-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, YjXHqBdSaKi8MQ6AojcuWNf+GZ126LKVSRO1s/yWVkJjb6YQQhP04XlfB9hc9+jq NyG2s9g8E4RRcJfTc3tIhw== 0000277595-94-000016.txt : 19940822 0000277595-94-000016.hdr.sgml : 19940822 ACCESSION NUMBER: 0000277595-94-000016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENERGEN CORP CENTRAL INDEX KEY: 0000277595 STANDARD INDUSTRIAL CLASSIFICATION: 4924 IRS NUMBER: 630757759 STATE OF INCORPORATION: AL FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07810 FILM NUMBER: 94543595 BUSINESS ADDRESS: STREET 1: 2101 SIXTH AVE N CITY: BIRMINGHAM STATE: AL ZIP: 35203 BUSINESS PHONE: 2053262742 MAIL ADDRESS: STREET 1: 2101 SIXTH AVE N CITY: BIRNINGHAM STATE: AL ZIP: 35203 FORMER COMPANY: FORMER CONFORMED NAME: ALAGASCO INC DATE OF NAME CHANGE: 19851002 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALABAMA GAS CORP CENTRAL INDEX KEY: 0000003146 STANDARD INDUSTRIAL CLASSIFICATION: 4924 IRS NUMBER: 63022000 STATE OF INCORPORATION: AL FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-70466 FILM NUMBER: 94543596 BUSINESS ADDRESS: STREET 1: 2101 SIXTH AVE NORTH CITY: BIRMINGHAM STATE: AL ZIP: 35203 BUSINESS PHONE: 2053268100 MAIL ADDRESS: STREET 1: 2101 SIXTH AVE NORTH CITY: BIRMINGHAM STATE: AL ZIP: 35203 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 1994 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___ TO ___ Commission IRS Employer File State of Identification Number Registrant Incorporation Number 1-7810 Energen Corporation Alabama 63-0757759 2-38960 Alabama Gas Corporation Alabama 63-0022000 2101 Sixth Avenue North Birmingham, Alabama 35203 Telephone Number 205/326-2700 Alabama Gas Corporation, a wholly owned subsidiary of Energen Corporation, meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with reduced disclosure format pursuant to General Instruction H(2). Indicate by a check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. YES X NO ____ Indicate the number of shares outstanding of each of the issuers' classes of common stock, as of August 6, 1994: Energen Corporation, $0.01 par value 10,915,904 shares Alabama Gas Corporation, $0.01 par value 1,972,052 shares ENERGEN CORPORATION AND ALABAMA GAS CORPORATION FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1994 TABLE OF CONTENTS Page PART I: FINANCIAL INFORMATION (Unaudited) Item 1. Financial Statements (a) Consolidated Statements of Income of Energen Corporation 4 (b) Consolidated Balance Sheets of Energen Corporation 5 (c) Consolidated Statements of Cash Flows of Energen Corporation 7 (d) Statements of Income of Alabama Gas Corporation 8 (e) Balance Sheets of Alabama Gas Corporation 9 (f) Statements of Cash Flows of Alabama Gas Corporation 11 (g) Notes to Unaudited Financial Statements 12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 14 Selected Business Segment Data of Energen Corporation 17 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 18 SIGNATURES 19 (This page intentionally left blank.) PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED STATEMENTS OF INCOME Energen Corporation and Subsidiaries (Unaudited)
Three months ended Nine months ended June 30, June 30, (in thousands, except share data) 1994 1993 1994 1993 Operating Revenues Natural gas distribution $ 66,070 $ 69,452 $ 303,331 $ 288,632 Oil and gas production activities 6,414 4,932 18,785 14,810 Other 2,477 2,948 13,286 11,655 Intercompany eliminations (1,836) (2,008) (6,271) (6,019) Total operating revenues 73,125 75,324 329,131 309,078 Operating Expenses Cost of gas 30,669 36,557 167,955 163,543 Operations 23,180 21,603 70,020 63,144 Maintenance 2,490 2,281 7,179 7,017 Depreciation, depletion and amortization 7,029 6,353 20,536 18,540 Taxes, other than income taxes 5,432 5,549 23,033 21,620 Total operating expenses 68,800 72,343 288,723 273,864 Operating Income 4,325 2,981 40,408 35,214 Other Income (Expense) Interest expense, net of amounts capitalized (2,837) (2,649) (8,582) (7,982) Dividends on preferred stock of subsidiary (21) (63) Gain on sale of assets 2,142 2,142 Other, net 2,403 591 3,247 1,584 Total other income (expense) 1,708 (2,079) (3,193) (6,461) Income Before Income Taxes 6,033 902 37,215 28,753 Income taxes 2,083 (179) 8,773 5,057 Net Income $ 3,950 $ 1,081 $ 28,442 $23,696 Earnings Per Average Common Share $ 0.36 $ 0.11 $ 2.63 $ 2.32 Dividends Per Common Share $ 0.27 $ 0.26 $ 0.81 $ 0.78 Average Common Shares Outstanding 10,917 10,255 10,806 10,216 The accompanying Notes are an integral part of these statements.
CONSOLIDATED BALANCE SHEETS Energen Corporation and Subsidiaries (Unaudited)
June 30, September 30, (in thousands) 1994 1993 ASSETS Property, Plant and Equipment Utility plant $448,328 $429,115 Less accumulated depreciation 227,208 215,892 Utility plant, net 221,120 213,223 Oil and gas properties, successful efforts method 89,570 86,077 Less accumulated depreciation, depletion and amortization 40,578 35,150 Oil and gas properties, net 48,992 50,927 Other property net 5,377 8,947 Total property, plant and equipment, net 275,489 273,097 Current Assets Cash and cash equivalents 56,489 15,008 Accounts receivable, net of allowance for doubtful accounts of $2,027 at June 30, 1994 and $1,927 at September 30, 1993 24,888 36,181 Inventories, at average cost Storage gas 18,466 Materials and supplies 8,027 8,957 Liquified natural gas in storage 3,167 3,636 Deferred gas costs 1,713 2,966 Deferred income taxes 10,255 4,090 Prepayments and other 2,741 4,034 Total current assets 125,746 74,872 Other Assets Notes receivable 4,691 6,798 Deferred charges and other 10,993 15,918 Total other assets 15,684 22,716 TOTAL ASSETS $416,919 $370,685 The accompanying Notes are an integral part of these statements.
CONSOLIDATED BALANCE SHEETS Energen Corporation and Subsidiaries (Unaudited)
June 30, September 30, (in thousands) 1994 1993 CAPITAL AND LIABILITIES Capitalization Preferred stock, cumulative $0.01 par value, 5,000,000 shares authorized $ $ Common shareholders' equity Common stock, $0.01 par value; 30,000,000 shares authorized 10,917,355 shares outstanding at June 30, 1994, and 10,320,317 shares outstanding at September 30, 1993 109 103 Premium on capital stock 81,063 66,368 Capital surplus 2,802 2,802 Retained earnings 90,791 71,040 Treasury stock at cost; 2,000 shares (44) Total common shareholders' equity 174,721 140,313 Long-term debt 125,760 85,852 Total capitalization 300,481 226,165 Current Liabilities Long-term debt due within one year 4,593 5,043 Notes payable to banks 40,000 Accounts payable 19,567 27,609 Accrued taxes 20,815 9,656 Customers' deposits 17,258 16,719 Amounts due customers 10,547 5,105 Accrued wages and benefits 10,354 8,054 Other 15,421 13,232 Total current liabilities 98,555 125,418 Deferred Credits and Other Liabilities Deferred income taxes 564 480 Accumulated deferred investment tax credits 4,712 5,077 Other 12,607 13,545 Total deferred credits and other liabilities 17,883 19,102 Commitments and Contingencies TOTAL CAPITAL AND LIABILITIES $416,919 $370,685 The accompanying Notes are an integral part of these statements.
CONSOLIDATED STATEMENTS OF CASH FLOW Energen Corporation and Subsidiaries (Unaudited)
Nine months ended June 30, (in thousands) 1994 1993 Operating Activities Net Income $ 28,442 $ 23,696 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 20,536 18,540 Deferred income taxes, net (6,502) (2,060) Deferred investment tax credits, net (365) (397) Gain on sale of assets (2,142) Gain on sale of equity securities (2,878) Net change in: Accounts receivable 10,780 (2,814) Inventories (18,227) 1,232 Accounts payable (8,042) 3,631 Other current assets and liabilities 23,647 641 Other, net 437 1,001 Net cash provided by operating activities 45,686 43,470 Investing Activities Additions to property, plant and equipment (25,765) (31,955) Proceeds from sale of equity securities 4,808 Proceeds from sale of assets 8,624 Payments on notes receivable 1,394 1,044 Other, net 1,640 182 Net cash used in investing activities (9,299) (30,729) Financing Activities Purchase of treasury stock (44) Payment of dividends on common stock (8,689) (7,975) Issuance of common stock 14,699 1,943 Reduction of long-term debt and preferred stock of subsidiary (10,542) (9,648) Proceeds from issuance of medium-term notes 49,670 14,555 Net change in short-term debt (40,000) (14,000) Net cash provided by (used in) financing activities 5,094 (15,125) Net change in cash and cash equivalents 41,481 (2,384) Cash and cash equivalents at beginning of period 15,008 10,303 Cash and cash equivalents at end of period $ 56,489 $ 7,919 The accompanying Notes are an integral part of these statements.
STATEMENTS OF INCOME Alabama Gas Corporation (Unaudited)
Three months ended Nine months ended June 30, June 30, (in thousands) 1994 1993 1994 1993 Operating Revenues $ 66,070 $ 69,452 $ 303,331 $ 288,632 Operating Expenses Cost of gas 31,604 37,619 171,144 167,260 Operations 18,023 17,029 54,553 49,739 Maintenance 2,390 2,171 6,885 6,681 Depreciation 4,505 4,312 13,373 12,852 Income taxes Current 1,280 824 16,760 9,868 Deferred, net (335) (328) (6,154) (596) Deferred investment tax credits, net (122) (132) (365) (397) Taxes, other than income taxes 5,145 5,264 22,125 20,772 Total operating expenses 62,490 66,759 278,321 266,179 Operating Income 3,580 2,693 25,010 22,453 Other Income Allowance for funds used during construction 90 43 277 94 Other, net 207 168 188 455 Total other income 297 211 465 549 Interest Charges Interest on long-term debt 1,717 1,360 4,795 4,325 Other interest expense 361 507 1,497 1,435 Total interest charges 2,078 1,867 6,292 5,760 Net Income 1,799 1,037 19,183 17,242 Less cash dividends on cumulative preferred stock 21 63 Net Income Available for Common $ 1,799 $ 1,016 $ 19,183 $ 17,179 The accompanying Notes are an integral part of these statements.
BALANCE SHEETS Alabama Gas Corporation (Unaudited)
June 30, September 30, (in thousands) 1994 1993 ASSETS Property, Plant and Equipment Utility plant $448,328 $429,115 Less accumulated depreciation 227,208 215,892 Utility plant, net 221,120 213,223 Other property, net 240 83 Current Assets Cash and cash equivalents 27,119 480 Accounts receivable Gas 21,559 23,563 Merchandise 1,421 1,256 Other 896 1,011 Allowance for doubtful accounts (2,000) (1,800) Inventories, at average cost Storage gas 18,466 Materials and supplies 5,885 5,851 Liquified natural gas in storage 3,167 3,636 Deferred gas costs 1,713 2,966 Deferred income taxes 8,775 2,587 Prepayments and other 1,679 2,520 Total current assets 88,680 42,070 Deferred Charges and Other Assets 8,424 9,172 TOTAL ASSETS $318,464 $264,548 The accompanying Notes are an integral part of these statements.
BALANCE SHEETS Alabama Gas Corporation (Unaudited)
June 30, September 30, (in thousands) 1994 1993 CAPITAL AND LIABILITIES Capitalization Common shareholders' equity Common stock, $0.01 par value; 3,000,000 shares authorized 1,972,052 shares outstanding in 1994 and 1993 $ 20 $ 20 Premium on capital stock 31,682 21,682 Capital surplus 2,802 2,802 Retained earnings 85,374 74,886 Total common shareholder's equity 119,878 99,390 Cumulative preferred stock, $0.01 par value, 120,000 shares authorized, issuable in series $4.70 Series Long-term debt 84,420 43,912 Total capitalization 204,298 143,302 Current Liabilities Long-term debt due within one year 2,793 3,193 Notes payable to banks 29,000 Accounts payable Other 17,227 18,772 Affiliated companies 5,625 1,252 Accrued taxes 19,070 8,960 Customers' deposits 17,258 16,717 Supplier refunds due customers 828 740 Other amounts due customers 9,719 4,365 Accrued wages and benefits 6,557 5,261 Other 7,154 4,821 Total current liabilities 86,231 93,081 Deferred Credits and Other Liabilities Deferred income taxes 12,871 12,416 Accumulated deferred investment tax credits 4,712 5,077 Regulatory liability 7,158 7,717 Customer advances for construction and other 3,194 2,955 Total deferred credits and other liabilities 27,935 28,165 Commitments and Contingencies TOTAL CAPITAL AND LIABILITIES $ 318,464 $ 264,548 The accompanying Notes are an integral part of these statements.
STATEMENTS OF CASH FLOW Alabama Gas Corporation (Unaudited)
Nine months ended June 30, (in thousands) 1994 1993 Operating Activities Net Income $ 19,183 $ 17,242 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 13,373 12,852 Deferred income taxes, net (6,154) (596) Deferred investment tax credits (365) (397) Net change in: Accounts receivable 2,067 (2,066) Inventories (18,031) 276 Accounts payable 1,005 1,034 Other current assets and liabilities 21,816 3,120 Other, net 939 362 Net cash provided by operating activities 33,833 31,827 Investing Activities Additions or property, plant and equipment (21,069) (13,948) Net advances from holding company 87 Other, net (118) (152) Net cash used in investing activities (21,100) (14,100) Financing Activities Payment of dividends on common stock (8,695) (7,975) Payment of dividends on preferred stock (63) Reduction of long-term debt and preferred stock (9,892) (8,838) Proceeds from issuance of medium-term notes 49,670 Proceeds from equity infusion from parent 10,000 Net advances from (to) affiliates 1,823 (2,510) Net change in short-term debt (29,000) 1,000 Net cash provided by (used in) financing activities 13,906 (18,386) Net change in cash 26,639 (659) Cash at beginning of period 480 2,394 Cash at end of period $ 27,119 $ 1,735 The accompanying Notes are an integral part of these statements.
NOTES TO UNAUDITED FINANCIAL STATEMENTS Energen Corporation and Alabama Gas Corporation 1. BASIS OF PRESENTATION All adjustments to the unaudited financial statements which are, in the opinion of management, necessary for a fair statement of the results of operations for the interim periods have been recorded. Such adjustments consisted only of normal recurring items. The consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes for the years ended September 30, 1993, 1992, and 1991 included in the 1993 Annual Report of Energen Corporation (the Company) on Form 10-K. Certain reclassifacations were made to conform prior years' financial statements to the current quarter presentation. The Company's primary business is seasonal in character and influenced by weather conditions. Results of operations for the interim periods are not necessarily indicative of the results which may be expected for the fiscal year. 2. REGULATORY As a public utility in the state of Alabama, Alagasco is subject to regulation by the Alabama Public Service Commission (APSC), which has adopted several innovative approaches to rate regulation, including Alabama's Rate Stabilization and Equalization (RSE) rate-setting process. Implemented in 1983 and modified in 1985, 1987, and 1990, RSE replaced the traditional utility rate case with APSC-monitored periodic rate adjustments presently designed to give Alagasco the opportunity to earn an average return on equity (ROE) at its fiscal year-end within a specified range. Under Alagasco's current RSE order, which became effective December 1990, Alagasco's allowed ROE range is 13.15 percent to 13.65 percent. The APSC conducts quarterly reviews to determine, based on Alagasco's budget and fiscal year-to-date performance, whether Alagasco's projected ROE for the fiscal year will be within the allowed range. Reductions in rates bring the projected ROE within the allowed range. Increases, however, are permitted only once each fiscal year effective on December 1, and cannot exceed 4 percent of prior-year revenues. RSE limits Alagasco's equity upon which a return is permitted to 60 percent of total capitalization and provides for a cost control measure designed to monitor Alagasco's operations and maintenance (O & M) expense. If increases in O & M expense per customer fall within 1.25 percent above or below the Consumer Price Index for all Urban Customers (index range), no adjustment is required. If, however, increases in O & M expense per customer exceed the index range, three-fourths of the difference is returned to customers. To the extent increases in O & M expense per customer are less than the index range, Alagasco will benefit by one-half of the difference through future rate adjustments. Effective December 15, 1990, the APSC approved a temperature adjustment to customers' monthly bills to mitigate the effect of departures from normal temperature on Alagasco's earnings. The calculation is performed monthly and adjusted on customer's bills in the actual month the weather variation occurs. Under its terms, Alagasco's current RSE order continues until, after notice to Alagasco, the APSC votes to either modify or discontinue its operation. On October 4, 1993, the APSC unanimously voted to defer review of the current RSE order until such time as certain hearings mandated by the Energy Policy Act of 1992 (Energy Act) in connection with integrated resource planning and demand side management programs are completed. The proceedings are expected to continue through most of 1994. Following completion of the Energy Act proceedings, it is expected that the APSC will consider renewal of Rate RSE. Under RSE as extended, a $.5 million annual decrease in revenue became effective October 1, 1993, a $7.2 million annual increase in revenue became effective December 1, 1993, and a $1.0 million annual decrease in revenue became effective July 1,1994. 3. SUPPLEMENTAL CASH FLOW INFORMATION Energen Corporation Nine months ended June 30, (in thousands) 1994 1993 Interest paid, net of amounts capitalized $ 9,029 $ 9,158 Income taxes paid $ 7,571 $ 3,906 Noncash investing activities (capitalized depreciation and allowance for funds used during construction) $ 396 $ 231 Noncash financing activities (debt issuance costs) $ 330 $ Alabama Gas Corporation Nine months ended June 30, (in thousands) 1994 1993 Interest paid $ 7,024 $ 7,186 Income taxes paid $ 8,843 $ 4,562 Noncash investing activities (capitalized depreciation and allowance for funds used during construction) $ 396 $ 231 Noncash financing activities (debt issuance costs) $ 330 $ Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Consolidated net income for the third quarter was $3,950,000 ($.36 per share) compared with $1,081,000 ($.11 per share) for the same period last year. One-time gains associated with Energen's other activities and a strong performance by Alabama Gas Corporation (Alagasco) combined to create increased earnings for the quarter. The Company sold substantially all of the assets of its propane distribution subsidiary as well as a majority of its investment in equity securities of a high-temperature combustion technology company resulting in approximately $2 million in earnings for the quarter. Also, the utility continued to earn its allowed return on additional equity resulting from its investment in underground storage working gas. Consolidated net income for the nine months was $28,442,000 ($2.63 per share) compared with $23,696,000 ($2.32 per share) for the same period of the prior year. The factors contributing to the increase in current quarter earnings held true for the year-to-date with higher conventional gas production activities at Taurus Exploration, Inc. (Taurus) further enhancing earnings. Natural gas revenues decreased 5 percent for the quarter as a result of a 16 percent decrease in sales volumes to core customers offset in part by collections under the weather normalization adjustment. For the nine month period, natural gas revenues increased 5 percent primarily as a result of the recovery of Gas Supply Adjustment (GSA) costs. Oil and gas revenues increased 30 percent for the quarter and 27 percent for the nine months primarily due to significantly higher conventional gas production and increased operating fees associated with a new operating project. Offsetting these increases to some degree were the effects of decreased oil prices and decreased consulting fees following the conclusion of a major consulting contract. The average sales price of gas for the current quarter was $1.83 per Mcf compared with $1.73 per Mcf in the prior year. The average sales price of oil for the current quarter was $14.16 per barrel compared with $17.41 per barrel in the prior year. The average sales price of gas for the nine months ended June 30, 1994, and 1993, was $1.93 per Mcf and $1.88 per Mcf, respectively. The average sales price of oil for the nine months ended June 30, 1994, was $14.08 per barrel compared with $17.41 per barrel in the prior year. To hedge its exposure to such price fluctuations on oil and gas production, Taurus periodically enters into futures contracts. Under this program, Taurus has entered into futures contracts for the sale of 2.1 Bcf of its gas production with an average contract price of $1.96, and for the sale of 42,000 barrels of its oil production at an average contract price of $18.41 over the remainder of this fiscal year. Taurus has extended its program into fiscal 1995 for the sale of 4.6 Bcf of its gas production with an average contract price of $2.17, and for the sale of 72,000 barrels of its oil production at an average contract price of $18.41. Other revenues for the quarter were 16 percent lower due primarily to decreased revenues from propane operations as a result of the asset sale. For the year-to-date, other revenues were 14 percent higher as increased sales from the merchandising operations more than offset decreases from propane operations. The 15 percent decrease in cost of gas for the quarter was due largely to a 16 percent decrease in volumes sold to residential customers. Although volumes sold for the nine months remained virtually unchanged from the prior year, cost of gas increased 3 percent due primarily to the recovery of GSA costs offset largely by lower commodity cost of gas. The 7 percent increase in operations and maintenance expense for the quarter was primarily due to increased labor and related expenses at Alagasco and increased exploration expenses at Taurus. Impacting the 11 percent increase for the nine months were labor and related expenses at Alagasco, increased operations expenses associated with merchandising operations, and increased exploration and lease operating expenses at Taurus. Depreciation expense for the quarter and year-to-date increased 11 percent due largely to higher conventional gas production at Taurus and normal plant growth at Alagasco. The Company's expense for taxes other than income taxes primarily reflects various state and local business taxes paid by Alagasco as well as various payroll-related taxes. The state and local business taxes are generally based on gross receipts of Alagasco and fluctuate accordingly. Interest expense for the quarter and year-to-date rose 7 and 8 percent, respectively, due primarily to the issuance of $50 million in unsecured notes in the current year offset in part by lower average short-term debt outstanding. During the third quarter of the current year, the Company sold substantially all of the operating assets of its propane distribution subsidiary resulting in a pretax gain of $2.1 million dollars and sold a majority of its investment in equity securities in a high-temperature combustion company for a pre-tax gain of $1.5 million. The increase in income tax expense for the quarter and year-to-date was primarily associated with increased pretax income. The Company anticipates effective tax rates to remain lower than statutory rates through the year 2002 as it expects to recognize all section 29 tax credits generated for financial statement purposes. As previously discussed, the Company's business is seasonal in character and influenced by weather conditions. Results of operations for the interim periods are not necessarily indicative of the results that may be expected for the fiscal year. Liquidity and Capital Resources Two factors were primarily responsible for the $2.2 million increase in cash provided by operations. The recovery of GSA costs and increases in accrued taxes payable (both reflected in other current assets and liabilities) were largely offset by Alagasco's current year purchase of storage gas. Fluctuations in accounts receivable and payable are generally the result of timing of payments. Net cash from investing activities increased $21.4 million over the prior year primarily as a result of three factors proceeds from the current year sale of equity securities, proceeds from the sale of assets of the propane subsidiary, and a decrease in capital expenditures. Capital expenditures for the prior year included the Company's investment of approximately $13 million in conventional producing properties following the 1992 sale of nonconventional properties. Offsetting the current year decrease at Taurus was an increase in capital expenditures at Alagasco due in part to the development of a new customer information system. The increase in net cash provided by financing activities of $20.2 million is attributable to several occurrences in the current year. Proceeds from the issuance of 550,000 shares of Energen common stock in November of 1993 totaled $13.5 million and were used to help fund the purchase of storage gas. Alagasco also issued $50 million of medium-term notes which offered investors a combination of interest rates and investment periods ranging from 5.4 percent to 7.2 percent for notes redeemable December 1, 1998, to December 15, 2023. Alagasco used proceeds from these notes to fund the balance of the storage investment, redeem its 8.75 percent debentures, reduce its short-term debt outstanding, and to fund additional capital needs. During the third quarter, the Energen Board of Directors authorized the purchase of up to 500,000 shares of the Company's common stock. At June 30, 1994, the Company had repurchased 2,000 shares. Energen has short-term credit facilities totaling $110 million available for working capital needs with $6 million outstanding at June 30, 1993. Capital Expenditures: Capital and exploration expenditures could approximate $52 million in 1994, excluding municipal gas system acquisitions, and primarily will be used to fund normal distribution system expansion and the development of a new customer information system at Alagasco, and oil and gas development activities. The Company anticipates funding these capital expenditures through internally generated capital and the utilization of short-term credit facilities as needed. In addition to the capital expenditures, the Company will maintain an investment in storage working gas which is anticipated to average $25 million. (This page intentionally left blank.) SELECTED BUSINESS SEGMENT DATA Energen Corporation
Three months ended Nine months ended June 30, June 30, (in thousands) 1994 1993 1994 1993 Natural Gas Distribution Operating Revenues (in thousands) Residential $ 42,982 $ 45,346 $ 205,166 $ 192,121 Commercial and industrial - small 16,009 17,377 74,644 72,452 Commercial and industrial - large 30 (35) 763 1,205 Transportation 6,892 6,285 22,948 21,652 Other 157 479 (190) 1,202 Total $ 66,070 $ 69,452 $ 303,331 $ 288,632 Volumes sold and transported (thousands of Mcf) Residential 5,129 6,149 28,902 28,575 Commercial and industrial - small 2,498 2,859 12,000 12,286 Commercial and industrial - large 7 12 98 278 Transportation 12,785 11,669 39,700 38,109 Total 20,419 20,689 80,700 79,248 Other data (in thousands) Depreciation and amortization $ 4,505 $ 4,312 $ 13,373 $ 12,852 Capital expenditures $ 7,451 $ 5,061 $ 21,465 $ 14,179 Operating income $ 4,403 $ 3,057 $ 35,251 $ 31,328 Oil and Gas Exploration and Production Operating revenues (in thousands) Natural gas $ 4,452 $ 2,949 $ 12,607 $ 8,354 Oil 722 940 2,183 2,647 Other 1,240 1,043 3,995 3,809 Total $ 6,414 $ 4,932 $ 18,785 $ 14,810 Sales volume- natural gas (thousands of Mcf) 2,431 1,702 6,368 4,435 Sales volume - oil (thousands of barrels) 51 54 155 152 Average sales price - natural gas (Per Mcf)$ 1.83 $ 1.73 $ 1.93 $ 1.88 Average sales price - oil (per barrel) $ 14.16 $ 17.41 $ 14.08 $ 17.41 Other data (in thousands) Depreciation, depletion and amortization $ 2,323 $ 1,757 $ 6,368 $ 4,840 Capital expenditures $ 2,226 $ 3,728 $ 4,374 $ 17,618 Exploration expenditures $ 1,093 $ 255 $ 1,287 $ 819 Operating income $ 911 $ 677 $ 4,922 $ 3,890 Other Business (in thousands) Operating revenues $ 2,477 $ 2,948 $ 13,268 $ 11,655 Depreciation and amortization $ 201 $ 284 $ 795 $ 848 Capital expenditures $ 125 $ 118 $ 322 $ 389 Operating income $ (299) $ (128) $ 1,547 $ 1,264 Eliminations and Corporate Expenses (in thousands) Operating loss $ ( 690) $ (625) $ (1,312) $ (1,268) The accompanying Notes are an integral part of these statements.
PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a. Exhibits None. b. Reports on Form 8-K No reports on Form 8-K were filed for the three months ended June 30, 1994. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ENERGEN CORPORATION ALABAMA GAS CORPORATION August 12, 1994 By/s/ Rex J. Lysinger Rex J. Lysinger Chairman of the Board and Chief Executive Officer August 12, 1994 By/s/ G. C. Ketcham G. C. Ketcham Executive Vice President, Chief Financial Officer and Treasurer August 12, 1994 By/s/ J. T. McManus J. T. McManus Vice President-Finance and Corporate Development of Energen and Vice President-Finance and Planning of Alagasco -----END PRIVACY-ENHANCED MESSAGE-----