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Energen Reports 4th Quarter And CY12 Operating And Financial Results

Stocks in this article: EGN

Gains and losses from the change in fair value of derivative instruments that do not qualify for cash flow hedge accounting are reported in operating revenues each applicable reporting period and, therefore, can cause non-cash earnings volatility.

Sensitivity of 2013e Cash Flows and Earnings to Changes in Commodity Prices

Changes in commodity prices for the remainder of the year are estimated to have the following impact on Energen’s 2013 cash flows:

  • Every $1.00 change in the average NYMEX price of oil from $90 per barrel represents an estimated net impact of $750,000, or 1.0 cent per diluted share.
  • Every 1-cent change in the average price of liquids from $0.89 per gallon represents an estimated net impact of approximately $760,000, or 1.0 cent per diluted share.
  • Every 10-cent change in the average NYMEX price of gas from $3.50 represents an estimated net impact of $1.0 million, or 1.4 cents per diluted share.

Price-related events such as substantial basis differential changes could cause earnings sensitivities to be materially different from those outlined above.

The company’s utility subsidiary has the opportunity to earn a return on average equity that is estimated to be approximately $375-$380 million in 2013.

4Q12 Financial Data

Excluding non-cash mark-to-market revenue gains, Energen Resources generated adjusted 4 th quarter 2012 net income of $34.9 million as compared with $59.9 million in 2011. [See “Non-GAAP Financial Measures” for more information and reconciliation.]

 

Production (MBOE)

Commodity     4Q12     4Q11     Change
Oil     2,339     1,744     34 %
NGL 692 591 17 %
Natural Gas       3,185       3,135     2 %
Total       6,216       5,470     14 %
 
 

Production by Area (MBOE)

Area     4Q12     4Q11     Change
Permian Basin 3,082 2,216 39 %
San Juan Basin 2,446 2,480 (1

)%

Other       688       774     (11

)%

 
 

Average Realized Sales Prices

Commodity     4Q12     4Q11     Change
Oil (per barrel) $ 80.65 $ 78.52 3 %
NGL (per gallon) $ 0.77 $ 0.97 (21

)%

Natural Gas (per Mcf)     $ 3.87     $ 5.14     (25

)%

 

Total LOE per unit in the 4 th quarter of 2012 increased approximately 18 percent from the same period a year ago to $13.81 per BOE. Base LOE and marketing and transportation expenses increased approximately 26 percent to $11.48 per BOE largely due to increased water disposal costs, workovers, ad valorem taxes, and equipment rental partially offset by lower operations and maintenance expense. Commodity price-driven production taxes declined approximately 10 percent on a per-unit basis to $2.32 per unit.

DD&A expense per unit in the 4 th quarter of 2012 increased approximately 28 percent from the same period last year to $17.19 per BOE; this increase generally reflected year-over-year increases in development costs.

ALAGASCO

Energen’s utility operations under Alagasco generated net income of $12.2 million in the 4 th quarter of 2012; this $0.9 million increase from the same period last year reflects the utility’s ability to earn on a higher level of equity representing investment in utility plant.

ENERGEN MAINTAINS STRONG HEDGE POSITIONS THROUGH 2014

Energen Resources has hedges in place through 2014 to help protect its future cash flows from commodity.

 

Energen Resources’ 2014 hedges are as follows:

Commodity

   

Hedge Volumes

   

NYMEX Price

Oil

   

9.8 MMBO

   

$ 92.64 per barrel

Natural Gas

   

46.1 Bcf

   

$ 4.61 per Mcf*

 
*  

Basin-specific contract prices for natural gas have been converted for comparability purposes to a NYMEX-equivalent price by adding to them Energen Resources’ assumed San Juan and Permian basis differentials of $0.16 per Mcf and $0.13, respectively.

 

Average realized oil and gas prices for Energen Resources’ production associated with NYMEX contracts as well as for unhedged production will reflect the impact of basis differentials; average realized oil prices also will reflect transportation charges; and average realized NGL prices will be net of transportation and fractionation fees. The company has basin-specific natural gas contracts whereby Energen Resources will receive the contracted hedge price. Gains and losses from the change in fair value of derivative instruments that do not qualify for cash flow hedge accounting are reported in operating revenues each applicable reporting period and, therefore, can cause non-cash earnings volatility.

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