Exhibit 99.1
Contact: | Patrick Kane |
| (412) 553-7833 |
Equitable Resources Reports Second Quarter Earnings
PITTSBURGH, July 27, 2006/ PRNewswire-FirstCall/ — Equitable Resources, Inc. (NYSE: EQT) today announced second quarter 2006 earnings per diluted share (EPS) of $0.36, compared with $0.52 reported in the second quarter 2005. The second quarter 2005 results were dominated by a gain on the sale of Kerr-McGee shares.
Quarterly Results by Business
Equitable Utilities
Equitable Utilities had operating income for the second quarter of $13.9 million compared to $5.7 million reported for the same period last year. Net operating revenues were $45.8 million compared to $42.1 million in 2005, as higher Pipeline and Marketing net revenues more than offset lower Distribution net revenues.
Total operating expenses for the quarter decreased by $4.5 million from $36.4 million in 2005 to $31.9 million in 2006. During the quarter, the Company reversed $2.4 million of a $3.8 million second quarter 2005 charge for office relocations. Other operating expense increases included $2.7 million of costs associated with planning for the integration of Peoples Gas and Hope Gas, a $0.7 million increase in gathering operating expense and a $0.6 million increase in post retirement benefit costs. Major items partially offsetting these increases were a $1.9 million reduction in bad debt and the absence in 2006 of a $0.8 million severance charge in the second quarter 2005.
Equitable Supply
Equitable Supply’s operating income for the 2006 second quarter totaled $65.4 million, 3.6% higher than the $63.2 million earned in the same period last year. Total operating revenues were $119.3 million, $7.1 million higher than the previous year’s total of $112.2 million. Production sales volumes increased by 0.6 Bcfe to 19.1 Bcfe as volumes from new wells more than offset the 0.6 Bcfe from wells sold in May 2005. Excluding property dispositions, sales volumes were up by 6.7%. Partially offsetting revenues from higher sales volumes was a 1.3% reduction in average sales price. The Company expects to sell between 76 and 77 Bcfe of natural gas in 2006.
Gathering revenues were $26.7 million, $4.2 million higher than the second quarter 2005 as the average gathering fee increased by 29.5% to $1.01 per Mcfe. Gathered volumes declined by 2.7 Bcfe or 9.3%, primarily due to the transfer of certain regulated gathering facilities to Equitable Utilities for segment reporting purposes and the sale of non-core gathering assets in May 2005. These factors were partially offset by increased gathered volumes for Equitable Supply production in the quarter.
Total operating expenses for the 2006 second quarter totaled $53.9 million compared to $49.0 million in the 2005 second quarter. Higher SG&A expense, depreciation, depletion and amortization expense and production taxes account for most of the increase in operating expenses.
The Company drilled 142 wells in the second quarter for a total of 275 wells in the first half of 2006.
Other Business
Hedging
During the quarter, the Company increased its collar position for years 2007 — 2012. The approximate volumes and prices of Equitable’s hedges for the last six months of 2006 through 2008 are:
| | 2006** | | 2007 | | 2008 | |
Swaps | | | | | | | |
Total Volume (Bcf) | | 30 | | 56 | | 54 | |
Average Price per Mcf (NYMEX)* | | $ | 4.77 | | $ | 4.74 | | $ | 4.64 | |
| | | | | | | | | | |
| | 2006** | | 2007 | | 2008 | |
Collars | | | | | | | |
Total Volume (Bcf) | | 4 | | 10 | | 10 | |
Average Floor Price per Mcf (NYMEX)* | | $ | 7.35 | | $ | 7.61 | | $ | 7.61 | |
Average Cap Price per Mcf (NYMEX)* | | $ | 10.84 | | $ | 11.27 | | $ | 11.27 | |
* The above price is based on a conversion rate of 1.05 MMbtu/Mcf
** July through December
Operating Income
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
June 30, | | Six Months Ended
June 30, | |
| | 2006 | | 2005 | | 2006 | | 2005 | |
Operating income (thousands): | | | | | | | | | |
Equitable Utilities | | $ | 13,867 | | $ | 5,682 | | $ | 74,889 | | $ | 68,059 | |
Equitable Supply | | 65,443 | | 63,170 | | 137,426 | | 128,523 | |
Unallocated expenses | | (5,191 | ) | (15,393 | ) | (10,539 | ) | (15,927 | ) |
Operating Income | | $ | 74,119 | | $ | 53,459 | | $ | 201,776 | | $ | 180,655 | |
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.
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
2
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, sales 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.
3
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
(Thousands except per share amounts)
| | Three Months Ended | | Six Months Ended | |
| | June 30, | | June 30, | |
| | 2006 | | 2005 | | 2006 | | 2005 | |
Operating revenues | | $ | 251,207 | | $ | 230,194 | | $ | 681,326 | | $ | 631,470 | |
Cost of sales | | 86,113 | | 75,917 | | 294,930 | | 264,648 | |
Net operating revenues | | 165,094 | | 154,277 | | 386,396 | | 366,822 | |
| | | | | | | | | |
Operating expenses: | | | | | | | | | |
Operation and maintenance | | 25,366 | | 24,865 | | 48,970 | | 48,708 | |
Production | | 15,670 | | 15,026 | | 31,789 | | 29,196 | |
Selling, general and administrative | | 28,050 | | 30,492 | | 57,755 | | 54,119 | |
Office consolidation impairment charges | | (2,908 | ) | 7,316 | | (2,908 | ) | 7,835 | |
Depreciation, depletion and amortization | | 24,797 | | 23,119 | | 49,014 | | 46,309 | |
Total operating expenses | | 90,975 | | 100,818 | | 184,620 | | 186,167 | |
| | | | | | | | | |
Operating income | | 74,119 | | 53,459 | | 201,776 | | 180,655 | |
| | | | | | | | | |
Gain on sale and tender of available-for-sale securities, net | | — | | 60,819 | | — | | 60,819 | |
| | | | | | | | | |
Equity in earnings of nonconsolidated investments | | (124 | ) | 108 | | 50 | | 197 | |
| | | | | | | | | |
Other income, net | | — | | 57 | | — | | 1,195 | |
| | | | | | | | | |
Interest expense | | 9,995 | | 9,988 | | 22,952 | | 22,175 | |
| | | | | | | | | |
Income from continuing operations before income taxes | | 64,000 | | 104,455 | | 178,874 | | 220,691 | |
Income taxes | | 20,091 | | 46,502 | | 62,606 | | 87,947 | |
| | | | | | | | | |
Income from continuing operations | | 43,909 | | 57,953 | | 116,268 | | 132,744 | |
Income from discontinued operations, net of tax of $1,433 and $2,484 for the three and six months ended June 30, 2005, respectively | | — | | 6,366 | | — | | 7,981 | |
| | | | | | | | | |
Net income | | $ | 43,909 | | $ | 64,319 | | $ | 116,268 | | $ | 140,725 | |
| | | | | | | | | |
Earnings per share of common stock: | | | | | | | | | |
Basic: | | | | | | | | | |
Weighted average common shares outstanding | | 120,128 | | 121,472 | | 119,823 | | 121,472 | |
Income from continuing operations | | $ | 0.37 | | $ | 0.48 | | $ | 0.97 | | $ | 1.09 | |
Income from discontinued operations | | — | | 0.05 | | — | | 0.07 | |
Net income | | $ | 0.37 | | $ | 0.53 | | $ | 0.97 | | $ | 1.16 | |
| | | | | | | | | |
Diluted: | | | | | | | | | |
Weighted average common shares outstanding | | 122,044 | | 123,990 | | 121,899 | | 124,186 | |
Income from continuing operations | | $ | 0.36 | | $ | 0.47 | | $ | 0.95 | | $ | 1.07 | |
Income from discontinued operations | | — | | 0.05 | | — | | 0.06 | |
Net income | | $ | 0.36 | | $ | 0.52 | | $ | 0.95 | | $ | 1.13 | |
(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 and six month periods are not indicative of results for a full year.
4
