Energen Corp. (EGN, Financial) filed Quarterly Report for the period ended 2009-09-30.
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 $3.12 billion; its shares were traded at around $43.48 with a P/E ratio of 12 and P/S ratio of 2. The dividend yield of Energen Corp. stocks is 1.2%. 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.
For the 2009 year-to-date, Energens net income totaled $197.7 million ($2.75 per diluted share) and compared to net income of $256.6 million ($3.56 per diluted share) for the same period in the prior year. Energen Resources generated net income for the nine months ended September 30, 2009, of $161 million as compared with $222.6 million in the previous period primarily as a result of lower commodity prices (approximately $103 million after-tax), higher DD&A expense (approximately $23 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 expenses (approximately $4 million after-tax). Positively affecting net income was the impact of increased production volumes (approximately $46 million after-tax), decreased production taxes (approximately $22 million after-tax) and the $3.1 million after-tax gain on the sale of oil properties in the Permian Basin. Alagascos net income of $37.6 million in the current year-to-date compared to net income of $34.8 million, largely reflecting the utilitys ability to earn on a higher level of equity combined with timing differences associated with rate recovery (approximately $2.8 million after-tax) and increased revenue from cycle sales partially offset by decreased revenue from large commercial and industrial customers. Negatively affecting net income, as discussed above, was the prior year charge against the ESR (approximately $2.5 million after-tax) and the prior year benefit from the increase in O&M expense being below its inflation-based cost control measure (approximately $1.8 million after-tax).
Revenues from oil and gas operations declined 11.8 percent to $218.5 million for the three months ended September 30, 2009 and 14 percent to $606.2 million in the year-to-date largely as a result of decreased commodity prices partially offset by the impact of higher production volumes. During the current quarter, revenue per unit of production for natural gas fell 27.6 percent to $6.10 per thousand cubic feet (Mcf), while oil revenue per unit of production decreased 18 percent to $64.03 per barrel. Natural gas liquids revenue per unit of production decreased 14.6 percent to an average price of $0.88 per gallon. In the year-to-date, revenue per unit of production for natural gas declined 23.4 percent to $6.30 per Mcf, oil revenue per unit of production decreased 19.7 percent to $59.19 per barrel and natural gas liquids revenue per unit of production fell 18.9 percent to an average price of $0.86 per gallon.
O&M expense increased $8 million for the quarter and $6.3 million in the year-to-date. Lease operating expense (excluding production taxes) increased by $1.6 million for the quarter largely due to the June 2009 acquisition of Permian Basin oil properties (approximately $3.3 million) partially offset by lower ad valorem taxes (approximately $2 million). In the year-to-date, lease operating expense (excluding production taxes) rose $6.1 million primarily due to the oil property acquisition (approximately $3.3 million), increased ad valorem taxes (approximately $1.4 million), higher labor costs (approximately $1.2 million) and increased marketing and transportation costs (approximately $1.1 million) partially offset by decreased electrical costs (approximately $1 million). Administrative expense increased $6.2 million for the three months ended September 30, 2009 largely due to higher benefit costs primarily related to the Companys performance-based compensation plans (approximately $3.5 million) and increased litigation reserves (approximately $1.7 million). For the nine months ended September 30, 2009, administrative expense rose $3 million largely due to increased benefit costs (approximately $2.6 million) and litigation reserve increases (approximately $1.1 million) as described above partially offset by insurance recoveries associated with certain legal expenses (approximately $0.9 million). Exploration expense rose $0.2 million in the third quarter of 2009. In the year-to-date, exploration expense declined $2.8 million primarily due to mechanical difficulties encountered in the prior year while drilling an exploratory well in the San Juan Basin.
Energen Resources DD&A expense for the quarter rose $13.6 million and increased $36.9 million year-to-date. The average depletion rate for the current quarter was $1.63 per thousand cubic feet equivalent (Mcfe) as compared to $1.30 per Mcfe in the same period a year ago. For the nine months ended September 30, 2009, the average depletion rate was $1.58 per Mcfe as compared to $1.25 per Mcfe in the previous period. The increase in the current quarter and year-to-date per unit DD&A rate, which contributed approximately $11 million and $26.7 million, respectively, was largely due to increased development costs and the negative effect on reserves of lower year-end oil and gas prices. Increased production volumes also contributed approximately $2.6 million and $10.2 million to the increase in DD&A expense in the three months and nine months ended September 30, 2009, respectively.
The Company had a net outflow of cash from investing activities of $446.3 million for the nine months ended September 30, 2009 primarily due to additions of property, plant and equipment. Energen Resources invested $397.4 million (includes approximately $55.8 million of payments associated with accrued development cost) in capital expenditures primarily related to the acquisition and development of oil and gas properties. In June 2009, Energen Resources completed its purchase of oil properties located in the Permian Basin for a cash price of approximately $182 million. The acquisition added approximately 15.2 million barrels of oil equivalents in proved reserves. During the year-to-date, Energen Resources received cash proceeds of $7.4 million primarily from the sale of certain Permian Basin oil properties. Utility capital expenditures totaled $55.9 million (excludes approximately $0.2 million of accrued capital cost) in the year-to-date and primarily represented expansion and replacement of its distribution system and support facilities, including the implementation of the Customer Care and Service (CCS) software system.
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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 $3.12 billion; its shares were traded at around $43.48 with a P/E ratio of 12 and P/S ratio of 2. The dividend yield of Energen Corp. stocks is 1.2%. 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 $47.1 million ($0.65 per diluted share) for the three months ended September 30, 2009 compared with net income of $73.1 million ($1.01 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, 2009, of $59 million as compared with $79.6 million in the same quarter in the previous year. Significantly lower commodity prices (approximately $40 million after-tax), increased depreciation, depletion and amortization (DD&A) expense (approximately $8 million after-tax) and increased administrative expense (approximately $4 million after-tax) were partially offset by increased natural gas, oil and natural gas liquids production volumes (approximately $20 million after-tax), lower production taxes (approximately $7 million after-tax) and an after-tax gain of $3.1 million on the sale of certain oil properties in the Permian Basin. Energens natural gas utility, Alagasco, reported a net loss of $10.7 million in the third quarter of 2009 compared to a net loss of $5.8 million in the same period last year largely due to the prior quarter utilization of the Enhanced Stability Reserve (ESR) to compensate for certain large industrial and commercial load loss (approximately $2.5 million after tax), the benefit in the third quarter of 2008 from the increase in O&M expense being below its inflation-based cost control measure (approximately $1.8 million after-tax) and timing differences associated with rate recovery under other Alagasco rate mechanisms combined with the utilitys ability to earn on a higher level of equity (approximately $1.1 million after-tax).For the 2009 year-to-date, Energens net income totaled $197.7 million ($2.75 per diluted share) and compared to net income of $256.6 million ($3.56 per diluted share) for the same period in the prior year. Energen Resources generated net income for the nine months ended September 30, 2009, of $161 million as compared with $222.6 million in the previous period primarily as a result of lower commodity prices (approximately $103 million after-tax), higher DD&A expense (approximately $23 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 expenses (approximately $4 million after-tax). Positively affecting net income was the impact of increased production volumes (approximately $46 million after-tax), decreased production taxes (approximately $22 million after-tax) and the $3.1 million after-tax gain on the sale of oil properties in the Permian Basin. Alagascos net income of $37.6 million in the current year-to-date compared to net income of $34.8 million, largely reflecting the utilitys ability to earn on a higher level of equity combined with timing differences associated with rate recovery (approximately $2.8 million after-tax) and increased revenue from cycle sales partially offset by decreased revenue from large commercial and industrial customers. Negatively affecting net income, as discussed above, was the prior year charge against the ESR (approximately $2.5 million after-tax) and the prior year benefit from the increase in O&M expense being below its inflation-based cost control measure (approximately $1.8 million after-tax).
Revenues from oil and gas operations declined 11.8 percent to $218.5 million for the three months ended September 30, 2009 and 14 percent to $606.2 million in the year-to-date largely as a result of decreased commodity prices partially offset by the impact of higher production volumes. During the current quarter, revenue per unit of production for natural gas fell 27.6 percent to $6.10 per thousand cubic feet (Mcf), while oil revenue per unit of production decreased 18 percent to $64.03 per barrel. Natural gas liquids revenue per unit of production decreased 14.6 percent to an average price of $0.88 per gallon. In the year-to-date, revenue per unit of production for natural gas declined 23.4 percent to $6.30 per Mcf, oil revenue per unit of production decreased 19.7 percent to $59.19 per barrel and natural gas liquids revenue per unit of production fell 18.9 percent to an average price of $0.86 per gallon.
O&M expense increased $8 million for the quarter and $6.3 million in the year-to-date. Lease operating expense (excluding production taxes) increased by $1.6 million for the quarter largely due to the June 2009 acquisition of Permian Basin oil properties (approximately $3.3 million) partially offset by lower ad valorem taxes (approximately $2 million). In the year-to-date, lease operating expense (excluding production taxes) rose $6.1 million primarily due to the oil property acquisition (approximately $3.3 million), increased ad valorem taxes (approximately $1.4 million), higher labor costs (approximately $1.2 million) and increased marketing and transportation costs (approximately $1.1 million) partially offset by decreased electrical costs (approximately $1 million). Administrative expense increased $6.2 million for the three months ended September 30, 2009 largely due to higher benefit costs primarily related to the Companys performance-based compensation plans (approximately $3.5 million) and increased litigation reserves (approximately $1.7 million). For the nine months ended September 30, 2009, administrative expense rose $3 million largely due to increased benefit costs (approximately $2.6 million) and litigation reserve increases (approximately $1.1 million) as described above partially offset by insurance recoveries associated with certain legal expenses (approximately $0.9 million). Exploration expense rose $0.2 million in the third quarter of 2009. In the year-to-date, exploration expense declined $2.8 million primarily due to mechanical difficulties encountered in the prior year while drilling an exploratory well in the San Juan Basin.
Energen Resources DD&A expense for the quarter rose $13.6 million and increased $36.9 million year-to-date. The average depletion rate for the current quarter was $1.63 per thousand cubic feet equivalent (Mcfe) as compared to $1.30 per Mcfe in the same period a year ago. For the nine months ended September 30, 2009, the average depletion rate was $1.58 per Mcfe as compared to $1.25 per Mcfe in the previous period. The increase in the current quarter and year-to-date per unit DD&A rate, which contributed approximately $11 million and $26.7 million, respectively, was largely due to increased development costs and the negative effect on reserves of lower year-end oil and gas prices. Increased production volumes also contributed approximately $2.6 million and $10.2 million to the increase in DD&A expense in the three months and nine months ended September 30, 2009, respectively.
The Company had a net outflow of cash from investing activities of $446.3 million for the nine months ended September 30, 2009 primarily due to additions of property, plant and equipment. Energen Resources invested $397.4 million (includes approximately $55.8 million of payments associated with accrued development cost) in capital expenditures primarily related to the acquisition and development of oil and gas properties. In June 2009, Energen Resources completed its purchase of oil properties located in the Permian Basin for a cash price of approximately $182 million. The acquisition added approximately 15.2 million barrels of oil equivalents in proved reserves. During the year-to-date, Energen Resources received cash proceeds of $7.4 million primarily from the sale of certain Permian Basin oil properties. Utility capital expenditures totaled $55.9 million (excludes approximately $0.2 million of accrued capital cost) in the year-to-date and primarily represented expansion and replacement of its distribution system and support facilities, including the implementation of the Customer Care and Service (CCS) software system.
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