Discontinued Operations and Held for Sale Properties

3 Months Ended

Mar. 31, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations and Held for Sale Properties

DISCONTINUED OPERATIONSAND HELD FOR SALE PROPERTIES

On September 2, 2014, Energen completed the transaction to sell Alagasco to Laclede for $1.6 billion, less the assumption of $267 million in debt. The net pre-tax proceeds to Energen totaled approximately $1.32 billion, resulting in a pre-tax gain of $726.5 million. This sale has an effective date of August 31, 2014. Energen used cash proceeds from the sale to reduce long-term and short-term indebtedness. During the second quarter of 2014, Energen classified Alagasco as held for sale with prior period comparable and reflected the associated operating results in discontinued operations. Energen’s results of operations and cash flows for the three months ended March 31, 2014 and our financial position as of December 31, 2014 presented in our unaudited consolidated financial statements and these notes reflect Alagasco as discontinued operations.

In March 2014, Energen completed the sale of its North Louisiana/East Texas natural gas and oil properties for $30.3 million. 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 classified these primarily natural gas properties as held for sale and reflected the associated operating results in discontinued operations. Energen 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. 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.

As discussed in Note 13, Acquisition and Disposition of Properties, the following table details held for sale properties by major classes of assets and liabilities:

(in thousands)	December 31, 2014
		San Juan Basin*
Oil and natural gas properties		$	1,166,124
Less accumulated depreciation, depletion and amortization		(770,327		)
Total assets held for sale		395,797
Other long-term liabilities		(24,230		)
Total liabilities held for sale		(24,230		)
Total net assets held for sale		$	371,567

*The San Juan Basin natural gas assets which were held for sale as of December 31, 2014, did not qualify for discontinued operations as we have ongoing operations in the San Juan Basin.

We recognized interest on debt required to be extinguished in connection with the sale of Alagasco as discontinued operations. See Note 1, Organization and Basis of Presentation, for further information regarding adjustments associated with the sale of Alagasco.

(in thousands, except per share data)	Three months ended March 31, 2014
Natural gas distribution revenues	$	263,900
Oil and natural gas revenues	4,812
Total revenues	$	268,712
Pretax income from discontinued operations	$	62,316
Income tax expense	23,597
Income From Discontinued Operations	$	38,719
Loss on disposal of discontinued operations	$	(1,667	)
Income tax benefit	(617		)
Loss on Disposal of Discontinued Operations	$	(1,050	)
Total Income From Discontinued Operations	$	37,669
Diluted Earnings Per Average Common Share
Income from discontinued operations	$	0.53
Loss on disposal of discontinued operations	(0.01		)
Total Income From Discontinued Operations	$	0.52
Basic Earnings Per Average Common Share
Income from discontinued operations	$	0.53
Loss on disposal of discontinued operations	(0.01		)
Total Income From Discontinued Operations	$	0.52