EX-99.3 4 d674460dex993.htm EX-99.3 EX-99.3

Exhibit 99.3

 

 

Non-GAAP Financial Measures

 

Adjusted Net Income is a Non-GAAP financial measure (GAAP refers to generally accepted accounting principles) which excludes certain non-cash mark-to-market derivative financial instruments. Adjusted Income from continuing operations further excludes a gain on the sale of utility service center, a gain on disposal of discontinued operations, non-cash impairment charges and income from discontinued operations. 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 12/31/2013  
Consolidated Net Income ($ in millions except per share data)        Net Income        

    Per Diluted  

    Share  

  
Net Income (GAAP)     84.1        1.15   
Non-cash mark-to-market gains (net of $0.5 tax)     (0.2 )      (0.00 ) 

Adjusted Net Income from All Operations (Non-GAAP)

     83.9        1.15   

Gain on sale of utility service center (net of $4.1 tax)

     (6.8 )      (0.09 ) 

Gain on disposal of discontinued operations (net of $12.9 tax)

     (22.5 )      (0.31 ) 

Non-cash impairment charge (net of $2.0 tax) (1)

     3.2        0.04   

Income from discontinued operations (net of $1.5 tax)

     (1.5 )      (0.02 ) 

Adjusted Income from Continuing Operations (Non-GAAP)

     56.4        0.77   
                 
       
 
    Quarter Ended 12/31/2012  
Consolidated Net Income ($ in millions except per share data)        Net Income        

    Per Diluted  

    Share  

  
Net Income (GAAP)     62.8        0.87   
Non-cash mark-to-market gains (net of $9.0 tax)     (15.7 )      (0.22 ) 

Adjusted Net Income from All Operations (Non-GAAP)

     47.2        0.65   

Income from discontinued operations (net of $1.3 tax)

     (2.3 )      (0.03 ) 

Adjusted Income from Continuing Operations (Non-GAAP)

     44.9        0.62   
                 
       
 
          Year-to-Date Ended 12/31/2013      
Consolidated Net Income ($ in millions except per share data)        Net Income             Per Diluted  
    Share  		  
Net Income (GAAP)     204.6        2.82   
Non-cash mark-to-market losses (net of $17.3 tax)     30.6        0.42   

Adjusted Net Income from All Operations (Non-GAAP)

     235.1        3.24   

Gain on sale of utility service center (net of $4.1 tax)

     (6.8 )      (0.09 ) 

Gain on disposal of discontinued operations (net of $12.9 tax)

     (22.5 )      (0.31 ) 

Non-cash impairment charge (net of $10.9 tax) (1)

     18.9        0.26   

Income from discontinued operations (net of $2.2 tax)

     (7.8 )      (0.10 ) 

Adjusted Income from Continuing Operations (Non-GAAP)

     216.9        2.99   
                 
       
 
          Year-to-Date Ended 12/31/2012      
Consolidated Net Income ($ in millions except per share data)        Net Income        

    Per Diluted  

    Share  

  
Net Income (GAAP)     253.6        3.51   
Non-cash mark-to-market gains (net of $21.5 tax)     (37.2 )      (0.52 ) 

Adjusted Net Income from All Operations (Non-GAAP)

     216.3        2.99   

Non-cash write-down of natural gas properties (net of $8.1 tax) (2)

     13.4        0.19   

Income from discontinued operations (net of $7.3 tax)

     (11.8 )      (0.16 ) 

Adjusted Income from Continuing Operations (Non-GAAP)

     218.0        3.01   
                 

Note: Amounts may not sum due to rounding

(1) Current year-to-date and quarter-to-date loss on impairment ($18.9 and $3.2, respectively) included in gain (loss) on disposal of discontinued operations on the income statement

(2) Prior year-to-date write down of natural gas properties ($13.4) included in income (loss) from discontinued operations on the income statement

 

Non-GAAP Financial Measures

 

Adjusted Net Income is a Non-GAAP financial measure (GAAP refers to generally accepted accounting principles) which excludes certain non-cash mark-to-market derivative financial instruments. Adjusted Income from continuing operations further excludes a gain on disposal of discontinued operations, non-cash impairment charges and income from discontinued operations. 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  

12/31/2013

    

  Year-to-date  

12/31/2013

  
Net Income (GAAP)     64.4          146.8   
Non-cash mark-to-market (gains) losses (net of ($0.5) and $17.3 tax)     (0.2)         30.6   
Adjusted Net Income from All Operations (Non-GAAP)     64.2          177.4   
Gain on disposal of discontinued operations (net of $12.9 and $12.9 tax)     (22.5)         (22.5 ) 
Non-cash impairment charge (net of $2.0 and $10.9 tax) (1)     3.2          18.9   
Income from discontinued operations (net of $1.5 and $2.2 tax)     (1.5)         (7.8 ) 
Adjusted Income from Continuing Operations (Non-GAAP)     43.5          166.0   
                 
             
   
Energen Resources Net Income ($ in millions)  

Quarter Ended

12/31/2012

    

Year-to-date

12/31/2012

  
Net Income (GAAP)     50.6          204.1   
Non-cash mark-to-market gains (net of $9.0 and $21.5 tax)     (15.7)         (37.2 ) 
Adjusted Net Income from All Operations (Non-GAAP)     34.9          166.9   
Non-cash write-down of natural gas properties (net of $8.1 tax) (2)     -             13.4   
Income from discontinued operations (net of $1.3 and $7.3 tax)     (2.3)         (11.8 ) 
Adjusted Income from Continuing Operations (Non-GAAP)     32.6          168.5   
                 

Note: Amounts may not sum due to rounding

(1) Current year-to-date and quarter-to-date loss on impairment ($18.9 and $3.2, respectively) included in gain (loss) on disposal of discontinued operations on the income statement

(2) Prior year-to-date write down of natural gas properties ($13.4) included in income (loss) from discontinued operations on the income statement

 

Non-GAAP Financial Measures

 

Earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses (EBITDAX) is a Non-GAAP financial measure (GAAP refers to generally accepted accounting principles). Adjusted EBITDAX from continuing operations further excludes a gain on the sale of utility service center, non-cash asset impairments, a gain on disposal of discontinued operations, certain non-cash mark-to-market derivative financial instruments, and income from discontinued operations. Energen believes these measures allow analysts and investors to understand the financial performance of the company from core business operations, without including the effects of capital structure, tax rates and depreciation. Further, this measure is useful in comparing the company and other oil and gas producing companies.

 

 

Reconciliation To GAAP Information       Year-to-Date Ended 12/31                         Quarter Ended 12/31          
($ in millions)   2012     2013             2012     2013  
       
Consolidated Net Income (GAAP)     253.6        204.6              62.8        84.1   
Interest expense     65.5        69.2              17.1        17.4   
Income tax expense     144.5        105.3              34.0        31.4   
Depreciation, depletion and amortization     385.5        497.4              109.0        132.0   
Accretion expense     6.3        7.0              1.6        1.8   
Exploration expense     19.4        27.9              6.0        14.0   
Adjustment for gain on sale of utility service center     -           (10.9)             -           (10.9 ) 
Adjustment for asset impairment, net of tax (1)     13.4        18.9              -           3.2   
Adjustment for gain on disposal of discontinued operations, net of tax     -           (22.5)             -           (22.5 ) 
Adjustment for mark-to-market (gains) losses     (58.8 )      47.8              (24.7 )      (0.6 ) 
Adjustment for income from discontinued operations, net of tax     (11.8 )      (7.8)             (2.3 )      (1.5 ) 
Consolidated Adjusted EBITDAX from Continuing Operations (Non-GAAP)     817.7        936.9              203.6        248.5   
                 
                                        
Reconciliation To GAAP Information       Year-to-Date Ended 12/31                         Quarter Ended 12/31          
($ in millions)   2012     2013             2012     2013  
       
Energen Resources Net Income (GAAP)     204.1        146.8              50.6        64.4   
Interest expense     50.0        54.0              13.1        13.5   
Income tax expense     115.1        71.3              27.0        19.8   
Depreciation, depletion and amortization     343.2        453.5              98.3        120.8   
Accretion expense     6.3        7.0              1.6        1.8   
Exploration expense     19.4        27.9              6.0        14.0   
Adjustment for asset impairment, net of tax (1)     13.4        18.9              -           3.2   
Adjustment for gain on disposal of discontinued operations, net of tax     -           (22.5)             -           (22.5 ) 
Adjustment for mark-to-market (gains) losses     (58.8 )      47.8              (24.7 )      (0.6 ) 
Adjustment for income from discontinued operations, net of tax     (11.8 )      (7.8)             (2.3 )      (1.5 ) 
Energen Resources Adjusted EBITDAX from Continuing Operations (Non-GAAP)     681.0        796.9              169.6        212.9   
                 
                                        

Note: Amounts may not sum due to rounding

(1) Current year-to-date and quarter-to-date loss on impairment ($18.9 and $3.2, respectively) included in gain (loss) on disposal of discontinued operations on the income statement. Prior year-to-date write down of natural gas properties ($13.4) included in income (loss) from discontinued operations on the income statement.

 

Non-GAAP Financial Measures

 

After-tax Cash Flows is a Non-GAAP financial measure (GAAP refers to generally accepted accounting principles). 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. Adjusted after-tax cash flows excluding Alagasco provides a measure of cash flows available to fund the Company’s exploration and production activities.

 

 

Reconciliation To GAAP Information   Years Ended 12/31  
($ in millions)     2012 Actual       2013 Actual       2014 Estimate (e)  
                         

Consolidated Net Income (GAAP)

     254        205        200        230   

Depreciation, depletion and amortization

     441        558        572        572   

Deferred income taxes

     124        83        96        96   

Exploratory expense

     17        16        -            -       

Other

     (34 )      48        39        39   

After-tax Cash Flows (Non-GAAP)

     802        910        907        937   

Changes in assets and liabilities and other adjustments

     (66 )      15        2        2   

Net Cash Provided by Operating Activities (GAAP)

     736        925        909        939   
                                 
                         
Reconciliation To GAAP Information   Years Ended 12/31  
($ in millions)   2012 Actual     2013 Actual     2014 Estimate (e)  
     

Net Cash Provided by Operating Activities (GAAP)

     736        925        909        939   

Changes in assets and liabilities and other adjustments

     66        (15 )      (2 )      (2 ) 

After-tax Cash Flow (Non-GAAP)

     802        910        907        937   

Less: AGC cash flows from operations and other

     (103 )      (116 )      (95 )      (95 ) 

Adj. After-tax Cash Flows Excluding Alagasco (Non-GAAP)

     699        794        812        842   
                                 

 

 

 

(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.