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 $59.9 million in 2011. [See “Non-GAAP Financial Measures” for more information and reconciliation.]
|Production by Area (MBOE)|
|San Juan Basin||2,446||2,480||(1||)%|
|Average Realized Sales Prices|
|Oil (per barrel)||$||80.65||$||78.52||3||%|
|NGL (per gallon)||$||0.77||$||0.97||(21||)%|
|Natural Gas (per Mcf)||$||3.87||$||5.14||(25||)%|
|Energen Resources’ 2014 hedges are as follows:|
|Commodity||Hedge Volumes||NYMEX Price|
|Oil||9.8 MMBO||$ 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.|
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