EX-99.3 4 d385538dex993.htm NON-GAAP FINANCIAL MEASURES RECONCILIATION Non-GAAP Financial Measures Reconciliation

Exhibit 99.3

Non-GAAP Financial Measures

The United States Securities and Exchange Commission requires public companies, such as Energen Corporation (the Company), to reconcile Non-GAAP (GAAP refers to generally accepted accounting principles) financial measures to related GAAP measures. Adjusted Net Income is a Non-GAAP financial measure which excludes certain non-cash mark-to-market derivative financial instruments and a commodity price-related write-down of natural gas properties. Energen believes that excluding the impact of these items is more useful to analysts and investors in comparing the results of operations and operational trends between reporting periods and relative to other oil and gas producing companies.

 

     Quarter Ended 6/30/2012  

Consolidated Net Income ($ in millions)

    Net Income     Per Diluted Share  

Net Income (GAAP)

      131.3        1.82   

Non-cash mark-to-market gains (net of $43.0 tax)

      (78.5 )      (1.09 ) 
  

 

 

    

 

 

  

Adjusted Net Income (Non-GAAP)

      52.8        0.73   
  

 

 

    

 

 

  
     Year-to-Date Ended 6/30/2012  

Consolidated Net Income ($ in millions except per share data)

    Net Income     Per Diluted Share  

Net Income (GAAP)

      188.7        2.61   

Non-cash mark-to-market gains (net of $28.6 tax)

      (52.2 )      (0.73 ) 

Non-cash write-down of natural gas properties (net of $8.1 tax)

      13.4        0.19   
  

 

 

    

 

 

  

Adjusted Net Income (Non-GAAP)

      149.9        2.07   
  

 

 

    

 

 

  

Non-GAAP Financial Measures

The United States Securities and Exchange Commission requires public companies, such as Energen Corporation (the Company), to reconcile Non-GAAP (GAAP refers to generally accepted accounting principles) financial measures to related GAAP measures. Adjusted Net Income is a Non-GAAP financial measure which excludes certain non-cash mark-to-market derivative financial instruments and a commodity price-related write-down of natural gas properties. Energen believes that excluding the impact of these items is more useful to analysts and investors in comparing the results of operations and operational trends between reporting periods and relative to other oil and gas producing companies.

 

Energen Resources Net Income ($ in millions)

    Quarter Ended
6/30/2012		     Year-to-date
6/30/2012		  

Net Income (GAAP)

      131.7        141.2   

Non-cash mark-to-market gains (net of $43.0 and $28.6 tax)

      (78.5 )      (52.2 ) 

Non-cash write-down of natural gas properties (net of $8.1 tax)

      —          13.4   
  

 

 

    

 

 

  

Adjusted Net Income (Non-GAAP)

      53.2        102.4   
  

 

 

    

 

 

  

Non-GAAP Financial Measures

The United States Securities and Exchange Commission requires public companies, such as Energen Corporation (the Company), to reconcile Non-GAAP (GAAP refers to generally accepted accounting principles) financial measures to related GAAP measures. Earnings before interest, taxes, depreciation, and amortization (EBITDA) is a Non-GAAP financial measure. Energen believes this measure allows analysts and investors to understand the financial performance of the company by computing earnings from core business operations, without including the effects of capital structure, tax rates and depreciation. Further, this measure is useful in comparing profitability between the company and other oil and gas producing companies. Adjusted EBITDA excludes certain non-cash mark-to-market derivative financial instruments and a commodity price-related write-down of natural gas properties.

 

Reconciliation To GAAP Information    Year-to-Date Ended 6/30     Quarter Ended 6/30  

($ in millions)

    2011      2012     2011      2012  

Consolidated Net Income (GAAP)

      157.6         188.7        63.3         131.3   

Interest expense

      18.9         31.3        9.5         15.8   

Income tax expense

      91.5         106.8        34.2         73.6   

Depreciation, depletion and amortization

      126.8         196.5        65.6         102.0   
  

 

 

     

 

 

    

 

 

     

 

 

  

EBITDA (Non-GAAP)

      394.8         523.3        172.6         322.7   
  

 

 

     

 

 

    

 

 

     

 

 

  

Adjustment for asset impairment

      —           21.5        —           —     

Adjustment for mark-to-market gains

      —           (80.8 )      —           (121.5 ) 
  

 

 

     

 

 

    

 

 

     

 

 

  

Consolidated Adjusted EBITDA (Non-GAAP)

      394.8         464.0        172.6         201.2   
  

 

 

     

 

 

    

 

 

     

 

 

  
Reconciliation To GAAP Information    Year-to-Date Ended 6/30     Quarter Ended 6/30  

($ in millions)

    2011      2012     2011      2012  

Energen Resources Net Income (GAAP)

      112.8         141.2        63.1         131.7   

Interest expense

      12.0         23.5        6.1         12.0   

Income tax expense

      66.4         78.7        36.5         72.7   

Depreciation, depletion and amortization

      107.1         175.5        55.8         91.5   
  

 

 

     

 

 

    

 

 

     

 

 

  

Energen Resources EBITDA (Non-GAAP)

      298.3         418.9        161.5         307.9   
  

 

 

     

 

 

    

 

 

     

 

 

  

Adjustment for asset impairment

      —           21.5        —           —     

Adjustment for mark-to-market gains

      —           (80.8 )      —           (121.5 ) 
  

 

 

     

 

 

    

 

 

     

 

 

  

Energen Resources Adjusted EBITDA (Non-GAAP)

      298.3         359.6        161.5         186.4   
  

 

 

     

 

 

    

 

 

     

 

 

  

Non-GAAP Financial Measures

The United States Securities and Exchange Commission requires public companies, such as Energen Corporation (the Company), to reconcile Non-GAAP (GAAP refers to generally accepted accounting principles) financial measures to related GAAP measures. After-tax Cash Flows is a Non-GAAP financial measure. Energen believes after-tax cash flows are relevant because they are a measure of cash available to fund the Company’s capital expenditures, dividends, debt reduction, and other investments.

 

Reconciliation To GAAP Information    Years Ended 12/31  

($ in millions)

    2010 Actual     2011 Actual     2012 Estimate (e)  

Consolidated Net Income (Before asset impairment)

      291        260        235        264   

Asset impairment

      —          —          (14 )      (14 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Consolidated Net Income (GAAP)

      291        260        221        250   
  

 

 

    

 

 

    

 

 

    

 

 

  

Depreciation, depletion and amortization (Including asset impairment)

      248        284        459        459   

Deferred income taxes, net

      134        129        115        115   
  

 

 

    

 

 

    

 

 

    

 

 

  

After-tax Cash Flows (Non-GAAP)

      673        673        795        824   

Changes in assets and liabilities and other adjustments

      (2 )      89        (13 )      (13 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Net Cash Provided by Operating Activities (GAAP)

      671        762        782        811   
  

 

 

    

 

 

    

 

 

    

 

 

  
Reconciliation To GAAP Information    Years Ended 12/31  

($ in millions)

    2010 Actual     2011 Actual     2012 Estimate (e)  

Net Cash Provided by Operating Activities (GAAP)

      671        762        782        811   

Changes in assets and liabilities and other adjustments

      (69 )      25        13        13   
  

 

 

    

 

 

    

 

 

    

 

 

  

After-tax Cash Flow (Non-GAAP)

      602        787        795        824   

Less: AGC cash flows from operations and other

      (94 )      (107 )      (101 )      (101 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Adj. Cash Flows from Operations Excluding Alagasco (Non-GAAP)

      508        680        694        723   
  

 

 

    

 

 

    

 

 

    

 

 

  

(e) This estimate is a “forward-looking statement” as defined by the Securities and Exchange Commission. All statements based on future expectations rather than on historical facts are forward-looking statements that are dependent on certain events, risks and uncertainties that could cause actual results to differ materially from those anticipated. In addition, the Company cannot guarantee the absence of errors in input data, calculations and formulas used in its estimates, assumptions and forecasts. A discussion of risks and uncertainties, which could affect future results of Energen and its subsidiaries, is included in the Company’s periodic reports filed with the Securities and Exchange Commission.