Energen Corp. (EGN, Financial) filed Quarterly Report for the period ended 2009-03-31.
ENERGEN CORP is a diversified energy holding company engaged in naturalgas distribution and oil and natural gas exploration and productionactivities. The Corporation's utility subsidiary Alabama Gas Corporation is the largest natural gas distribution utility in the State of Alabama. The Corporation's oil and gas exploration and production activities are conducted by its subsidiary Taurus Exploration Inc. and its subsidiary. Energen Corp. has a market cap of $2.57 billion; its shares were traded at around $35.81 with a P/E ratio of 8.6 and P/S ratio of 1.7. The dividend yield of Energen Corp. stocks is 1.4%. Energen Corp. had an annual average earning growth of 33.6% over the past 10 years. GuruFocus rated Energen Corp. the business predictability rank of 4-star.
O&M expense increased $1.6 million for the quarter. Lease operating expense (excluding production taxes) increased by $2.7 million for the quarter largely due to higher non-operated expense (approximately $1.8 million), increased ad valorem taxes (approximately $1.6 million) and additional marketing and transportation costs (approximately $0.7 million) partially offset by lower compression costs (approximately $1 million). Administrative expense decreased $1 million for the three months ended March 31, 2009 largely due to insurance recoveries associated with certain legal expenses. Exploration expense declined $0.2 million in the first quarter of 2009.
Energen Resources DD&A expense for the quarter rose $11.6 million. The average depletion rate for the current quarter was $1.54 per thousand cubic feet equivalent (Mcfe) as compared to $1.21 per Mcfe in the same period a year ago. The increase in the current quarter per unit DD&A rate, which contributed approximately $8 million, was largely due to higher rates resulting from an increase in development costs and the negative effect on reserves of lower year-end oil and gas prices. Increased production volumes also contributed approximately $3.5 million to the increase in DD&A expense.
O&M expense rose 1.3 percent in the current quarter primarily due to increased insurance costs (approximately $1.4 million) and increased bad debt expense (approximately $0.6 million) partially offset by lower distribution operation expenses (approximately $0.5 million) and decreased consulting and technology fees (approximately $0.4 million).
The Company had a net outflow of cash from investing activities of $120.5 million for the three months ended March 31, 2009 primarily due to additions of property, plant and equipment. Energen Resources invested $105.9 million (includes approximately $33.1 million of payments associated with accrued development cost) in capital expenditures primarily related to the development of oil and gas properties. Utility capital expenditures totaled $14.5 million (excludes approximately $1.4 million of accrued capital cost) in the year-to-date and primarily represented expansion and replacement of its distribution system and support facilities.
Access to Capital: Energen and Alagasco rely upon excess cash flows supplemented by short-term credit facilities to fund working capital needs. The Company currently has available short-term credit facilities with eight financial institutions aggregating $515 million of which Energen has available $230 million, Alagasco has available $100 million and $185 million is available to either Company. These short-term credit facilities are 364-day committed bilateral agreements. Energen and Alagasco are subject to the risk that these facilities will not be renewed or will be renewed at less favorable terms. However, the Company believes that its expected cash flows, the diversity of credit facilities and its ability to adjust future capital spending provides adequate support for its liquidity needs.
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ENERGEN CORP is a diversified energy holding company engaged in naturalgas distribution and oil and natural gas exploration and productionactivities. The Corporation's utility subsidiary Alabama Gas Corporation is the largest natural gas distribution utility in the State of Alabama. The Corporation's oil and gas exploration and production activities are conducted by its subsidiary Taurus Exploration Inc. and its subsidiary. Energen Corp. has a market cap of $2.57 billion; its shares were traded at around $35.81 with a P/E ratio of 8.6 and P/S ratio of 1.7. The dividend yield of Energen Corp. stocks is 1.4%. Energen Corp. had an annual average earning growth of 33.6% over the past 10 years. GuruFocus rated Energen Corp. the business predictability rank of 4-star.
Highlight of Business Operations:
Energens net income totaled $95.6 million ($1.33 per diluted share) for the three months ended March 31, 2009 compared with net income of $116.7 million ($1.62 per diluted share) for the same period in the prior year. Energen Resources Corporation, Energens oil and gas subsidiary, had net income for the three months ended March 31, 2009, of $47.1 million as compared with $72.5 million in the same quarter in the previous year. Significantly lower commodity prices (approximately $28 million after-tax), increased depreciation, depletion and amortization (DD&A) expense (approximately $7 million after-tax), a 2008 after-tax gain of $6.4 million on the sale of certain Permian Basin oil properties and increased lease operating expense (approximately $2 million after-tax) were partially offset by increased natural gas, oil and natural gas liquids production volumes (approximately $13 million after-tax) and lower production taxes (approximately $5 million after-tax). Energens natural gas utility, Alagasco, reported net income of $47.5 million in the first quarter of 2009 compared to net income of $43.7 million in the same period last year largely reflecting the utilitys ability to earn on a higher level of equity (approximately $3 million after-tax).O&M expense increased $1.6 million for the quarter. Lease operating expense (excluding production taxes) increased by $2.7 million for the quarter largely due to higher non-operated expense (approximately $1.8 million), increased ad valorem taxes (approximately $1.6 million) and additional marketing and transportation costs (approximately $0.7 million) partially offset by lower compression costs (approximately $1 million). Administrative expense decreased $1 million for the three months ended March 31, 2009 largely due to insurance recoveries associated with certain legal expenses. Exploration expense declined $0.2 million in the first quarter of 2009.
Energen Resources DD&A expense for the quarter rose $11.6 million. The average depletion rate for the current quarter was $1.54 per thousand cubic feet equivalent (Mcfe) as compared to $1.21 per Mcfe in the same period a year ago. The increase in the current quarter per unit DD&A rate, which contributed approximately $8 million, was largely due to higher rates resulting from an increase in development costs and the negative effect on reserves of lower year-end oil and gas prices. Increased production volumes also contributed approximately $3.5 million to the increase in DD&A expense.
O&M expense rose 1.3 percent in the current quarter primarily due to increased insurance costs (approximately $1.4 million) and increased bad debt expense (approximately $0.6 million) partially offset by lower distribution operation expenses (approximately $0.5 million) and decreased consulting and technology fees (approximately $0.4 million).
The Company had a net outflow of cash from investing activities of $120.5 million for the three months ended March 31, 2009 primarily due to additions of property, plant and equipment. Energen Resources invested $105.9 million (includes approximately $33.1 million of payments associated with accrued development cost) in capital expenditures primarily related to the development of oil and gas properties. Utility capital expenditures totaled $14.5 million (excludes approximately $1.4 million of accrued capital cost) in the year-to-date and primarily represented expansion and replacement of its distribution system and support facilities.
Access to Capital: Energen and Alagasco rely upon excess cash flows supplemented by short-term credit facilities to fund working capital needs. The Company currently has available short-term credit facilities with eight financial institutions aggregating $515 million of which Energen has available $230 million, Alagasco has available $100 million and $185 million is available to either Company. These short-term credit facilities are 364-day committed bilateral agreements. Energen and Alagasco are subject to the risk that these facilities will not be renewed or will be renewed at less favorable terms. However, the Company believes that its expected cash flows, the diversity of credit facilities and its ability to adjust future capital spending provides adequate support for its liquidity needs.
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