-----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, qNBWACLBJTK/5o76Lq5+gdkB//djVq0hWkWrL9TRsiZjMRCnS7do4QxkjjwpAnVs CtOeAZJoomILCHeBsjKXVA== 0000033213-94-000008.txt : 19940518 0000033213-94-000008.hdr.sgml : 19940518 ACCESSION NUMBER: 0000033213-94-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940331 FILED AS OF DATE: 19940513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUITABLE RESOURCES INC /PA/ CENTRAL INDEX KEY: 0000033213 STANDARD INDUSTRIAL CLASSIFICATION: 4923 IRS NUMBER: 250464690 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-03551 FILM NUMBER: 94527991 BUSINESS ADDRESS: STREET 1: 420 BLVD OF THE ALLIES CITY: PITTSBURGH STATE: PA ZIP: 15219 BUSINESS PHONE: 4122613000 MAIL ADDRESS: STREET 1: 420 BOULEVARD OF THE ALLIES CITY: PITTSBURGH STATE: PA ZIP: 15219 FORMER COMPANY: FORMER CONFORMED NAME: EQUITABLE GAS CO DATE OF NAME CHANGE: 19841120 10-Q 1 FORM 10Q FOR QUARTER ENDED MARCH 31, 1994 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________ FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 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 FILE NUMBER 1-3551 EQUITABLE RESOURCES, INC. (Exact name of registrant as specified in its charter) PENNSYLVANIA 25-0464690 (State of incorporation or organization) (IRS Employer Identification No.) 420 Boulevard of the Allies, Pittsburgh, Pennsylvania 15219 (Address of principal executive offices, including zip code) Registrant's telephone number, including area code: (412) 261-3000 ____________ NONE (Former name, former address and former fiscal year, if changed since last report) ____________ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of issuer's classes of common stock, as of the close of the period covered by this report. Outstanding at Class March 31, 1994 Common stock, no par value 34,494,728 shares EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Index Page No. Part I. Financial Statements: Statements of Consolidated Income for the Three Months Ended March 31, 1994 and 1993 and the Twelve Months Ended March 31, 1994 and 1993 1 Statements of Consolidated Cash Flows for the Three Months Ended March 31, 1994 and 1993 and the Twelve Months Ended March 31, 1994 and 1993 2 Consolidated Balance Sheets, March 31, 1994 and 1993 and December 31, 1993 3 - 4 Long-Term Debt, March 31, 1994 and 1993 5 Notes to Consolidated Financial Statements 6 Gas Produced, Purchased and Sold 7 - 10 Information by Business Segment 11 Management's Discussion and Analysis of Financial Condition and Results of Operations 12 - 15 Part II. Other Information 16 Signature 17
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Statements of Consolidated Income (Thousands Except Per Share Amounts) Three Months Ended Twelve Months Ended March 31, March 31, 1994 1993 1994 1993 Operating Revenues $439,538 $269,819 $1,264,513 $836,985 Cost of Gas Purchased 281,646 137,366 788,437 425,638 ------- ------- --------- ------- Net operating revenues 157,892 132,453 476,076 411,347 ------- ------- --------- ------- Operating Expenses: Operation 50,888 40,157 185,151 161,698 Maintenance 7,128 6,025 30,127 26,300 Depreciation and depletion 22,894 17,649 82,139 66,487 Taxes other than income 16,003 13,273 42,532 37,438 ------- ------- --------- ------- Total operating expenses 96,913 77,104 339,949 291,923 ------- ------- --------- ------- Operating Income 60,979 55,349 136,127 119,424 Other Income 332 283 1,755 1,635 Interest Charges 9,998 9,064 39,662 35,092 ------- ------- --------- ------- Income Before Income Taxes 51,313 46,568 98,220 85,967 Income Taxes 14,954 15,773 19,201 21,251 ------- ------- --------- ------- Net Income $ 36,359 $ 30,795 $ 79,019 $ 64,716 ======= ======= ========== ====== Average Common Shares Outstanding 34,479 31,409 33,070 31,365 ====== ====== ====== ====== Earnings Per Share of Common Stock $1.05 $.98 $2.39 $2.06 ==== === ==== ==== Dividends Per Share of Common Stock $ .57 $.54 $1.13 $1.07 ===== === ==== ====
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Statements of Consolidated Cash Flows (Thousands) Three Months Ended Twelve Months Ended March 31, March 31, 1994 1993 1994 1993 Cash Flows from Operating Activities: Net Income $ 36,359 $ 30,795 $ 79,019 $ 64,716 ------- ------- ------- ------- Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Depreciation and depletion. 22,894 17,649 82,139 66,487 Deferred income taxes 824 (1,691) 3,271 373 Other - net 3,080 2,270 2,129 591 Changes in other assets and liabilities: Accounts receivable and unbilled revenues (62,813) (11,493) (73,672) (17,364) Gas stored underground 16,648 6,084 5,488 (13,866) Material and supplies (238) 1,589 (2,536) 1,068 Deferred purchased gas cost 7,931 11,594 (17,687) (2,722) Prepaid expenses and other (4,223) (1,162) (4,738) 1,916 Regulatory assets (1,254) (707) (19,204) (3,577) Accounts payable 21,219 (3,190) 43,156 28,983 Accrued taxes 17,203 15,788 2,439 4,274 Refunds due customers 1,909 (437) 4,883 3,431 Customer credit balances (7,560) (6,963) (919) (374) Other - net 2,515 (6,033) 5,959 7,897 ------- -------- --------- -------- Total adjustments 18,135 23,298 30,708 77,117 ------- -------- -------- -------- Net cash provided by operating activities 54,494 54,093 109,727 141,833 ------- -------- ------- ------- Cash Flows from Investing Activities: Capital expenditures: Energy resources (14,889) (18,385) (292,749) (59,078) Utility services (9,647) (8,205) (44,608) (45,684) Proceeds from sale of property 231 424 1,077 7,158 ------- ------- -------- ------- Net cash used in investing activities (24,305) (26,166) (336,280) (97,604) ------- ------- -------- ------- Cash Flows from Financing Activities: Issuance of common stock 479 190 112,701 1,487 Purchase of treasury stock - (18) (10) (191) Dividends paid (9,827) (8,481) (36,625) (33,038) Proceeds from issuance of long-term debt 43,185 31,775 43,112 56,134 Repayments and retirements of long-term debt (1,971) (16,445) (1,971) (25,545) Increase (decrease) in short-term loans (68,700) (43,500) 114,700 (41,500) ------- ------- ------- -------- Net cash provided (used) by financing activities (36,834) (36,479) 231,907 (42,653) ------- ------- ------- -------- Increase (decrease) in cash and cash equivalents (6,645) (8,552) 5,354 1,576 Cash and cash equivalents at beginning of period 15,037 11,590 3,038 1,462 ------- ------- -------- --------- Cash and cash equivalents at end of period $ 8,392 $ 3,038 $ 8,392 $ 3,038 ======== ======= ======== ======== Cash paid during the period for: Interest (net of amount capitalized) $ 11,786 $ 10,682 $ 35,696 $ 32,370 Income taxes $ (2,281) $ 1,214 $ 24,052 $ 17,646
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Thousands) March 31, December 31, ASSETS 1994 1993 1993 Property, Plant and Equipment (Successful Efforts Method): Energy resources $1,216,567 $ 832,079 $1,203,599 Less accumulated depreciation and depletion 315,822 261,092 298,370 --------- --------- --------- Net energy resources 900,745 570,987 905,229 --------- --------- --------- Utility services 910,736 858,696 903,238 Less accumulated depreciation and depletion 264,812 246,543 260,043 --------- --------- --------- Net utility services 645,924 612,153 643,195 --------- --------- --------- Net property, plant and equipment 1,546,669 1,183,140 --------- --------- --------- Current Assets: Cash and cash equivalents 8,392 3,038 15,037 Accounts receivable (less accumulated provision for doubtful accounts: March 31, 1994, $12,995; 1993, $11,598; December 31, 1993, $10,106) 240,383 136,746 171,626 Unbilled revenues 19,020 13,857 27,853 Gas stored underground - current inventory 1,411 6,899 18,059 Material and supplies 12,499 8,722 12,261 Deferred purchased gas cost 9,217 (8,470) 17,148 Prepaid expenses and other 28,200 22,866 23,977 --------- --------- ---------- Total current assets 319,122 183,658 285,961 --------- --------- ---------- Other Assets: Regulatory assets 88,278 69,074 87,024 Other 26,940 25,960 25,498 --------- --------- ---------- Total other assets 115,218 95,034 112,522 --------- --------- --------- Total $1,981,009 $1,461,832 $1,946,907 ========= ========= =========
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Thousands) March 31, December 31, CAPITALIZATION AND LIABILITIES 1994 1993 1993 Capitalization: Common stockholders' equity: Common stock, no par value, authorized 80,000 shares; shares issued March 31, 1994, 35,113; March 31, 1993, 32,048; December 31, 1993, 35,087 $ 223,443 $ 110,431 $ 222,801 Retained earnings 537,137 496,086 520,433 Treasury stock, shares at cost March 31, 1994, 618; March 31, 1993, 621; December 31, 1993, 622 (14,538) (14,613) (14,623) Foreign Currency Translation (1,290) - (581) --------- --------- --------- Total common stockholders' equity 744,752 591,904 728,030 Long-term debt 422,401 378,520 378,845 --------- --------- --------- Total capitalization 1,167,153 970,424 1,106,875 --------- - -------- --------- Current Liabilities: Long-term debt payable within one year - - 1,971 Short-term loans 185,200 70,500 253,900 Accounts payable 165,027 88,937 143,808 Accrued taxes 32,561 27,914 15,358 Accrued interest 9,832 8,716 12,338 Refunds due customers 16,115 11,232 14,206 Deferred income taxes 3,012 13,368 733 Dividends payable 9,828 8,485 - Customer credit balances 18 937 7,578 Other 14,071 4,855 14,061 --------- --------- --------- Total current liabilities 435,664 234,944 463,953 --------- --------- --------- Deferred and Other Credits: Deferred income taxes 331,129 221,869 331,140 Deferred investment tax credits 22,907 24,339 23,178 Other 24,156 10,256 21,761 --------- --------- --------- Total deferred and other credits 378,192 256,464 376,079 --------- --------- --------- Total $1,981,009 $1,461,832 $1,946,907 ========= ========= =========
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Long-Term Debt (Thousands) Annual Maturities Debt Maturities After One Year March 31, March 31, 1994 1993 1994 1993 8 1/4% Debentures, due July 1, 1996 (a) $ $ $ 75,000 $ 75,000 7 1/2% Debentures, due July 1, 1999 ($75,000 principal amount net of unamortized original issue discount) (a) 69,875 69,143 9 1/2% Convertible subordinated debentures, due January 15, 2006 2,526 2,877 9.9% Debentures, due April 15, 2013 (b) 75,000 75,000 Medium-Term Notes: 7.2% to 9.0% Series A, due 1998 thru 2021 100,000 100,000 5.1% to 7.6% Series B, due 1995 thru 2023 100,000 56,500 ------ ----- ------- ------- Total $ 0 $ 0 $422,401 $378,520 ====== ===== ======= ======= (a) Not redeemable prior to maturity. (b) Annual sinking fund payments of $3,750,000 are required beginning in 1999.
Equitable Resources, Inc. and Subsidiaries Notes to Consolidated Financial Statements A. The accompanying financial statements should be read in conjunction with the Company's 1993 Annual Report on Form 10-K. B. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position as of March 31, 1994 and 1993 and the results of operations for the three and twelve months then ended and cash flows for the three and twelve months then ended. All of the adjustments are of a normal recurring nature. C. The results of operations for the three-month periods ended March 31, 1994 and 1993 are not indicative of results for a full year because of the seasonal nature of the Company's operations. D. At March 31, 1994, 1,127,000 shares of Common Stock were reserved as follows: 229,000 shares for conversion of the 9 1/2% Convertible Subordinated Debentures, 666,000 shares for issuance under the Key Employee Restricted Stock Option and Stock Appreciation Rights Incentive Compensation Plan and 232,000 shares for issuance under the Company's Dividend Reinvestment and Stock Purchase Plan. E. The Company filed a shelf registration in March 1992 to issue $100 million of Medium-Term Notes--Series B to be used primarily to retire short-term loans incurred to temporarily finance a portion of 1991 acquisitions. Through December 31, 1993, the Company issued $56.5 million of Medium-Term Notes. The remaining $43.5 million of Medium-Term Notes were issued during the first quarter of 1994. These notes have maturity dates ranging from three to thirty years and a weighted average interest rate of 6.60%.
Three Months Ended March 31, 1994 Utility Energy Services Resources Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced 423 15,283 15,706 Purchased: Other producers 15,283 80,634 95,917 Inter-segment purchases 4,762 966 (5,728) Total purchases 20,045 81,600 (5,728) 95,917 Total produced and purchased 20,468 96,883 (5,728) 111,623 Net decrease in gas in storage (5,961) (5,961) Extracted natural gas liquids (equivalent gas volumes) 1,493 1,493 System use and unaccounted for 1,408 466 1,874 Total 25,021 94,924 (5,728) 114,217 Gas Sales (MMcf): Residential 15,457 15,457 Commercial 5,183 5,183 Industrial 1,223 1,223 Utilities 177 177 Production 15,283 (307) 14,976 Marketing 2,981 79,641 (5,421) 77,201 Total gas sales 25,021 94,924 (5,728) 114,217 Processed gas extracted Total 25,021 94,924 (5,728) 114,217 Natural Gas Transported (MMcf) 11,092 21,731 (7,428) 25,395 Oil Produced and Sold (thousands of bls) 510 510 Natural Gas Liquids Sold (thousands of gallons) 51,896 51,896 Average Selling Price Gas - Utility Sales (per Mcf) $7.746 - Energy Resource Production $2.576 - Energy Resource Marketing $2.444 Oil (per barrel) $12.171 Natural Gas Liquids (per gallon) $.251
Three Months Ended March 31, 1993 Utility Energy Services Resources Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced 647 13,095 13,742 Purchased: Other producers 15,761 34,911 50,672 Inter-segment purchases 3,765 657 (4,422) Total purchases 19,526 35,568 (4,422) 50,672 Total produced and purchased 20,173 48,663 (4,422) 64,414 Deduct: Net decrease in gas in storage (4,183) (4,183) Extracted natural gas liquids (equivalent gas volumes) 506 506 System use and unaccounted for 4,715 151 4,866 Total 19,641 48,006 (4,422) 63,225 Gas Sales (MMcf): Residential 14,027 14,027 Commercial 3,734 3,734 Industrial 1,363 (151) 1,212 Utilities 11 11 Production 13,095 (2,933) 10,162 Marketing 34,911 (832) 34,079 Total gas sales 19,135 48,006 (3,916) 63,225 Processed gas extracted 506 (506) Total 19,641 48,006 (4,422) 63,225 Natural Gas Transported (MMcf) 10,329 (8,047) 2,282 Oil Produced and Sold (thousands of bls) 549 549 Natural Gas Liquids Sold (thousands of gallons) 15,748 15,748 Average Selling Price Gas - Utility Sales (per Mcf) $7.254 - Energy Resource Production $2.276 - Energy Resource Marketing $2.154 Oil (per barrel) $17.040 Natural Gas Liquids (per gallon) $.342
Twelve Months Ended March 31, 1994 Utility Energy Services Resources Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced 1,748 55,738 57,486 Purchased: Other producers 51,392 263,708 315,100 Inter-segment purchases 8,465 3,654 (12,119) Total purchases 59,857 267,362 (12,119) 315,100 Total produced and purchased 61,605 323,100 (12,119) 372,586 Deduct: Net increase in gas in storage 4,426 4,426 Extracted natural gas liquids (equivalent gas volumes) 3,992 3,992 System use and unaccounted for 4,952 609 5,561 Total 52,227 318,499 (12,119) 358,607 Gas Sales (MMcf): Residential 31,410 31,410 Commercial 9,684 9,684 Industrial 3,450 (189) 3,261 Utilities 198 198 Production 55,738 (1,093) 54,645 Marketing 7,033 262,761 (10,385) 259,409 Total gas sales 51,775 318,499 (11,667) 358,607 Processed gas extracted 452 (452) Total 52,227 318,499 (12,119) 358,607 Natural Gas Transported (MMcf) 67,035 72,390 (34,009) 105,416 Oil Produced and Sold (thousands of bls) 2,073 2,073 Natural Gas Liquids Sold (thousands of gallons) 198,339 198,339 Average Selling Price Gas - Utility Sales (per Mcf) $7.849 - Energy Resource Production $2.349 - Energy Resource Marketing $2.380 Oil (per barrel) $14.968 Natural Gas Liquids (per gallon) $.276
Twelve Months Ended March 31, 1993 Utility Energy Services Resources Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced 2,820 49,008 51,828 Purchased: Pipeline suppliers 3,226 3,226 Other producers 44,779 136,495 181,274 Sub-total 48,005 136,495 184,500 Inter-segment purchases 8,538 2,574 (11,112) Total purchases 56,543 139,069 (11,112) 184,500 Total produced and purchased 59,363 188,077 (11,112) 236,328 Deduct: Net decrease in gas in storage (27) (27) Extracted natural gas liquids (equivalent gas volumes) 1,989 1,989 System use and unaccounted for 14,435 585 15,020 Total 44,955 185,503 (11,112) 219,346 Gas Sales (MMcf): Residential 30,156 30,156 Commercial 7,827 7,827 Industrial 4,920 (585) 4,335 Utilities 63 63 Production 49,008 (4,609) 44,399 Marketing 136,495 (3,929) 132,566 Total gas sales 42,966 185,503 (9,123) 219,346 Processed gas extracted 1,989 (1,989) Total 44,955 185,503 (11,112) 219,346 Natural Gas Transported (MMcf) 63,272 (35,032) 28,240 Oil Produced and Sold (thousands of bls) 2,302 2,302 Natural Gas Liquids Sold (thousands of gallons) 62,184 62,184 Average Selling Price Gas - Utility Sales (per Mcf) $7.314 - Energy Resource Production $2.077 - Energy Resource Marketing $2.153 Oil (per barrel) $18.352 Natural Gas Liquids (per gallon) $.337
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Information by Business Segment (Thousands) Three Months Ended Twelve Months Ended March 31, March 31, 1994 1993 1994 1993 Operating Revenues: Energy resources $259,886 $124,453 $ 878,497 $491,425 Utility services 197,586 159,345 435,538 390,345 Sales between segments (17,934) (13,979) (49,522) (44,785) ------- ------- --------- ------- Total $439,538 $269,819 $1,264,513 $836,985 ======= ======= ========= ======= Operating Income: Energy resources $ 12,811 $ 12,158 $ 54,806 $ 45,765 Utility services 48,168 43,191 81,321 73,659 -------- ------- -------- ------- Total $ 60,979 $ 55,349 $ 136,127 $119,424 ======= ======= ========= ======= Net Income: Energy resources $ 7,971 $ 8,100 $ 37,871 $ 32,558 Utility services 28,388 22,695 41,148 32,158 ------ ------ --------- ------- Total $ 36,359 $ 30,795 $ 79,019 $ 64,716 ======= ======= ========= =======
Management's Discussion and Analysis of Financial Condition and Results of Operations OVERVIEW Consolidated net income for the quarter ended March 31, 1994 was $36.4 million, or $1.05 per share, compared with $30.8 million, or $.98 per share, for the quarter ended March 31, 1993. The 18 percent increase in income is due primarily to higher margins realized from utility service operations reflecting colder weather. Consolidated net income for the twelve months ended March 31, 1994 was $79.0 million, or $2.39 per share, compared with $64.7 million, or $2.06 per share, for the twelve months ended March 31, 1993. The 22 percent increase in income is due primarily to increased margins from utility service operations and increases in production and average wellhead prices for natural gas. RESULTS OF OPERATIONS ENERGY RESOURCES ________________ Operating revenues were $259.9 million for the quarter ended March 31, 1994 compared with $124.5 million for the quarter ended March 31, 1993. Operating revenues for the twelve months ended March 31, 1994 were $878.5 million compared with $491.4 million for the twelve months ended March 31, 1993. The increase in revenues for the current periods is due primarily to increases in gas marketing activity, production and average wellhead prices for natural gas and increased production of natural gas liquids which were partially offset by lower prices for oil and natural gas liquids. The increase in marketed natural gas and production of natural gas liquids is due primarily to the acquisition of Louisiana Intrastate Gas Company (LIG) on June 30, 1993. Three Months Ended Twelve Months Ended March 31, March 31, Energy Resources 1994 1993 1994 1993 Operating Revenues (thousands): Natural Gas: Production $ 39,364 $ 29,799 $130,924 $101,774 Marketing 194,611 75,200 625,241 293,884 Oil 6,207 9,359 31,024 42,242 Natural Gas Liquids 13,040 5,392 54,769 20,943 Direct Billing Settlements - - 7,815 7,815 Other 6,664 4,703 28,724 24,767 ------- ------- ------- ------- Total Revenues $259,886 $124,453 $878,497 $491,425 ======= ======= ======= ======= Sales Quantities: Natural Gas (MMcf): Production 15,283 13,095 55,738 49,008 Marketing 79,641 34,911 262,761 136,495 Oil (MBls) 510 549 2,073 2,302 Natural Gas Liquids (thousands of gallons) 51,896 15,748 198,339 62,184 Cost of gas purchased amounted to $201.9 million for the quarter ended March 31, 1994 compared with $77.6 million for the quarter ended March 31, 1993. Gas purchases for the twelve months ended March 31, 1994 amounted to $658.1 million compared with $302.5 million for the twelve months ended March 31, 1993. The increased cost for the current periods reflects the increase in volume of marketed natural gas and requirements for the higher production level of natural gas liquids. Other operating expenses were $45.2 million for the quarter ended March 31, 1994 compared with $34.7 million for the quarter ended March 31, 1993. Other operating expenses for the twelve months ended March 31, 1994 were $165.6 million compared with $143.1 million for the twelve months ended March 31, 1993. Increases for the current periods are attributed to increased production expenses and depreciation and depletion related to the acquisition of LIG on June 30, 1993, as well as the higher level of natural gas production. Operating income was $12.8 million for the quarter ended March 31, 1994 compared with $12.2 million for the quarter ended March 31, 1993. Operating income for the twelve months ended March 31, 1994 was $54.8 million compared with $45.8 million for the twelve months ended March 31, 1993. The increases for the current periods are attributed to increases in production and average wellhead prices for natural gas. The Company expects 1994 gas and oil production to be 15 to 20 percent greater than 1993 levels. Average wellhead gas prices for the first quarter of 1994 were $.30/Mcf higher than the first quarter of 1993 due in part to the high winter demand resulting from extremely cold weather experienced throughout most of the eastern United States. The Company believes that the need to refill storage pools depleted to meet the high winter demand, plus a growing interest in security of supply following the recent cold weather, should sustain the strength in wellhead gas prices. UTILITY SERVICES ________________ Operating revenues, which are derived principally from the sale and transportation of natural gas, were $197.6 million for the quarter ended March 31, 1994 compared with $159.3 million for the quarter ended March 31, 1993. The increase in revenues is the result of increased retail gas sales due primarily to colder weather and increased retail rates to pass-through higher gas costs to customers. Operating revenues were $435.6 million for the twelve months ended March 31, 1994 compared with $390.3 million for the twelve months ended March 31, 1993. The increase in revenues is the result of increased retail gas sales reflecting colder weather, the return to gas sales of some commercial and industrial customers previously using transportation service, and the full-year impact of a retail rate increase for Pennsylvania customers that went into effect in July of 1992. The implementation of Order 636 has resulted in a shift of utility revenues from pipeline sales to marketed gas sales. Three Months Ended Twelve Months Ended March 31, March 31, Utility Services 1994 1993 1994 1993 Operating Revenues (thousands): Retail Gas Sales $170,648 $136,392 $348,568 $301,759 Pipeline Gas Sales 62 6,035 6,284 25,294 Transportation Service 14,251 13,270 45,741 48,327 Storage Service 2,157 1,477 7,607 5,602 Marketed Gas Sales 8,401 - 18,601 - Other 2,067 2,171 8,737 9,363 ------- ------- ------- ------- Total Revenues $197,586 $159,345 $435,538 $390,345 ======= ======= ======= ======= Sales Quantities (MMcf): Retail Gas Sales 22,024 18,283 43,723 37,817 Pipeline Gas Sales 16 1,358 1,472 6,067 Transportation 11,092 10,329 67,035 63,272 Marketed Gas 2,981 - 7,033 - Heating Degree Days (Normal: Quarter-2,995; Annual-5,968) 3,182 2,798 6,012 5,679 Cost of gas purchased amounted to $97.0 million for the quarter ended March 31, 1994 compared with $73.3 million for the quarter ended March 31, 1993. The increase in the cost of gas purchased is the result of the increase in retail sales volumes and the pass-through of higher costs in rates to retail customers. Gas purchases amounted to $177.3 million for the twelve months ended March 31, 1994 compared with $165.8 million for the twelve months ended March 31, 1993. The increase is the result of higher retail sales volumes. Other operating expenses amounted to $52.4 million for the quarter ended March 31, 1994 compared with $42.8 million for the quarter ended March 31, 1993. The increase is attributed primarily to provisions for estimated interstate rate refunds and higher taxes other than income related to increased sales. Other operating expenses were $177.0 million for the twelve months ended March 31, 1994 compared with $150.8 million for the twelve months ended March 31, 1993. The increase reflects the recording of the provision for estimated interstate rate refunds, higher taxes other than income related to increased sales, and increased depreciation. Operating income was $48.2 million for the quarter ended March 31, 1994 compared with $43.2 million for the quarter ended March 31, 1993. The increase in operating income is due primarily to increased retail sales reflecting colder weather. Operating income for the twelve months ended March 31, 1994 was $81.3 million compared with $73.7 million for the twelve months ended March 31, 1993. The increase in operating income is due to increased retail gas sales reflecting colder weather and the full-year impact of a retail rate increase for Pennsylvania customers that went into effect in July of 1992. CAPITAL RESOURCES AND LIQUIDITY Operating Activities ____________________ Cash required for operations is impacted primarily by the seasonal nature of the Company's utility operations. Gas purchased for storage during the nonheating season is financed with short-term loans which are repaid as gas is withdrawn from storage and sold during the heating season. Short-term loans are also used to provide other working capital requirements during the nonheating season. Investing Activities ____________________ The Company's business requires major ongoing expenditures for replacements, improvements and additions to utility plant and continuing development and expansion of its energy resources. A total of $151.2 million has been authorized for the 1994 capital expenditure program, of which 60 percent is allocated to Energy Resources. Capital expenditures for the three months ended March 31, 1994 were $24.5 million. Short-term loans are used as interim financing for a portion of capital expenditures. The Company expects to finance its 1994 capital expenditures with cash generated from operations and temporarily with short-term loans. Financing Activities ____________________ The Company believes it has adequate borrowing capacity to meet its financing requirements. Bank loans and commercial paper, supported by available credit, are used to meet short-term financing requirements. At March 31, 1994, $167.1 million of commercial paper and $18.1 million of bank loans were outstanding at an average interest rate of 3.49 percent. Lines of credit currently available to the Company total $325 million which require commitment fees averaging one-tenth of one percent. Adequate lines of credit are expected to continue to be available in the future. The Company intends to file a shelf registration by May 31, 1994 for the issuance of $100 million of Medium-Term Notes -- Series C. Proceeds from issuance of the Medium-Term Notes will be used to repay short-term loans incurred to finance a portion of capital expenditures and acquisitions. Balance Sheet Changes _____________________ The changes in deferred purchased gas cost are due to the timing of pass-through of gas costs to rate payers. Changes in deferred purchased gas cost do not affect results of operations due to regulatory procedures for recovery of purchased gas cost in rates. Gas stored underground--current inventory decreased reflecting higher withdrawals to meet the demand caused by colder weather. The increase in Energy Resource property, plant and equipment and accumulated depreciation, accounts receivable, accounts payable, prepaid expenses and other current assets, deferred income taxes, other current liabilities and other deferred credits compared to March 31, 1993 are due primarily to the acquisition of LIG. The increase in regulatory assets since March 31, 1993 is due to accounting for income taxes applicable to rate regulated operations. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: None (b) Reports on Form 8-K during the quarter ended March 31, 1994: None Signature 17 Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EQUITABLE RESOURCES, INC. ---------------------------------- (Registrant) s/ Joseph L. Giebel --------------------------------- Joseph L. Giebel Vice President - Accounting and Administration Chief Accounting Officer Date: May 13, 1994 -----END PRIVACY-ENHANCED MESSAGE-----