| 2350 N. Sam Houston Parkway East Suite 300 Houston, Texas 77032 (281) 618-4700 Fax: (281) 618-4820 |
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NEWS RELEASE
SOUTHWESTERN ENERGY ANNOUNCES
THIRD QUARTER 2006 RESULTS
Houston, Texas – October 23, 2006..Southwestern Energy Company (NYSE: SWN) today announced financial and operating results for the third quarter of 2006. Highlights include:
·
Natural gas and crude oil production of 19.3 Bcfe, up 19% over the same period in 2005
·
Record net cash provided by operating activities before changes in operating assets and liabilities (a non-GAAP measure reconciled below) of $95.2 million, up 19% from the same period in 2005
For the third quarter of 2006, Southwestern reported net income of $33.5 million, or $0.20 per diluted share, compared to $39.5 million, or $0.26* per diluted share, for the same period in 2005. In the third quarter of 2005, earnings included the net effect of a pre-tax gain of $8.7 million, or $0.04* per diluted share, relating to gains on future basis hedges that do not qualify for hedge accounting, partially offset by a loss associated with hedge ineffectiveness. Net cash provided by operating activities before changes in operating assets and liabilities (non-GAAP; see reconciliation below), was $95.2 million in the third quarter of 2006, up from $80.3 million in the same period of 2005. During the third quarter, the positive effect on the company’s earnings of increased production volumes was offset by declines in realized commodity prices and increases in operating costs.
“As our drilling programs in East Texas and the conventional Arkoma Basin have continued their solid performance, our activities in the Fayetteville Shale play are expanding,” stated Harold M. Korell, President and Chief Executive Officer of Southwestern. “We currently have 14 rigs running in the play area, and have tested four new pilot areas that provide additional data confirming the viability of an even larger portion of our sizeable acreage position. We also continue to be encouraged by the production performance of our horizontal wells. Despite the recent retreat in commodity prices, we remain positive about the long-term outlook for natural gas and believe that the low gas prices we experienced during the third quarter are not sustainable over an extended period of time.”
Net income for the nine months ended September 30, 2006 was $128.9 million, or $0.75 per diluted share, up 30% from $98.9 million, or $0.65* per diluted share, for the same period in 2005. Net cash provided by operating activities before changes in operating assets and liabilities was $304.8 million for the first nine months of 2006, up 39% from $219.0 million for the same period in 2005.
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Third Quarter 2006 Financial Results
E&P Segment - Operating income from the company’s E&P segment was $56.3 million for the three months ended September 30, 2006, down from $68.9 million for the same period in 2005. The increase in revenues resulting from the growth in production volumes was more than offset by increased operating costs and lower natural gas prices.
Southwestern’s natural gas and crude oil production totaled 19.3 Bcfe for the three months ended September 30, 2006, up 19% from 16.2 Bcfe in the third quarter of 2005. The increase resulted primarily from increased production from the Fayetteville Shale play. Net production from the Fayetteville Shale was 3.8 Bcf in the third quarter of 2006, compared to 1.8 Bcf in the second quarter of 2006 and 0.7 Bcf in the third quarter of 2005. With 14 rigs currently drilling in the Fayetteville Shale play, at October 19, 2006, the company has built its inventory of wells waiting on completion to 27 compared to 12 at July 31, 2006. Southwestern currently has two completion crews operating in the area and has entered into supply arrangements with strategic partners to have up to five crews in the area by the end of the first quarter of 2007.
Southwestern’s average realized gas price was $6.23 per Mcf, including the effect of hedges, in the third quarter of 2006, compared to $6.98 per Mcf in the third quarter of 2005. The company’s commodity hedging activities increased its average gas price $0.19 per Mcf during the third quarter of 2006, compared to a decrease of $0.91 per Mcf in the third quarter of 2005. For the fourth quarter, the company has hedged approximately 60% to 65% of its expected gas production.
Assuming current NYMEX natural gas futures prices for the remainder of 2006, the company expects the average price received for its gas production for the fourth quarter of 2006 to be approximately $0.45 to $0.55 per Mcf below the NYMEX Henry Hub price.
Southwestern’s average realized oil price was $62.78 per barrel, including the effect of hedges, during the third quarter of 2006, compared to $47.23 per barrel in the third quarter of 2005. The company’s hedging activities decreased its average oil price $5.53 per barrel during the third quarter of 2006 and $13.84 per barrel during the same period in 2005. For the fourth quarter, the company has hedged approximately 15% to 20% of its expected crude oil production.
Lease operating expenses per unit of production for the company’s E&P segment increased to $0.68 per Mcfe in the third quarter of 2006, compared to $0.51 per Mcfe in the same period in 2005, primarily as a result of increases in gathering and compression costs. The majority of the increases primarily relate to the company’s operations in the Fayetteville Shale play.
General and administrative expenses per unit of production for the company’s E&P segment were $0.54 per Mcfe during the third quarter of 2006, up from $0.42 per Mcfe for the same period in 2005, primarily due to increased compensation and other costs associated with increased staffing levels required to meet the demands of the company’s expanding E&P operations, primarily related to developing the Fayetteville Shale play. Southwestern added 145 new employees during the third quarter of 2006, most of whom were hired in the company’s E&P segment.
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Taxes other than income taxes per unit of production were $0.32 per Mcfe during the third quarter of 2006, compared to $0.40 per Mcfe for the same period in 2005. The company’s full cost pool amortization rate increased to $1.97 per Mcfe in the third quarter of 2006, compared to $1.44 per Mcfe for the same period in 2005, primarily due to increased finding and development costs. The timing and amount of production and reserve additions attributed to the company’s Fayetteville Shale play could materially impact the company’s per unit costs going forward.
Midstream Services - Operating income for the company’s midstream services segment, which is comprised of natural gas marketing and gathering activities, was $1.3 million for the three months ended September 30, 2006, compared to $1.5 million in the same period in 2005.
Natural Gas Distribution Segment -The company’s utility segment recorded a seasonal operating loss of $4.5 million for the three months ended September 30, 2006, compared to an operating loss of $3.2 million for the same period in 2005. The decrease in operating income for this segment was primarily due to increased operating costs and higher general and administrative expenses, partially offset by the effects of a $4.6 million annual rate increase effective October 31, 2005.
On September 25, 2006, Arkansas Western Gas Company (AWG) filed with the Arkansas Public Service Commission (APSC) a request for a change in its general rates and tariffs that would increase AWG’s annual operating revenue by $13.1 million. The APSC has 10 months to review the filing, audit AWG’s records, hold hearings and make a decision on the request. If the increase is approved, the rates are expected to take effect in July, 2007.
First Nine Months of 2006 Financial Results
E&P Segment - Operating income for the E&P segment was $186.6 million during the first nine months of 2006, compared to $165.2 million during the first nine months of 2005. The increase was primarily due to a 14% increase in production volumes combined with higher realized oil and gas prices.
Gas and oil production increased to 51.6 Bcfe for the nine months ended September 30, 2006, as compared to 45.2 Bcfe for the same period in 2005. The increase resulted primarily from increased production from the company’s Fayetteville Shale play. Net production from the Fayetteville Shale was 6.3 Bcf in the first nine months of 2006, compared to 1.3 Bcfe for the same period in 2005. The company has lowered its production guidance for the fourth quarter of 2006 to a range of 20.4 Bcfe to 21.4 Bcfe and its full year guidance to a range of 72.0 to 73.0 Bcfe to reflect the current shortage of pressure pumping equipment and crews in the Arkoma Basin and the pending sale of the company’s South Louisiana properties. The revised guidance represents an increase of 18% to 20% compared to 2005. Southwestern’s average realized gas price was $6.73 per Mcf, including the effect of hedges, in the first nine months of 20 06 compared to $6.16 per Mcf during the same period in 2005. The company’s hedging activities increased the average gas price realized during the first nine months of 2006 by $0.17 per Mcf, compared to a decrease of $0.58 per Mcf during the same period in 2005. Southwestern’s average realized oil price was $60.24 per barrel for the first nine months of 2006, compared to $42.29 per barrel during the same period in 2005. The average realized oil
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prices for the first nine months of 2006 and 2005 were reduced by $5.07 per barrel and $11.07 per barrel, respectively, due to the effects of the company’s hedging activities.
Disregarding the impact of hedges, the average price received for the company’s gas production during the first nine months of 2006 was approximately $0.89 per Mcf lower than average NYMEX spot prices, compared to the average for the prior year period of approximately $0.42 per Mcf. The change between periods was due to widening of the locational differences in the company’s market prices for natural gas.
Lease operating expenses per unit of production for the company’s E&P segment were $0.62 per Mcfe during the first nine months of 2006, up from $0.46 per Mcfe during the same period in 2005 as a result of increases in gathering and compression costs primarily related to the company’s operations in the Fayetteville Shale play. Based on projected production, the company currently expects its unit operating costs for 2006 to range between $0.65 and $0.70 per Mcfe.
General and administrative expenses per unit of production were $0.56 per Mcfe during the first nine months of 2006, compared to $0.40 per Mcfe in the same period in 2005, primarily due to increased compensation and other costs associated with increased staffing levels to meet the demands of the company’s expanding E&P operations, primarily related to developing the Fayetteville Shale play. Southwestern added 389 new employees during the nine months ended September 30, 2006, most of which were hired in the company’s E&P segment. Approximately 300 to 325 of the total new hires during 2006 are expected to be employed by Southwestern’s new drilling company. Southwestern currently expects its per unit G&A expense for 2006 to range between $0.50 and $0.55 per Mcfe.
Taxes other than income taxes per unit of production were $0.34 per Mcfe during the first nine months of 2006, compared to $0.35 per Mcfe during the same period in 2005. The company’s full cost pool amortization rate increased to $1.79 per Mcfe in the first nine months of 2006, compared to $1.37 per Mcfe for the same period in 2005, primarily due to increased finding and development costs. The company’s amortization rate can vary from this estimate due to changes in the level of oil and gas reserves, production rates, costs associated with developing reserves, services costs and changes in the levels of unevaluated costs. Additionally, Southwestern’s finding and development costs during 2006 are expected to be impacted by the timing and amount of the company’s reserve bookings related to the Fayetteville Shale play.
Midstream Services - Operating income for the company’s natural gas marketing activities was $3.1 million during the first nine months of 2006, compared to $3.5 million in the same period in 2005. The decrease in operating income was primarily the result of increased staffing and operating costs associated with the company’s gathering activities related to the Fayetteville Shale play.
Natural Gas Distribution Segment - Operating income for Southwestern’s utility was $1.3 million during the first nine months of 2006, down from $1.9 million during the first nine months of 2005. The decrease in operating income for this segment resulted primarily from warmer weather, increased operating costs and higher general and administrative expenses, partially offset by the effects of a rate increase implemented in October 2005. Weather during the first nine months of 2006 was 21% warmer than normal and 11% warmer than the same period in 2005.
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Explanation and Reconciliation of Non-GAAP Financial Measures
Net cash provided by operating activities before changes in operating assets and liabilities is presented because of its acceptance as an indicator of an oil and gas exploration and production company’s ability to internally fund exploration and development activities and to service or incur additional debt. The company has also included this information because changes in operating assets and liabilities relate to the timing of cash receipts and disbursements which the company may not control and may not relate to the period in which the operating activities occurred. Net cash provided by operating activities before changes in operating assets and liabilities should not be considered in isolation or as a substitute for net cash provided by operating activities prepared in accordance with generally accepted accounting principles. The table below reconciles net cash provided by operating activities before changes in operating assets and liabilities with net cash provided by operating activities as derived from the company's financial information.
3 Months Ended September 30, | 9 Months Ended September 30, | ||||||
2006 | 2005 | 2006 | 2005 | ||||
(in thousands) | |||||||
Net cash provided by operating activities before changes in operating assets and liabilities | $95,182 | $80,322 | $304,847 | $219,003 | |||
Add back (deduct): | |||||||
Change in operating assets and liabilities | 6,903 | (28,891) | 26,289 | (3,181) | |||
Net cash provided by operating activities | $102,085 | $51,431 | $331,136 | $215,822 | |||
Southwestern will host a teleconference call on Tuesday, October 24, 2006, at 12:00 p.m. Eastern to discuss the company’s third quarter 2006 financial and operating results. The toll-free number to call is 800-289-0496 and the reservation number is 1068984. The teleconference can also be heard “live” on the Internet athttp://www.swn.com.
Southwestern Energy Company is an integrated natural gas company whose wholly-owned subsidiaries are engaged in oil and gas exploration and production, and natural gas gathering, marketing and distribution. Additional information on the company can be found on the Internet athttp://www.swn.com.
Contacts: | Greg D. Kerley | Brad D. Sylvester, CFA |
| Executive Vice President | Manager, Investor Relations |
| and Chief Financial Officer | (281) 618-4897 |
| (281) 618-4803 |
All statements, other than historical financial information, may be deemed to be forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements that address activities, outcomes and other matters that should or may occur in the future, including, without limitation, statements regarding the financial position, business strategy, production and reserve growth and other plans and objectives for the company’s future operations, are forward-looking statements. Although the company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. The company has no obligation and makes no undertaking to publicly update
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or revise any forward-looking statements. You should not place undue reliance on forward-looking statements. They are subject to known and unknown risks, uncertainties and other factors that may affect the company’s operations, markets, products, services and prices and cause its actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In addition to any assumptions and other factors referred to specifically in connection with forward-looking statements, risks, uncertainties and factors that could cause the company’s actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to: the availability of oil field personnel, services, drilling rigs and other equipment, including pressure pumping equipment and cr ews in the Arkoma Basin; the timing and extent of changes in commodity prices for natural gas and oil; the timing and extent of the company’s success in discovering, developing, producing and estimating reserves; the extent to which the Fayetteville Shale play can replicate the results of other productive shale gas plays; the potential for significant variability in reservoir characteristics of the Fayetteville Shale over such a large acreage position; the extent of the company’s success in drilling and completing horizontal wells; the company’s ability to determine the most effective and economic fracture stimulation for the Fayetteville Shale formation; the company’s lack of experience owning and operating drilling rigs; the company’s ability to fund its planned capital expenditures; future property acquisition or divestiture activities; the effects of weather and regulation on the company’s gas distribution segment; increased competition; the impact of federal, state and loca l government regulation; the financial impact of accounting regulations and critical accounting policies; changing market conditions and prices (including regional basis differentials); the comparative cost of alternative fuels; conditions in capital markets and changes in interest rates; and any other factors listed in the reports we have filed and may file with the Securities and Exchange Commission (SEC). For additional information with respect to certain of these and other factors, see reports filed by the company with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Financial Summary Follows
# # #
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| OPERATING STATISTICS (Unaudited) | Page 1 of 5 | ||||||||
| Southwestern Energy Company and Subsidiaries | |||||||||
Three Months | Nine Months | ||||||||
| Periods Ended September 30 | 2006 | 2005 | 2006 | 2005 | |||||
| Exploration & Production | |||||||||
| Production | |||||||||
| Gas production (MMcf) | 18,175 | 15,030 | 48,415 | 41,989 | |||||
| Oil production (MBbls) | 180 | 200 | 527 | 543 | |||||
| Total equivalent production (MMcfe) | 19,255 | 16,227 | 51,577 | 45,246 | |||||
| Commodity Prices | |||||||||
| Average realized gas price per Mcf | $6.23 | $6.98 | $6.73 | $6.16 | |||||
| Average realized oil price per Bbl | $62.78 | $47.23 | $60.24 | $42.29 | |||||
| Operating Expenses per Mcfe | |||||||||
| Lease operating expenses | $0.68 | $0.51 | $0.62 | $0.46 | |||||
| General & administrative expenses | $0.54 | $0.42 | $0.56 | $0.40 | |||||
| Taxes, other than income taxes | $0.32 | $0.40 | $0.34 | $0.35 | |||||
| Full cost pool amortization | $1.97 | $1.44 | $1.79 | $1.37 | |||||
| Marketing | |||||||||
| Gas volumes marketed (MMcf) | 20,072 | 17,114 | 50,485 | 46,500 | |||||
| Gas Distribution | |||||||||
| Deliveries (Bcf) | |||||||||
Sales and end-use transportation | 3.0 | 3.0 | 14.9 | 16.0 | |||||
Number of customers at period end | 145,987 | 142,642 | 145,987 | 142,642 | |||||
Average sales rate per Mcf | $14.21 | $15.85 | $13.11 | $10.63 | |||||
Heating weather - degree days | 55 | 14 | 2,005 | 2,231 | |||||
| - percent of normal | 117% | 33% | 79% | 90% | |||||
| STATEMENTS OF OPERATIONS (Unaudited) | Page 2 of 5 | |||||||||
| Southwestern Energy Company and Subsidiaries | ||||||||||
Three Months | Nine Months | |||||||||
| Periods Ended September 30 | 2006 | 2005 | 2006 | 2005 | ||||||
(in thousands, except share/per share amounts) | ||||||||||
| Operating Revenues | ||||||||||
Gas sales | $ 121,515 | $ 118,466 | $ 409,883 | $ 337,929 | ||||||
Gas marketing | 33,261 | 32,822 | 98,277 | 87,572 | ||||||
Oil sales | 11,305 | 9,415 | 31,749 | 22,954 | ||||||
Gas transportation and other | 2,313 | 1,424 | 9,186 | 7,188 | ||||||
| 168,394 | 162,127 | 549,095 | 455,643 | |||||||
| Operating Costs and Expenses | ||||||||||
Gas purchases - gas distribution | 2,174 | 5,971 | 50,994 | 44,872 | ||||||
Gas purchases - midstream services | 31,314 | 30,770 | 91,474 | 82,900 | ||||||
Operating expenses | 17,360 | 13,980 | 47,828 | 38,326 | ||||||
General and administrative expenses | 16,947 | 11,437 | 46,738 | 32,048 | ||||||
Depreciation, depletion and amortization | 40,459 | 25,527 | 100,512 | 68,783 | ||||||
Taxes, other than income taxes | 7,022 | 7,241 | 20,333 | 18,106 | ||||||
| 115,276 | 94,926 | 357,879 | 285,035 | |||||||
| Operating Income | 53,118 | 67,201 | 191,216 | 170,608 | ||||||
| Interest Expense | ||||||||||
Interest on long-term debt | 2,871 | 6,047 | 7,690 | 16,211 | ||||||
Other interest charges | 400 | 293 | 1,043 | 961 | ||||||
Interest capitalized | (3,051) | (1,629) | (8,232) | (3,268) | ||||||
| 220 | 4,711 | 501 | 13,904 | |||||||
| Other Income | 1,217 | 427 | 17,674 | 626 | ||||||
Income Before Income Taxes and Minority Interest | 54,115 | 62,917 | 208,389 | 157,330 | ||||||
| Minority Interest in Partnership | (120) | (477) | (525) | (885) | ||||||
| Income Before Income Taxes | 53,995 | 62,440 | 207,864 | 156,445 | ||||||
| Provision for Income Taxes - Deferred | 20,518 | 22,971 | 78,988 | 57,541 | ||||||
| Net Income | $ 33,477 | $ 39,469 | $ 128,876 | $ 98,904 | ||||||
| Earnings Per Share: | ||||||||||
Basic | $0.20 | $0.27 | (1) | $0.77 | $0.68 | (1) | ||||
Diluted | $0.20 | $0.26 | (1) | $0.75 | $0.65 | (1) | ||||
Weighted Average Common Shares Outstanding: | ||||||||||
Basic | 167,514,249 | 148,192,648 | (1) | 167,114,831 | 145,895,536 | (1) | ||||
Diluted | 171,578,104 | 153,664,600 | (1) | 171,140,513 | 151,311,240 | (1) | ||||
(1) Restated to reflect the two-for-one stock split effected on November 17, 2005.
| BALANCE SHEETS (Unaudited) | Page 3 of 5 | |||||
| Southwestern Energy Company and Subsidiaries | ||||||
| September 30 | 2006 | 2005 | ||||
(in thousands) | ||||||
| ASSETS | ||||||
| Current Assets | $ 246,808 | $ 617,655 |
| |||
| Investments | - | 15,820 | ||||
Property, Plant and Equipment, at cost | 2,865,663 | 2,100,737 | ||||
Less: Accumulated depreciation, depletion and amortization | 975,781 | 845,145 | ||||
| 1,889,882 | 1,255,592 | |||||
| Other Assets | 43,853 | 19,318 |
| |||
| $ 2,180,543 | $ 1,908,385 | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
| Current Liabilities | $ 257,768 |
| $ 474,217 |
| ||
| Long-Term Debt | 137,200 | 100,000 | ||||
| Deferred Income Taxes | 359,189 | 224,644 | ||||
Long-term Hedging Liability | 7,909 |
| 90,642 |
| ||
| Other Liabilities | 29,469 |
| 18,624 |
| ||
| Commitments and Contingencies | ||||||
| Minority Interest in Partnership | 11,383 | 12,243 | ||||
| Shareholders' Equity | ||||||
Common stock, $.01 par value in 2006, $.10 par value in 2005; authorized 540,000,000 shares in 2006 and 220,000,000 shares in 2005, issued 168,452,336 shares | 1,684 | 16,845 | (1) | |||
| Additional paid-in capital | 731,134 | 703,276 | (1) | |||
| Retained earnings | 627,097 | 449,365 | ||||
Accumulated other comprehensive income (loss) | 18,289 |
| (172,147) |
| ||
Common stock in treasury, at cost, 207,196 shares at September 30, 2006 and 1,723,784 (1) shares at September 30, 2005 | (579) | (4,801) | ||||
Unamortized cost of restricted shares issued under stock incentive plan, 1,228,914 (1) shares at September 30, 2005 | - | (4,523) | ||||
| 1,377,625 | 988,015 | |||||
| $ 2,180,543 | $ 1,908,385 | |||||
(1) 2005 restated to reflect a two-for-one stock split effected on November 17, 2005.
| STATEMENTS OF CASH FLOWS (Unaudited) | Page 4 of 5 | |||||
| Southwestern Energy Company and Subsidiaries | ||||||
| Nine Months | ||||||
| Periods Ended September 30 | 2006 | 2005 | ||||
(in thousands) | ||||||
| Cash Flows From Operating Activities | ||||||
| Net Income | $ 128,876 |
| $ 98,904 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation, depletion and amortization | 101,425 | 70,651 | ||||
Deferred income taxes | 78,988 | 57,541 | ||||
Unrealized (gain) loss on derivatives | 3,542 | (9,271) | ||||
Stock-based compensation expense | 4,034 | 1,148 | ||||
Gain on sale of investment in partnership | (10,863) | - | ||||
Equity in income of NOARK partnership | (925) | (354) | ||||
Minority interest in partnership | (230) | 384 | ||||
Change in operating assets and liabilities | 26,289 | (3,181) | ||||
| Net cash provided by operating activities | 331,136 | 215,822 | ||||
| Cash Flows From Investing Activities | ||||||
Capital expenditures | (603,410) | (317,375) | ||||
Proceeds from sale of investment in partnership and other property | 79,655 | 1,040 | ||||
Other items | 880 | (448) | ||||
Net cash used in investing activities | (522,875) | (316,783) | ||||
Cash Flows From Financing Activities | ||||||
| Net proceeds from equity offering | - | 579,956 | ||||
Debt retirement | (600) | - | ||||
Payments on revolving long-term debt | - | (563,800) | ||||
Borrowings under revolving long-term debt | - | 463,800 | ||||
Debt issuance costs | - | (1,180) | ||||
Tax benefit for stock-based compensation | 7,447 | - | ||||
Change in bank drafts outstanding | 11,768 | 4,974 | ||||
Proceeds from exercise of common stock options |
| 2,540 |
| 4,177 | ||
Net cash provided by financing activities | 21,155 | 487,927 | ||||
| Increase (decrease) in cash and cash equivalents | (170,584) | 386,966 | ||||
| Cash and cash equivalents at beginning of year | 223,705 | 1,235 | ||||
| Cash and cash equivalents at end of period | $ 53,121 | $ 388,201 | ||||
| SEGMENT INFORMATION (Unaudited) | Page 5 of 5 | ||||||||||||||||
| Southwestern Energy Company and Subsidiaries | |||||||||||||||||
Exploration & Production | Gas Distribution | Midstream Services & Other | Eliminations | Total | |||||||||||||
| (in thousands) | |||||||||||||||||
| Quarter Ending September 30, 2006 | |||||||||||||||||
| Revenues | $ | 124,772 | $ | 18,295 | $ | 125,438 | $ | (100,111) | $ | 168,394 | |||||||
Gas purchases | - | 9,128 | 120,572 | (96,212) | 33,488 | ||||||||||||
Operating expenses | 13,051 | 6,357 | 1,720 | (3,768) | 17,360 | ||||||||||||
General & administrative expenses | 10,428 | 5,162 | 1,488 | (131) | 16,947 | ||||||||||||
Depreciation, depletion & amortization | 38,792 | 1,470 | 197 | - | 40,459 | ||||||||||||
Taxes, other than income taxes | 6,175 | 708 | 139 | - | 7,022 | ||||||||||||
| Operating Income (Loss) | $ | 56,326 | $ | (4,530) | $ | 1,322 | $ | - | $ | 53,118 | |||||||
| Capital Investments (1) | $ | 233,688 | $ | 2,777 | $ | 21,980 | $ | - | $ | 258,445 | |||||||
| |||||||||||||||||
| Quarter Ending September 30, 2005 | |||||||||||||||||
| Revenues | $ | 114,269 | $ | 20,266 | $ | 133,724 | $ | (106,132) | $ | 162,127 | |||||||
Gas purchases | - | 11,154 | 131,343 | (105,756) | 36,741 | ||||||||||||
Operating expenses | 8,225 | 5,988 | 6 | (239) | 13,980 | ||||||||||||
General & administrative expenses | 6,817 | 3,992 | 765 | (137) | 11,437 | ||||||||||||
Depreciation, depletion & amortization | 23,813 | 1,681 | 33 | - | 25,527 | ||||||||||||
Taxes, other than income taxes | 6,553 | 652 | 36 | - | 7,241 | ||||||||||||
| Operating Income (Loss) | $ | 68,861 | $ | (3,201) | $ | 1,541 | $ | - | $ | 67,201 | |||||||
| Capital Investments (1) | $ | 145,961 | $ | 3,042 | $ | 5,222 | $ | - | $ | 154,225 | |||||||
| |||||||||||||||||
| Nine Months Ending September 30, 2006 | |||||||||||||||||
| Revenues | $ | 360,245 | $ | 119,140 | $ | 337,797 | $ | (268,087) | $ | 549,095 | |||||||
Gas purchases | - | 77,257 | 325,957 | (260,746) | 142,468 | ||||||||||||
Operating expenses | 31,934 | 19,396 | 3,413 | (6,915) | 47,828 | ||||||||||||
General & administrative expenses | 28,733 | 14,386 | 4,045 | (426) | 46,738 | ||||||||||||
Depreciation, depletion & amortization | 95,225 | 4,636 | 651 | - | 100,512 | ||||||||||||
Taxes, other than income taxes | 17,747 | 2,180 | 406 | - | 20,333 | ||||||||||||
| Operating Income | $ | 186,606 | $ | 1,285 | $ | 3,325 | $ | - | $ | 191,216 | |||||||
| Capital Investments (1) | $ | 577,905 | $ | 9,108 | $ | 45,109 | $ | - | $ | 632,122 | |||||||
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| Nine Months Ending September 30, 2005 | |||||||||||||||||
| Revenues | $ | 283,852 | $ | 107,450 | $ | 305,315 | $ | (240,974) | $ | 455,643 | |||||||
Gas purchases | - | 67,886 | 300,090 | (240,204) | 127,772 | ||||||||||||
Operating expenses | 20,939 | 17,746 | 6 | (365) | 38,326 | ||||||||||||
General & administrative expenses | 18,160 | 12,821 | 1,472 | (405) | 32,048 | ||||||||||||
Depreciation, depletion & amortization | 63,613 | 5,068 | 102 | - | 68,783 | ||||||||||||
Taxes, other than income taxes | 15,949 | 2,044 | 113 | - | 18,106 | ||||||||||||
| Operating Income | $ | 165,191 | $ | 1,885 | $ | 3,532 | $ | - | $ | 170,608 | |||||||
| Capital Investments (1) | $ | 323,337 | $ | 7,825 | $ | 9,746 | $ | - | $ | 340,908 | |||||||
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(1) Capital expenditures include $11.5 million and $26.8 million for the three and nine month periods ended September 30, 2006, respectively, and $14.2 million and $24.8 million for the three and nine month periods ended September 30, 2005, respectively, relating to the change in accrued expenditures between periods.