Discontinued Operations and Held for Sale Properties

12 Months Ended

Dec. 31, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations and Held for Sale Properties

DISCONTINUED OPERATIONS AND HELD FOR SALE PROPERTIES

As discussed in Note 15, Acquisition and Disposition of Properties, subsequent to December 31, 2015, Energen classified certain non-core assets in the eastern Delaware Basin as held for sale. Proved reserves associated with these Delaware Basin properties totaled 25,200 MBOE at December 31, 2015.

At December 31, 2015, our remaining San Juan Basin properties were classified as held for sale. Proved reserves associated with these San Juan Basin properties totaled 16,930 MBOE at December 31, 2015.

The following table details San Juan Basin held for sale properties by major classes of assets and liabilities. Property sales in the San Juan Basin do not qualify for discontinued operations:

(in thousands)	December 31, 2015			December 31, 2014
Inventories	$	3,651		$	—
Oil and natural gas properties	305,386			1,166,124
Less accumulated depreciation, depletion and amortization	(219,059		)	(770,327		)
Other property and equipment, net	3,761			—
Total assets held for sale	93,739			395,797
Other long-term liabilities	(12,789		)	(24,230		)
Total liabilities held for sale	(12,789		)	(24,230		)
Total net assets held for sale	$	80,950		$	371,567

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 and reflected the associated operating results in discontinued operations. Energen’s results of operations and cash flows for the years ended December 31, 2014 and 2013 presented in our consolidated financial statements and these notes reflect Alagasco as discontinued operations.

We classified as discontinued operations interest on debt required to be extinguished, certain depreciation costs that ended at close of transaction, the related income tax impact of these items and the earnings of Alagasco. In addition, we reclassified from discontinued operations certain general and administrative expenses, other income and the related tax impact from these items. The table below provides a detail of these items included in income (loss) from discontinued operations as follows:

Years ended December 31, (in thousands)	2014			2013
Alagasco net income	$	40,646		$	57,399
Depreciation, depletion and amortization	(408		)	(598		)
General and administrative	3,337			5,894
Interest expense	(17,306		)	(13,815		)
Other income	(347		)	(1,342		)
Income tax expense	5,567			3,728
Alagasco income from discontinued operations	31,489			51,266
Energen income (loss) from discontinued operations	(2,197		)	7,813
Income from discontinued operations	$	29,292		$	59,079

Years ended December 31, (in thousands, except per share data)	2014		2013
Natural gas distribution revenues	$	397,648	$	533,338
Oil and natural gas revenues	5,199		60,191
Total revenues	$	402,847	$	593,529
Pretax income from discontinued operations	$	47,220	$	92,253
Income tax expense	17,928		33,174
Income From Discontinued Operations	$	29,292	$	59,079
Gain on disposal of discontinued operations, net	$	724,594	$	5,605
Income tax expense	285,497		2,011
Gain on Disposal of Discontinued Operations, net	$	439,097	$	3,594
Total Income From Discontinued Operations	$	468,389	$	62,673
Diluted Earnings Per Average Common Share
Income from discontinued operations	$	0.40	$	0.81
Gain on disposal of discontinued operations, net	5.99		0.05
Total Income From Discontinued Operations	$	6.39	$	0.86
Basic Earnings Per Average Common Share
Income from discontinued operations	$	0.40	$	0.82
Gain on disposal of discontinued operations, net	6.02		0.05
Total Income From Discontinued Operations	$	6.42	$	0.87

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 non-cash impairment writedowns on these properties in 2014 of $1.9 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. These non-cash impairment writedowns are reflected in gain on disposal of discontinued operations, net in the year ended December 31, 2014. Energen also recognized non-cash impairment writedowns on these properties of $29.8 million in 2013. These non-cash impairment writedowns are reflected in gain on disposal of discontinued operations, net in the year ended December 31, 2013. 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 completed the sale of its Black Warrior Basin coalbed methane properties in Alabama for $160 million. Energen recorded a pre-tax gain on the sale of approximately $35 million in the fourth quarter of 2013 that 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.