | | | |
(in thousands) | | | | | |
Production operating income | | $ | 62,012 | | $ | 57,283 | |
Gathering operating income | | 9,971 | | 8,070 | |
Total | | $ | 71,983 | | $ | 65,353 | |
| | | | | |
Production depletion | | $ | 12,137 | | $ | 12,059 | |
Gathering and compression depreciation | | 3,767 | | 3,324 | |
Other depreciation, depletion and amortization | | 942 | | 1,002 | |
Total depreciation, depletion and amortization | | $ | 16,846 | | $ | 16,385 | |
| | | | | |
FINANCIAL DATA (Thousands) | | | | | |
Production revenues | | $ | 95,521 | | $ | 89,104 | |
Gathering revenues | | 26,928 | | 24,171 | |
Total revenues | | 122,449 | | 113,275 | |
| | | | | |
Operating expenses: | | | | | |
Lease operating expense excluding production taxes | | 5,430 | | 6,235 | |
Production taxes | | 10,689 | | 7,935 | |
Gathering and compression | | 9,842 | | 9,896 | |
Selling, general and administrative | | 7,659 | | 6,952 | |
Office consolidation impairment charges | | — | | 519 | |
Depreciation, depletion and amortization | | 16,846 | | 16,385 | |
Total operating expenses | | 50,466 | | 47,922 | |
| | | | | |
Operating income | | $ | 71,983 | | $ | 65,353 | |
