1
EXHIBIT 13
Financial Review
Management's Discussion and Analysis of Results of Operations and Financial
Condition
RESULTS OF OPERATIONS
CONSOLIDATED NET INCOME
Energen achieved record net income for the fourth year in a row with earnings
totaling $23.8 million ($2.19 per share) compared to fiscal 1993 net income of
$18.1 million ($1.77 per share). Included in the Company's current-year
earnings are one-time gains of $2 million from the sale of its propane assets
and the reduction of its investment in high-temperature combustion technology.
Excluding these gains, Energen would have achieved record net income of $21.8
million ($2.01 per share). Energen reported earnings of $16.6 million ($1.64
per share) in 1992. In that year, Energen adopted Statement of Financial
Accounting Standard (SFAS) 109, Accounting for Income Taxes, and the cumulative
effect of that change (10 cents per share) was reflected.
1994 VS. 1993: Alagasco, Energen's natural gas distribution company, earned
record net income of $14.9 million compared with $13 million in fiscal 1993.
The utility's investment in underground storage working gas in November 1993
increased the equity upon which Alagasco was able to earn its allowed return.
The utility's return on average equity was 13.2 percent. Customer bills were
not increased by the storage working gas investment as it represented a
transfer of costs from the pipeline supplier to Alagasco.
Taurus Exploration Inc. (Taurus), Energen's oil and gas exploration and
production company, reported net income of $6.5 million compared with fiscal
1993 earnings of $5.1 million. The 27 percent increase largely was associated
with increased conventional gas activities as production more than doubled to
5.5 Bcf. Taurus also benefited from increased coalbed methane operating fees.
1993 VS. 1992: Taurus was the primary contributor to Energen's improved
earnings. Taurus's net income of $5.1 million more than doubled its 1992 income
from current operations of $2.3 million, largely due to increased coalbed
methane operating fees and consulting revenues, decreased exploration expenses,
and higher natural gas prices.
Alagasco reported record net income of $13 million, an increase of $0.6 million
over the prior year. The utility earned near its allowed range of return on an
increased level of equity which represented investment needed to meet the
demands of a growing service area. Contributions from the Company's group of
other activities decreased from the previous year primarily due to reduced
income from gathering services and propane activities.
OPERATING INCOME
CONSOLIDATED: Consolidated operating income in 1994, 1993, and 1992 totaled
$35.9 million, $30.3 million, and $22.8 million, respectively. The notable
increase over the prior year primarily is associated with the utility, as
Alagasco's operating income has tended to increase in a manner consistent with
its opportunity for earning within its allowed range of return on equity. The
more pronounced improvement in 1994 operating income is a direct result of its
investment in underground working storage gas which was financed, in part,
through the issuance of equity. Taurus again had a strong positive influence on
Energen's operating income as it focused on expanding its conventional oil and
gas operations and capitalizing on its coalbed methane expertise.
ALABAMA GAS CORPORATION: Alagasco generates revenues through the sale and
transportation of natural gas. Shifts between transportation and sales gas can
cause large variations in natural gas revenues since the transportation rate
does not contain an amount representing the cost of gas. Alagasco's rate
structure, however, allows similar margins on transported and sales gas;
therefore, operating income is not adversely affected. Alagasco's gross natural
gas sales revenues totaled $315.3 million, $303.2 million, and $285.6 million
in 1994, 1993, and 1992, respectively. Rate relief created the majority of the
increase in 1994. The increase for 1993 primarily was due to higher gas costs,
increased sales to core customers, and rate relief, partially offset by
decreased sales to large commercial and industrial customers who shifted to
transportation.
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Years ended September 30,
(dollars in thousands) 1994 1993 1992
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Gross natural gas sales revenues $ 315,317 $ 303,178 $ 285,637
Cost of natural gas (188,592) (187,800) (176,411)
Revenue taxes (20,018) (18,540) (15,674)
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Net natural gas sales margin 106,707 96,838 93,552
Net natural gas transportation margin 29,320 27,382 25,089
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Net natural gas sales and transportation
margin $ 136,027 $124,220 $ 118,641
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Natural gas sales volumes (MMcf)
Residential 31,254 30,957 29,119
Commercial and industrial--small 13,536 13,853 13,860
Commercial and industrial--large 106 282 2,654
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Total natural gas sales volumes 44,896 45,092 45,633
Natural gas transportation volumes (MMcf) 52,635 49,346 46,235
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Total deliveries (MMcf) 97,531 94,438 91,868
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Residential sales volumes, which tend to fluctuate as a function of weather,
remained relatively stable in the current year following a 6 percent increase
in 1993. Weather in Alagasco's service area was 2 percent colder than normal in
1994, 1 percent colder than normal in 1993, and 6 percent warmer than normal in
1992. While weather typically affects customers' usage of natural gas,
Alagasco's operating margins remain unaffected due to a real-time temperature
adjustment provision which lets Alagasco adjust customer bills monthly to
reflect changes in usage due to variances from normal temperatures.
Sales and transportation volumes to commercial, industrial and municipal
customers totaled 66.3 Bcf in 1994, 63.5 Bcf in 1993, and 62.7 Bcf in 1992. The
4 percent increase in 1994 represents the addition of several industrial
customers. Volumes were relatively stable in 1993.
The utility's 1994 unit cost of gas virtually was unchanged from 1993. Firm and
spot market prices were lower on stable sales volumes; however, the resulting
decrease largely was offset by the inclusion in the current year of gas supply
realignment costs incurred in connection with the implementation of FERC Order
636. In 1993 the increased cost of firm and spot market gas supplies resulted
in a 7 percent increase in the unit cost of gas.
Operations and maintenance (O&M) expenses increased 9 percent and 7 percent in
1994 and 1993, respectively, primarily due to increases in labor and related
expenses. Of the 9 percent increase in 1994, 3 percent related to the adoption
of SFAS 106, Employers' Accounting For Postretirement Benefits Other Than
Pensions, for employees under labor union agreements. On a per customer basis,
the remainder of the O&M expense increase fell within the index range
established by the Alabama Public Service Commission (APSC). In 1993 the
increase in O&M expense per customer exceeded the APSC index range and
necessitated the return to customers of a portion of the excess.
Depreciation expense rose 4 percent in 1994 consistent with growth in the
utility's depreciable base. In 1993 depreciation expense remained stable as the
increases in depreciable base were offset by lower average depreciation rates
resulting from a change in both APSC-established rates and the composition of
depreciable assets. Alagasco's expense for taxes other than income primarily
reflects various state and local business taxes as well as payroll-related
taxes; state and local business taxes are generally based on gross receipts and
fluctuate accordingly.
As discussed more fully in Note 3, Alagasco is subject to regulation by the
APSC, which is expected to consider renewal of the utility's rate-setting
mechanism following the completion of its review of certain mandates under the
Energy Policy Act of 1992. Changes, if any, to the utility's present
rate-setting assumptions or provisions could have an impact on its net income
for 1995 and beyond.
TAURUS: Taurus continued to focus on its conventional oil and gas strategy in
1994 as evidenced by its mix of conventional and coalbed methane production.
Conventional oil and gas constituted 64 percent of total 1994 production
compared to 49 percent and 25 percent in 1993 and 1992, respectively.
Accordingly, the $5.8 million increase in natural gas production revenues
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in the current year almost exclusively was due to higher conventional
production which more than doubled the prior year's levels. Oil revenues
declined slightly primarily as a result of a 17 percent decrease in oil prices.
In 1993 natural gas revenues increased $1.1 million largely due to a 13 percent
increase in average natural gas sales prices. The $0.9 million increase in oil
revenue primarily was due to a 41 percent increase in volumes.
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Years ended September 30,
(dollars in thousands, except unit price) 1994 1993 1992
====================================================================================================================================
Revenues
Natural gas production $ 17,292 $ 11,449 $ 10,364
Oil production 2,725 3,484 2,559
Operating and consulting fees 5,194 4,954 2,795
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Total Revenues $ 25,211 $ 19,887 $ 15,718
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Production volumes
Natural gas (MMcf) 9,169 6,245 6,415
Oil (MBbl) 191 204 145
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Average unit sales price
Natural gas (per Mcf) $ 1.89 $ 1.83 $ 1.62
Oil (per Bbl) $ 14.25 $ 17.09 $ 17.65
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Increased operating fees virtually were offset by decreased consulting fees in
the current year. Operating fees represent a percentage of net proceeds on
certain coalbed methane properties, as defined by the related operating
agreements, and vary with changes in natural gas prices, production volumes and
operating expenses. The $1 million increase in operating fees resulted from
increased production and the addition of TECO Coalbed Methane's CDM Project in
late 1993. Consulting fees decreased $0.8 million due to the completion of
several projects partially offset by revenue from the new strategic alliance
with Conoco Inc. For 1993 operating fees and consulting revenues increased $2.2
million. The $1.4 increase in operating fees primarily resulted from increased
natural gas prices and a new 47-well program. Consulting fees were $0.8 million
higher due to the addition of new projects.
The $2 million increase in operations expense over the prior year primarily was
due to increased exploration and lease operating expenses. Exploration expense
exceeded the prior year by $1.3 million due to the expansion of Taurus's
exploratory efforts. Operating expenses for several offshore properties
brought on-line in late 1993 and early 1994 caused the increased lease
operating expenses. A $3.8 million decrease in 1993 primarily resulted from
lower exploration expense and lower labor and related expenses.
Depreciation, depletion, and amortization increased 30 percent in 1994 due to a
significant increase in production volumes. The depletion rate (78 cents) was
unchanged from the previous year. A 13 percent decrease in 1993 over the prior
year primarily was the result of decreased depletion rates (84 cents).
OTHER ACTIVITIES AND INTERCOMPANY ELIMINATIONS: Operating income from
Energen's group of other activities increased in 1994 due to increased
contribution from propane activities prior to the asset sale and increased
contribution from its merchandising operations. The 1993 decrease primarily
reflects reduced contribution from its gathering services and propane
activities.
Intercompany revenue eliminations for 1994, 1993, and 1992 totaled $8.1
million, $8.3 million, and $9.6 million, respectively, and vary primarily based
on intercompany natural gas and merchandising sales.
NON-OPERATING ITEMS
CONSOLIDATED: Interest expense in 1994 increased 7 percent over 1993.
Increases resulting from the issuance of $50 million in medium-term notes in
1994 and the inclusion for a full year of the Series 1993 Notes were offset in
part by decreased average short-term borrowings. Interest expense increased
only slightly in 1993 as the effects of increased average short-term borrowings
virtually were offset by a slight decrease in average long-term debt and
declining interest rates.
Total other expense decreased $3.2 million in the current year primarily due to
the inclusion of one-time pre-tax gains associated
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with the sale of the Company's propane assets ($2.1 million) and the sale of
the Company's investment in equity securities ($1.5 million). An increase of
$2.1 million in 1993 reflects the inclusion in 1992 of a one-time gain from the
sale of a portion of Taurus's coalbed methane properties.
The Company's effective tax rates in 1994, 1993, and 1992 were lower than
statutory federal tax rates in each of those years primarily due to the
recognition of nonconventional fuel tax credits and the amortization of
investment tax credits. Income tax expense increases in both years primarily
resulted from increased consolidated pre-tax income. In 1993 a 25 percent
decrease in the recognition of nonconventional fuel tax credits over the
previous year also contributed to the increase. The Company's effective tax
rates are expected to remain lower than statutory federal rates in the near
future as all tax credits generated are expected to be recognized.
FINANCIAL POSITION AND LIQUIDITY
The Company's net cash from operating activities totaled $34.3 million, $40.4
million, and 30.3 million in 1994, 1993, and 1992, respectively. Operating cash
flows in 1994 were strongly influenced by the implementation of Order 636 and
the resulting purchase of storage gas by Alagasco. The initial investment in
November 1993 was approximately $28 million and averaged $21 million over the
full year; by year-end, the total capital employed related to storage gas was
$24 million. Offsetting this investment was the timing of the recovery of gas
supply adjustment costs. In addition, cash flow was affected by fluctuations in
other receivables and payables which are generally the result of timing.
Cash used in investing activities decreased $13.5 million in 1994 to $28
million. The proceeds received for both the sale of assets and equity
securities totaled $13.4 million and effectively offset the cash used for
capital additions, which was comparable in both years. Net cash used in 1993
increased to $41.5 million primarily as a result of significantly increased oil
and gas expenditures associated with Taurus's investment in conventional
producing properties.
Cash provided by financing activities in 1994 was $6.2 million. Proceeds from
the issuance of 550,000 shares of Energen common stock in November totaled
$13.5 million and were used to help fund the purchase of underground storage
working gas. Additionally, Alagasco issued $50 million of medium-term notes to
fund the balance of the storage investment, redeem its 8.75 percent debentures,
reduce its short-term debt, and fund additional capital needs. The notes
offered investors a combination of interest rates and investment periods: from
5.4 percent to 7.2 percent for notes redeemable December 1, 1998, to December
15, 2023. In 1993 cash provided by financing activities was $5.7 million as
compared to a use of $14.9 million in 1992. The Series 1993 Notes provided
$14.6 million which was used to repay short-term indebtedness incurred in the
acquisition of conventional oil and gas reserves and for coalbed methane
development activities. The utility used $15.6 million in short-term borrowings
to redeem the remainder of its Series F and Series G First Mortgage Bonds and
its preferred stock in addition to its scheduled payments.
CAPITAL EXPENDITURES
NATURAL GAS DISTRIBUTION: During the last three fiscal years, Alagasco has
invested $80.8 million for capital projects; $68.4 million was spent on normal
expansion replacements and support of its distribution system; $6.4 million was
used in connection with the development of a new customer information system;
$3.8 million was used to improve gas availability; and $2.2 million was used to
purchase two municipal gas distribution systems.
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Years ended September 30,
(in thousands) 1994 1993 1992
====================================================================================================================================
Capital expenditures for:
Renewals, replacements, system
expansion and other $ 30,264 $ 19,438 $ 18,658
Additions to improve gas availability 1,644 1,569 563
Municipal gas system acquisitions 178 1,086 1,007
Customer information system 6,387 - -
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Total $ 38,473 $ 22,093 $ 20,228
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EXPLORATION AND PRODUCTION: Taurus spent $35.5 million for capital projects
over the last three years. Of that total, $4.9 million was charged to income as
exploration expense. Expenditures for conventional oil and gas activities over
the last three years totaled $29.8 million and primarily reflect Taurus's
investment in proved property acquisitions and exploration and development of
offshore natural gas properties. Expenditures for nonconventional oil and gas
activities for the last three years totaled $4 million.
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Years ended September 30,
(dollars in thousands) 1994 1993 1992
====================================================================================================================================
Capital and exploration expenditures for:
Conventional oil and gas $ 7,853 $ 20,777 $ 1,203
Nonconventional gas 217 1,007 2,742
Other 900 397 441
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Total $ 8,970 $ 22,181 $ 4,386
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Exploration expenditures charged to
income (included above) for:
Conventional oil and gas $ 1,577 $ 731 $ 504
Nonconventional gas 37 1 2,044
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Total $ 1,614 $ 732 $ 2,548
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OTHER ACTIVITIES: Capital expenditures by Energen's other activities totaled
$1.5 million during the last three fiscal years and included two propane
acquisitions in 1992.
FUTURE CAPITAL EXPENDITURES AND LIQUIDITY
Capital and exploration expenditures could approximate $66 million in 1995,
excluding municipal gas system acquisitions, and primarily represent additions
for normal distribution system expansion, the development of a new customer
information system at Alagasco, and oil and gas development activities. In
addition, the Company will maintain an investment in storage working gas which
is anticipated to average $19 million in 1995. The Company anticipates funding
these capital requirements through internally generated capital and the
utilization of short-term credit facilities. Energen has short-term credit
facilities totaling $110 million available for working capital needs, with $6
million and $40 million employed at September 30, 1994 and 1993, respectively.
The Company's oil and gas subsidiary periodically enters into futures contracts
to hedge its exposure to price fluctuations on oil and gas production. Under
this program, Taurus has entered into futures contracts for the sale of 5 Bcf
of its fiscal 1995 gas production at an average contract price of $2.17 and for
the sale of 160,000 barrels of its oil production at an average contract price
of $18.61.
As previously discussed, the Company anticipates its effective income tax rates
to remain lower than statutory federal tax rates due to the recognition of
nonconventional fuel tax credits; the Company will receive cash benefit for a
portion of those tax credits in the future due to alternative minimum tax
provisions.
6
Consolidated Statements Of Income
Energen Corporation and Subsidiaries
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Years ended September 30, (in thousands, except share data) 1994 1993 1992
====================================================================================================================================
OPERATING REVENUES
Natural gas distribution $ 344,637 $ 330,560 $ 310,726
Oil and gas production 25,211 19,887 15,718
Other 15,401 14,926 15,099
Intercompany eliminations (8,176) (8,257) (9,561)
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Total operating revenues 377,073 357,116 331,982
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OPERATING EXPENSES
Cost of gas 184,458 182,925 170,079
Operations 91,787 84,050 81,707
Maintenance 9,469 9,235 9,067
Depreciation, depletion and amortization 28,000 25,289 26,274
Taxes, other than income taxes 27,451 25,350 22,062
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Total operating expenses 341,165 326,849 309,189
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OPERATING INCOME 35,908 30,267 22,793
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OTHER INCOME (EXPENSE)
Interest expense, net of amounts capitalized (11,345) (10,605) (10,415)
Dividends on preferred stock of subsidiary - (70) (85)
Gain on sale of assets 2,142 - 2,763
Other, net 3,657 1,897 1,013
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Total other income (expense) (5,546) (8,778) (6,724)
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INCOME BEFORE INCOME TAXES 30,362 21,489 16,069
Income taxes 6,611 3,408 382
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INCOME BEFORE CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE 23,751 18,081 15,687
Cumulative effect of change in accounting principle - - 941
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NET INCOME $ 23,751 $ 18,081 $ 16,628
====================================================================================================================================
EARNINGS PER AVERAGE COMMON SHARE
Income before cumulative effect $ 2.19 $ 1.77 $ 1.54
Cumulative effect of change in accounting principle - - .10
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Net income $ 2.19 $ 1.77 $ 1.64
====================================================================================================================================
AVERAGE COMMON SHARES OUTSTANDING 10,833,619 10,236,926 10,168,111
====================================================================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
7
Consolidated Balance Sheets
Energen Corporation and Subsidiaries
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As of September 30, (in thousands) 1994 1993
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ASSETS
PROPERTY, PLANT AND EQUIPMENT
Utility plant $ 464,593 $ 429,115
Less accumulated depreciation 231,327 215,892
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Utility plant, net 233,266 213,223
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Oil and gas properties, successful efforts method 92,355 86,077
Less accumulated depreciation, depletion and amortization 43,052 35,150
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Oil and gas properties, net 49,303 50,927
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Other property, net 4,613 8,947
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Total property, plant and equipment, net 287,182 273,097
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CURRENT ASSETS
Cash and cash equivalents 27,526 15,008
Accounts receivable, net of allowance for doubtful accounts of $2,037 in 1994 and
$1,927 in 1993 34,145 36,181
Inventories, at average cost
Storage gas inventory 24,363 -
Materials and supplies 7,589 8,957
Liquified natural gas in storage 3,349 3,636
Deferred gas costs 1,460 2,966
Deferred income taxes 7,542 4,090
Prepayments and other 3,117 4,034
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Total current assets 109,091 74,872
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OTHER ASSETS
Notes receivable 3,911 6,798
Deferred charges and other 11,130 15,918
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Total other assets 15,041 22,716
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TOTAL ASSETS $ 411,314 $ 370,685
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The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
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As of September 30, (in thousands) 1994 1993
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CAPITAL AND LIABILITIES
CAPITALIZATION
Preferred stock, cumulative, $0.01 par value, 5,000,000 shares authorized $ - $ -
Common shareholders' equity
Common stock, $0.01 par value; 30,000,000 shares authorized, 10,917,904 shares
outstanding in 1994 and 10,320,317 shares outstanding in 1993 109 103
Premium on capital stock 81,073 66,368
Capital surplus 2,802 2,802
Retained earnings 83,042 71,040
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Total common shareholders' equity 167,026 140,313
Long-term debt 118,302 85,852
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Total capitalization 285,328 226,165
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CURRENT LIABILITIES
Long-term debt due within one year 10,123 5,043
Notes payable to banks 6,000 40,000
Accounts payable 27,480 27,609
Accrued taxes 13,083 9,656
Customers' deposits 17,462 16,719
Amounts due customers 11,734 5,105
Accrued wages and benefits 9,662 8,054
Other 15,129 13,232
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Total current liabilities 110,673 125,418
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DEFERRED CREDITS AND OTHER LIABILITIES
Deferred income taxes 1,706 480
Accumulated deferred investment tax credits 4,590 5,077
Other 9,017 13,545
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Total deferred credits and other liabilities 15,313 19,102
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COMMITMENTS AND CONTINGENCIES - -
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TOTAL CAPITAL AND LIABILITIES $ 411,314 $ 370,685
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9
Consolidated Statements Of Shareholders Equity
Energen Corporation and Subsidiaries
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(In thousands, except share amounts)
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Common Stock
-----------------------
Number of Par Premium on Capital Retained
Shares Value Capital Stock Surplus Earnings
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BALANCE AT SEPTEMBER 30, 1991 10,104,482 $ 101 $ 61,745 $ 2,802 $ 57,347
Net income 16,628
Shares issued for:
Dividend reinvestment plan 8,483 153
Employee benefit plans 69,633 1 1,347
Cash dividends--$1.01 per share (10,266)
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BALANCE AT SEPTEMBER 30, 1992 10,182,598 102 63,245 2,802 63,709
Net income 18,081
Shares issued for:
Dividend reinvestment plan 20,862 474
Employee benefit plans 116,857 1 2,649
Cash dividends--$1.05 per share (10,750)
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BALANCE AT SEPTEMBER 30, 1993 10,320,317 103 66,368 2,802 71,040
Net income 23,751
Shares issued for:
Stock offering 550,000 6 13,531
Dividend reinvestment plan 7,717 181
Employee benefit plans 39,870 993
Cash dividends -- $1.09 per share (11,749)
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BALANCE AT SEPTEMBER 30, 1994 10,917,904 $ 109 $ 81,073 $ 2,802 $ 83,042
====================================================================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
10
Consolidated Statements Of Cash Flows
Energen Corporation and Subsidiaries
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Years ended September 30, (in thousands) 1994 1993 1992
====================================================================================================================================
OPERATING ACTIVITIES
Net income $ 23,751 $ 18,081 $ 16,628
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, depletion and amortization 28,000 25,289 26,274
Deferred income taxes, net (2,802) (785) (4,441)
Deferred investment tax credits, net (487) (528) (535)
Gain on sale of assets (2,142) - (2,763)
Gain on sale of equity securities (2,878) - -
Net change in:
Accounts receivable 1,523 (6,360) (3,615)
Inventories (23,467) 466 438
Accounts payable (129) 4,990 4,405
Other current assets and liabilities 15,798 (1,808) (3,394)
Other, net (2,824) 1,096 (2,695)
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Net cash provided by operating activities 34,343 40,441 30,302
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INVESTING ACTIVITIES
Additions to property, plant and equipment (45,543) (43,672) (22,533)
Proceeds from sale of assets 8,624 - 10,750
Proceeds from sale of equity securities 4,808 - -
Payments on notes receivable 1,639 1,388 -
Other, net 2,485 819 383
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Net cash used in investing activities (27,987) (41,465) (11,400)
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FINANCING ACTIVITIES
Payment of dividends on common stock (11,749) (10,750) (10,266)
Issuance of common stock 14,711 3,124 1,501
Reduction of long-term debt and preferred stock of subsidiary (12,470) (21,200) (7,302)
Proceeds from issuance of medium-term notes 49,670 14,555 19,200
Net change in short-term debt (34,000) 20,000 (18,000)
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Net cash provided by (used in) financing activities 6,162 5,729 (14,867)
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Net change in cash and cash equivalents 12,518 4,705 4,035
Cash and cash equivalents at beginning of period 15,008 10,303 6,268
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Cash and cash equivalents at end of period $ 27,526 $ 15,008 $ 10,303
====================================================================================================================================
The accompanying Notes to Consolidated Financial Statements are an integral
part of these statements.
11
Notes To Consolidated Financial Statements
Energen Corporation and Subsidiaries
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Energen Corporation (the
Company) is a diversified energy holding company engaged primarily in the
distribution, exploration and production of natural gas, principally in central
and north Alabama. The following is a description of the Company's significant
accounting policies and practices.
A. Principles of Consolidation
The accompanying financial statements include the accounts of Energen
Corporation and its subsidiaries, principally Alabama Gas Corporation
(Alagasco), after elimination of all significant intercompany transactions in
consolidation. Until May 1994, the Company owned a 41 percent interest in
American Combustion Inc. and accounted for that investment under the equity
method. Following the sale of a majority of that interest in the current year,
the Company accounts for its remaining 8 percent investment under the cost
method.
B. Property, Plant and Equipment and Related Depreciation
Property, plant and equipment (principally utility plant) is stated at cost.
The cost of utility plant includes an allowance for funds used during
construction. Maintenance is charged for the cost of normal repairs and the
renewal or replacement of an item of property which is less than a retirement
unit. When property which represents a retirement unit is replaced or removed,
the cost of such property is credited to utility plant and, together with the
cost of removal less salvage, is charged to the accumulated reserve for
depreciation. Depreciation is provided on the straight-line method over the
estimated useful lives of utility property at rates established by the Alabama
Public Service Commission (APSC). Approved depreciation rates averaged
approximately 4.3 percent in 1994 and 1993 and 4.4 percent in 1992.
C. Operating Revenue and Gas Costs
In accordance with industry practice, the Company records natural gas
distribution revenue on a monthly and cycle billing basis. The Company extends
credit to its residential and industrial utility customers which are located
primarily in central and north Alabama. The commodity cost of purchased gas
applicable to gas delivered to customers but not yet billed under the cycle
billing method is deferred as a current asset.
D. Income Taxes
The Company's deferred income taxes reflect the impact of temporary differences
between the tax basis of assets and liabilities and their carrying amounts for
financial reporting purposes and are measured in compliance with enacted tax
laws. Investment tax credits have been deferred and are being amortized over
the lives of the related assets.
E. Oil and Gas Producing Activities
The Company follows the successful efforts method of accounting for costs
incurred in the exploration and development of oil and gas reserves. Lease
acquisition costs are capitalized initially, and unproved properties are
reviewed periodically to determine if there has been impairment of the carrying
value, with any such impairment charged to exploration expense currently.
Exploratory drilling costs are capitalized pending determination of proved
reserves. If proved reserves are not discovered, the exploratory drilling costs
are expensed. Other exploration costs, including geological and geophysical
costs, are expensed as incurred. All development costs are capitalized.
Depreciation, depletion and amortization is determined on a field-by-field
basis using the unit-of-production method based on proved reserves. A provision
for anticipated abandonment and restoration costs at the end of a property's
useful life is made through depreciation expense. The Company's oil and gas
subsidiary periodically enters into futures contracts to hedge its exposure to
price fluctuations on oil and gas production. Gains and losses on futures
contracts are recognized in the income statement as the hedged volumes are
produced.
F. Cash Equivalents
The Company includes highly liquid marketable securities and debt instruments
purchased with a maturity of three months or less in cash equivalents.
12
2. LONG-TERM DEBT AND NOTES PAYABLE Long-term debt consists of the following:
====================================================================================================================================
As of September 30, (in thousands) 1994 1993
====================================================================================================================================
Energen Corporation:
8% debentures, due up to $1,000,000 annually to February 1, 2007 $ 19,935 $ 19,960
Series 1993 notes, interest ranging from 4.65% to 7.25%, due annually beginning
March 1, 1996, in payments ranging from $775,000 to $1,675,000 to March 1, 2008 14,976 15,000
Notes payable, interest ranging from 9.3% to 10.05%, scheduled to be repaid in 1995 6,300 7,100
Alabama Gas Corporation:
First Mortgage Bonds, 11% Series H, due $1,500,000 annually to January 15, 1999 7,500 9,000
Medium-term notes, interest ranging from 5.4% to 7.2%, for notes redeemable
December 1, 1998, to December 15, 2023 50,000 -
9% debentures, due up to $1,200,000 annually to November 1, 2014 28,758 28,758
8.75% debentures, redeemed during fiscal year 1994 - 8,299
Mortgage note payable, due $30,800 quarterly to April 1, 2002;
interest is variable 956 1,048
Other Entities:
First Mortgage Note, repaid during fiscal year 1994 - 1,680
Other - 50
- ------------------------------------------------------------------------------------------------------------------------------------
Total 128,425 90,895
Less amounts due within one year 10,123 5,043
- ------------------------------------------------------------------------------------------------------------------------------------
Total $118,302 $ 85,852
====================================================================================================================================
Substantially all utility plant serves as collateral for the Alabama Gas
Corporation First Mortgage Bonds. Utility plant having a net book value of
$1,703,000 serves as collateral for the mortgage note payable which has a
variable interest rate of 1.47 percent above the 91-day U.S. Treasury Bill
rate, adjusted quarterly. The applicable year-end interest rates were 5.66
percent and 4.54 percent for 1994 and 1993, respectively.
The aggregate maturities of long-term debt for the next five years are as
follows:
====================================================================================================================================
Years ending September 30, (in thousands)
====================================================================================================================================
1995 1996 1997 1998 1999
- ------------------------------------------------------------------------------------------------------------------------------------
$10,123 $4,598 $4,648 $4,698 $10,073
====================================================================================================================================
The Company and Alagasco are subject to various restrictions on the payment of
dividends. The most restrictive provisions are: (1) Under Energen's 8 percent
debentures, dividends or other distributions with respect to common stock may
not be made unless the Company maintains a minimum consolidated tangible net
worth of $80 million; at September 30, 1994, Energen had a tangible net worth
of $166,799,000; and, (2) Under Alagasco's 9 percent debentures, utility
dividends or other distributions with respect to utility common stock may not
be made unless the utility maintains a consolidated tangible net worth, as
defined, of at least $50 million. At September 30, 1994, Alagasco had a
tangible net worth of $115,364,000.
The Company and Alagasco have short-term credit lines and other credit
facilities of $110 million available to either entity for working capital
needs.
13
The following is a summary of information relating to notes payable to banks:
====================================================================================================================================
As of September 30, (in thousands) 1994 1993 1992
====================================================================================================================================
Amount outstanding $ 6,000 $ 40,000 $ 20,000
Available for borrowings 104,000 70,000 90,000
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 110,000 $ 110,000 $ 110,000
====================================================================================================================================
Maximum amount outstanding at any month-end $ 60,000 $ 43,000 $ 43,000
Average daily amount outstanding $ 13,836 $ 31,318 $ 28,642
Weighted average interest rates based on:
Average daily amount outstanding 3.32% 3.42% 4.74%
Amount outstanding at year-end 5.17% 3.33% 3.42%
====================================================================================================================================
Total interest expense for Energen in 1994, 1993 and 1992 was $11,345,000,
$10,605,000, and $10,476,000 (of which $61,000 was capitalized), respectively.
3. REGULATORY As an Alabama utility, Alagasco is subject to regulation by the
APSC which, in 1983, established the Rate Stabilization and Equalization (RSE)
rate-setting process. RSE was extended for the third time on December 3, 1990,
for a three-year period. Under the terms of that extension, RSE shall continue
after November 30, 1993, unless, after notice to the Company, the Commission
votes to either modify or discontinue its operation. On October 4, 1993, the
Commission unanimously voted to extend RSE until such time as certain hearings
mandated by the Energy Policy Act of 1992 (Energy Act) in connection with
integrated resource planning and demand-side management programs are completed.
The Energy Act proceedings are expected to conclude during fiscal 1995 at which
time it is expected that the Commission will consider renewal of RSE.
Under RSE as extended, the APSC conducts quarterly reviews to determine, based
on Alagasco's projections and fiscal year-to-date performance, whether
Alagasco's return on equity for the fiscal year will be within the allowed
range of 13.15 percent to 13.65 percent. Reductions in rates can be made
quarterly to bring the projected return within the allowed range. Increases,
however, are allowed only once each fiscal year, effective December 1, and
cannot exceed 4 percent of prior-year revenues. RSE limits the utility's equity
upon which a return is permitted to 60 percent of total capitalization and
provides for certain cost control measures designed to monitor the Company's
operations and maintenance (O&M) expense. If O&M expense per customer falls
within 1.25 percentage points above or below the Consumer Price Index For All
Urban Customers (index range), no adjustment is required. If, however, O&M
expense per customer exceeds the index range, three-quarters of the difference
will be returned to the customers. To the extent O&M expense per customer is
less than the index range, the utility will benefit by one-half of the
difference through future rate adjustments. Effective December 15, 1990, the
APSC approved a temperature adjustment to customers' monthly bills to mitigate
the effect of departures from normal temperature on Alagasco's earnings. The
calculation is performed monthly, and adjustments to customer's bills are made
in the same month the weather variation occurs.
The Company's rate schedules for natural gas distribution charges contained a
Purchased Gas Adjustment (PGA) rider in 1993 which permitted the pass-through
of changes in gas costs to customers. The APSC approved, effective October 4,
1993, the replacement of the PGA rider with the new Gas Supply Adjustment rider
in order to accommodate changes in gas supply purchases resulting from
implementation of FERC Order 636, including gas supply realignment surcharges
imposed by the Company's suppliers.
In accordance with APSC-directed regulatory accounting procedures, Alagasco in
1989 began returning excess utility deferred taxes which resulted from a
reduction in the federal statutory tax rate from 46 percent to 34 percent using
the average rate assumption method. This method provides for the return to
ratepayers of excess deferred taxes over the lives of the related assets. In
1993 those excess taxes were reduced as a result of a federal tax rate increase
from 34 percent to 35 percent. Approximately $3.1 million of remaining excess
utility deferred taxes are being returned to ratepayers over approximately 16
years.
14
4. INCOME TAXES The components of income taxes consist of the following:
====================================================================================================================================
For the years ended September 30, (in thousands) 1994 1993 1992
====================================================================================================================================
Taxes estimated to be payable currently:
Federal $ 8,550 $ 3,905 $ 4,836
State 1,369 611 522
- ------------------------------------------------------------------------------------------------------------------------------------
Total current 9,919 4,516 5,358
- ------------------------------------------------------------------------------------------------------------------------------------
Taxes deferred:
Federal (2,976) (1,280) (5,214)
State (332) 172 238
- ------------------------------------------------------------------------------------------------------------------------------------
Total deferred (3,308) (1,108) (4,976)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income tax expense $ 6,611 $ 3,408 $ 382
====================================================================================================================================
As discussed in Note 14, the Company adopted SFAS 109 as of October 1, 1991,
and the cumulative effect of this change is reported in the 1992 consolidated
statements of income.
Temporary differences and carryforwards which give rise to a significant
portion of deferred tax assets and liabilities for 1994 and 1993 are as
follows:
====================================================================================================================================
As of September 30, (in thousands) 1994 1993
====================================================================================================================================
Deferred tax assets:
Deferred investment tax credits $ 1,567 $ 1,748
Regulatory liabilities 2,585 2,866
Minimum tax credit 12,469 12,043
Insurance and accruals 1,568 1,010
Unbilled revenue 1,454 1,426
Other, net 6,448 4,797
- ------------------------------------------------------------------------------------------------------------------------------------
Subtotal 26,091 23,890
Valuation allowance - -
- ------------------------------------------------------------------------------------------------------------------------------------
Total deferred tax assets $ 26,091 $ 23,890
====================================================================================================================================
Deferred tax liabilities:
Depreciation and basis differences $ 16,905 $ 16,635
Basis differences on oil and gas producing properties 1,564 1,221
Pension and other benefit costs 1,306 1,222
Other, net 480 1,202
- ------------------------------------------------------------------------------------------------------------------------------------
Total deferred tax liabilities $ 20,255 $ 20,280
====================================================================================================================================
No valuation allowance with respect to deferred taxes is deemed necessary, as
the Company anticipates generating adequate future taxable income to realize
the benefits of all deferred tax assets on the balance sheet. As of September
30, 1994, the amount of minimum tax credit which can be carried forward
indefinitely to reduce future regular tax liability is $12,469,000.
Total income tax expense differs from the amount which would be provided by
applying the statutory federal income tax rate to pretax earnings as
illustrated below:
====================================================================================================================================
For the years ended September 30, (in thousands) 1994 1993 1992
====================================================================================================================================
Income tax expense at statutory federal income tax rate $ 10,627 $ 7,467 $ 5,464
Increase (decrease) resulting from:
Nonconventional fuel credits--current (4,259) (1,374) (1,302)
Nonconventional fuel credits--deferred 127 (2,446) (3,775)
Investment tax credits--deferred (487) (528) (535)
Return of utility excess deferred taxes (76) (172) -
State income taxes, net of federal income tax benefit 700 639 609
Other, net (21) (178) (79)
- ------------------------------------------------------------------------------------------------------------------------------------
Total income tax expense $ 6,611 $ 3,408 $ 382
====================================================================================================================================
15
5. RETIREMENT INCOME PLANS AND OTHER BENEFITS The Company has two defined
benefit non-contributory pension plans which cover a majority of employees.
Benefits are based on years of service and final earnings. The Company's policy
is to use the "projected unit credit" actuarial method for funding and
financial reporting purposes. The expense (income) for the plan covering the
majority of employees for the years ended September 30, 1994, 1993 and 1992,
was $15,000, $(118,000), and $(278,000), respectively. The expense for the
second plan covering employees under labor union agreements for 1994, 1993 and
1992 was $555,000, $557,000, and $503,000, respectively.
The funded status of the plans is as follows:
====================================================================================================================================
Assets Exceed Accumulated Benefits
As of June 30, (in thousands) Accumulated Benefits Exceed Assets
====================================================================================================================================
1994 1993 1994 1993
------------------------ ------------------------
Vested benefits $(48,354) $ (46,513) $(12,860) $(12,258)
Nonvested benefits (5,530) (5,403) (2,253) (2,121)
- ------------------------------------------------------------------------------------------------------------------------------------
Accumulated benefit obligation (53,884) (51,916) (15,113) (14,379)
Effects of salary progression (10,332) (9,803) - -
- ------------------------------------------------------------------------------------------------------------------------------------
Projected benefit obligation (64,216) (61,719) (15,113) (14,379)
Fair value of plan assets, primarily equity and fixed income
securities 72,004 73,576 11,863 11,815
Unrecognized net gain 2,646 (434) 1,034 124
Unrecognized prior service cost 46 51 1,554 1,696
Unrecognized net transition obligation (asset) (6,524) (7,332) 452 509
Additional minimum liability - - (3,040) (2,329)
- ------------------------------------------------------------------------------------------------------------------------------------
Accrued pension asset (liability) $ 3,956 $ 4,142 $ (3,250) $ (2,564)
====================================================================================================================================
At September 30, 1994 and 1993, the discount rate used to measure the projected
benefit obligation was 7.5 percent for both plans, and the annual rate of
salary increase for the salaried plan was 5.5 percent. The expected long-term
rate of return on plan assets was 8.25 percent for both plans in 1994 and 8
percent in 1993.
The components of net pension costs for 1994, 1993 and 1992 were:
====================================================================================================================================
Assets Exceed Accumulated Benefits
For the years ended September 30, (in thousands) Accumulated Benefits Exceed Assets
====================================================================================================================================
1994 1993 1992 1994 1993 1992
---------------------------- --------------------------
Service cost $ 1,873 $ 1,678 $ 1,560 $ 224 $ 187 $ 176
Interest cost on projected benefit obligation 4,550 4,097 3,807 1,042 1,018 970
Actual return on plan assets (504) (6,858) (6,123) (372) (1,048) (1,116)
Net amortization and deferral (5,904) 965 478 (339) 400 473
- ------------------------------------------------------------------------------------------------------------------------------------
Net pension (income) expense $ 15 $ (118) $ (278) $ 555 $ 557 $ 503
====================================================================================================================================
The Company has deferred compensation plan agreements for certain key
executives providing for payments on retirement, death or disability. The
deferred compensation expense under these agreements for 1994, 1993 and 1992
was $461,000, $650,000, and $528,000, respectively.
In addition to providing pension benefits, the Company provides certain
post-employment health care and life insurance benefits. Substantially all of
the Company's employees may become eligible for such benefits if they reach
normal retirement age while working for the Company. In a prior year, the
Company adopted SFAS No. 106, Employers' Accounting for Post-retirement
Benefits Other Than Pensions, with respect to the accrual of such costs for
salaried employees. During fiscal year 1994, the Company adopted SFAS 106 with
respect to such costs for employees under collective bargaining agreements.
There is no cumulative effect on the income statement resulting from the
adoption of SFAS 106, as the Company elected to amortize transition costs over
a 20-year period. On December 6, 1993, the APSC adopted Order 4-3454 which
allows the Company to recover all costs accrued under SFAS 106 through rates.
While the Company has not adopted a formal funding policy, all of its accrued
post-retirement liability was funded at year-end.
16
The expense for salaried employees for the years ended September 30, 1994,
1993, and 1992 was $2,319,000, $2,677,000, and $2,439,000, respectively. Prior
to 1994, the Company recognized the cost of providing post-retirement benefits
for union employees on a "pay-as-you-go" basis. These benefits were provided
through a self-insurance arrangement and through insurance companies whose
premiums were based on the benefits paid during the year. In 1994 the expense
for union employees was $3,685,000, an increase of $2,246,000 over what would
have been recognized under the "pay-as-you-go" method. Expense of $982,000 and
$882,000 was incurred during 1993 and 1992, respectively. The "projected unit
credit" actuarial method was used to determine the normal cost and actuarial
liability.
A reconciliation of the estimated status of the obligation is as follows:
====================================================================================================================================
As of June 30, (in thousands) Salaried Employees Union Employees
====================================================================================================================================
1994 1993 1994 1993
------------------------- ---------------------------
Accumulated post-employment benefit obligation $ (21,296) $(23,067) $(24,564) $ -
Plan assets 9,408 6,488 1,248 -
Unamortized amounts 11,751 14,456 21,357 -
- ------------------------------------------------------------------------------------------------------------------------------------
Accrued post-employment benefit liability $ (137) $ (2,123) $ (1,959) $ -
====================================================================================================================================
Net periodic post-employment benefit cost for the years ended September 30,
1994, 1993, and 1992, included the following:
====================================================================================================================================
For the years ended September 30, (in thousands) Salaried Employees Union Employees
====================================================================================================================================
1994 1993 1992 1994 1993 1992
------------------------------ ------------------------------
Service cost $ 450 $ 464 $ 321 $ 481 $ - $ -
Interest cost on accumulated post-employment
benefit obligation 1,726 1,457 1,276 1,920 - -
Amortization of transition obligation 723 842 842 1,285 - -
Amortization of actuarial gains and losses - 49 - - - -
Deferred asset (gain) loss (453) - - - - -
Actual return on plan assets (127) (135) - (1) - -
- ------------------------------------------------------------------------------------------------------------------------------------
Net periodic post-employment benefit expense $ 2,319 $ 2,677 $ 2,439 $ 3,685 $ - $ -
====================================================================================================================================
The weighted average health care cost trend rate used in determining the
accumulated post-employment benefit obligation was 8 percent in 1994 and 1993
and 8.5 percent in 1992. That assumption has a significant effect on the
amounts reported. For example, with respect to salaried employees, increasing
the weighted average health care cost trend rate by 1 percent would increase
the accumulated post-employment benefit obligation by 3.8 percent and the net
periodic post-employment benefit cost by 4.7 percent. For union employees,
increasing the weighted average health care cost trend rate by 1 percent would
increase the accumulated post-employment benefit obligation by 5.8 percent and
the net periodic post-employment benefit cost by 5.4 percent. The weighted
average discount rate used in determining the accumulated post-employment
benefit obligation was 7.5 percent in 1994 and 1993 and 8 percent in 1992.
The Company has a long-term disability plan covering most salaried employees.
Expense for the years ended September 30, 1994, 1993, and 1992, was $150,000,
$129,000, and $129,000, respectively.
6. COMMON STOCK PLANS A majority of Company employees are eligible to
participate in the Energen Employee Savings Plan (ESP) by investing a portion
of their compensation in the Plan, with the Company matching a part of the
employee investment by contributing Company common stock. The ESP also contains
employee stock ownership plan provisions. The Company issued 36,355 common
shares to the ESP in 1994, 111,895 shares in 1993, and 76,203 shares in 1992.
At September 30, 1994, 481,484 common shares were reserved for issuance under
the ESP. Expense associated with Company contributions to the ESP was
$2,772,000, $2,601,000, and $2,431,000 for 1994, 1993 and 1992, respectively.
The Restricted Stock Incentive Plan of Energen Corporation, adopted in 1984,
provided for the award of common stock to eligible participants. Stock awarded
under the Plan is subject to certain restrictions against sale or pledge.
Pursuant to its terms, the Plan terminated effective January 1994 subject to
completion of restriction periods applicable to previously awarded shares.
Under the Plan, no common shares were awarded in 1994, 1993, or 1992. Expense
of $218,000, $289,000 and $303,000 was charged during 1994, 1993 and 1992,
respectively, under this Plan.
17
The Company has a dividend reinvestment plan for which 161,437 common shares
were reserved at September 30, 1994.
The Energen Corporation 1988 Stock Option Plan provides for the grant of
incentive stock options, non-qualified stock options, or a combination thereof
to officers and key employees. Options granted under the Plan provide for
purchase of the Company's common stock at not less than the fair market value
on the date the option is granted. Under the Plan, 270,000 shares of the
Company's common stock have been reserved for issuance. Options were granted in
1993 and 1991 with dividend equivalents, 1,900 of which have been exercised,
and, in 1990, with stock appreciation rights (SARS), 12,696 of which were
canceled upon exercise.
Transactions under the Plan are summarized as follows:
====================================================================================================================================
As of September 30, 1994 1993 1992
====================================================================================================================================
Outstanding at beginning of year ($16.75 - $20.125) 141,556 111,152 130,986
Granted (at $16.75 - $18.375) - 45,000 -
Exercised ($22.875 - $25.125) - (1,900) -
Canceled upon exercise of Stock Appreciation Rights ($23.25 - $26.375) - (12,696) -
Forfeited - - (19,834)
- ------------------------------------------------------------------------------------------------------------------------------------
Outstanding at year-end 141,556 141,556 111,152
- ------------------------------------------------------------------------------------------------------------------------------------
Exercisable at year-end 141,556 141,556 111,152
- ------------------------------------------------------------------------------------------------------------------------------------
Remaining reserved for issuance at year-end 113,848 113,848 158,848
====================================================================================================================================
In 1992 the Company adopted the Energen Corporation 1992 Long-Range Performance
Plan which provides for the award of up to 500,000 performance units, with each
unit equal to the market value of one share of common stock, to eligible
employees based on predetermined performance criteria at the end of a four-year
award period. Under the Plan, a portion of the performance units is payable
with Company common stock; accordingly, 350,000 shares have been reserved for
issuance. Under the Plan, 49,120, 59,850 and 53,774 performance units were
awarded in 1994, 1993 and 1992, respectively, leaving 337,256 performance units
available for award at September 30, 1994. The Company recorded expense of
$939,000, $688,000 and $175,000 for 1994, 1993 and 1992, respectively, under
the Plan.
In 1992 the Company adopted the Energen Corporation 1992 Directors Stock Plan
to enable the Company to pay part of the compensation of its non-employee
directors in shares of the Company's common stock. Under the Plan, 3,515 and
5,085 shares were issued in 1994 and 1993, respectively, leaving 93,423 shares
reserved for issuance at September 30, 1994.
The Company has adopted a Shareholder Rights Plan intended to protect
shareholders from coercive or unfair takeover tactics. Under certain
circumstances, shareholders have the right to acquire the Company's Series A
Junior Participating Preferred Stock (or, in certain cases, securities of an
acquiring person) at a significant discount. Terms and conditions are set forth
in a Rights Agreement (dated July 27, 1988, and amended February 28, 1990)
between the Company and its Rights Agent. In general, in the absence of certain
takeover-related events, as described in the Plan, the rights may be redeemed
prior to their July 27, 1998, expiration for $0.02 per right.
7. PREFERRED STOCK The Company is authorized to issue 5,000,000 shares of
cumulative preferred stock, par value $0.01 per share, in one or more series,
150,000 of which have been designated as Series A Junior Participating
Preferred Stock. None of these shares are issued or outstanding.
Alagasco is authorized to issue 120,000 shares of preferred stock, par value
$0.01 per share, in one or more series. Alagasco's $4.70 Series cumulative
preferred stock had an annual sinking fund requirement to redeem 2,000 shares
of such stock at par plus accrued dividends to date of redemption. On July 30,
1993, all outstanding shares of Alagasco's $4.70 Series cumulative preferred
stock were redeemed.
8. COMMITMENTS The Company has various firm gas supply and firm gas
transportation contracts, which expire at various dates through the year
2008. These contracts typically contain minimum demand charge obligations on
the part of the Company.
18
In January 1989, the Company entered into an agreement with a financial
institution whereby it can sell on an ongoing basis, with recourse, certain
installment receivables related to its merchandising program up to a maximum of
$15 million. During 1994 and 1993, the Company sold $6,784,000 and $5,608,000,
respectively, of installment receivables. At September 30, 1994 and 1993, the
balance of these installment receivables was $13,027,000 and $11,699,000,
respectively. Receivables sold under this agreement are considered financial
instruments with off-balance sheet risk. The Company's exposure to credit loss
in the event of non-performance by customers is represented by the balance of
installment receivables.
The Company's oil and gas subsidiary periodically enters into futures contracts
to hedge its exposure to price fluctuations on oil and gas production. Under
this program, Taurus has entered into futures contracts for the sale of 5 Bcf
of its fiscal 1995 gas production at an average contract price of $2.17 and for
the sale of 160,000 barrels of its oil production at an average contract price
of $18.61.
9. LEASES Total payments related to leases included as operating expense in
the accompanying consolidated statements of income were $2,986,000,
$3,228,000, and $4,358,000 in 1994, 1993 and 1992, respectively. Minimum future
rental payments (in thousands) required after 1994 under leases with initial or
remaining noncancelable lease terms in excess of one year are as follows:
====================================================================================================================================
1995 1996 1997 1998 1999 2000 and thereafter
====================================================================================================================================
$2,130 $2,021 $574 $97 $91 $173
====================================================================================================================================
10. ENVIRONMENTAL MATTERS Alagasco is in the chain of title of eight former
manufactured gas plant sites, of which it still owns four, and five
manufactured gas distribution sites, of which it still owns one. A preliminary
investigation of the sites does not indicate the present need for remediation
activities. Management expects that, should remediation of any such sites be
required in the future, Alagasco's share, if any, of such costs will not
materially affect the results of operations or financial condition of Alagasco.
Taurus is subject to various environmental regulations. Management believes
that Taurus is in compliance with the currently applicable standards of the
environmental agencies to which it is subject and that potential environmental
liabilities, if any, are minimal. Also, to the extent Taurus has operating
agreements with various joint venture partners, environmental costs, if any,
would be shared proportionately.
11. SUPPLEMENTAL CASH FLOW INFORMATION Supplemental information concerning
cash flow activities is as follows:
====================================================================================================================================
For the years ended September 30, (in thousands) 1994 1993 1992
====================================================================================================================================
Interest paid, net of amount capitalized $ 11,055 $ 11,906 $ 11,634
Income taxes paid $ 10,965 $ 5,133 $ 6,285
Noncash investing activities:
Notes receivable--sale of properties $ - $ - $ 7,100
Capitalized depreciation $ 155 $ 187 $ 175
Allowance for funds used during construction $ 465 $ 163 $ 50
Noncash financing activities (debt issuance costs) $ 330 $ 445 $ 800
====================================================================================================================================
12. SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED) The following data
summarize quarterly operating results. The Company's business is seasonal in
character and strongly influenced by weather conditions.
====================================================================================================================================
1994 Fiscal Quarters
(In thousands, except per share amounts) First Second Third Fourth
====================================================================================================================================
Operating revenues $ 87,919 $ 168,087 $ 73,125 $ 47,942
Operating income (loss) $ 5,713 $ 30,370 $ 4,325 $ (4,500)
Net income (loss) $ 2,300 $ 22,192 $ 3,950 $ (4,691)
Earnings (loss) per average common share $ 0.22 $ 2.03 $ 0.36 $ (0.43)
====================================================================================================================================
19
1993 Fiscal Quarters
(In thousands, except per share amounts) First Second Third Fourth
====================================================================================================================================
Operating revenues $ 84,108 $ 149,646 $ 75,324 $ 48,038
Operating income (loss) $ 5,366 $ 26,867 $ 2,981 $ (4,947)
Net income (loss) $ 2,670 $ 19,945 $ 1,081 $ (5,615)
Earnings (loss) per average common share $ 0.26 $ 1.95 $ 0.11 $ (0.55)
====================================================================================================================================
13. INDUSTRY SEGMENT INFORMATION The Company is principally engaged in the
purchase, distribution and sale of natural gas in central and north Alabama and
the development of oil and gas in the continental United States. The Company
also is engaged in intrastate gas transmission services and merchandising.
====================================================================================================================================
As of September 30, (in thousands) 1994 1993 1992
====================================================================================================================================
Operating revenues, unaffiliated customers:
Natural gas distribution $ 344,637 $ 330,560 $ 310,726
Oil and gas production 22,294 16,463 11,280
Other 10,142 10,093 9,976
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 377,073 $ 357,116 $ 331,982
====================================================================================================================================
Intersegment revenues:
Natural gas distribution $ - $ - $ -
Oil and gas production 2,917 3,424 4,438
Other 5,259 4,833 5,123
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 8,176 $ 8,257 $ 9,561
====================================================================================================================================
Depreciation, depletion and amortization expense:
Natural gas distribution $ 17,941 $ 17,206 $ 17,154
Oil and gas production 9,065 6,947 7,957
Other 994 1,136 1,163
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 28,000 $ 25,289 $ 26,274
====================================================================================================================================
Capital expenditures:
Natural gas distribution $ 38,473 $ 22,107 $ 20,228
Oil and gas production 7,356 21,449 1,838
Other 334 480 692
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 46,163 $ 44,036 $ 22,758
====================================================================================================================================
Identifiable assets (year-end):
Natural gas distribution $ 308,905 $ 264,548 $ 258,902
Oil and gas production 92,019 84,664 60,839
Other 10,390 21,473 22,378
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 411,314 $ 370,685 $ 342,119
====================================================================================================================================
Operating income (loss) before income taxes:
Natural gas distribution $ 30,017 $ 26,381 $ 25,915
Oil and gas production 5,701 4,539 (4,181)
Other 1,594 929 2,009
Eliminations and corporate expenses (1,404) (1,582) (950)
- ------------------------------------------------------------------------------------------------------------------------------------
Total 35,908 30,267 22,793
Interest expense (11,345) (10,605) (10,415)
Dividends on preferred stock of subsidiary - (70) (85)
Gain on sale of assets 2,142 - 2,763
Other, net 3,657 1,897 1,013
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes $ 30,362 $ 21,489 $ 16,069
====================================================================================================================================
20
14. ACCOUNTING CHANGE As discussed more fully in Note 5, the Company adopted
SFAS 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions, with respect to the accrual of such costs for all employees under
labor union agreements effective October 1, 1993. The Company adopted SFAS 106
with respect to salaried employees in a prior year.
Effective October 1, 1991, the Company elected early adoption of SFAS 109,
Accounting for Income Taxes, which was required to be adopted by the Company no
later than its fiscal year ending September 30, 1994. In 1992 this adoption
resulted in additional income before the effect of the change of $438,000, or
$0.04 per share, and income from the cumulative effect of the change in
accounting principle of $941,000, or $.10 per share. The cumulative effect on
the income statement of the adoption of SFAS 109 relates to the Company's
non-regulated subsidiaries. Changes in the utility's deferred income taxes
arising from the adoption represent income taxes returnable through future
rates over the life of the related assets and have been recorded as a
regulatory liability on the balance sheets.
15. OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) The following schedules
detail historical financial data of the Company's oil and gas producing
activities. Certain terms appearing in the schedules are prescribed by the
Securities and
21
Exchange Commission and are briefly described as follows:
* Lease Acquisition Costs are costs incurred to lease or otherwise acquire a
property.
* Exploration Expenses are primarily costs associated with drilling
unsuccessful exploratory wells in undeveloped properties, exploratory
geological and geophysical activities, and costs of impaired leaseholds.
* Development Costs include costs necessary to gain access to, prepare and
equip development wells in areas of proved reserves.
* Production (Lifting) Costs include costs incurred to operate and maintain
wells.
* Gross Revenues are reported after deduction of royalty interest payments.
* Gross Well or Acre is a well or acre in which a working interest is owned.
* Net Well or Acre is deemed to exist when the sum of fractional ownership
working interests in gross wells or acres equals one.
* Dry Well is an exploratory or a development well found to be incapable of
producing either oil or gas in sufficient quantities to justify completion as
an oil or gas well.
* Productive Well is an exploratory or a development well that is not a dry
well.
CAPITALIZED COSTS
====================================================================================================================================
As of September 30, (in thousands) 1994 1993 1992
====================================================================================================================================
Proved $ 90,709 $ 84,373 $ 64,340
Unproved 1,646 1,704 1,282
- ------------------------------------------------------------------------------------------------------------------------------------
Total capitalized costs 92,355 86,077 65,622
Accumulated depreciation, depletion and amortization 43,052 35,150 29,485
- ------------------------------------------------------------------------------------------------------------------------------------
Capitalized costs, net $ 49,303 $ 50,927 $ 36,137
====================================================================================================================================
22
COSTS INCURRED The following table sets forth costs incurred in property
acquisition and exploration and development activities and includes both
capitalized costs and costs charged to expense during the year:
====================================================================================================================================
As of September 30, (in thousands) 1994 1993 1992
====================================================================================================================================
Property acquisition:
Proved $ 1,372 $ 11,645 $ -
Unproved 1,169 154 1,391
Exploration 4,565 3,336 1,585
Development 1,438 6,673 1,010
- ------------------------------------------------------------------------------------------------------------------------------------
Total costs incurred $ 8,544 $ 21,808 $ 3,986
====================================================================================================================================
RESULTS OF OPERATIONS The following table sets forth results of the Company's
oil and gas producing activities:
====================================================================================================================================
Years ended September 30, (in thousands) 1994 1993 1992
====================================================================================================================================
Gross revenues:
Unaffiliated (excluding consulting revenues) $ 21,577 $ 14,974 $ 10,537
Affiliated 2,917 3,424 4,438
Production (lifting) costs 5,882 5,383 5,201
Exploration expense 2,088 756 2,588
Depreciation, depletion and amortization 8,080 5,852 6,157
Income taxes (1,607) (1,185) (4,681)
- ------------------------------------------------------------------------------------------------------------------------------------
Results of operations from producing activities $ 10,051 $ 7,592 $ 5,710
====================================================================================================================================
AVERAGE SALES PRICE, PRODUCTION COST AND DEPRECIATION RATE
====================================================================================================================================
Years ended September 30, 1994 1993 1992
====================================================================================================================================
Average sales price:
Gas (per Mcf) $ 1.89 $ 1.83 $ 1.62
Oil (per barrel) $ 14.25 $ 17.09 $ 17.65
Average production (lifting) cost (per Mcf equivalent) $ 0.57 $ 0.72 $ 0.71
Average depreciation rate (per Mcf equivalent) $ 0.78 $ 0.78 $ 0.84
====================================================================================================================================
Drilling Activity The following table sets forth the total number of net
productive and dry exploratory and development wells drilled:
====================================================================================================================================
Years ended September 30, 1994 1993 1992
====================================================================================================================================
Exploratory:
Productive 0.6 0.9 0.7
Dry 0.4 0.3 0.2
- ------------------------------------------------------------------------------------------------------------------------------------
Total 1.00 1.2 0.9
====================================================================================================================================
Development:
Productive 0.7 3.7 1.3
Dry -- -- 0.1
- ------------------------------------------------------------------------------------------------------------------------------------
Total 0.7 3.7 1.4
====================================================================================================================================
As of September 30, 1994, the Company was participating in the drilling of 5
gross wells, with the Company's interest equivalent to .74 wells.
23
PRODUCTIVE WELLS AND ACREAGE The following table sets forth the total gross
and net productive gas and oil wells and developed and undeveloped acreage:
====================================================================================================================================
As of September 30, 1994 Gross Net
====================================================================================================================================
Gas Wells 808 208.9
Oil Wells 1,698 22.7
Developed Acreage 239,542 47,510
Undeveloped Acreage 74,873 7,130
====================================================================================================================================
The Company also had a revenue interest only in an additional 216 gross wells.
There were 25 gross wells with multiple completions with the Company's interest
being an equivalent of 3.0 wells. All wells and acreage are located in the
United States, with the majority of the net undeveloped acreage located in the
Gulf Coast region.
OIL AND GAS PRODUCING ACTIVITIES Taurus's proved reserves are located in the
United States and are as follows:
====================================================================================================================================
Years ended September 30, 1994 1993 1992
====================================================================================================================================
Gas Oil Gas Oil Gas Oil
MMcf MBbl MMcf MBbl MMcf MBbl
--------------- -------------- ---------------
Proved reserves at beginning of year 67,298 1,289 51,329 338 73,279 402
Revisions of previous estimates (3,579) 144 400 (13) (3,954) 81
Purchase (sale) of minerals in place 456 201 11,467 1,149 (18,971) -
Discoveries and other additions 5,051 42 10,347 19 7,390 -
Production (9,169) (191) (6,245) (204) (6,415) (145)
- ------------------------------------------------------------------------------------------------------------------------------------
Proved reserves at end of year 60,057 1,485 67,298 1,289 51,329 338
====================================================================================================================================
During 1993, Taurus purchased working interests in conventional oil and gas
properties primarily funded by the 1992 property sale in which Taurus sold a
portion of its coalbed methane properties for cash of $10.8 million and a note
of $7.1 million. The sale resulted in a one-time net gain in 1992 of $1.8
million.
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL
AND GAS RESERVES The standardized measure of discounted future net cash flows
is not intended, nor should it be interpreted, to present the fair market value
of the Company's crude oil and natural gas reserves. An estimate of fair market
value would take into consideration factors such as, but not limited to, the
recovery of reserves not presently classified as proved reserves, anticipated
future changes in prices and costs, and a discount factor more representative
of the time value of money and the risks inherent in reserve estimates.
====================================================================================================================================
Years ended September 30, (in thousands) 1994 1993 1992
====================================================================================================================================
Future gross revenues $105,986 $ 164,483 $ 97,654
Future production and development costs 54,137 62,185 39,447
- ------------------------------------------------------------------------------------------------------------------------------------
Future net cash flows before income taxes 51,849 102,298 58,207
Future income tax expense (benefit) including tax credits (15,856) 1,304 (12,757)
- ------------------------------------------------------------------------------------------------------------------------------------
Future net cash flows after income taxes 67,705 100,994 70,964
Discount at 10% per annum 16,051 28,210 22,666
- ------------------------------------------------------------------------------------------------------------------------------------
Standardized measure of discounted future net cash flows relating to
proved oil and gas reserves $ 51,654 $ 72,784 $ 48,298
====================================================================================================================================
24
The following are the principal sources of changes in the standardized measure
of discounted future net cash flows:
====================================================================================================================================
Years ended September 30, (in thousands) 1994 1993 1992
====================================================================================================================================
Balance at beginning of year $ 72,784 $ 48,298 $ 38,488
- ------------------------------------------------------------------------------------------------------------------------------------
Revisions to reserves proved in prior years:
Net changes in prices, production costs and future development costs (24,969) 5,789 12,379
Net changes due to revisions in quantity estimates (2,278) 1,303 (3,726)
Development costs incurred, previously estimated 1,723 1,700 54
Accretion of discount 7,278 4,830 3,849
Other (560) (2,638) (1,820)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Revisions (18,806) 10,984 10,736
New field discoveries and extensions, net of future production
and development costs 523 11,906 5,876
Sales of oil and gas produced, net of production costs (14,635) (9,550) (7,722)
Purchases (sales) of minerals in place 1,354 17,158 (10,499)
Net change in income taxes 10,434 (6,012) 11,419
- ------------------------------------------------------------------------------------------------------------------------------------
Net change in standardized measure of discounted future net cash flows (21,130) 24,486 9,810
- ------------------------------------------------------------------------------------------------------------------------------------
Balance at end of year $ 51,654 $ 72,784 $ 48,298
====================================================================================================================================
COALBED METHANE ACTIVITIES The Company is actively engaged in the development
of pipeline-quality natural gas from coal (coalbed methane). The results of the
Company's coalbed methane activities have been included in the oil and gas
disclosures shown previously. Because of the significance of coalbed methane to
the Company, certain data are separately disclosed below.
Production of coalbed methane from wells drilled prior to January 1, 1993,
qualifies through December 31, 2002, for federal income tax credits under
Section 29 of the Internal Revenue Code of 1986, as amended. The tax credit
currently approximates 98 cents per Mcf of qualifying production. Accordingly,
a significant portion of the value of proved coalbed methane reserves is
associated with this tax credit.
====================================================================================================================================
Years ended September 30, (MMcf) 1994 1993 1992
====================================================================================================================================
Proved reserves at beginning of year 34,109 34,306 61,314
Revisions of previous estimates (3,687) 364 (3,612)
Sales of mineral in place - - (18,971)
Discoveries and other additions - 3,231 1,029
Production (3,710) (3,792) (5,454)
- ------------------------------------------------------------------------------------------------------------------------------------
Proved reserves at end of year 26,712 34,109 34,306
====================================================================================================================================
Estimated proved reserves qualifying for tax credits 18,947 21,461 24,543
====================================================================================================================================
Net capitalized costs (in thousands) $21,924 $ 24,896 $ 27,052
====================================================================================================================================
Gross wells in which Taurus has working and/or revenue interest 657 727 677
====================================================================================================================================
Net productive wells 164.2 173.2 165.8
====================================================================================================================================
16. FINANCIAL INSTRUMENTS In accordance with the requirements of SFAS No.
107, the estimated fair values of the Company's financial instruments at
September 30, 1994, were as follows:
====================================================================================================================================
Carrying Fair
As of September 30, 1994 (in thousands) Amount Value
====================================================================================================================================
Cash and cash equivalents $ 27,526 $ 27,526
Receivables, net of allowance account $ 34,145 $ 34,145
Short-term debt $ 6,000 $ 6,000
Long-term debt (including current portion) $ 128,425 $ 119,614
====================================================================================================================================
25
The following methods and assumptions were used to estimate the fair value of
financial instruments:
* Cash and cash equivalents: Fair value was considered to be the same as the
carrying amount.
* Receivables: The Company believes that, in the aggregate, current and
non-current net receivables were not materially different from the fair value
of those receivables.
* Short-term debt: The fair value was determined to be the same as the
carrying amount.
* Long-term debt: The fair value of fixed-rate long-term debt was based on the
market value of debt with similar maturities and with interest rates currently
trading in the marketplace; the carrying amount of variable rate long-term
debt was assumed to approximate fair value.
====================================================================================================================================
QUARTERLY MARKET PRICES AND DIVIDENDS PAID PER SHARE
====================================================================================================================================
Dividends
Quarter ended (in dollars) High Low Close Paid
====================================================================================================================================
December 31, 1992 19-1/4 17-5/8 18-3/8 .26
March 31, 1993 23-5/8 18-1/8 22-7/8 .26
June 30, 1993 26-1/2 21-1/4 26 .26
September 30, 1993 26-3/4 23-1/4 24-3/4 .27
December 31, 1993 26-5/8 20-1/8 21-1/2 .27
March 31, 1994 23-7/8 20-1/4 20-1/2 .27
June 30, 1994 23-1/4 19-1/4 20-7/8 .27
September 30, 1994 23-1/2 20-3/4 22-1/2 .28
====================================================================================================================================
26
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING
The accompanying consolidated financial statements and related notes of Energen
Corporation were prepared by management, which has the primary responsibility
for the integrity of the financial information therein. The statements were
prepared in conformity with generally accepted accounting principles
appropriate in the circumstances and include amounts which are necessarily
based on management's best estimates and judgments. Financial information
presented elsewhere in this report is consistent with that in the financial
statements.
Management maintains a comprehensive system of internal accounting controls and
relies on the system to discharge its responsibility for the integrity of the
financial statements. This system provides reasonable assurance that corporate
assets are safeguarded and that transactions are recorded in such a manner as
to permit the preparation of reliable financial information. Reasonable
assurance recognizes that the cost of a system of internal accounting controls
should not exceed the related benefits. This system of internal accounting
controls is augmented by written policies and procedures, internal auditing,
and the careful selection and training of qualified personnel. As of September
30, 1994, management was aware of no material weaknesses in Energen's system of
internal accounting controls.
The consolidated financial statements have been audited by the Company's
independent certified public accountants, whose opinion is expressed elsewhere
on this page. Their audit was conducted in accordance with generally accepted
auditing standards; and, in connection therewith, they obtained an
understanding of the Company's system of internal accounting controls and
conducted such tests and related procedures as they deemed necessary to arrive
at an opinion on the fairness of presentation of the consolidated financial
statements.
The functioning of the accounting system and related internal accounting
controls is under the general oversight of the Audit Committee of the Board of
Directors, which is comprised of four outside Directors. The Audit Committee
meets regularly with the independent public accountants and representatives of
management to discuss matters regarding internal accounting controls, auditing
and financial reporting.
Geoffrey C. Ketcham
Executive Vice President,
Chief Financial Officer and Treasurer
James T. McManus
Vice President--Finance and Corporate Development
27
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Shareholders of Energen:
We have audited the accompanying consolidated balance sheets of Energen
Corporation and Subsidiaries as of September 30, 1994 and 1993, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the three years in the period ended September 30, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Energen
Corporation and Subsidiaries as of September 30, 1994 and 1993, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended September 30, 1994, in conformity with
generally accepted accounting principles.
As discussed in Note 14 to the consolidated financial statements, the Company
changed its method of accounting for certain other postretirement benefits,
effective October 1, 1993, and income taxes effective October 1, 1991.
Coopers & Lybrand L.L.P.
Birmingham, Alabama
October 26, 1994
28
Selected Financial Data
Energen Corporation and Subsidiaries
====================================================================================================================================
Years ended September 30,
(dollars in thousands, except per share amounts) 1994 1993 1992 1991
====================================================================================================================================
INCOME STATEMENT
Operating revenues $ 377,073 $ 357,116 $ 331,982 $ 325,643
Income before cumulative effect of change
in accounting principle $ 23,751 $ 18,081 $ 15,687 $ 14,112
Net income $ 23,751 $ 18,081 $ 16,628 $ 14,112
Earnings per share before cumulative effect $ 2.19 $ 1.77 $ 1.54 $ 1.42
Earnings per average common share $ 2.19 $ 1.77 $ 1.64 $ 1.42
====================================================================================================================================
BALANCE SHEET
Capitalization at year-end:
Common shareholders' equity $ 167,026 $ 140,313 $ 129,858 $ 121,995
Preferred stock - - 1,800 1,800
Long-term debt 118,302 85,852 90,609 77,677
- ------------------------------------------------------------------------------------------------------------------------------------
Total capitalization $ 285,328 $ 226,165 $ 222,267 $ 201,472
- ------------------------------------------------------------------------------------------------------------------------------------
Total assets $ 411,314 $ 370,685 $ 342,119 $ 337,516
- ------------------------------------------------------------------------------------------------------------------------------------
Property, plant and equipment, net $ 287,182 $ 273,097 $ 254,630 $ 273,539
====================================================================================================================================
COMMON STOCK DATA
Annual dividend rate at year-end $ 1.12 $ 1.08 $ 1.04 $ 1.00
Cash dividends paid per common share $ 1.09 $ 1.05 $ 1.01 $ .955
Book value per common share $ 15.30 $ 13.60 $ 12.75 $ 12.07
Market-to-book ratio at year-end (%) 147 182 142 150
Yield at year-end (%) 5.0 4.4 5.7 5.5
Return on average common equity (%) 14.6 13.0 13.0 11.6
Price-to-earnings ratio at year-end 10.3 14.0 11.1 12.8
Shares outstanding at year-end (000) 10,918 10,320 10,183 10,104
Price Range:
High $ 26-5/8 $ 26-3/4 $ 18-7/8 $ 20
Low $ 19-1/4 $ 17-5/8 $ 15 $ 16
Close $ 22-1/2 $ 24-3/4 $ 18-1/8 $ 18-1/8
====================================================================================================================================
OTHER GENERAL DATA
Capital expenditures $ 46,163 $ 44,036 $ 22,758 $ 47,024
====================================================================================================================================
Note: All information prior to 1989 has been adjusted for the effects of a
three-for-two common stock split.
All information prior to 1990 includes the effects of discontinued operations.
29
====================================================================================================================================
1990 1989 1988 1987 1986 1985 1984
====================================================================================================================================
$ 324,860 $ 308,604 $ 353,135 $ 323,590 $ 364,853 $ 378,660 $ 416,606
$ 11,267 $ 6,422 $ 11,667 $ 8,950 $ 1,544 $ 5,248 $ 5,539
$ 11,267 $ 6,422 $ 11,667 $ 8,950 $ 1,544 $ 5,248 $ 5,539
$ 1.15 $ .69 $ 1.53 $ 1.38 $ .24 $ .86 $ .93
$ 1.15 $ .69 $ 1.53 $ 1.38 $ .24 $ .86 $ .93
====================================================================================================================================
$ 113,316 $ 107,950 $ 86,256 $ 63,687 $ 58,325 $ 59,085 $ 55,291
1,800 2,450 2,450 2,850 3,000 3,150 3,300
82,835 86,188 53,203 54,589 42,286 24,690 25,606
- ------------------------------------------------------------------------------------------------------------------------------------
$ 197,951 $ 196,588 $ 141,909 $ 121,126 $ 103,611 $ 86,925 $ 84,197
- ------------------------------------------------------------------------------------------------------------------------------------
$ 326,350 $ 294,614 $ 260,560 $ 237,445 $ 211,055 $ 191,524 $ 187,790
- ------------------------------------------------------------------------------------------------------------------------------------
$ 250,983 $ 238,329 $ 206,230 $ 191,099 $ 170,952 $ 150,544 $ 135,562
====================================================================================================================================
$ .94 $ .88 $ .827 $ .76 $ .72 $ .693 $ .613
$ .895 $ .843 $ .777 $ .73 $ .70 $ .653 $ .593
$ 11.48 $ 11.13 $ 10.80 $ 9.73 $ 9.02 $ 9.45 $ 9.22
157 190 147 163 140 97 92
5.2 4.2 5.2 4.8 5.7 7.6 7.2
10.0 6.0 15.6 14.7 2.6 9.2 10.3
15.7 30.6 10.4 11.5 52.6 10.6 9.1
9,872 9,695 7,989 6,544 6,467 6,253 5,996
$ 21-1/2 $ 24-3/8 $ 16-1/4 $ 16-1/2 $ 14-3/8 $ 10-3/4 $ 8-7/8
$ 16 $ 15-3/8 $ 11-3/8 $ 12-1/2 $ 9 $ 7-7/8 $ 6-3/4
$ 18 $ 21-1/8 $ 15-7/8 $ 15-7/8 $ 12-5/8 $ 9-1/8 $ 8-1/2
====================================================================================================================================
$ 37,335 $ 54,474 $ 39,260 $ 40,139 $ 39,688 $ 29,182 $ 16,021
====================================================================================================================================
30
Selected Operating Data
Energen Corporation and Subsidiaries
====================================================================================================================================
Years ended September 30,
(dollars in thousands) 1994 1993 1992 1991
====================================================================================================================================
NATURAL GAS DISTRIBUTION
Gas sold and transported (MMcf)
Residential 31,254 30,957 29,119 26,262
Commercial and industrial--small 13,536 13,853 13,860 14,837
Commercial and industrial--large 106 282 2,654 3,411
Transportation 52,635 49,346 46,235 41,447
- ------------------------------------------------------------------------------------------------------------------------------------
Total 97,531 94,438 91,868 85,957
- ------------------------------------------------------------------------------------------------------------------------------------
Revenues from gas sold and transported
Residential $229,019 $216,587 $198,676 $195,250
Commercial and industrial--small 84,443 83,069 78,799 84,260
Commercial and industrial--large 790 1,223 6,501 8,916
Transportation 29,321 27,382 25,089 22,890
Other 1,064 2,299 1,661 (2,188)
- ------------------------------------------------------------------------------------------------------------------------------------
Total $344,637 $330,560 $310,726 $309,128
- ------------------------------------------------------------------------------------------------------------------------------------
Average number of customers
Residential 402,531 395,057 387,871 382,747
Commercial and industrial--small 32,563 32,269 31,732 31,432
Commercial and industrial--large 43 46 41 39
- ------------------------------------------------------------------------------------------------------------------------------------
Total 435,137 427,372 419,644 414,218
- ------------------------------------------------------------------------------------------------------------------------------------
Degree days (systemwide)
39-year moving average 2,590 2,590 2,590 2,590
Actual for year 2,636 2,624 2,434 2,017
Ratio of actual to 39-year average (%) 101.8 101.3 94.0 77.9
====================================================================================================================================
OIL AND GAS PRODUCTION
Operating revenues $ 25,211 $ 19,887 $ 15,718 $ 12,661
Coalbed methane proved reserves (MMcf) 26,712 34,109 34,306 61,314
Conventional proved reserves (MMcf)* 42,261 40,923 19,041 14,369
Oil and gas produced (MMcf)* 10,316 7,468 7,287 6,455
====================================================================================================================================
OTHER ACTIVITIES
Operating revenues $ 15,401 $ 14,926 $ 15,099 $ 13,951
Operating income $ 1,594 $ 929 $ 2,009 $ 1,395
Property, plant and equipment, net $ 1,977 $ 6,273 $ 6,797 $ 7,098
====================================================================================================================================
* Oil expressed in natural gas equivalents
31
====================================================================================================================================
1990 1989 1988 1987 1986 1985 1984
====================================================================================================================================
28,653 27,210 28,636 27,365 25,373 26,314 29,300
16,581 17,946 21,806 18,482 22,337 22,620 24,168
4,786 9,494 13,026 8,902 20,877 18,365 23,180
39,117 34,447 28,730 26,895 6,636 3,876 --
- ------------------------------------------------------------------------------------------------------------------------------------
89,137 89,097 92,198 81,644 75,223 71,175 76,648
- ------------------------------------------------------------------------------------------------------------------------------------
$188,168 $170,302 $190,836 $181,007 $165,160 $165,034 $177,261
85,588 85,477 104,420 93,242 112,580 119,290 124,963
13,596 25,000 37,923 24,982 77,989 87,134 108,932
22,734 19,574 15,158 17,871 3,748 1,802 --
873 731 689 679 648 507 1,247
- ------------------------------------------------------------------------------------------------------------------------------------
$310,959 $301,084 $349,026 $317,781 $360,125 $373,767 $412,403
- ------------------------------------------------------------------------------------------------------------------------------------
379,362 365,572 358,872 350,712 341,406 334,418 329,237
31,565 30,492 29,717 29,007 28,318 27,817 27,512
42 42 37 34 32 30 34
- ------------------------------------------------------------------------------------------------------------------------------------
410,969 396,106 388,626 379,753 369,756 362,265 356,783
- ------------------------------------------------------------------------------------------------------------------------------------
2,590 2,585 2,585 2,585 2,585 2,590 2,591
2,378 2,383 2,592 2,523 2,345 2,410 2,868
91.8 92.2 100.3 97.6 90.7 93.1 110.7
====================================================================================================================================
$ 12,983 $ 13,469 $ 13,034 $ 9,536 $ 8,163 $ 7,833 $ 4,203
44,881 17,384 8,783 9,450 3,594 -- --
14,626 14,060 7,772 8,985 10,796 12,136 10,375
5,434 5,534 5,540 3,975 2,926 2,374 1,199
====================================================================================================================================
$ 13,372 $ 5,962 $ 3,345 $ 3,843 $ 734 $ 578 $ 93
$ 1,890 $ (94) $ 1,324 $ 1,690 $ 319 $ 317 $ 36
$ 7,754 $ 9,004 $ 9,814 $ 5,833 $ 5,581 $ 44 $ 84
====================================================================================================================================