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Energen Reports 4th Quarter And CY12 Operating And Financial Results

CONFERENCE CALL

Energen will hold its quarterly conference call Thursday, January 24, at 11:00 a.m. EST. Members of the investment community may participate by calling 1-866-901-2585. A live audio Webcast of the program as well as a replay may be accessed through Energen’s Web site, www.energen.com.

Energen Corporation is an oil and gas exploration and production company with headquarters in Birmingham, Alabama. Through Energen Resources Corporation, the company has approximately 750 million barrels of oil-equivalent proved, probable, and possible reserves. These all-domestic reserves are located mainly in the Permian and San Juan basins. For more information, go to http://www.energen.com .

FORWARD LOOKING STATEMENT: This release contains statements expressing expectations of future plans, objectives and performance that constitute forward-looking statements made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Except as otherwise disclosed, the Company’s forward-looking statements do not reflect the impact of possible or pending acquisitions, divestitures or restructurings. We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise. All statements based on future expectations rather than on historical facts are forward-looking statements that are dependent on certain events, risks and uncertainties that could cause actual results to differ materially from those anticipated. In addition, the Company cannot guarantee the absence of errors in input data, calculations and formulas used in its estimates, assumptions and forecasts. A more complete discussion of risks and uncertainties that could affect future results of Energen and its subsidiaries is included in the Company’s periodic reports filed with the Securities and Exchange Commission.

Financial, operating, and support data pertaining to all reporting periods included in this release are unaudited and subject to revision.

 

Non-GAAP Financial Measures

 

The United States Securities and Exchange Commission requires public companies, such as Energen Corporation (the Company), to reconcile Non-GAAP (GAAP refers to generally accepted accounting principles) financial measures to related GAAP measures. Adjusted Net Income is a Non-GAAP financial measure which excludes certain non-cash mark-to-market derivative financial instruments and a commodity price-related write-down of natural gas properties. Energen believes that excluding the impact of these items is more useful to analysts and investors in comparing the results of operations and operational trends between reporting periods and relative to other oil and gas producing companies.

 
     
Quarter Ended 12/31/2012
Consolidated Net Income ($ in millions except per share data)     Net Income     Per Diluted Share
Net Income (GAAP) 62.8     0.87
Non-cash mark-to-market gains (net of $9.0 tax)     (15.7 )     (0.22 )
Adjusted Net Income (Non-GAAP)     47.2       0.65  
 
 
Quarter Ended 12/31/2011
Consolidated Net Income ($ in millions except per share data)     Net Income     Per Diluted Share
Net Income (GAAP) 14.4 0.20
Non-cash mark-to-market losses (net of $34.2 tax)     56.6       0.78  
Adjusted Net Income (Non-GAAP)     71.0       0.98  
 
 
Year-to-Date Ended 12/31/2012
Consolidated Net Income ($ in millions except per share data)     Net Income     Per Diluted Share
Net Income (GAAP) 253.6 3.51
Non-cash mark-to-market gains (net of $21.6 tax) (37.2 ) (0.52 )
Non-cash write-down of natural gas properties (net of $8.1 tax)     13.4       0.19  
Adjusted Net Income (Non-GAAP)     229.7       3.18  
 
 
Year-to-Date Ended 12/31/2011
Consolidated Net Income ($ in millions except per share data)     Net Income     Per Diluted Share
Net Income (GAAP) 259.6 3.59
Non-cash mark-to-market losses (net of $14.2 tax)     23.4       0.32  
Adjusted Net Income (Non-GAAP)     283.0       3.91  
 
Note: Amounts may not sum due to rounding
 
 

Non-GAAP Financial Measures

 

The United States Securities and Exchange Commission requires public companies, such as Energen Corporation (the Company), to reconcile Non-GAAP (GAAP refers to generally accepted accounting principles) financial measures to related GAAP measures. Adjusted Net Income is a Non-GAAP financial measure which excludes certain non-cash mark-to-market derivative financial instruments and a commodity price-related write-down of natural gas properties. Energen believes that excluding the impact of these items is more useful to analysts and investors in comparing the results of operations and operational trends between reporting periods and relative to other oil and gas producing companies.

 
     
Energen Resources Net Income ($ in millions)    

Quarter Ended 12/31/2012

   

Year-to-date 12/31/2012

Net Income (GAAP) 50.6     204.1
Non-cash mark-to-market gains (net of $9.0 and $21.6 tax) (15.7 ) (37.2 )
Non-cash write-down of natural gas properties (net of $8.1 tax)     -       13.4  
Adjusted Net Income (Non-GAAP)     34.9       180.3  
 
 
Energen Resources Net Income ($ in millions)    

Quarter Ended 12/31/2011

   

Year-to-date 12/31/2011

Net Income (GAAP) 3.3 213.0
Non-cash mark-to-market losses (net of $34.2 and $14.2 tax)     56.6       23.4  
Adjusted Net Income (Non-GAAP)     59.9       236.4  
 
 

Non-GAAP Financial Measures

 

The United States Securities and Exchange Commission requires public companies, such as Energen Corporation (the Company), to reconcile Non-GAAP (GAAP refers to generally accepted accounting principles) financial measures to related GAAP measures. Earnings before interest, taxes, depreciation, and amortization (EBITDA) is a Non-GAAP financial measure. Energen believes this measure allows analysts and investors to understand the financial performance of the company by computing earnings from core business operations, without including the effects of capital structure, tax rates and depreciation. Further, this measure is useful in comparing profitability between the company and other oil and gas producing companies. Adjusted EBITDA excludes certain non-cash mark-to-market derivative financial instruments and a commodity price-related write-down of natural gas properties.

 
           
Reconciliation To GAAP Information Year-to-Date Ended 12/31 Quarter Ended 12/31
($ in millions)     2011     2012 2011     2012
       
Consolidated Net Income (GAAP) 259.6 253.6 14.4 62.8
Interest expense 44.8 65.6 14.0 17.1
Income tax expense 145.7 143.8 4.8 35.4
Depreciation, depletion and amortization     284.0     419.6   84.4       118.7  
EBITDA (Non-GAAP)     734.1     882.5   117.7       234.0  
Adjustment for asset impairment - 21.5 - -
Adjustment for mark-to-market (gains) / losses     37.6     (58.8 ) 90.8       (24.7 )
Consolidated Adjusted EBITDA (Non-GAAP)     771.7     845.3   208.5       209.3  
 
 
   
Reconciliation To GAAP Information Year-to-Date Ended 12/31 Quarter Ended 12/31
($ in millions)     2011     2012 2011     2012
 
Energen Resources Net Income (GAAP) 213.0 204.1 3.3 50.6
Interest expense 30.9 50.0 10.4 13.1
Income tax expense 120.1 114.4 (1.5 ) 28.3
Depreciation, depletion and amortization     244.1     377.3   74.1       108.0  
Energen Resources EBITDA (Non-GAAP)     608.1     745.8   86.4       200.0  
Adjustment for asset impairment - 21.5 - -
Adjustment for mark-to-market (gains) / losses     37.6     (58.8 ) 90.8       (24.7 )
Energen Resources Adjusted EBITDA (Non-GAAP)     645.7     708.6   177.2       175.3  
 
Note: Amounts may not sum due to rounding
 
 

Non-GAAP Financial Measures

 

The United States Securities and Exchange Commission requires public companies, such as Energen Corporation (the Company), to reconcile Non-GAAP (GAAP refers to generally accepted accounting principles) financial measures to related GAAP measures.  After-tax Cash Flows is a Non-GAAP financial measure.  Energen believes after-tax cash flows are relevant because they are a measure of cash available to fund the Company’s capital expenditures, dividends, debt reduction, and other investments.

 
     
Reconciliation To GAAP Information Years Ended 12/31
($ in millions)     2011 Actual     2012 Actual     2013 Estimate (e)
           
Consolidated Net Income (Before asset impairment) 260 268 219 248
Asset impairment     -       (14 )     -       -  
Consolidated Net Income (GAAP)     260       254       219       248  
Depreciation, depletion and amortization (Including asset impairment) 284 441 530 530
Deferred income taxes, net 129 124 110 110
Exploratory expense 11 17 35 35
Other     53       (34 )     23       23  
After-tax Cash Flows (Non-GAAP) 737 802 917 946
Changes in assets and liabilities and other adjustments     25       (64 )     -       -  
Net Cash Provided by Operating Activities (GAAP)     762       738       917       946  
 
 
Reconciliation To GAAP Information Years Ended 12/31
($ in millions)     2011 Actual     2012 Actual     2013 Estimate (e)
 
Net Cash Provided by Operating Activities (GAAP) 762 738 917 946
Changes in assets and liabilities and other adjustments     (25 )     64       -       -  
After-tax Cash Flow (Non-GAAP) 737 802 917 946
Less: AGC cash flows from operations and other     (115 )     (103 )     (95 )     (95 )
Adj. After-tax Cash Flows Excluding Alagasco (Non-GAAP)     622       699       822       851  
 

(e) This estimate is a “forward-looking statement” as defined by the Securities and Exchange Commission. All statements based on future expectations rather than on historical facts are forward-looking statements that are dependent on certain events, risks and uncertainties that could cause actual results to differ materially from those anticipated. In addition, the Company cannot guarantee the absence of errors in input data, calculations and formulas used in its estimates, assumptions and forecasts. A discussion of risks and uncertainties, which could affect future results of Energen and its subsidiaries, is included in the Company’s periodic reports filed with the Securities and Exchange Commission.

 
 

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) For the 3 months ending December 31, 2012 and 2011

 
    4th Quarter    
   
( in thousands, except per share data)     2012     2011     Change
 
Operating Revenues
Oil and gas operations $ 308,640 $ 168,692 $ 139,948
Natural gas distribution       124,406         119,456         4,950  
 
Total operating revenues       433,046         288,148         144,898  
 
Operating Expenses
Cost of gas 48,049 47,607 442
Operations and maintenance 126,022 100,356 25,666
Depreciation, depletion and amortization 118,735 84,438 34,297
Taxes, other than income taxes 23,121 22,335 786
Accretion expense       1,953         1,771         182  
 
Total operating expenses       317,880         256,507         61,373  
 
Operating Income       115,166         31,641         83,525  
 
Other Income (Expense)
Interest expense (17,098 ) (13,979 ) (3,119 )
Other income 708 1,706 (998 )
Other expense       (598 )       (106 )       (492 )
 
Total other expense       (16,988 )       (12,379 )       (4,609 )
 
Income Before Income Taxes 98,178 19,262 78,916
Income tax expense       35,355         4,830         30,525  
 
Net Income     $ 62,823       $ 14,432       $ 48,391  
 
Diluted Earnings Per Average Common Share     $ 0.87       $ 0.20       $ 0.67  
 
Basic Earnings Per Average Common Share     $ 0.87       $ 0.20       $ 0.67  
 
Diluted Avg. Common Shares Outstanding       72,319         72,269         50  
 
Basic Avg. Common Shares Outstanding       72,138         72,082         56  
 
Dividends Per Common Share     $ 0.14       $ 0.135       $ 0.005  
 
 
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) For the 12 months ending December 31, 2012 and 2011
   
    Year-to-date    
   
( in thousands, except per share data)     2012     2011     Change
 
Operating Revenues
Oil and gas operations $ 1,165,580 $ 948,526 $ 217,054
Natural gas distribution       451,589         534,953         (83,364 )
 
Total operating revenues       1,617,169         1,483,479         133,690  
 
Operating Expenses
Cost of gas 142,228 233,523 (91,295 )
Operations and maintenance 477,883 419,119 58,764
Depreciation, depletion and amortization 419,598 283,997 135,601
Asset impairment 21,545

21,545
Taxes, other than income taxes 88,989 91,734 (2,745 )
Accretion expense       7,534         6,837         697  
 
Total operating expenses       1,157,777         1,035,210         122,567  
 
Operating Income       459,392         448,269         11,123  
 
Other Income (Expense)
Interest expense (65,556 ) (44,822 ) (20,734 )
Other income 4,448 2,334 2,114
Other expense       (903 )       (456 )       (447 )
 
Total other expense       (62,011 )       (42,944 )       (19,067 )
 
Income Before Income Taxes 397,381 405,325 (7,944 )
Income tax expense       143,819         145,701         (1,882 )
 
Net Income     $ 253,562       $ 259,624       $ (6,062 )
 
Diluted Earnings Per Average Common Share     $ 3.51       $ 3.59       $ (0.08 )
 
Basic Earnings Per Average Common Share     $ 3.52       $ 3.60       $ (0.08 )
 
Diluted Avg. Common Shares Outstanding       72,316         72,332         (16 )
 
Basic Avg. Common Shares Outstanding       72,119         72,056         63  
 
Dividends Per Common Share     $ 0.56       $ 0.54       $ 0.02  
 
 

CONSOLIDATED BALANCE SHEETS (UNAUDITED) As of December 31, 2012 and December 31, 2011

 
           
(in thousands)     December 31, 2012     December 31, 2011
   
ASSETS
Current Assets
Cash and cash equivalents $ 17,014 $ 9,541
Accounts receivable, net of allowance 282,405 231,925
Inventories 63,994 74,012
Regulatory asset 45,515 57,143
Other       28,007       71,547
 
Total current assets       436,935       444,168
 
Property, Plant and Equipment
Oil and gas properties, net 4,673,886 3,783,842
Utility plant, net 842,643 813,428
Other property, net       25,107       23,506
 
Total property, plant and equipment, net       5,541,636       4,620,776
 
Other Assets
Regulatory asset 110,566 95,633
Long-term derivative instruments 40,577 31,056
Other       53,486       45,783
 
Total other assets       204,629       172,472
 
TOTAL ASSETS     $ 6,183,200     $ 5,237,416
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Long-term debt due within one year $ 50,000 $ 1,000
Notes payable to banks 643,000 15,000
Accounts payable 264,889 302,048
Regulatory liability 45,116 58,279
Other       164,087       167,552
 
Total current liabilities       1,167,092       543,879
 
Long-term debt       1,103,528       1,153,700
 
Deferred Credits and Other Liabilities
Regulatory liability 80,404

87,234

Deferred income taxes 905,601 806,127
Long-term derivative instruments 11,305 34,663
Other       238,580       179,650
 
Total deferred credits and other liabilities       1,235,890       1,107,674
 
Total Shareholders’ Equity       2,676,690       2,432,163
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY     $ 6,183,200     $ 5,237,416
 
 

SELECTED BUSINESS SEGMENT DATA (UNAUDITED) For the 3 months ending December 31, 2012 and 2011

 
    4th Quarter    
   
( in thousands, except sales price data)     2012     2011     Change
 
Oil and Gas Operations (GAAP)
Operating revenues
Natural gas $ 77,608 $ 96,654 $ (19,046 )
Oil 211,067 47,490 163,577
Natural gas liquids 20,968 23,975 (3,007 )
Other       (1,003 )       573       (1,576 )
 
Total (GAAP)     $ 308,640       $ 168,692     $ 139,948  
 

Oil and Gas Operations excluding mark-to-market (Non-GAAP)

Operating revenues
Natural gas $ 74,002 $ 96,654 $ (22,652 )
Oil 188,636 138,093 50,543
Natural gas liquids 22,290 24,184 (1,894 )
Other       (1,003 )       573       (1,576 )
 
Total (Non-GAAP)*     $ 283,925       $ 259,504     $ 24,421  
 
Production volumes
Natural gas (MMcf) 19,110 18,810 300
Oil (MBbl) 2,339 1,744 595
Natural gas liquids (MMgal) 29.1 24.8 4.3
 
Total production volumes (MMcfe) 37,296 32,820 4,476
Total production volumes (MBOE) 6,216 5,470 746
 
Revenue per unit of production including effects of designated cash flow hedges
Natural gas (Mcf) $ 3.87 $ 5.14 $ (1.27 )
Oil (barrel) $ 80.65 $ 78.52 $ 2.13
Natural gas liquids (gallon) $ 0.77 $ 0.97 $ (0.20 )
 

Revenue per unit of production excluding effects of all derivative instruments

Natural gas (Mcf) $ 3.27 $ 3.45 $ (0.18 )
Oil (barrel) $ 81.09 $ 90.89 $ (9.80 )
Natural gas liquids (gallon) $ 0.68 $ 1.14 $ (0.46 )
 
Other data
Lease operating expense (LOE)
LOE and other $ 71,375 $ 49,874 $ 21,501
Production taxes       14,442         14,109       333  
 
Total     $ 85,817       $ 63,983     $ 21,834  
 
Depreciation, depletion and amortization $ 108,016 $ 74,128 $ 33,888
General and administrative expense $ 14,453 $ 16,973 $ (2,520 )
Capital expenditures $ 333,298 $ 448,851 $ 115,553
Exploration expenditures $ 5,976 $ 514 $ 5,462
Operating income     $ 92,425       $ 11,323     $ 81,102  
 

*Operating revenues excluding mark-to-market gains of $24,715 and losses of $90,812 in fourth quarter 2012 and 2011, respectively.

 
Natural Gas Distribution
Operating revenues
Residential $ 76,161 $ 74,157 $ 2,004
Commercial and industrial 30,822 29,186 1,636
Transportation 16,093 14,665 1,428
Other       1,330         1,448       (118 )
 
Total     $ 124,406       $ 119,456     $ 4,950  
 
Gas delivery volumes (MMcf)
Residential 4,413 4,407 6
Commercial and industrial 2,235 2,151 84
Transportation       13,271         10,901       2,370  
 
Total       19,919         17,459       2,460  
 
Other data
Depreciation and amortization $ 10,719 $ 10,310 $ 409
Capital expenditures $ 20,083 $ 16,814 $ 3,269
Operating income     $ 22,951       $ 20,675     $ 2,276  
 
 

SELECTED BUSINESS SEGMENT DATA (UNAUDITED) For the 12 months ending December 31, 2012 and 2011

     
    Year-to-date    
   
( in thousands, except sales price data)     2012     2011     Change
 
Oil and Gas Operations (GAAP)
Operating revenues
Natural gas $ 288,979 $ 386,894 $ (97,915 )
Oil 790,345 467,320 323,025
Natural gas liquids 85,938 87,466 (1,528 )
Other       318         6,846         (6,528 )
 
Total (GAAP)     $ 1,165,580       $ 948,526       $ 217,054  
 

Oil and Gas Operations excluding mark-to-market (Non-GAAP)

Operating revenues
Natural gas $ 289,494 $ 386,894 $ (97,400 )
Oil 731,559 504,793 226,766
Natural gas liquids 85,459 87,580 (2,121 )
Other       318         6,846         (6,528 )
 
Total (Non-GAAP)*     $ 1,106,830       $ 986,113       $ 120,717  
 
Production volumes
Natural gas (MMcf) 76,362 71,718 4,644
Oil (MBbl) 8,766 6,318 2,448
Natural gas liquids (MMgal) 108.1 91.4 16.7
 
Total production volumes (MMcfe) 144,396 122,688 21,708
Total production volumes (MBOE) 24,066 20,448 3,618
 
Revenue per unit of production including effects of designated cash flow hedges
Natural gas (Mcf) $ 3.79 $ 5.39 $ (1.60 )
Oil (barrel) $ 83.45 $ 79.72 $ 3.73
Natural gas liquids (gallon) $ 0.79 $ 0.96 $ (0.17 )
 

Revenue per unit of production excluding effects of all derivative instruments

Natural gas (Mcf) $ 2.71 $ 3.93 $ (1.22 )
Oil (barrel) $ 87.56 $ 90.53 $ (2.97 )
Natural gas liquids (gallon) $ 0.75 $ 1.11 $ (0.36 )
 
Other data
Lease operating expense (LOE)
LOE and other $ 250,497 $ 202,094 $ 48,403
Production taxes       55,878         54,951         927  
 
Total     $ 306,375       $ 257,045       $ 49,330  
 
Depreciation, depletion and amortization $ 377,328 $ 244,081 $ 133,247
Asset impairment $ 21,545

$

$ 21,545
General and administrative expense $ 66,192 $ 64,322 $ 1,870
Capital expenditures $ 1,291,211 $ 1,115,452 $ 175,759
Exploration expenditures $ 19,363 $ 13,110 $ 6,253
Operating income     $ 367,243       $ 363,131       $ 4,112  
 

*Operating revenues excluding mark-to-market gains of $58,750 and losses of $37,587 in 2012 and 2011, respectively.

 
Natural Gas Distribution
Operating revenues
Residential $ 277,698 $ 343,740 $ (66,042 )
Commercial and industrial 115,711 136,469 (20,758 )
Transportation 58,857 55,234 3,623
Other       (677 )       (490 )       (187 )
 
Total     $ 451,589       $ 534,953       $ (83,364 )
 
Gas delivery volumes (MMcf)
Residential 16,014 21,132 (5,118 )
Commercial and industrial 8,372 9,994 (1,622 )
Transportation       48,106         44,614         3,492  
 
Total       72,492         75,740         (3,248 )
 
Other data
Depreciation and amortization $ 42,270 $ 39,916 $ 2,354
Capital expenditures $ 71,869 $ 73,984 $ (2,115 )
Operating income     $ 93,216       $ 86,216       $ 7,000  
 




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