Discontinued Operations

3 Months Ended

Mar. 31, 2014

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONS

In March 2014, Energen Resources completed the sale on its North Louisiana/East Texas natural gas and oil properties for $30.3 million (subject to closing adjustments). The sale had an effective date of December 1, 2013, and the proceeds from the sale were used to repay short-term obligations. During the third quarter of 2013, Energen Resources classified these natural gas and oil properties as held-for-sale and reflected the associated operating results in discontinued operations. Energen Resources recognized a non-cash impairment writedown on these properties in the first quarter of 2014 of $1.7 million pre-tax to adjust the carrying amount of these properties to their fair value based on an estimate of the selling price of the properties. This non-cash impairment writedown is reflected in loss on disposal of discontinued operations in the three months ended March 31, 2014. Energen Resources also recognized non-cash impairment writedowns on these properties in the third and fourth quarters of 2013 of $24.6 million pre-tax and $5.2 million pre-tax, respectively. Significant assumptions in valuing the proved reserves included the reserve quantities, anticipated operating costs, anticipated production taxes, future expected natural gas prices and basis differentials, anticipated production declines, and a discount rate of 10 percent commensurate with the risk of the underlying cash flow estimates. The impairment writedowns are classified as Level 3 fair value. At December 31, 2013, proved reserves associated with Energen’s North Louisiana/East Texas properties totaled 23 Bcf of natural gas and 91 MBbl of oil.

In October 2013, Energen Resources completed the sale of its Black Warrior Basin coalbed methane properties in Alabama for $160 million (subject to closing adjustments). The Company recorded a pre-tax gain on the sale of approximately $35 million in the fourth quarter of 2013 which was reflected in gain on disposal of discontinued operations in the year ended December 31, 2013. The sale had an effective date of July 1, 2013, and the proceeds from the sale were used to repay short-term obligations. The property was classified as held-for-sale and reflected in discontinued operations during the third quarter of 2013. At December 31, 2012, proved reserves associated with Energen’s Black Warrior Basin properties totaled 97 Bcf of natural gas.

The following table details held-for-sale properties by major classes of assets and liabilities:

(in thousands)	March 31, 2014
	Black Warrior Basin			North Louisiana/East Texas			Total
Accounts receivable	$	—		$	1,670		$	1,670
Inventories	—			68			68
Other property, net	—			133			133
Total assets held-for-sale	—			1,871			1,871
Accounts payable	(2,172		)	(10		)	(2,182		)
Royalty payable	—			(1,221		)	(1,221		)
Other current liabilities	—			(7		)	(7		)
Total liabilities held-for-sale	(2,172		)	(1,238		)	(3,410		)
Total net held-for-sale properties	$	(2,172	)	$	633		$	(1,539	)

Gains and losses on the sale of certain oil and gas properties and any impairments of properties held-for-sale are reported as discontinued operations, with income or loss from operations of the associated properties reported as income or loss from discontinued operations. Accordingly, the results of operations for certain held-for-sale properties were reclassified and reported as discontinued operations for all prior periods presented. Energen Resources may, in the ordinary course of business, be involved in the sale of developed or undeveloped properties. All assets held-for-sale are reported at the lower of the carrying amount or fair value.

	Three months ended
	March 31,
(in thousands, except per share data)	2014			2013
Oil and gas revenues	$	4,821		$	18,663
Pretax income (loss) from discontinued operations	$	(2,078	)	$	3,168
Income tax expense (benefit)	(952		)	1,170
Income (Loss) From Discontinued Operations	$	(1,126	)	$	1,998
Loss on disposal of discontinued operations	$	(1,667	)	$	—
Income tax benefit	(617		)	—
Loss on Disposal of Discontinued Operations	$	(1,050	)	$	—
Total Income (Loss) From Discontinued Operations	$	(2,176	)	$	1,998
Diluted Earnings Per Average Common Share
Income (Loss) from Discontinued Operations	$	(0.02	)	$	0.03
Loss on Disposal of Discontinued Operations	(0.01		)	—
Total Income (Loss) From Discontinued Operations	$	(0.03	)	$	0.03
Basic Earnings Per Average Common Share
Income (Loss) from Discontinued Operations	$	(0.02	)	$	0.03
Loss on Disposal of Discontinued Operations	(0.01		)	—
Total Income (Loss) From Discontinued Operations	$	(0.03	)	$	0.03