Energen Corp. (EGN, Financial) filed Quarterly Report for the period ended 2010-09-30.
Energen Corp. has a market cap of $3.26 billion; its shares were traded at around $45.45 with a P/E ratio of 11.5 and P/S ratio of 2.2. The dividend yield of Energen Corp. stocks is 1.1%. Energen Corp. had an annual average earning growth of 35.1% over the past 10 years. GuruFocus rated Energen Corp. the business predictability rank of 2.5-star.EGN is in the portfolios of Chuck Royce of Royce& Associates, Louis Moore Bacon of Moore Capital Management, LP, Jim Simons of Renaissance Technologies LLC, Diamond Hill Capital of Diamond Hill Capital Management Inc, Mario Gabelli of GAMCO Investors, George Soros of Soros Fund Management LLC, Jeremy Grantham of GMO LLC.
For the 2010 year- to- date, Energens net income totaled $210.6 million ($2.92 per diluted share) and compared favorably to net income of $197.7 million ($2.75 per diluted share) for the same period in the prior year. Energen Resources generated net income for the nine months ended September 30, 2010, of $174.7 million as compared with $161 million in the previous period primarily as a result of higher commodity prices (approximately $62 million after-tax) and increased production volumes (approximately $4 million). Negatively affecting net income was the impact of higher DD&A expense (approximately $10 million after-tax), increased production taxes (approximately $4 million after-tax), increased administrative expense (approximately $2 million after-tax), the $3.1 million after-tax gain on the 2009 sale of oil properties in the Permian Basin and increased exploration expense (approximately $33 million after-tax) largely due to the non-cash $24.6 million after-tax Alabama shale acreage write-off combined with the related $8.6 million write-off of well costs. Alagascos net income of $36.8 million in the current year- to- date compared to net income of $37.6 million in the same period in the previous year. This decrease largely reflects the timing of rate recovery under Alagascos rate-setting mechanisms, partially offset by the utilitys ability to earn on a higher level of equity and the revised depreciation rates discussed above.
Revenues from oil and gas operations rose 7.1 percent to $234.1 million for the three months ended September 30, 2010 largely as a result of increased natural gas and oil commodity prices partially offset by lower natural gas production volumes. For the year to date, revenues from oil and gas operations increased 16.5 percent to $706.3 million primarily as a result of increased natural gas and oil commodity prices along with the impact of higher oil production volumes partially offset by lower natural gas production volumes. During the current quarter, revenue per unit of production for natural gas rose 10.3 percent to $6.73 per thousand cubic feet (Mcf), while oil revenue per unit of production increased 19.9 percent to $76.80 per barrel. Natural gas liquids revenue per unit of production fell 11.4 percent to an average price of $0.78 per gallon. In the year- to- date, revenue per unit of production for natural gas increased 9.8 percent to $6.92 per Mcf, oil revenue per unit of production rose 31.9 percent to $78.09 per barrel and natural gas liquids revenue per unit of production fell 5.8 percent to an average price of $0.81 per gallon.
properties (approximately $5.3 million), additional marketing and transportation costs ($2.2 million), higher ad valorem taxes (approximately $1.9 million) and increased electrical costs (approximately $1 million) partially offset by decreased workover expense ($5 million), lower nonoperated costs ($2.7 million) and decreased operation and maintenance expense ($1.1 million). Administrative expense decreased $3.2 million for the three months ended September 30, 2010 largely due to decreased legal expenses (approximately $2 million) and lower costs related to the Companys performance-based compensation plans (approximately $0.9 million). For the nine months ended September 30, 2010, administrative expense rose $2.4 million primarily due to higher costs primarily related to the Companys performance-based compensation plans (approximately $0.7 million) and increased insurance costs (approximately $0.4 million). Exploration expense rose $33.4 million in the third quarter of 2010 and $53 million year- to- date. In the third quarter of 2010, Energen Resources incurred a non-cash write-off of $23.4 million pre-tax of unproved capitalized leasehold costs associated with the remainder of its Alabama shale leasehold. In the second quarter of 2010, Energen Resources recorded a non-cash write-off of $16.1 million pre-tax of unproved leasehold associated with the deep Conasauga shale acreage. During the three months and nine months ended September 30, 2010, Energen Resources also recorded $10.8 million and $13.8 million, respectively, in write-offs of well costs related to Alabama shale leasehold.
Energen Resources DD&A expense for the quarter rose $2.9 million and increased $16.5 million year-to-date. The average depletion rate for the current quarter was $1.78 per thousand cubic feet equivalent (Mcfe) as compared to $1.63 per Mcfe in the same period a year ago. For the nine months ended September 30, 2010, the average depletion rate was $1.77 per Mcfe as compared to $1.58 per Mcfe in the previous period. The increase in the current quarter and year-to-date per unit DD&A rate, which contributed approximately $4.1 million and $12.9 million, respectively, to the increase in DD&A expense, was largely due to higher development costs along with the reserve revisions associated with lower year-end reserve pricing. Lower production volumes partially offset the increase to DD&A expense with an approximate $1.3 million for the three months ended September 30, 2010. Increased production volumes contributed approximately $3.3 million to the increase in DD&A expense for the nine months ended September 30, 2010.
The Company plans to continue investing significant capital in Energen Resources oil and gas production operations. For 2010, the Company expects its oil and gas capital spending to total approximately $586 million, including $353 million for existing properties, $209 million for acquisitions in the Permian and San Juan basins and $21 for exploration. On September 30, 2010, Energen completed the purchase of certain oil properties in the Permian Basin for a cash price of $189 million (subject to closing adjustments). This purchase had an effective date of September 1, 2010. Energen acquired proved reserves of approximately 18 million barrels of oil equivalents (MMBOE). Of the proved reserves acquired, an estimated 89 percent are undeveloped. The Company currently expects capital spending at Energen Resources to total approximately $510 million during 2011, including approximately $480 million for existing properties and $25 million for exploration. The 2011 projection may be revised as Energen Resources completes its formal budgeting process and incorporates the effect of any commodity price changes through year-end.
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Energen Corp. has a market cap of $3.26 billion; its shares were traded at around $45.45 with a P/E ratio of 11.5 and P/S ratio of 2.2. The dividend yield of Energen Corp. stocks is 1.1%. Energen Corp. had an annual average earning growth of 35.1% over the past 10 years. GuruFocus rated Energen Corp. the business predictability rank of 2.5-star.EGN is in the portfolios of Chuck Royce of Royce& Associates, Louis Moore Bacon of Moore Capital Management, LP, Jim Simons of Renaissance Technologies LLC, Diamond Hill Capital of Diamond Hill Capital Management Inc, Mario Gabelli of GAMCO Investors, George Soros of Soros Fund Management LLC, Jeremy Grantham of GMO LLC.
Highlight of Business Operations:
Energens net income totaled $38.3 million ($0.53 per diluted share) for the three months ended September 30, 2010 compared with net income of $47.1 million ($0.65 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 September 30, 2010, of $46.3 million as compared with $59 million in the same quarter in the previous year. Significantly higher commodity prices (approximately $16 million after-tax) and decreased administrative expense (approximately $2 million after-tax) were more than offset by decreased production volumes (approximately $3 million after-tax), increased depreciation, depletion and amortization (DD&A) expense (approximately $2 million after-tax), increased lease operating expense (approximately $1 million after-tax) and higher exploration expense (approximately $21 million after-tax) due to a non-cash write-off of $14.6 million after-tax (approximately $0.20 per diluted share) of unproved leasehold costs associated with the remainder of its Alabama shale acreage combined with a related $6.7 million write-off of well costs. Energen Resources also reported an after-tax gain of $3.1 million on the sale of certain oil properties in the Permian Basin during the third quarter of 2009. Energens natural gas utility, Alagasco, reported a net loss of $7.1 million in the third quarter of 2010 compared to a net loss of $10.7 million in the same period last year, primarily due to the utilitys ability to earn on a higher level of equity and lower depreciation expense due to the Alabama Public Service Commission (APSC) approved reduction in depreciation rates.For the 2010 year- to- date, Energens net income totaled $210.6 million ($2.92 per diluted share) and compared favorably to net income of $197.7 million ($2.75 per diluted share) for the same period in the prior year. Energen Resources generated net income for the nine months ended September 30, 2010, of $174.7 million as compared with $161 million in the previous period primarily as a result of higher commodity prices (approximately $62 million after-tax) and increased production volumes (approximately $4 million). Negatively affecting net income was the impact of higher DD&A expense (approximately $10 million after-tax), increased production taxes (approximately $4 million after-tax), increased administrative expense (approximately $2 million after-tax), the $3.1 million after-tax gain on the 2009 sale of oil properties in the Permian Basin and increased exploration expense (approximately $33 million after-tax) largely due to the non-cash $24.6 million after-tax Alabama shale acreage write-off combined with the related $8.6 million write-off of well costs. Alagascos net income of $36.8 million in the current year- to- date compared to net income of $37.6 million in the same period in the previous year. This decrease largely reflects the timing of rate recovery under Alagascos rate-setting mechanisms, partially offset by the utilitys ability to earn on a higher level of equity and the revised depreciation rates discussed above.
Revenues from oil and gas operations rose 7.1 percent to $234.1 million for the three months ended September 30, 2010 largely as a result of increased natural gas and oil commodity prices partially offset by lower natural gas production volumes. For the year to date, revenues from oil and gas operations increased 16.5 percent to $706.3 million primarily as a result of increased natural gas and oil commodity prices along with the impact of higher oil production volumes partially offset by lower natural gas production volumes. During the current quarter, revenue per unit of production for natural gas rose 10.3 percent to $6.73 per thousand cubic feet (Mcf), while oil revenue per unit of production increased 19.9 percent to $76.80 per barrel. Natural gas liquids revenue per unit of production fell 11.4 percent to an average price of $0.78 per gallon. In the year- to- date, revenue per unit of production for natural gas increased 9.8 percent to $6.92 per Mcf, oil revenue per unit of production rose 31.9 percent to $78.09 per barrel and natural gas liquids revenue per unit of production fell 5.8 percent to an average price of $0.81 per gallon.
properties (approximately $5.3 million), additional marketing and transportation costs ($2.2 million), higher ad valorem taxes (approximately $1.9 million) and increased electrical costs (approximately $1 million) partially offset by decreased workover expense ($5 million), lower nonoperated costs ($2.7 million) and decreased operation and maintenance expense ($1.1 million). Administrative expense decreased $3.2 million for the three months ended September 30, 2010 largely due to decreased legal expenses (approximately $2 million) and lower costs related to the Companys performance-based compensation plans (approximately $0.9 million). For the nine months ended September 30, 2010, administrative expense rose $2.4 million primarily due to higher costs primarily related to the Companys performance-based compensation plans (approximately $0.7 million) and increased insurance costs (approximately $0.4 million). Exploration expense rose $33.4 million in the third quarter of 2010 and $53 million year- to- date. In the third quarter of 2010, Energen Resources incurred a non-cash write-off of $23.4 million pre-tax of unproved capitalized leasehold costs associated with the remainder of its Alabama shale leasehold. In the second quarter of 2010, Energen Resources recorded a non-cash write-off of $16.1 million pre-tax of unproved leasehold associated with the deep Conasauga shale acreage. During the three months and nine months ended September 30, 2010, Energen Resources also recorded $10.8 million and $13.8 million, respectively, in write-offs of well costs related to Alabama shale leasehold.
Energen Resources DD&A expense for the quarter rose $2.9 million and increased $16.5 million year-to-date. The average depletion rate for the current quarter was $1.78 per thousand cubic feet equivalent (Mcfe) as compared to $1.63 per Mcfe in the same period a year ago. For the nine months ended September 30, 2010, the average depletion rate was $1.77 per Mcfe as compared to $1.58 per Mcfe in the previous period. The increase in the current quarter and year-to-date per unit DD&A rate, which contributed approximately $4.1 million and $12.9 million, respectively, to the increase in DD&A expense, was largely due to higher development costs along with the reserve revisions associated with lower year-end reserve pricing. Lower production volumes partially offset the increase to DD&A expense with an approximate $1.3 million for the three months ended September 30, 2010. Increased production volumes contributed approximately $3.3 million to the increase in DD&A expense for the nine months ended September 30, 2010.
The Company plans to continue investing significant capital in Energen Resources oil and gas production operations. For 2010, the Company expects its oil and gas capital spending to total approximately $586 million, including $353 million for existing properties, $209 million for acquisitions in the Permian and San Juan basins and $21 for exploration. On September 30, 2010, Energen completed the purchase of certain oil properties in the Permian Basin for a cash price of $189 million (subject to closing adjustments). This purchase had an effective date of September 1, 2010. Energen acquired proved reserves of approximately 18 million barrels of oil equivalents (MMBOE). Of the proved reserves acquired, an estimated 89 percent are undeveloped. The Company currently expects capital spending at Energen Resources to total approximately $510 million during 2011, including approximately $480 million for existing properties and $25 million for exploration. The 2011 projection may be revised as Energen Resources completes its formal budgeting process and incorporates the effect of any commodity price changes through year-end.
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