UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______
COMMISSION FILE NUMBER 1-3551
EQUITABLE RESOURCES, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-0464690
(State of incorporation or organization) (IRS Employer Identification No.)
One Oxford Centre, Suite 3300, 301 Grant Street,
Pittsburgh, Pennsylvania 15219 (Address of principal
executive offices, including zip code)
Registrant's telephone number, including area code: (412) 553-5700
------------
NONE
(Former name, former address and former fiscal year,
if changed since last report)
------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of issuer's classes of common
stock, as of the latest practicable date.
Outstanding at
Class October 31, 1999
Common stock, no par value 33,036,000 shares
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Index
Page No.
Part I. Financial Information:
Item 1. Financial Statements (Unaudited):
Statements of Consolidated Income for the Three
And Nine Months Ended September 30, 1999 and 1998 1
Statements of Condensed Consolidated Cash Flows
for the Nine Months Ended September 30, 1999 and 1998 2
Condensed Consolidated Balance Sheets, September 30,
1999, and December 31, 1998 3 - 4
Notes to Condensed Consolidated Financial Statements 5 - 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 22
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 22
Part II. Other Information:
Item 5. Other Information 23
Item 6. Exhibits and Reports on Form 8-K 23
Signature 24
Index to Exhibits 25
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Statements of Consolidated Income (Unaudited)
(Thousands Except Per Share Amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
------------------------------------ ------------------------------------
Operating revenues $ 191,602 $ 156,730 $ 801,289 $ 620,943
Cost of sales 95,465 72,785 470,712 327,480
----------------- ---------------- ----------------- ----------------
Net operating revenues 96,137 83,945 330,577 293,463
----------------- ---------------- ----------------- ----------------
Operating expenses:
Operation and maintenance 18,321 18,171 62,563 59,958
Exploration 4,045 670 8,341 3,083
Production 6,039 6,879 18,490 21,445
Selling, general and administrative 24,840 23,865 69,697 76,322
Depreciation, depletion and amortization 25,585 21,563 77,584 60,762
----------------- ---------------- ----------------- ----------------
Total operating expenses 78,830 71,148 236,675 221,570
----------------- ---------------- ----------------- ----------------
Operating income 17,307 12,797 93,902 71,893
Equity in nonconsolidated subsidiaries 1,056 917 2,306 1,877
----------------- ---------------- ----------------- ----------------
Earnings from continuing operations,
before interest & taxes 18,363 13,714 96,208 73,770
Interest charges 8,559 9,415 26,787 27,818
----------------- ---------------- ----------------- ----------------
Income before income taxes 9,804 4,299 69,421 45,952
Income taxes 4,074 2,262 26,712 16,989
----------------- ---------------- ----------------- ----------------
Net income from continuing operations 5,730 2,037 42,709 28,963
Income (loss) from discontinued operations -
net of tax - - - (4,604)
----------------- ---------------- ----------------- ----------------
Net income $ 5,730 $ 2,037 $ 42,709 $ 24,359
================= ================ ================= ================
Average common shares outstanding -
assuming dilution 34,273 37,128 34,650 37,129
Earnings (loss) per share of common stock:
Basic:
Continuing operations $ 0.17 $ 0.06 $ 1.24 $ 0.78
Discontinued operations - - - (0.12)
----------------- ---------------- ----------------- ----------------
Net income $ 0.17 $ 0.06 $ 1.24 $ 0.66
================= ================ ================= ================
Diluted:
Continuing operations $ 0.17 $ 0.06 $ 1.23 $ 0.78
Discontinued operations - - - (0.12)
----------------- ---------------- ----------------- ----------------
Net income $ 0.17 $ 0.06 $ 1.23 $ 0.66
================= ================ ================= ================
The accompanying notes are an integral part of these
condensed consolidated financial statements.
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
(Thousands)
Nine Months Ended
September 30,
1999 1998
-----------------------------------
Cash flows from operating activities:
Net income from continuing operations $ 42,709 $ 28,963
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion, and amortization 77,584 60,762
Amortization of net contract costs (234) 2,602
Deferred income taxes 14,115 12,612
Changes in other assets and liabilities 7,657 528
---------------- ----------------
Net cash provided by continuing operations 141,831 105,467
Net cash used in discontinued operations - (2,420)
---------------- ----------------
Net cash provided by operating activities 141,831 103,047
---------------- ----------------
Cash flows from investing activities:
Capital expenditures (72,276) (123,981)
Increase in investment in nonconsolidated subsidiaries (20,861) (7,028)
Proceeds from sale of property 4,661 -
Increase in net noncurrent assets held for sale - (31,935)
---------------- ----------------
Net cash provided by (used in) investing activities (88,476) (162,944)
---------------- ----------------
Cash flows from financing activities:
Retirement of long-term debt (75,000) (10,880)
Increase (decrease) in short-term loans 3,088 (66,451)
Dividends paid (30,858) (32,830)
Proceeds from issuance of long-term debt 17,000 -
Proceeds from preferred trust securities - 125,000
Proceeds from issuance of common stock 2,801 2,392
Purchase of treasury stock (65,999) -
---------------- ----------------
Net cash provided by (used in) financing activities (148,968) 17,231
---------------- ----------------
Net decrease in cash and cash equivalents (95,613) (42,666)
Cash and cash equivalents at beginning of period 102,444 69,442
---------------- ----------------
Cash and cash equivalents at end of period $ 6,831 $ 26,776
================ ================
Cash paid during the period for:
Interest (net of amount capitalized) $ 25,802 $ 38,719
================ ================
Income taxes $ (2,316) $ 10,304
================ ================
The accompanying notes are an integral part of these
condensed consolidated financial statements.
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
ASSETS September 30, December 31,
1999 1998
------------------------------------------
(Thousands)
------------------------------------------
Current assets:
Cash and cash equivalents $ 6,831 $ 102,444
Accounts receivable 108,791 199,363
Unbilled revenues 26,992 41,616
Inventory 42,755 33,743
Deferred purchased gas cost 24,210 39,445
Prepaid expenses and other 45,989 34,831
---------------- ----------------
Total current assets 255,568 451,442
---------------- ----------------
Property, plant and equipment 1,991,843 1,956,763
Less accumulated depreciation and depletion (814,925) (762,320)
---------------- ----------------
Net property, plant and equipment 1,176,918 1,194,443
---------------- ----------------
Other assets 232,501 214,971
---------------- ----------------
Total $ 1,664,987 $ 1,860,856
================ ================
The accompanying notes are an integral part of these
condensed consolidated financial statements.
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY September 30, December 31,
1999 1998
-----------------------------------------
(Thousands)
-----------------------------------------
Current liabilities:
Current portion long-term debt $ - $ 74,136
Short-term loans 118,791 115,703
Accounts payable 58,420 147,951
Other current liabilities 112,057 104,170
---------------- ----------------
Total current liabilities 289,268 441,960
---------------- ----------------
Long-term debt 298,280 281,350
Deferred and other credits 297,889 304,127
Commitments and contingencies - -
Preferred trust securities 125,000 125,000
Capitalization:
Common stockholders' equity:
Common stock, no par value, authorized 80,000
shares; shares issued September 30, 1999, 37,252;
December 31, 1998, 37,252 276,213 280,400
Treasury stock, shares at cost September 30, 1999,
3,594; December 31, 1998, 1,396 (100,875) (39,298)
Retained earnings 479,177 467,326
Accumulated other comprehensive income (loss) 35 (9)
---------------- ----------------
Total common stockholders' equity 654,550 708,419
---------------- ----------------
Total $ 1,664,987 $ 1,860,856
================ ================
The accompanying notes are an integral part of these
condensed consolidated financial statements.
Equitable Resources, Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
A. The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three- and nine-month periods ended
September 30, 1999 are not necessarily indicative of the results that may
be expected for the year ended December 31, 1999.
The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
For further information, refer to the consolidated financial statements
and footnotes thereto included in the Equitable Resources' annual report
on Form 10-K for the year ended December 31, 1998.
B. In April 1998 management adopted a formal plan to sell the Company's
natural gas midstream operations. The operations include an integrated
gas gathering, processing and storage system in Louisiana and a natural
gas and electricity marketing business based in Houston. In December
1998, the Company completed the sale of these operations to various
parties for $338.3 million, which included working capital adjustments.
The condensed consolidated financial statements include these as
discontinued operations.
Net loss from discontinued operations was $4.6 million for the nine
months ended September 30, 1998. These results were reported net of
income tax benefit of $2.3 million. Interest expense allocated to
discontinued operations was $6.5 million in the first nine months of
1998.
C. In April 1998, $125 million of 7.35% Trust Preferred Capital Securities
were issued. The capital securities were issued through a subsidiary
trust, Equitable Resources Capital Trust I, established for the purpose
of issuing the capital securities and investing the proceeds in 7.35%
Junior Subordinated Debentures issued by the Company. Interest expense
for the three- and nine months ended September 30, 1999, includes $2.3
million and $6.9 million, respectively, of preferred dividends related to
the trust preferred capital securities.
D. Segment Disclosure - The Equitable Utilities segment's activities
comprise the operations of the Company's state-regulated local
distribution company, in addition to gas transportation, storage and
marketing activities involving the Company's interstate natural gas
pipelines. The Equitable Production segment's activities comprise the
exploration, development, production, gathering and sale of natural gas
and oil, and extraction and sale of natural gas liquids. NORESCO's
activities comprise cogeneration and power plant development, the
development and implementation of energy and water efficiency programs,
performance contracting and central facility plant operations. Equitable
Energy provides gas operations, commodity procurement and delivery, risk
management and customer services to energy consumers including large
industrial, utility, commercial, institutional and residential end-users.
Operating segments are evaluated on their contribution to the Company's
consolidated results, based on earnings before interest and taxes.
Interest charges and income taxes are managed on a consolidated basis and
allocated pro forma to operating segments. Headquarters costs are billed
to operating segments based on a fixed allocation of the annual
headquarters' operating budget. Differences between budget and actual
headquarters expenses are not allocated to operating segments, but
included as a reconciling item to consolidated earnings from continuing
operations.
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---------------------------------------------------------------------------------
(Thousands)
Revenues from external customers:
Equitable Utilities $ 48,791 $ 39,906 $ 265,932 $ 242,884
Equitable Production 56,872 44,027 138,957 127,465
Equitable Services:
NORESCO 44,107 32,867 123,070 73,309
Equitable Energy 41,832 39,930 273,330 177,285
----------------- ----------------- ---------------- ----------------
Total $ 191,602 $ 156,730 $ 801,289 $ 620,943
================= ================= ================ ================
Intersegment revenues:
Equitable Utilities $ 2,857 $ 4,376 $ 9,644 $ 19,632
Equitable Production 2,569 2,152 13,128 18,000
Equitable Services:
Equitable Energy 36,724 17,589 78,845 51,792
----------------- ----------------- ---------------- ----------------
Total $ 42,150 $ 24,117 $ 101,617 $ 89,424
================= ================= ================ ================
Segment profit (loss):
Equitable Utilities $ 2,042 $ 2,352 $ 54,433 $ 41,463
Equitable Production 12,264 9,883 31,168 32,296
Equitable Services:
NORESCO 4,884 3,320 11,819 5,018
Equitable Energy (408) (2,316) 1,832 (5,631)
----------------- ----------------- ---------------- ----------------
Total operating segments 18,782 13,239 99,252 73,146
Less: reconciling items
Headquarters operating expenses (gains)
not allocated to operating segments 419 (475) 3,044 (624)
Interest expense 8,559 9,415 26,787 27,818
Income tax expenses 4,074 2,262 26,712 16,989
----------------- ----------------- ---------------- ----------------
Net income from continuing operations $ 5,730 $ 2,037 $ 42,709 $ 28,963
================= ================= ================ ================
E. Derivative Instruments and Hedging Activities - In June 1998, the
Financial Accounting Standards Board (FASB) issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." The
Company has not yet determined when it will adopt the provisions of this
statement, which may be implemented at the beginning of any fiscal
quarter. SFAS No. 133 will require the Company to recognize all
derivatives on the balance sheet at fair value. Derivatives that are not
hedges must be adjusted to fair value through income. If the derivative
is a hedge, depending on the nature of the hedge, changes in the fair
value of derivatives will either be offset against the change in fair
value of the hedged assets, liabilities or firm commitments through
earnings or recognized in other comprehensive income until the hedged
item is recognized in earnings. The ineffective portion of a derivative's
change in fair value will be immediately recognized in earnings.
In June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities-Deferral of the Effective Date of FASB
Statement No. 133." This statement delays the required implementation for
the Company until 2001.
The Company has not yet determined what the effect of SFAS No. 133 will
be on the earnings and financial position of the Company.
F. Reclassification - Certain previously reported amounts have been
reclassified to conform with the 1999 presentation.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
OVERVIEW
Equitable's consolidated net income for the quarter ended September 30,
1999, was $5.7 million, or $0.17 per diluted share, compared with net income of
$2.0 million, or $0.06 per share, for the quarter ended September 30, 1998. The
earnings improvement for the 1999 quarter is primarily attributable to increased
natural gas production and prices, the continuing benefit from last year's cost
structure improvements, increased construction activity in the NORESCO segment
and improved margins in the Equitable Energy natural gas marketing business.
These earnings increases were partially offset by expenses for the
implementation of process improvements in the Company's production and utility
businesses, increased exploration costs in the Production segment, and an
increased provision for performance-related compensation, reflecting the
Company's strong year-to-date and anticipated full-year results and its
continuing move to put more pay at risk for key employees throughout the
Company.
In the nine months ended September 30, 1999, Equitable's consolidated net
income was $42.7 million, or $1.23 per diluted share, compared to $24.4 million,
or $0.66 per share, for the nine months ended September 30, 1998. The 1998
period included a loss on the Company's discontinued midstream operations of
$4.6 million, or $0.12 per share. These operations were sold in December 1998.
The 1999 nine months net income of $1.23 per diluted share represents a 58%
increase over earnings per share from continuing operations of $0.78 for same
period in 1998. The 1999 improvement for the nine-month period is due to higher
production volumes, increased NORESCO construction activity, improved gas
marketing margins, higher first quarter weather-related sales in the
distribution operations and lower selling, general and administrative expenses
across all of the Company's businesses.
RESULTS OF OPERATIONS
EQUITABLE UTILITIES
Equitable Utilities' operations comprise the sale and transportation of
natural gas to retail customers at state-regulated rates, interstate
transportation and storage of natural gas subject to federal regulation and the
marketing of natural gas.
The pipeline operations of Equitrans, L.P. (Equitrans) and Three Rivers
Pipeline Corporation are subject to rate regulation by the Federal Energy
Regulatory Commission (FERC). Equitrans filed a rate case in April 1997, which
addressed the recovery of certain stranded plant costs related to the
implementation of Order 636. The requested rates were placed into effect in
August 1997, subject to refund, pending the final FERC order. On April 29, 1999,
the FERC approved, without modification, the joint stipulated settlement
agreement resolving all issues in its proceeding.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
EQUITABLE UTILITIES (Continued)
The approved settlement provides for prospective collection of increased
gathering charges. In addition, the settlement provides Equitrans the
opportunity to retain all revenues associated with interruptible transportation
and negotiated rate agreements as well as moving its gathering charge toward a
cost-based rate. In the second quarter of 1999, Equitrans recorded the final
settlement of the rate case, including adjustment of the prior provisions for
refund and recognition of the previously deferred revenues and costs related to
the stranding of certain gathering facilities.
Three Months Ending Nine Months Ending
September 30, September 30,
1999 1998 1999 1998
-------------------------------------------------------------------------
OPERATIONAL DATA
Heating degree days 113 56 3,589 2,938
Residential sales and transportation volume (MMcf) 1,711 1,680 17,586 15,481
Commercial and industrial volume (MMcf) 2,782 2,816 15,132 13,651
--------------- --------------- ---------------- ---------------
Total throughput (MMcf) - Distribution 4,493 4,496 32,718 29,132
Off-system sales - Distribution 5,005 5,147 13,273 13,285
Throughput (thousand Dths) - Pipeline
- Delivered to distribution system 7,971 6,005 34,069 23,503
- Other deliveries 10,260 9,739 23,851 25,695
FINANCIAL DATA (Thousands $)
Total operating revenues $ 51,648 $ 44,282 $ 275,576 $ 262,516
Purchased gas cost 17,034 9,961 104,137 112,941
Revenue related taxes 1,094 1,154 7,507 8,344
--------------- --------------- ---------------- ---------------
Net operating revenues 33,520 33,167 163,932 141,231
--------------- --------------- ---------------- ---------------
Operating and maintenance expense 15,029 14,723 53,033 49,658
Selling, general and administrative expense 9,215 10,914 28,131 34,484
Depreciation, depletion and amortization 7,234 5,178 28,335 15,626
--------------- --------------- ---------------- ---------------
Total operating expenses 31,478 30,815 109,499 99,768
--------------- --------------- ---------------- ---------------
Earnings from continuing operations,
before interest and taxes $ 2,042 $ 2,352 $ 54,433 $ 41,463
=============== =============== ================ ===============
Capital expenditures $ 9,062 $ 7,987 $ 19,173 $ 18,405
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
EQUITABLE UTILITIES (Continued)
Three Months Ended September 30, 1999
vs. Three Months Ended September 30, 1998
Equitable Utilities had earnings before interest and taxes (EBIT) for the
September 1999 quarter of $2.0 million compared to $2.4 million for the 1998
period. The segment's results for the 1999 quarter include charges of $0.9
million for further reorganization of utility segment operating functions and
consolidation of facilities begun in the fourth quarter of 1998. EBIT, excluding
these items, of $2.9 million increased $0.5 million, or 20%, attributed to lower
operating expenses due to restructuring initiatives, partially offset by lower
margins from distribution operations. The lower distribution margins are due
primarily to a favorable settlement of a gas cost filing allowing the
recognition of the sale of pipeline capacity ($1.7 million) reflected in the
third quarter of 1998.
Net operating revenues for the three months ended September 30, 1999, of
$33.5 million include $1.6 million related to a surcharge for the collection of
stranded costs under the pipeline rate settlement and $0.5 million for the
pass-through of products extraction costs to customers. Net operating revenues
of $31.4 million for the quarter, excluding the impact of the rate settlement
and extraction revenues, decreased $1.8 million, or 5%, from the $33.2 million
for the 1998 period due primarily to the lower distribution margins as described
above.
Total operating expenses of $31.5 million for the three months ended
September 30, 1999, include $1.2 million of amortization expense related to the
stranded plant, products extraction costs of $0.5 million and $0.9 million for
reorganization as more fully described above. Operating expenses of $28.9
million, excluding the effect of the rate settlement, extraction charges and
one-time expenses, decreased $1.9 million, or 6%, from the 1998 amount of $30.8
million due primarily to restructuring initiatives, which began in the fourth
quarter of 1998.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
EQUITABLE UTILITIES (Continued)
Nine Months Ended September 30, 1999
vs. Nine Months Ended September 30, 1998
Equitable Utilities had EBIT of $54.4 million for the nine months ended
September 30, 1999. The segment's results for the 1999 period include $3.9
million from recognition of the settlement of Equitrans' rate case described
above. Results also include charges of $3.0 million for further reorganization
of utility segment operating functions and consolidation of facilities. EBIT,
excluding these items, increased $19.8 million, or 31%, over the $41.5 million
for the nine months ended September 30, 1998. The increase in 1999 is a result
of higher net revenues due principally to colder weather during the heating
season ($7.2 million), increased revenues from nontraditional services by the
distribution operations ($2.6 million) and lower operating expenses due to
restructuring initiatives begun in the fourth quarter of 1998.
Net operating revenues for the nine months ended September 30, 1999 of
$163.9 million include $13.8 million related to recognition of the rate
settlement and pass through of stranded costs described above and $1.2 million
for the pass-through of products extraction costs to customers. Net operating
revenues of $148.9 million for the period, excluding the impact of the rate
settlement and extraction revenues, increased $7.7 million, or 5%, over the
$141.2 million for the 1998 period. The increase in net revenues is due
primarily to higher throughput ($7.2 million) and increased revenues from
nontraditional services for distribution operations ($2.6 million).
Total operating expenses of $109.5 million for the nine months ended
September 30, 1999, include $9.9 million of amortization expense related to the
stranded plant from recognition of the rate settlement, $1.2 million of products
extraction costs and $3.0 million for reorganization as more fully described
above. Excluding these items, operating expenses decreased $4.8 million from the
1998 amount of $99.8 million due primarily to the benefit of restructuring
initiatives, which began in the fourth quarter of 1998, substantially offset by
higher depreciation expense.
EQUITABLE PRODUCTION
The Production operations comprise the exploration and production of
natural gas, natural gas liquids and crude oil through operations focused in the
Appalachian and Gulf of Mexico regions.
In 1998, the managerial responsibility for the operations conducted by
two subsidiaries, Kentucky West Virginia Gas Company and Nora Transmission
Company, were transferred from Equitable Utilities to Equitable Production under
a services agreement. In 1999 these FERC regulated pipelines filed for
decertification allowing for complete integration of these operations. The
financial results for both periods are reclassified to reflect the new
structure.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
EQUITABLE PRODUCTION (Continued)
Three Months Ending Nine Months Ending
September 30, September 30,
1999 1998 1999 1998
---------------------------------------------------------------------------
OPERATIONAL DATA
Gas sales (MMcf) - East 9,488 9,427 28,901 28,689
Gas sales (MMcf) - Gulf 6,711 4,797 18,082 11,834
---------------- ---------------- ---------------- ----------------
Total gas sales (MMcf) 16,199 14,224 46,983 40,523
Oil production (000s BBls) - East 110 127 326 371
Oil production (000s BBls) - Gulf 191 97 443 388
---------------- ---------------- ---------------- ----------------
Total oil production (000s Bbls) 301 224 769 759
Liquids production (000s Gals.) - East 15,577 13,322 47,198 45,739
Liquids production (000s Gals.) - Gulf 2,503 1,854 6,594 3,669
---------------- ---------------- ---------------- ----------------
Total liquids production (000s Gals.) 18,080 15,176 53,792 49,408
Produced gas and oil (MMcfe)- East 10,990 11,010 32,696 32,572
Produced gas and oil (MMcfe)- Gulf 7,861 5,382 20,742 14,160
---------------- ---------------- ---------------- ----------------
Total produced gas & oil (MMcfe) 18,851 16,392 53,438 46,732
Transportation (MMcfe) 12,007 11,823 35,883 35,783
Effective gas price - East (per MMBtu) $ 2.32 $ 2.02 $ 2.06 $ 2.16
Effective gas price - Gulf (per MMBtu) $ 2.50 $ 2.12 $ 2.11 $ 2.20
Effective oil price - East (per Bbl) $ 16.34 $ 10.92 $ 13.41 $ 11.80
Effective oil price - Gulf (per Bbl) $ 18.09 $ 15.33 $ 15.56 $ 16.41
Effective liquids price - East (per gallon) $ 0.28 $ 0.26 $ 0.25 $ 0.23
Effective liquids price - Gulf (per gallon) $ 0.20 $ 0.15 $ 0.19 $ 0.18
FINANCIAL DATA (Thousands $)
Total operating revenues $ 59,441 $ 46,179 $ 152,085 $ 145,465
Cost of energy purchased 7,525 4,211 18,489 16,311
---------------- ---------------- ---------------- ----------------
Net operating revenue/gross margin 51,916 41,968 133,596 129,154
---------------- ---------------- ---------------- ----------------
Operating and maintenance expense 3,293 3,449 9,530 10,300
Lease operating expense 6,039 6,879 18,490 21,445
Selling, general and administrative expenses 9,842 7,508 21,123 23,954
Dry hole cost 1,040 0 2,317 115
Exploration expenses 3,005 670 6,024 2,968
Depreciation, depletion and amortization 16,433 13,579 44,944 38,076
---------------- ---------------- ---------------- ----------------
Total operating expenses 39,652 32,085 102,428 96,858
---------------- ---------------- ---------------- ----------------
Earnings from continuing operations,
before interest and taxes $ 12,264 $ 9,883 $ 31,168 $ 32,296
================ ================ ================ ================
Capital expenditures $ 21,294 $ 37,094 $ 56,530 $ 95,619
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
EQUITABLE PRODUCTION (Continued)
Three Months Ended September 30, 1999
vs. Three Months Ended September 30, 1998
Equitable Production's EBIT for the September 1999 quarter was $12.3
million, which was $2.4 million higher than the September 1998 quarter. The
segment's positive results were primarily due to increased natural gas and oil
production and higher natural gas and oil prices offset by higher total
operating expenses.
Net operating revenues for the three months ended September 30, 1999,
increased $9.9 million, or 24%, compared with the third quarter of 1998. Natural
gas volumes increased 2.0 billion cubic feet (Bcf), which positively impacted
revenues by $4.5 million. The higher gas production volumes are related to
production increases in the Gulf of Mexico region from drilling activities at
West Cameron 180/198 and South Marsh Island 39. Also, crude oil production
increased by 77 thousand barrels (MBbls) in the current quarter compared with
the same quarter last year due to the drilling activities at South Marsh Island
39. The increase in oil production contributed $1.4 million to revenues in the
1999 quarter. In addition to the production increases in the current quarter are
increases of 17% and 36% in Equitable Production's average prices for natural
gas and crude oil, respectively. The total impact of these price increases was
$6.4 million additional revenues in the third quarter of 1999, compared to the
same quarter in 1998. Included in 1998 are $2.6 million revenues from direct
bill settlements, which represent the final installment of a FERC pricing
settlement reached in an earlier period.
Total operating expenses for the three months ended September 30, 1999
increased $7.6 million compared with the same quarter in 1998. Depreciation,
depletion and amortization (DD&A) was $2.9 million higher because of increased
production ($2.7 million) and a $1.0 million impairment associated with the
abandonment of a processing facility, offset in part by a lower depletion rate
in the Gulf region in the current year. During the third quarter of 1999, the
Gulf region drilled one dry hole at Eugene Island 44, which accounted for the
current quarter dry hole costs of $1.0 million. Also, other exploration costs
were $2.3 million higher for the September 1999 quarter due primarily to a lease
impairment and the impairment of an equity investment in an oil and gas
production company. Additionally, selling, general and administrative (SG&A)
expenses were $2.3 million higher for the September 1999 quarter. Current
quarter SG&A includes $2.6 million related to process improvements, including
the Company's decision to close its regional office in Kingsport, Tennessee,
consolidate administration in Houston and realign field offices; $2.0 million of
charges related to the decertification of Kentucky West Virginia Gas Company;
and $0.5 million in increased provisions for performance-related compensation
due to the segment's strong performance. These expenses were partially offset by
a $1.6 million savings in SG&A as a result of restructuring activities in the
fourth quarter of 1998. In addition, production costs decreased $0.8 million due
to operating efficiencies and decreased well-tending staff.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
EQUITABLE PRODUCTION (Continued)
Nine Months Ended September 30, 1999
vs. Nine Months Ended September 30, 1998
For the nine months ended September 30, 1999, net operating revenues
increased to $133.6 million from $129.2 million for the comparable period last
year. Natural gas production increased 6.5 Bcf, or 16%, in the nine-month
period. This production increase contributed $13.3 million to current year
revenues. The increased production volume is related to the drilling activities
in the Gulf region discussed above under third quarter results and additional
Gulf wells at West Cameron 540, which commenced production in mid-1998.
Partially offsetting the increase in production is a 4% decline in Equitable
Production's year-to-date average sales price for natural gas. The total revenue
impact of this 1999 price decline was $4.3 million. The 1998 revenues include
$2.6 million of direct bill settlements described above.
Total operating expenses for the nine-month period of 1999 increased by
$5.6 million compared with the nine-month period 1998. DD&A is higher by $6.8
million due to increased gas production and a third quarter writedown of $1.0
million partially offset by a lower depletion rate in the Gulf region for 1999.
Dry hole expense is $2.2 million higher due to the dry holes drilled in the
second and third quarters of 1999. Also, other exploration costs were $3.0
million higher in 1999, as described above under third quarter results.
Production costs, however, decreased $3.0 million due to current year operating
efficiencies and decreased well-tending staff. Also, SG&A expenses declined $2.8
million as a result of management and staff headcount reductions and corporate
restructuring activities, which occurred in the fourth quarter of 1998. The
savings in SG&A are partially offset by the third quarter 1999 expenses related
to the implementation of process improvements in the East region and increased
performance compensation accruals.
EQUITABLE SERVICES
Equitable Services provides energy and energy related products and
services that are designed to reduce its customers' operating costs and improve
their productivity. The majority of Equitable Services' revenue and earnings is
derived from energy saving performance contracting services and natural gas
marketing activities. Equitable Services is comprised of two distinct business
segments: NORESCO and Equitable Energy.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
NORESCO
NORESCO provides energy and energy related products and services that are
designed to reduce its customers' operating costs and improve their
productivity. NORESCO's customers include commercial, governmental,
institutional and industrial end-users. The majority of NORESCO's revenue and
earnings comes from energy saving performance contracting services. NORESCO
provides the following integrated energy management services: project
development and engineering analysis; construction; management; financing;
equipment operation and maintenance; and energy savings metering, monitoring and
verification. NORESCO also manages the segment's energy infrastructure division,
which develops and operates private power, cogeneration and central plant
facilities in the U.S. and selected international markets.
Three Months Ending Nine Months Ending
September 30, September 30,
1999 1998 1999 1998
------------------------------------------------------------------------
OPERATIONAL DATA (Thousands $)
Construction backlog, end of period $ 78,714 $ 100,251
Construction completed $ 35,941 $ 23,699 $ 109,496 $ 51,307
FINANCIAL DATA (Thousands $)
Total revenue $ 44,107 $ 32,867 $ 123,070 $ 73,309
Contract costs 33,685 24,651 95,657 53,212
---------------- ------------------ -------------- ----------------
Gross profit margin 10,422 8,216 27,413 20,097
---------------- ------------------ --------------- ----------------
Equity earnings of non-consolidated subsidiaries (1,056) (917) (2,306) (1,877)
Selling, general and administrative expenses 4,761 4,700 13,818 13,683
Amortization of goodwill 937 957 2,810 2,862
Depreciation and depletion 896 156 1,272 411
---------------- ------------------ --------------- ----------------
Total expenses (net of equity earnings) 5,538 4,896 15,594 15,079
---------------- ------------------ --------------- ----------------
Earnings from continuing operations,
before interest and taxes $ 4,884 $ 3,320 $ 11,819 $ 5,018
================ ================== =============== ================
Capital expenditures $ (662) $ 318 $ 184 $ 876
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
NORESCO (Continued)
Three Months Ended September 30, 1999
vs. Three Months Ended September 30, 1998
NORESCO's gross profit margin increased by 27% to $10.4 million for the
quarter ended September 30, 1999, compared to $8.2 million for the same period
in 1998. The increase in gross profit margin reflects the continued expansion of
this segment's operations and the implementation of larger value contracts.
Construction completed during the third quarter of $35.9 million was $12.2
million greater than the third quarter of 1998, an increase of 52%. The gross
margin rate as a percent of sales declined to 23.6% compared to 25.0% during
1998, primarily due to the increase in revenues from the federal government
market, which contributes lower gross margins than the company's other core
markets. At September 30, 1999, construction backlog totaled approximately $79
million, a decrease of $22 million from backlog at September 30, 1998, due
primarily to the build-out of several large energy infrastructure projects which
were in backlog in 1998.
Total expenses for this segment remained relatively unchanged, as
increased marketing and development expenses were offset by lower direct labor
costs and a reduction in allocated corporate overhead expense. Equity earnings
of non-consolidated subsidiaries come primarily from power generation assets.
Nine Months Ended September 30, 1999
vs. Nine Months Ended September 30, 1998
NORESCO's gross profit margin increased by 36% to $27.4 million for the
nine months ended September 30, 1999, compared to $20.1 million for the same
period in 1998. The increase in gross profit margin reflects the continued
expansion of this segment's operations and the implementation of larger value
contracts. Construction completed during the nine months of $109.5 million was
up 113% from the $51.3 million completed during the same period in 1998. The
gross margin rate as a percent of sales declined to 22.3% compared to 27.2%
during 1998, primarily due to the increase in revenues from the federal
government market, which contributes lower gross margins than the company's
other core markets. Other factors contributing to the decline in average gross
margin rates are increased competition in the energy services industry and an
increase in revenues from the sale of natural gas and electricity included in
the segment's integrated energy management services.
Total expenses for this segment remained relatively unchanged for the
nine-month period, as increased marketing and project development expenses were
offset by lower administrative expenses and a reduction in allocated corporate
overhead expense. The increase in equity earnings of non-consolidated
subsidiaries of $0.4 million for the nine-month period results from the
contributions of assets which were fully operational in 1999, but which were
either partially operating or in construction during the same period in 1998.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
EQUITABLE ENERGY
Equitable Energy provides gas operations, commodity procurement and
delivery, risk management and customer services to energy consumers including
large industrial, utility, commercial, institutional and residential end-users.
This segment's primary focus is to provide products and services in those areas
where the Company has a strategic marketing advantage, usually due to geographic
coverage and ownership of physical assets.
Three Months Ending Nine Months Ending
September 30, September 30,
1999 1998 1999 1998
--------------------------------------------------------------------------
OPERATIONAL DATA
Sales volume (MMbtu):
Large industrial 5,181 7,058 19,499 21,085
On-system residential 19 180 2,830 344
Off-system residential 61 - 587 -
Other commercial & industrial 2,087 3,541 7,244 11,423
Utilities/trading companies 19,928 15,651 109,530 63,027
---------------- ---------------- ---------------- ---------------
Total sales (MMbtu) 27,276 26,430 139,690 95,879
================ ================ ================ ===============
Total weighted average sales price ($/MMbtu) $ 2.88 $ 2.18 $ 2.52 4 2.39
FINANCIAL DATA (Thousands $)
Total revenue $ 78,556 $ 57,519 $ 352,175 $ 229,077
Purchased gas cost 77,593 56,926 345,860 226,096
---------------- ---------------- ---------------- ---------------
Net operating revenue 963 593 6,315 2,981
Selling, general and administrative expenses 1,324 2,782 4,338 8,210
Depreciation, depletion and amortization 47 127 145 402
---------------- ---------------- ---------------- ---------------
Total operating expenses 1,371 2,909 4,483 8,612
---------------- ---------------- ---------------- ---------------
Earnings (loss) from continuing operations,
before interest and taxes $ (408) $ (2,316) $ 1,832 $ (5,631)
================ ================ ================ ===============
Capital expenditures $ 60 $ 4 $ 92 $ 42
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
EQUITABLE ENERGY (Continued)
Three Months Ended September 30, 1999
vs. Three Months Ended September 30, 1998
Net operating revenues increased to $1 million for the quarter ended
September 30, 1999, compared to $.6 million for the same period in 1998.
Increased Company production volumes sold to utility/marketing companies
contributed to higher margins for gas sales.
Total operating expenses for the quarter were 53% lower than those of the
third quarter of 1998, reflecting more cost control plus a significant staff
reduction and office closing completed as part of the corporate-wide
restructuring in the fourth quarter of 1998.
Nine Months Ended September 30, 1999
vs. Nine Months Ended September 30, 1998
Net operating revenues increased to $6.3 million for the nine-month
period ended September 30, 1999, compared to $3 million for the same period in
1998. During the first nine months, Equitable Energy marketed 136 billion cubic
feet (Bcf) of natural gas compared to 93 Bcf for the same period last year. The
increased volume is a result of the addition of residential customer choice
programs in Pennsylvania and Ohio (3 Bcf) and increased utility/marketing
company volumes transported during the 1999 winter heating season (45 Bcf).
Effective July 1, 1999, Equitable Energy gave its residential customers in the
Pennsylvania choice program the option to transfer back to Equitable Gas Company
at lower gas prices. All but approximately 3,100 have taken this option. The
utility/marketing company business represents high volume, comparatively low
margin transactions, which complement the higher margin, lower volume base
commercial and residential sales. Many of these utility/marketing company
contracts expired at the end of March 1999 and were not renewed.
Total operating expenses for the nine-month period ended September 30,
1999, were 48% below those of the same period of 1998, again reflecting cost
control, a significant staff reduction and office closing completed as part of
the corporate-wide restructuring in the fourth quarter of 1998.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Cash required for operations is impacted primarily by the seasonal nature
of Equitable Resources' natural gas distribution operations and the volatility
of oil and gas commodity prices. Equitable Resources' primary source of
commodity price exposure comes from the production and sale of natural gas.
However, the Company does have crude oil and natural gas liquid production as
well.
The Company's overall objective in its hedging program is to protect
earnings from undue exposure to the risk of falling commodity prices. Since it
is primarily a natural gas company, this leads to different approaches to
hedging natural gas than for crude oil and natural gas liquids.
With respect to hedging the Company's exposure to changes in natural gas
commodity prices, management's objective is to provide price protection for the
majority of expected production for the year 2000. Its preference is to use
derivative instruments which create a price floor, in order to provide downside
protection while allowing the Company to participate in upward price movements.
This is accomplished with the use of a mix of costless collars, straight floors
and some fixed price swaps. This mix allows the Company to participate in a
range of prices, while protecting shareholders from significant price
deterioration. In addition to this current strategy, part of the Company's
portfolio of natural gas hedges is a swap entered into in 1995 as part of a
financing transaction. This swap, covering about 15% of natural gas production
at a NYMEX price of $1.82/Mcf, expires near the end of the year 2000.
Crude oil and natural gas liquids prices are currently at relatively high
levels compared to historical averages. As a result, the Company has used swaps
and other derivative instruments to lock in current prices for the majority of
expected production of crude oil and of natural gas liquids for the remainder of
1999. Management is in the process of executing the same strategy for the year
2000.
During the nine months ended September 30, 1999, cash provided by
operating activities increased to $141.8 million, compared to $103.0 million
from continuing operations for the first nine months of 1998. The $38.8 million
increase is primarily a result of increased sales volumes in the Production and
NORESCO segments and lower cash operating expenses throughout the Company. In
addition, in 1999 the Utility segment has collected $15 million from its
customers for gas costs deferred in prior periods.
During the three months and nine months ended September 30, 1999, the
Company repurchased 0.3 million and 2.6 million shares of common stock at
average prices of $36.94 and $28.17, respectively, per share. Including shares
repurchased in the fourth quarter of 1998, the Company has repurchased 4.2
million shares. In October 1999, the Company's Board of Directors increased from
5.6 million to 6.7 million the total shares authorized for repurchase.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
Liquidity (Continued)
Equitable Resources' financial objectives require ongoing capital
expenditures for growth projects in continuing operations of the Equitable
Production segment, as well as replacements, improvements and additions to plant
assets in the Equitable Utilities segment. Such capital expenditures during the
first nine months of 1999 were approximately $72.3 million, including $33.7
million and $19.0 million for exploration and production projects in the Gulf of
Mexico and Appalachian regions, respectively. A total of $119 million has been
authorized for the 1999 capital expenditure program. The Company expects to
continue to finance its 1999 capital expenditure program with cash generated
from operations and with short-term loans.
The energy infrastructure business of the Company's Noresco segment
requires capital expenditures for capital projects accounted for as investments
in nonconsolidated subsidiaries. Such projects used $21 million dollars in the
nine months ended September 30, 1999.
On June 1, 1999 the Company announced an agreement to purchase Carnegie
Natural Gas Company and affiliated subsidiaries (Carnegie) from USX-Marathon
Group. Management anticipates the purchase will be completed during the fourth
quarter 1999. The purchase of Carnegie will be funded by cash from operations or
existing sources of short-term debt. The purchase will not have a material
effect on the Company's financial position or results of operations.
Capital Resources
Equitable Resources has adequate borrowing capacity to meet its financing
requirements. Bank loans and commercial paper, supported by available credit,
are used to meet short-term financing requirements. Interest rates on these
short-term loans averaged 4.68% during the first nine months of 1999. Equitable
Resources maintains a revolving credit agreement with a group of banks providing
$500 million of available credit. Adequate credit is expected to continue to be
available in the future.
In the fourth quarter of 1998, the Company completed the sale of its
midstream operations for $338 million. Portions of the proceeds to the Company
were used to retire a portion of the Company's outstanding long- and short-term
debt and to fund the repurchase of common stock. In the quarter ended September
30, 1999 $75 million was used to retire additional long-term debt that matured
on July 1, 1999.
The Company has completed the evaluation of its Gulf region production
operations, previously identified as a non-core business. Management is actively
exploring alternatives to maximize the shareholder value from these operations.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
CAPITAL RESOURCES AND LIQUIDITY (Continued)
Year 2000
State of Readiness
The Company initiated an enterprise-wide project in 1996 to address the
Year 2000 issue. A management team was put in place to manage this project and a
detailed project plan has been developed to address the three identified primary
risk areas: process controls and facilities, business information systems
applications and issues relative to third party product and service providers.
This plan is continuously updated and reviewed regularly with senior management
and the Board of Directors. The Company is on schedule to complete remediation
and testing of all critical components as planned.
To date, the Company has completed the inventory and assessment phases
covering all process controls (embedded chips), facilities and systems
applications. The remediation and testing of process controls, using both
internal resources and contracted engineers, is well underway (99% complete) and
on schedule. The testing and remediation of systems applications are on schedule
with approximately 98% of the critical applications remediated and tested.
Equitable anticipates that all critical systems will be Y2K compliant by
December 15, 1999.
Additionally, the Company has developed a formal communications process
with external parties with whom it does business to determine the extent to
which they have addressed their Year 2000 compliance. The Company will continue
to evaluate responses as they are received. Actions to remediate potential
problems (up to and including shifting business to Year 2000 compliant vendors
from those with problems) will take place until the end of 1999.
Costs
The total cost to date of the Company's Year 2000 project is $3.5 million
and the total cost estimate for the balance of the project is an additional $0.5
million. All of the costs have been or will be charged to operating expense
except $0.6 million of systems upgrades, which have been capitalized and charged
to expense over the estimated useful life of the associated hardware and
software. Additional costs could be incurred if significant remediation
activities are required with third party suppliers (see below). The estimated
costs to convert remaining systems are not expected to be material to results of
operations in any future period.
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
Year 2000 (Continued)
Risks and Contingencies
The Company continues to evaluate risks associated with the potential
inability of outside parties to successfully complete their Year 2000 effort,
and contingency plans are being developed and/or adapted as appropriate. While
the Company believes it has taken the necessary steps to provide for the
continued safe and reliable operation of its natural gas delivery system into
the Year 2000, monitoring the progress of critical suppliers is an ongoing
process. A worst-case scenario would involve the failure of one or more of the
gas marketers or pipelines supplying the Company's distribution operations. If
this occurs, the Company would either supply its customers from existing
internal supply sources or attempt to purchase supply on the "spot" market,
probably at somewhat higher prices. Unless supply shortfalls were of a long
duration or occurred during a period of extreme weather conditions when spot
supplies might not be as readily available, it would be unlikely that the
distribution company would have to curtail deliveries to its customers. If it
appears that this scenario is more than a remote possibility additional
contingency plans will be put into place.
INFORMATION REGARDING FORWARD LOOKING STATEMENTS
Disclosures in this report may include forward-looking statements related
to such matters as anticipated financial performance, business prospects,
capital projects, new products and operational matters. The Company notes that 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, development and results of the Company business
include, but are not limited to, the following: weather conditions, the pace of
deregulation of retail natural gas and electricity markets, the timing and
extent of changes in commodity prices for natural gas and crude oil, changes in
interest rates, the timing and extent of the Company's success in acquiring
natural gas and crude oil properties and in discovering, developing and
producing reserves, the inability of the Company or others to remediate Year
2000 concerns in a timely fashion, delays in obtaining necessary governmental
approvals, the impact of competitive factors on profit margins in various
markets in which the Company competes and other factors detailed in the
Company's filings with the Securities and Exchange Commission.
Quantitative and Qualitative Disclosures About Market Risk
There have not been any material changes regarding quantitative and
qualitative disclosures about market risk from the information reported in the
Company's 1998 Annual Report on Form 10-K.
PART II. OTHER INFORMATION
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.1 Employment Agreement dated July 9, 1999 by and between
Equitable Resources, Inc. and John C. Gongas, Jr.
10.2 Non-Competition Agreement dated July 9, 1999 by and
between Equitable Resources, Inc. and John C. Gongas,
Jr.
10.3 Release Agreement dated August 19, 1999 by and between
Equitable Resources, Inc. and Richard D. Spencer.
10.4 Equitable Resources, Inc. Directors' Deferred
Compensation Plan.
(b) Reports on Form 8-K during the quarter ended September 30,
1999:
None.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EQUITABLE RESOURCES, INC.
______________________________________________
(Registrant)
/s/ David L. Porges
______________________________________________
David L. Porges
Senior Vice President
and Chief Financial Officer
Date: November 12, 1999
INDEX TO EXHIBITS
Exhibit No. Document Description
10.1 Employment Agreement dated July 9, Filed Herewith
1999 by and between Equitable
Resources, Inc. and John C. Gongas, Jr.
10.2 Non-Competition Agreement dated July 9, Filed Herewith
1999 by and between Equitable Resources,
Inc. and John C. Gongas, Jr.
10.3 Release Agreement dated August 19, 1999 Filed Herewith
by and between Equitable Resources, Inc.
and Richard D. Spencer.
10.4 Equitable Resources, Inc. Directors' Deferred Filed Herewith
Compensation Plan.
27 Financial Data Schedule for the Period Filed Herewith
Ended September 30, 1999