EMPLOYEE BENEFIT PLANS

In October 2014, Energen’s Board of Directors elected to freeze and terminate its qualified defined benefit pension plan. A plan amendment adopted in October 2014 closed the plan to new entrants, effective November 1, 2014, and froze benefit accruals after December 31, 2014. Energen terminated the plan on January 31, 2015 and anticipates distributing benefits in late 2015 or in 2016.

Energen’s non-qualified supplemental retirement plans were terminated effective December 31, 2014. Distributions under the plans are subject to certain payment restrictions under the Internal Revenue Code and Treasury regulations and payments to plan participants were made in the first quarter of 2015 with the remainder to be made in the first quarter of 2016. In connection with the termination of these plans, the Company has also classified approximately $3.3 million as of September 30, 2015 of its investment in a Rabbi Trust from other long term assets to prepayments and other assets in the accompanying balance sheets to reflect its intent to utilize these assets to partially fund the estimated payments in the first quarter of 2016.

In October 2014, Energen’s Board of Directors amended and restated the Employee Savings Plan to make certain benefit design changes effective January 1, 2015. The benefit design changes include an increase in the percentage of Energen match and other contributions.

Effective April 30, 2014, Energen separated its defined benefit non-contributory pension plan and its postretirement healthcare and life insurance benefit plan into an Energen and an Alagasco plan reflecting the separation of assets and obligations in accordance with ERISA provisions. Energen remeasured the plans using current assumptions.

The components of net periodic benefit cost from continuing operations for Energen’s defined benefit non-contributory pension plan and certain nonqualified supplemental pension plans were as follows:



	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2015		2014			2015		2014
Components of net periodic benefit cost:
Service cost	$	—	$	1,902		$	—	$	5,157
Interest cost	204		1,157			612		3,974
Expected long-term return on assets	—		(1,157		)	—		(4,067		)
Actuarial loss	184		1,296			553		4,115
Prior service cost amortization	—		63			—		177
Settlement charge	546		370			3,909		4,043
Net periodic expense	$	934	$	3,631		$	5,074	$	13,399

During 2015, Energen anticipates an additional contribution of $14.3 million in order to complete the distribution of plan assets related to the plan terminations. The Company made benefit payments, which were funded by the Rabbi Trust, of approximately $10.9 million during the nine months ended September 30, 2015 with respect to the termination of the non-qualified supplemental retirement plans and expects to make additional benefit payments of $30,000 through the remainder of 2015. In the three months and nine months ended September 30, 2015, Energen incurred settlement charges of $0.5 million and $1.4 million, respectively, for the payment of lump sums from the qualified defined benefit pension plans. Also in the first quarter of 2015, Energen incurred a settlement charge of $2.5 million for the payment of lump sums from the non-qualified supplemental retirement plans. In the second quarter and third quarter of 2014, Energen incurred settlement charges of $0.4 million and $0.3 million, respectively, for the payment of lump sums from the qualified defined benefit pension plan. In the first quarter of 2014, Energen incurred settlement charges of $6.9 million for the payment of lump sums from the qualified defined benefit pension plans of which $3.7 million is included in discontinued operations. Also in the first quarter and third quarter of 2014, Energen incurred settlement charges of $0.4 million and $26,000, respectively, for the payment of lump sums from the non-qualified supplemental retirement plans.

The components of net periodic postretirement benefit expense from continuing operations for Energen’s postretirement benefit plan were as follows:



	Three months ended September 30,						Nine months ended September 30,
(in thousands)	2015			2014			2015			2014
Components of net periodic benefit cost:
Service cost	$	98		$	87		$	294		$	206
Interest cost	117			137			350			587
Expected long-term return on assets	(114		)	(246		)	(343		)	(1,016		)
Actuarial gain	—			(151		)	—			(572		)
Transition amortization	—			9			—			39
Net periodic (income) expense	$	101		$	(164	)	$	301		$	(756	)

There are no required contributions to the postretirement benefit plan during 2015.