-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VLukFmsiYk96X26C+HsO80wt6FaPZPnho34/AT/MLOShRa3j58gG/3pFxuGpU9jh BGZ2iKeKN9KpygYlWc5jmA== 0000033213-96-000012.txt : 19960816 0000033213-96-000012.hdr.sgml : 19960816 ACCESSION NUMBER: 0000033213-96-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NYSE SROS: PHLX FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUITABLE RESOURCES INC /PA/ CENTRAL INDEX KEY: 0000033213 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [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: 96612858 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 JUNE 1996 10-Q 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 JUNE 30, 1996 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 June 30, 1996 Common stock, no par value 35,130,151 shares EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Index Page No. PART I. FINANCIAL STATEMENTS: Statements of Consolidated Income for the Three Months Ended June 30, 1996 and 1995, the Six Months Ended June 30, 1996 and 1995 and the Twelve Months Ended June 30, 1996 and 1995 1 Statements of Consolidated Cash Flows for the Three Months Ended June 30, 1996 and 1995, the Six Months Ended June 30, 1996 and 1995 and the Twelve Months Ended June 30, 1996 and 1995 2 Consolidated Balance Sheets, June 30, 1996 and 1995 and December 31, 1995 3 - 4 Long-Term Debt, June 30, 1996 and 1995 5 Notes to Consolidated Financial Statements 6 Gas Produced, Purchased and Sold 7 - 12 Information by Business Segment 13 Management's Discussion and Analysis of Financial Condition and Results of Operations 14 - 21 PART II. OTHER INFORMATION 22 SIGNATURE 23
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Statements of Consolidated Income (Thousands Except Per Share Amounts) Three Months Ended Six Months Ended Twelve Months Ended June 30, June 30, June 30, ------------------ ----------------------- ------------------------ 1996 1995 1996 1995 1996 1995 ---- ---- ---- ---- ---- ---- Operating Revenues........... $ 391,767 $ 316,534 $ 1,032,045 $ 721,225 $ 1,736,810 $ 1,362,845 Cost of Energy Purchased .... 296,372 218,721 771,843 477,278 1,205,923 901,206 ---------- -------- ----------- --------- ----------- ---------- Net operating revenues.. 95,395 97,813 260,202 243,947 530,887 461,639 ---------- -------- ----------- --------- ----------- ---------- Operating Expenses: Operation................. 50,922 49,620 103,583 97,934 204,150 194,601 Maintenance............... 6,359 6,223 12,267 13,201 25,701 30,091 Depreciation and depletion 20,076 28,800 41,658 57,425 88,858 105,444 Impairment of assets...... - - - - 121,081 - Taxes other than income... 9,055 8,138 24,308 22,043 44,103 38,944 ---------- -------- ----------- --------- ----------- ---------- Total operating expenses 86,412 92,781 181,816 190,603 483,893 369,080 Operating Income............. 8,983 5,032 78,386 53,344 46,994 92,559 ---------- -------- ----------- --------- ----------- ---------- Other Income ................ 2,686 447 4,855 (164) 5,406 2,491 Interest Charges............. 9,938 12,678 20,412 25,544 44,966 48,520 ---------- -------- ----------- --------- ----------- ---------- Income (Loss) Before Income Taxes ...... 1,731 (7,199) 62,829 27,636 7,434 46,530 Income Taxes (Benefits)...... 803 (6,037) 23,175 1,044 (7,175) 1,625 ---------- -------- ----------- --------- ----------- ---------- Net Income (Loss)............ $ 928 $ (1,162) $ 39,654 $ 26,592 $ 14,609 $ 44,905 ========== ======== =========== ========= =========== ========== Average Common Shares Outstanding......... 35,113 34,703 35,070 34,666 34,989 34,601 ========== ======== =========== ========= =========== ========== Earnings (Loss) Per Share of Common Stock.............. $.03 $(.03) $1.13 $.77 $.42 $1.30 ==== ===== ===== ==== ==== ===== Dividends Per Share of Common Stock.............. $ - $ - $.59 $.59 $1.18 $1.17 ====== ====== ==== ==== ===== =====
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Statements of Consolidated Cash Flows (Thousands) Three Months Ended Six Months Ended Twelve Months Ended June 30, June 30, June 30, ------------------ ---------------- ------------------- 1996 1995 1996 1995 1996 1995 ---- ---- ---- ---- ---- ---- Cash Flows from Operating Activities: Net income (loss)......................... $ 928 $ (1,162) $ 39,654 $ 26,592 $ 14,609 $ 44,905 -------- -------- -------- -------- --------- -------- Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Impairment of assets................... - - - - 121,081 - Depreciation and depletion............. 20,076 28,800 41,658 57,425 88,858 105,444 Deferred income taxes (benefits)....... 2,120 (4,581) 14,944 (14,197) (45,207) (15,332) Other - net............................ 788 (307) 3,542 2,236 539 447 Changes in other assets and liabilities: Accounts receivable and unbilled revenues 109,080 19,900 19,759 (261) (54,255) (4,004) Gas stored underground............... (7,480) (3,865) 2,278 7,547 (90) (9) Material and supplies................ (149) (1,740) 1,919 1,034 1,039 2,987 Deferred purchased gas cost.......... (21,535) 834 (30,118) 26,529 (41,917) 16,419 Prepaid expenses and other........... 9,116 (2,802) 8,775 (5,459) 5,480 (15,390) Regulatory assets.................... 67 (1,449) 432 (1,428) 3,670 (204) Accounts payable..................... (98,220) 2,429 (29,367) (7,968) 37,392 (21,586) Accrued taxes........................ (6,590) (1,852) 1,757 (5,536) 5,812 (3,356) Refunds due customers................ 157 (3,840) 829 (1,048) (4,375) 3,037 Customer credit balances............. 82 816 (8,634) (8,382) (920) 706 Deferred revenue..................... (7,868) - (13,294) - 116,580 - Other - net.......................... (19,608) (6,983) (5,375) 8,559 (5,378) 5,701 -------- -------- -------- -------- --------- -------- Total adjustments.................. (19,964) 25,360 9,105 59,051 228,309 74,860 -------- -------- -------- -------- --------- -------- Net cash provided (used) by operating activities........... (19,036) 24,198 48,759 85,643 242,918 119,765 -------- -------- -------- -------- --------- -------- Cash Flows from Investing Activities: Capital expenditures...................... (23,851) (24,266) (42,682) (54,990) (105,804) (140,658) Proceeds from sale of property............ 1,078 106 1,503 753 25,360 1,433 -------- -------- -------- -------- --------- -------- Net cash used in investing activities............. (22,773) (24,160) (41,179) (54,237) (80,444) (139,225) -------- -------- -------- -------- --------- -------- Cash Flows from Financing Activities: Issuance of common stock.................. 648 544 1,191 1,202 2,745 2,119 Purchase of treasury stock................ (8) (5) (8) (74) (174) (469) Dividends paid............................ (7) (10,238) (20,708) (20,462) (41,344) (40,486) Proceeds from issuance of long-term debt.. - 17,878 - 17,878 (42) 17,776 Repayments and retirements of long-term debt ......................... (84,823) - (84,823) - (109,323) - Increase (decrease) in short-term loans... 96,306 (16,785) 92,652 (45,226) 3,578 36,174 -------- -------- -------- -------- --------- -------- Net cash provided (used) by financing activities........... 12,116 (8,606) (11,696) (46,682) (144,560) 15,114 -------- -------- -------- -------- --------- -------- Increase (decrease) in cash and cash equivalents............................. (29,693) (8,568) (4,116) (15,276) 17,914 (4,346) Cash and cash equivalents at beginning of period....................... 55,746 16,707 30,169 23,415 8,139 12,485 -------- -------- -------- -------- --------- -------- Cash and cash equivalents at end of period... $ 26,053 $ 8,139 $ 26,053 $ 8,139 $ 26,053 $ 8,139 ======== ======== ======== ======== ========= ======== Cash paid during the period for: Interest (net of amount capitalized)...... $ 13,124 $ 15,960 $ 24,812 $ 29,378 $ 41,793 $ 51,600 ======== ======== ======== ======== ========= ======== Income taxes.............................. $ 9,025 $ 8,006 $ 9,631 $ 7,541 $ 43,362 $ 14,128 ======== ======== ======== ======== ========= ========
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Thousands) June 30, December 31, -------- ------------ 1996 1995 1995 -------------------- ---- ASSETS Current Assets: Cash and cash equivalents............................... $ 26,053 $ 8,139 $ 30,169 Accounts receivable (less accumulated provision for doubtful accounts: June 30, 1996 $13,635; 1995 $12,708; December 31, 1995, $10,539)........................... 247,712 194,069 240,846 Unbilled revenues ...................................... 2,031 2,346 31,752 Gas stored underground - current inventory ............. 7,644 7,554 9,922 Material and supplies .................................. 10,658 11,842 12,577 Deferred purchased gas cost ............................ 40,278 (1,639) 10,160 Prepaid expenses and other ............................. 33,548 39,028 42,323 ------------- ------------ ------------- Total current assets............................... 367,924 261,339 377,749 ------------- ------------ ------------- Property, Plant and Equipment: Exploration and production (successful efforts method).. 888,972 1,010,688 869,329 Energy marketing........................................ 304,853 315,461 295,061 Natural gas distribution................................ 576,204 568,316 568,272 Natural gas transmission................................ 386,843 390,497 388,986 ------------- ------------ ------------- Total property, plant and equipment................ 2,156,872 2,284,962 2,121,648 Less accumulated depreciation and depletion .......... 702,405 694,479 664,065 ------------- ------------ ------------- Net property, plant and equipment.................. 1,454,467 1,590,483 1,457,583 ------------- ------------ ------------- Other Assets: Regulatory assets ...................................... 84,809 89,815 85,241 Other................................................... 42,632 30,844 41,235 ------------- ------------ ------------- Total other assets ................................... 127,441 120,659 126,476 ------------- ------------ ------------- Total.............................................. $ 1,949,832 $ 1,972,481 $ 1,961,808 ============= ============ =============
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Thousands) June 30, December 31, -------- ------------ 1996 1995 1995 ---- ---- ---- CAPITALIZATION AND LIABILITIES Current Liabilities: Long-term debt payable within one year............. $ - $ 24,500 $ - Short-term loans................................... 143,652 224,074 135,000 Accounts payable................................... 152,818 115,426 182,185 Accrued taxes...................................... 19,864 14,052 18,107 Accrued interest................................... 8,786 7,395 14,842 Refunds due customers.............................. 16,832 21,207 16,003 Deferred income taxes.............................. 9,858 (9,569) (1,506) Customer credit balances........................... 1,125 2,045 9,759 Other.............................................. 21,222 10,161 14,889 ------------ ------------- ------------- Total current liabilities..................... 374,157 409,291 389,279 ------------ ------------- ------------- Long--Term Debt ....................................... 415,870 415,195 415,527 ------------- ------------- ------------- Deferred and Other Credits: Deferred income taxes.............................. 261,766 339,854 265,737 Deferred investment tax credits.................... 20,441 21,542 20,991 Deferred revenue................................... 116,580 - 129,874 Other.............................................. 23,703 27,530 25,321 ------------ ------------- ------------- Total deferred and other credits.............. 422,490 388,926 441,923 ------------ ------------- ------------- Capitalization: Common stockholders' equity: Common stock, no par value, authorized 80,000 shares; shares issued June 30, 1996, 35,469; June 30, 1995, 35,352; December 31, 1995, 35,414..................... 225,200 227,670 223,854 Retained earnings ............................... 520,982 547,606 502,036 Treasury stock, shares at cost June 30, 1996, 339; June 30, 1995, 635; December 31, 1995, 407 (7,730) (15,007) (9,673) Foreign currency translation..................... (1,137) (1,200) (1,138) ------------ ------------- ------------- Total common stockholders' equity............. 737,315 759,069 715,079 ------------ ------------- ------------- Total..................................... $ 1,949,832 $ 1,972,481 $ 1,961,808 ============ ============= =============
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Long-Term Debt (Thousands) Annual Maturities Debt Maturities After One Year --------------- -------------- June 30, June 30, --------------- -------------- 1996 1995 1996 1995 ---- ---- ---- ---- 8 1/4% Debentures, due July 1, 1996 (a)............... $ $ $ $ 75,000 7 1/2% Debentures, due July 1, 1999 ($75,000 principal amount net of unamortized original issue discount) (b).......... 71,768 70,884 9 1/2% Convertible subordinated debentures, due January 15, 2006.................. 602 811 9.9% Debentures, due April 15, 2013 (c)............... 66,000 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 2003 thru 2023......... 24,500 75,500 75,500 6.8% to 7.6% Series C, due 2007 thru 2018......... 18,000 18,000 Short-term debt to be refinanced (a)(c)............... 84,000 -------- --------- ----------- ----------- Total.......................................... $ - $ 24,500 $ 415,870 $ 415,195 ======== ========= =========== =========== (a) 8 1/4% Debentures were retired and financed temporarily with short-term debt. See Note F to the Consolidated Financial Statements. (b) Annual sinking fund payments of $3,750,000 are required beginning in 1999. (c) $9,000,000 retired as of June 30, 1996 through tender offer. See Note F to the Consolidated Financial Statements.
Equitable Resources, Inc. and Subsidiaries Notes to Consolidated Financial Statements A. The accompanying financial statements should be read in conjunction with the Company's 1995 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 June 30, 1996 and 1995 and the results of operations for the three, six and twelve months then ended and cash flows for the three, six and twelve months then ended. All of the adjustments are of a normal recurring nature. C. The results of operations for the three- and six-month periods ended June 30, 1996 and 1995 are not indicative of results for a full year because of the seasonal nature of the Company's operations. D. At June 30, 1996, 2,561,000 shares of Common Stock were reserved as follows: 55,000 shares for conversion of the 9 1/2% Convertible Subordinated Debentures, 587,000 shares for issuance under the Key Employee Restricted Stock Option and Stock Appreciation Rights Incentive Compensation Plan, 1,726,000 shares for issuance under the Long-Term Incentive Plan, 76,000 shares for issuance under the Non-Employee Directors' Stock Incentive Plan, and 117,000 shares for issuance under the Company's Dividend Reinvestment and Stock Purchase Plan. E. Effective March 29,1996, the Company acquired all of the outstanding stock of Conogen, Inc. (Conogen) in exchange for 239,316 shares of the Company's common stock valued at $7 million and subject to an additional contingent amount. At the time of closing, the Company tendered 68,376 shares of common stock held in treasury with 170,940 shares tendered in July 1996. The effect of this acquisition on the consolidated financial statements of the Company is not material. Conogen is a design-builder and performance contractor in self-funded energy and resource efficiency projects for commercial, industrial and institutional customers. F. On June 28, 1996, the Company funded the retirement of $75 million of 8 1/4% Debentures due July 1, 1996. On June 25, 1996, the Company commenced a tender offer for the purchase of all of the outstanding 9.9% Debentures due April 15, 2013. As of June 30, 1996, $9 million of the Debentures were tendered for purchase. In July and August an additional $60 million were tendered for purchase leaving $6 million outstanding. The retirement of 8 1/4% Debentures and purchase of 9.9% Debentures were financed temporarily with short-term loans which were repaid with long-term debt issued in July 1996 as described below. As such, $84 million of outstanding short-term debt at June 30, 1996 is classified as long-term debt in the financial statements. The Company filed a shelf registration with the Securities and Exchange Commission effective in June 1996 to issue $250 million of long-term debt. On July 29, 1996 the Company issued $150 million of 30-year Debentures with a coupon rate of 7 3/4%. The proceeds were used to finance the retirement of 8 1/4% Debentures and purchase of 9.9% Debentures as described above.
THREE MONTHS ENDED JUNE 30, 1996 Exploration and Natural Gas Natural Gas Natural Gas Intersegment Production Marketing Distribution Transmission Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced ................................... 13,711 28 614 14,353 ------- -------- ------- -------- -------- ------- Purchased: Other producers .......................... 124,701 15,412 1,980 142,093 Inter-segment purchases .................. 601 10,785 1,593 (12,979) ------- -------- ------- -------- -------- ------- Total purchases ...................... 601 135,486 17,005 1,980 (12,979) 142,093 ------- -------- ------- -------- -------- ------- Total produced and purchased ..... 14,312 135,486 17,033 2,594 (12,979) 156,446 Deduct: Net increase (decrease) in gas in storage 2,808 2,808 Extracted natural gas liquids (equivalent gas volumes) ............... 452 1,909 2,361 System use and unaccounted for ........... 136 420 (540) 23 39 ------- -------- ------- -------- -------- ------- Total ............................ 13,724 133,157 14,765 2,571 (12,979) 151,238 ======= ======== ======= ======== ======== ======= Gas Sales (MMcf): Residential ................................ 4,284 4,284 Commercial ................................. 1,982 1,982 Industrial and Utility ..................... 8,499 (1,112) 7,387 Production ................................. 13,711 (104) 13,607 Marketing .................................. 13 133,157 2,571 (11,763) 123,978 ------- -------- ------- -------- -------- ------- Total ............................ 13,724 133,157 14,765 2,571 (12,979) 151,238 ======= ======== ======= ======== ======== ======= Natural Gas Transported (MMcf) .................... 30,321 979 30,542 (22,648) 39,194 ======= ======== ======= ======== ======== ======= Oil Produced and Sold (thousands of bls) .......... 442 442 ======== ======= Natural Gas Liquids Sold (thousands of gallons) .......................... 16,261 57,660 73,921 ======== ======== ======= Average Selling Price: Residential Gas Sales (per Mcf)............. $9.480 Commercial Gas Sales........................ 6.400 Industrial and Utility Gas Sales............ 2.845 N/A Produced Natural Gas........................ $1.428 Marketed Natural Gas........................ 4.846 $1.989 $2.836 Oil (per barrel)............................ 15.287 Natural Gas Liquids (per gallon)............ .337 .331
THREE MONTHS ENDED JUNE 30, 1995 Exploration and Natural Gas Natural Gas Natural Gas Intersegment Production Marketing Distribution Transmission Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced................................. 17,564 33 560 18,157 -------- --------- -------- --------- --------- --------- Purchased: Other producers........................ 122,209 13,417 1,448 137,074 Inter-segment purchases................ 768 12,921 1,894 (15,583) -------- --------- -------- --------- --------- --------- Total purchases.................... 768 135,130 15,311 1,448 (15,583) 137,074 -------- --------- -------- --------- --------- --------- Total produced and purchased... 18,332 135,130 15,344 2,008 (15,583) 155,231 Deduct: Net increase (decrease) in gas in storage 2,224 171 2,395 Extracted natural gas liquids (equivalent gas volumes)............. 485 1,650 2,135 System use and unaccounted for......... 145 422 2,279 (121) 2,725 -------- --------- -------- --------- --------- --------- Total.......................... 17,702 133,058 10,841 1,958 (15,583) 147,976 ======== ========= ======== ========= ========= ========= Gas Sales (MMcf): Residential.............................. 4,070 4,070 Commercial............................... 58 581 Industrial and Utility................... 6,190 6,190 Production............................... 17,564 (80) 17,484 Marketing................................ 138 133,058 1,958 (15,503) 119,651 -------- --------- -------- --------- --------- --------- Total.......................... 17,702 133,058 10,841 1,958 (15,583) 147,976 ======== ========= ======== ========= ========= ========= Natural Gas Transported (MMcf).................. 30,929 3,126 27,765 (22,206) 39,614 ======== ========= ======== ========= ========= ========= Oil Produced and Sold (thousands of bls)........ 500 500 ======== ========= Natural Gas Liquids Sold (thousands of gallons)........................ 16,087 49,791 65,878 ======== ========= ========= Average Selling Price: Residential Gas Sales (per Mcf).......... $9.657 Commercial Gas Sales..................... 9.246 Industrial and Utility Gas Sales......... 1.927 N/A Produced Natural Gas..................... $1.482 Marketed Natural Gas..................... 2.283 $1.584 $1.936 Oil (per barrel)......................... 17.270 Natural Gas Liquids (per gallon)......... .328 .277
SIX MONTHS ENDED JUNE 30, 1996 Exploration and Natural Gas Natural Gas Natural Gas Intersegment Production Marketing Distribution Transmission Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced................................. 30,089 62 1,153 31,304 ------- --------- ------- ------- -------- -------- Purchased: Other producers........................ 259,885 32,095 4,616 296,596 Inter-segment purchases................ 1,192 20,684 6,993 (28,869) ------- -------- ------- ------- -------- -------- Total purchases.................... 1,192 280,569 39,088 4,616 (28,869) 296,596 ------- -------- ------- ------- -------- -------- Total produced and purchased... 31,281 280,569 39,150 5,769 (28,869) 327,900 Deduct: Net increase (decrease) in gas in storage (2,491) (2,491) Extracted natural gas liquids (equivalent gas volumes)............. 882 3,214 4,096 System use and unaccounted for......... 244 751 2,138 49 3,182 ------- -------- ------- ------- -------- -------- Total.......................... 30,155 276,604 39,503 5,720 (28,869) 323,113 ======= ======== ======= ======= ======== ======== Gas Sales (MMcf): Residential.............................. 19,301 19,301 Commercial............................... 8,314 8,314 Industrial and Utility................... 11,888 (1,559) 10,329 Production............................... 30,089 (399) 29,690 Marketing................................ 66 276,604 5,720 (26,911) 255,479 ------- -------- ------- ------- -------- -------- Total.......................... 30,155 276,604 39,503 5,720 (28,869) 323,113 ======= ======== ======= ======= ======== ======== Natural Gas Transported (MMcf).................. 60,598 3,303 65,412 (54,915) 74,398 ======= ======== ======= ======= ======== ======== Oil Produced and Sold (thousands of bls)........ 892 892 ======= ======== Natural Gas Liquids Sold (thousands of gallons)........................ 28,668 96,732 125,400 ======= ======== ======== Average Selling Price: Residential Gas Sales (per Mcf).......... $8.387 Commercial Gas Sales..................... 6.424 Industrial and Utility Gas Sales......... 3.164 N/A Produced Natural Gas..................... $1.926 Marketed Natural Gas..................... 3.697 $2.459 $3.456 Oil (per barrel)......................... 16.114 Natural Gas Liquids (per gallon)......... .370 .327
SIX MONTHS ENDED JUNE 30, 1995 Exploration and Natural Gas Natural Gas Natural Gas Intersegment Production Marketing Distribution Transmission Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced................................. 34,826 62 1,092 35,980 ------- -------- ------- ------- -------- -------- Purchased: Other producers........................ 235,690 25,311 3,019 264,020 Inter-segment purchases................ 1,726 23,665 6,924 (32,315) ------- -------- ------- ------- -------- -------- Total purchases ................... 1,726 259,355 32,235 3,019 (32,315) 264,020 ------- -------- ------- ------- -------- -------- Total produced and purchased... 36,552 259,355 32,297 4,111 (32,315) 300,000 Deduct: Net increase (decrease) in gas in storage (2,893) (2,893) Extracted natural gas liquids (equivalent gas volumes) ............ 952 3,243 4,195 System use and unaccounted for......... 276 829 6,489 104 7,698 ------- -------- ------- ------- -------- -------- Total.......................... 35,324 255,283 28,701 4,007 (32,315) 291,000 ======= ======== ======= ======= ======== ======== Gas Sales (MMcf): Residential.............................. 17,484 17,484 Commercial............................... 2,359 2,359 Industrial and Utility................... 8,858 1 8,859 Production............................... 34,826 (308) 34,518 Marketing................................ 498 255,283 4,006 (32,007) 227,780 ------- -------- ------- ------- -------- -------- Total.......................... 35,324 255,283 28,701 4,007 (32,315) 291,000 ======= ======== ======= ======= ======== ======== Natural Gas Transported (MMcf).................. 57,522 9,435 58,194 (49,926) 75,225 ======= ======== ======= ======= ======== ======== Oil Produced and Sold (thousands of bls)........ 1,011 1,011 ======= ======== Natural Gas Liquids Sold (thousands of gallons)........................ 31,134 98,024 129,158 ======= ======== ======== Average Selling Price: Residential Gas Sales (per Mcf).......... $9.272 Commercial Gas Sales..................... 9.413 Industrial and Utility Gas Sales......... 1.914 N/A Produced Natural Gas..................... $1.546 Marketed Natural Gas..................... 1.606 $1.593 $2.006 Oil (per barrel)......................... 16.758 Natural Gas Liquids (per gallon)......... .338 .272
TWELVE MONTHS ENDED JUNE 30, 1996 Exploration and Natural Gas Natural Gas Natural Gas Intersegment Production Marketing Distribution Transmission Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced ................................ 60,247 140 2,621 63,008 ------- -------- ------- -------- -------- -------- Purchased: Other producers........................ 487,746 48,710 9,633 546,089 Inter-segment purchases................ 2,612 50,575 13,618 (66,805) ------- -------- ------- -------- -------- -------- Total purchases.................... 2,612 538,321 62,328 9,633 (66,805) 546,089 ------- -------- ------- -------- -------- -------- Total produced and purchased... 62,859 538,321 62,468 12,254 (66,805) 609,097 Deduct: Net increase (decrease) in gas in storage (993) (276) (1,269) Extracted natural gas liquids (equivalent gas volumes)............. 1,801 6,511 8,312 System use and unaccounted for......... 525 1,572 680 (330) 2,447 ------- -------- ------- -------- -------- -------- Total.......................... 60,533 530,238 62,781 12,860 (66,805) 599,607 ======= ======== ======= ======== ======== ======== Gas Sales (MMcf): Residential.............................. 31,311 31,311 Commercial............................... 10,449 10,449 Industrial and Utility................... 21,021 (1) (11,908) 9,112 Production............................... 60,247 (556) 59,691 Marketing................................ 286 530,238 12,861 (54,341) 489,044 ------- -------- ------- -------- -------- -------- Total.......................... 60,533 530,238 62,781 12,860 (66,805) 599,607 ======= ======== ======= ======== ======== ======== Natural Gas Transported (MMcf).................. 125,481 9,971 126,308 (103,387) 158,373 ======= ======== ======= ======== ======== ======== Oil Produced and Sold (thousands of bls)........ 1,813 1,813 ======= ======== Natural Gas Liquids Sold (thousands of gallons)........................ 60,581 196,648 257,229 ======= ======== ======== Average Selling Price: Residential Gas Sales (per Mcf).......... $8.515 Commercial Gas Sales..................... 6.795 Industrial and Utility Gas Sales......... 2.754 N/A Produced Natural Gas..................... $1.779 Marketed Natural Gas..................... 2.084 $2.074 $2.647 Oil (per barrel)......................... 16.098 Natural Gas Liquids (per gallon)......... .329 .295
TWELVE MONTHS ENDED JUNE 30, 1995 Exploration and Natural Gas Natural Gas Natural Gas Intersegment Production Marketing Distribution Transmission Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced ................................ 67,899 143 2,088 70,130 ------- -------- ------- ------- -------- -------- Purchased: Other producers........................ 447,488 50,067 6,215 503,770 Inter-segment purchases ............... 3,105 48,795 12,819 62 (64,781) ------- -------- ------- ------- -------- -------- Total purchases ................... 3,105 496,283 62,886 6,277 (64,781) 503,770 ------- -------- ------- ------- -------- -------- Total produced and purchased .. 71,004 496,283 63,029 8,365 (64,781) 573,900 Deduct: Net increase (decrease) in gas in storage 487 (181) 306 Extracted natural gas liquids (equivalent gas volumes) ............ 1,909 6,511 8,420 System use and unaccounted for......... 545 1,643 11,491 306 13,985 ------- -------- ------- ------- -------- -------- Total.......................... 68,550 488,129 51,051 8,240 (64,781) 551,189 ======= ======== ======= ======= ======== ======== Gas Sales (MMcf): Residential ............................. 27,287 27,287 Commercial............................... 5,124 5,124 Industrial and Utility................... 18,640 3 (3,211) 15,432 Production............................... 67,899 (3,855) 64,044 Marketing................................ 651 488,129 8,237 (57,715) 439,302 ------- -------- ------- ------- -------- -------- Total.......................... 68,550 488,129 51,051 8,240 (64,781) 551,189 ======= ======== ======= ======= ======== ======== Natural Gas Transported (MMcf).................. 113,269 13,138 117,529 (93,883) 150,053 ======= ======== ======= ======= ======== ======== Oil Produced and Sold (thousands of bls)........ 2,010 2,010 ======= ======== Natural Gas Liquids Sold (thousands of gallons)........................ 60,855 197,554 258,409 ======= ======== ======== Average Selling Price: Residential Gas Sales (per Mcf).......... $9.440 Commercial Gas Sales..................... 8.440 Industrial and Utility Gas Sales......... 2.027 N/A Produced Natural Gas..................... $1.602 Marketed Natural Gas..................... 1.665 $1.649 $1.993 Oil (per barrel)......................... 16.463 Natural Gas Liquids (per gallon)......... .326 .273
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Information by Business Segment (Thousands)
Three Months Ended Six Months Ended Twelve Months Ended June 30, June 30, June 30, 1996 1995 1996 1995 1996 1995 (Thousands) OPERATING REVENUES: Exploration and production ......... $ 38,382 $ 44,099 $ 93,756 $ 90,443 $ 238,178 $ 190,700 Natural gas marketing .............. 287,256 227,236 718,750 438,241 1,169,812 869,196 Natural gas distribution ........... 79,983 63,656 263,505 225,937 418,618 376,938 Natural gas transmission ........... 26,623 24,985 64,952 56,630 127,183 111,047 Sales between segments ............. (40,477) (43,442) (108,918) (90,026) (216,981) (185,036) ----------- ----------- ----------- ----------- ----------- ----------- Total ..................... $ 391,767 $ 316,534 $ 1,032,045 $ 721,225 $ 1,736,810 $ 1,362,845 =========== =========== =========== =========== =========== =========== OPERATING INCOME (LOSS): Exploration and production ....... $ 634 $ (2,611) $ 16,199 $ (880) $ 3,256 $ 14,400 Natural gas marketing ............ 959 1,732 6,508 3,979 (16,316) 6,371 Natural gas distribution ......... (128) 234 34,940 33,021 25,440 39,712 Natural gas transmission ......... 7,518 5,677 20,739 17,224 34,614 32,076 ----------- ----------- ----------- ----------- ----------- ----------- Total ..................... $ 8,983 $ 5,032 $ 78,386 $ 53,344 $ 46,994 $ 92,559 =========== =========== =========== =========== =========== =========== CAPITAL EXPENDITURES: Exploration and production ....... $ 13,607 $ 14,022 $ 19,937 $ 30,406 $ 34,317 $ 77,278 Natural gas marketing ............ 2,672 2,573 9,523 5,900 27,787 19,053 Natural gas distribution ......... 6,130 6,185 11,714 15,707 38,202 34,830 Natural gas transmission ......... 1,442 1,486 1,508 2,977 5,498 9,497 ----------- ----------- ----------- ----------- ----------- ----------- Total ..................... $ 23,851 $ 24,266 $ 42,682 $ 54,990 $ 105,804 $ 140,658 =========== =========== =========== =========== =========== ===========
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Consolidated net income for the quarter ended June 30, 1996 was $.9 million or $.03 per share, compared with a loss of $1.2 million or $.03 per share for the quarter ended June 30, 1995. The increase in income is due to lower depreciation and depletion and interest expense and higher margins for natural gas marketing. These increases were partially offset by lower production of natural gas, lower nonconventional fuels tax credits and an after-tax charge of $1.2 million in the current period resulting from closing of some of the Company's natural gas price hedge positions related to production for the second half of 1996. The hedge positions were closed in response to unprecedented basis differentials between the New York Mercantile Exchange prices and regional cash prices. Consolidated net income for the six months ended June 30, 1996 was $39.7 million or $1.13 per share, compared with $26.6 million or $.77 per share for the six months ended June 30, 1995. The increase in earnings is due to lower depreciation and depletion, higher average prices for produced natural gas, increased retail gas sales reflecting weather that was 9 percent colder than the prior year, higher margins for natural gas marketing and lower interest expense. These increases were partially offset by lower nonconventional fuels tax credits, lower natural gas production and the charge in the current period for closing natural gas price hedge positions. Consolidated net income for the twelve months ended June 30, 1996 was $14.6 million or $.42 per share, compared with $44.9 million or $1.30 per share for the twelve months ended June 30, 1995. Earnings for the current period includes an after-tax charge of $74.2 million or $2.12 per share recorded in the fourth quarter of 1995 for the recognition of impairment of assets of $121.2 million, pursuant to the methodology of Statement of Financial Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". The results for the current period also include a non-recurring after-tax gain of $29.1 million or $.83 per share related to the Columbia Gas Transmission (Columbia) bankruptcy settlement and $6.6 million or $.19 per share, resulting from regulatory approval for accelerated recovery of future gas costs recognized in the fourth and third quarters of 1995, respectively. The increase in net income, excluding the charge and the effect of the settlements, was due to lower depreciation and depletion, higher average prices for produced natural gas, increased retail gas sales reflecting weather that was 16 percent colder than the prior year, higher margins for natural gas marketing and lower interest expense. These increases were partially offset by lower nonconventional fuels tax credits and lower production of natural gas. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) RESULTS OF OPERATIONS EXPLORATION AND PRODUCTION Operating revenues, which are derived from the sale of produced natural gas, oil and natural gas liquids and from contract drilling were $38.4 million for the quarter ended June 30, 1996 compared with $44.1 million for the quarter ended June 30, 1995. The decrease in operating revenues is due primarily to lower average prices and production for natural gas and lower oil prices. The lower average prices for produced natural gas in the current period are due in part to a $2.0 million hedging charge to close natural gas hedge positions related to production for the second half of 1996. Operating revenues for the six months ended June 30, 1996 were $93.8 million compared with $90.4 million for the six months ended June 30, 1995. The increase in operating revenues is due to higher average prices for produced natural gas partially offset by lower natural gas production and lower production and prices of oil. Operating revenues for the twelve months ended June 30, 1996 were $238.2 million compared with $190.7 million for the twelve months ended June 30, 1995. The 1996 period includes $40.2 million of nonrecurring amounts from the Columbia bankruptcy settlement and $11.0 million of additional revenue from direct bill settlements. The decrease in operating revenues for the current period, excluding the nonrecurring items, is due primarily to lower production of natural gas and oil and lower prices for oil. These decreases were partially offset by higher average prices for produced natural gas.
THREE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED JUNE 30, JUNE 30, JUNE 30, EXPLORATION AND PRODUCTION 1996 1995 1996 1995 1996 1995 OPERATING REVENUES (THOUSANDS): Natural Gas ............................ $19,578 $26,024 $57,939 $53,852 $107,200 $108,775 Oil .................................... 6,757 8,635 14,374 16,942 29,185 33,090 Natural Gas Liquids .................... 5,488 5,278 9,875 10,530 19,946 19,868 Contract Drilling ...................... 5,007 2,857 8,171 5,703 16,792 14,594 Direct Billing Settlements ............. -- -- -- -- 32,582 7,815 Other .................................. 1,552 1,305 3,397 3,416 32,473 6,558 ------- ------- ------- ------- ------- ------- Total Revenues ........................ $38,382 $44,099 $93,756 $90,443 $238,178 $190,700 ======= ======= ======= ======= ======= ======= SALES QUANTITIES: Natural Gas (MMcf) .................... 13,711 17,564 30,089 34,826 60,247 67,899 Oil (MBls) ............................. 442 500 892 1,011 1,813 2,010 Natural Gas Liquids (thousands of gallons) ................ 16,261 16,087 28,668 31,134 60,581 60,855
Energy purchased amounted to $3.7 million for the quarter ended June 30, 1996 compared with $2.6 million for the quarter ended June 30, 1995. Energy purchased for the six months ended June 30, 1996 amounted to $8.6 million compared with $5.4 million for the six months ended June 30, 1995. Energy purchased for the twelve months ended June 30, 1996 amounted to $14.1 million compared with $10.3 million for the twelve months ended June 30, 1995. The increase in purchased energy for the current periods is due to higher prices. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Other operating expenses were $34.1 million for the quarter ended June 30, 1996 compared with $44.1 million for the quarter ended June 30, 1995. Other operating expenses for the six months ended June 30, 1996 were $69.0 million compared with $85.9 million for the six months ended June 30, 1995. Other operating expenses for the twelve months ended June 30, 1996 were $220.9 million compared with $166.0 million for the twelve months ended June 30, 1995. The current twelve month period includes a charge of $73.9 million for impairment of assets. The decrease for the current periods, excluding the charge in the twelve-month period, is due to decreased depreciation and depletion reflecting lower depletion rates and lower production. Operating income was $.6 million for the quarter ended June 30, 1996 compared with an operating loss of $2.6 million for the quarter ended June 30, 1995. The increase in operating income is due to lower depreciation and depletion, partially offset by lower production of natural gas and lower oil prices. Operating income for the six months ended June 30, 1996 was $16.2 million compared with a loss of $.9 million for the six months ended June 30, 1995. The increase in operating income reflects higher average prices for produced natural gas and lower depreciation and depletion, partially offset by lower production of natural gas and oil and lower oil prices. Operating income for the twelve months ended June 30, 1996 was $3.3 million compared with $14.4 million for the twelve months ended June 30, 1995. The increase in operating income, excluding the effect of the nonrecurring items, is due to lower depreciation and depletion and higher average prices for produced natural gas partially offset by lower production of natural gas and oil and lower prices for oil. ENERGY MARKETING Operating revenues, which are derived primarily from the marketing of natural gas, sale of produced natural gas liquids, and intrastate transportation of natural gas in Louisiana, were $287.3 million for the quarter ended June 30, 1996 compared with $227.2 million for the quarter ended June 30, 1995. The increase in revenues is due to a 26 percent increase in the average price of marketed gas and higher selling prices and production of natural gas liquids. Operating revenues for the six months ended June 30, 1996 were $718.7 million compared with $438.2 million for the six months ended June 30, 1995. The increase in revenues is due to a 54 percent increase in the average price of marketed gas, an 8 percent increase in marketed gas volumes and higher selling prices of natural gas liquids. Operating revenues for the twelve months ended June 30, 1996 were $1,169.8 million compared with $869.2 million for the twelve months ended June 30, 1995. The increase in revenues is due to a 26 percent increase in the average price of marketed gas, a 9 percent increase in marketed gas volumes and higher selling prices of natural gas liquids. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
THREE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED JUNE 30, JUNE 30, JUNE 30, ENERGY MARKETING 1996 1995 1996 1995 1996 1995 OPERATING REVENUES (THOUSANDS): Natural Gas Marketing ........... $ 264,834 $ 210,787 $ 680,213 $ 406,542 $1,099,814 $ 804,927 Natural Gas Liquids ............. 19,106 13,806 31,640 26,690 57,969 54,027 Transportation .................. 1,478 2,417 3,201 4,710 7,896 9,732 Other ........................... 1,838 226 3,696 299 4,133 510 ---------- ---------- ---------- ---------- ---------- ---------- Total Revenues ................. $ 287,256 $ 227,236 $ 718,750 $ 438,241 $1,169,812 $ 869,196 ========== ========== ========== ========== ========== ========== SALES QUANTITIES: Marketed Natural Gas (MMcf) ..... 133,157 133,058 276,604 255,283 530,238 488,129 Natural Gas Liquids (thousands of gallons) ......... 57,660 49,791 96,732 98,024 196,648 197,554 Transportation Deliveries (Mmcf) 30,321 30,929 60,598 57,522 125,481 113,269
Energy purchased was $275.8 million for the quarter ended June 30, 1996 compared with $218.1 million for the quarter ended June 30, 1995. The increase in energy purchased for the current quarter is due to higher gas prices, higher volumes of marketed gas and requirements for the higher production of natural gas liquids. Energy purchased for the six months ended June 30, 1996 was $695.1 million compared with $419.3 million for the six months ended June 30, 1995. Energy purchased for the twelve months ended June 30, 1996 was $1,130.2 million compared with $832.8 million for the twelve months ended June 30, 1995. The increase in energy purchased for the six- and twelve-month periods reflects higher gas prices and higher volumes of marketed gas. Other operating expenses were $10.5 million for the quarter ended June 30, 1996 compared with $7.4 million for the quarter ended June 30, 1995. Other operating expenses for the six months ended June 30, 1996 were $17.1 million compared with $14.9 million for the six months ended June 30, 1995. The increase for the current periods is due primarily to higher gas processing expenses reflecting higher production of natural gas liquids and marketing and administrative expenses associated with the gas storage service that began in early 1996. Other operating expenses for the twelve months ended June 30, 1996 were $55.9 million compared with $30.0 million for the twelve months ended June 30, 1995. Other operating expenses for the 1996 period include a charge of $21.2 million for impairment of assets. The increase for the current period, excluding the charge, reflects higher gas processing expenses and costs associated with the gas storage service that began in early 1996. Operating results for the quarter ended June 30, 1996 were $1.0 million compared with $1.7 million for the quarter ended June 30, 1995. The decrease is due to lower margins for marketed gas. Operating results for the six months ended June 30, 1996 were $6.5 million compared with $4.0 million for the six months ended June 30, 1995. The increase is due to higher margins and sales for marketed gas. Operating results for the twelve months ended June 30, 1996 were a loss of $16.3 million compared with income of $6.4 million for the twelve months ended June 30, 1995. The decrease in operating income for the twelve-month period, excluding the charge for impairment of assets, is due primarily to increased operating expenses. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) NATURAL GAS DISTRIBUTION Operating revenues, which are derived from the sale and transportation of natural gas primarily to retail customers at state regulated rates, were $80.0 million for the quarter ended June 30, 1996 compared with $63.6 million for the quarter ended June 30, 1995. The increase in revenues is due primarily to an increase in industrial and utility gas sales and the effect of commercial customers switching from transportation service to gas sales, partially offset by lower retail rates to pass through lower regulatory purchased gas costs to customers. Operating revenues for the six months ended June 30, 1996 were $263.5 million compared with $225.9 million for the six months ended June 30, 1995. The increase in revenues is due primarily to an increase in retail gas sales reflecting weather that was 9 percent colder than the prior year, an increase in industrial and utility gas sales and the effect of commercial customers switching from transportation service to gas sales, partially offset by lower retail rates to pass through lower regulatory purchased gas costs to customers. Operating revenues for the twelve months ended June 30, 1996 were $418.6 million compared with $376.9 million for the twelve months ended June 30, 1995. The increase in revenues is due to an increase in retail gas sales reflecting weather that was 16 percent colder than the 1995 period, an increase in industrial and utility gas sales and the effect of commercial customers switching from transportation to gas sales.
THREE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED JUNE 30, JUNE 30, JUNE 30, NATURAL GAS DISTRIBUTION 1996 1995 1996 1995 1996 1995 OPERATING REVENUES (THOUSANDS): Residential Gas Sales ............ $ 40,613 $ 39,303 $161,881 $162,110 $266,626 $257,591 Commercial Gas Sales ............. 12,684 5,372 53,406 22,206 71,004 43,246 Industrial and Utility Gas Sales . 24,177 11,929 37,609 16,954 57,883 37,779 Transportation Service ........... 665 5,660 6,616 21,952 16,394 33,520 Other ............................ 1,844 1,392 3,993 2,715 6,711 4,802 -------- -------- -------- -------- -------- -------- Total Revenues ..................... $ 79,983 $ 63,656 $263,505 $225,937 $418,618 $376,938 ======== ======== ======== ======== ======== ======== SALES QUANTITIES (MMCF): Residential Gas Sales ............ 4,284 4,070 19,301 17,484 31,311 27,287 Commercial Gas Sales ............. 1,982 581 8,314 2,359 10,449 5,124 Industrial and Utility Gas Sales . 8,499 6,190 11,888 8,858 21,021 18,640 Transportation Deliveries ........ 979 3,126 3,303 9,435 9,971 13,138 Heating Degree Days .............. 656 655 3,746 3,451 6,043 5,232
Energy purchased amounted to $52.7 million for the quarter ended June 30, 1996 compared with $38.0 million for the quarter ended June 30, 1995. Energy purchased for the six months ended June 30, 1996 was $161.7 million compared with $134.7 for the six months ended June 30, 1995. Energy purchased for the twelve months ended June 30, 1996 was $248.7 million compared with $226.5 million for the twelve months ended June 30, 1995. The increase in energy costs for the current periods is due to higher gas sales, partially offset by the pass-through of lower regulatory purchased gas costs to retail customers. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Other operating expenses were $27.4 million for the quarter ended June 30, 1996 compared with $25.4 million for the quarter ended June 30, 1995. Other operating expenses for the six months ended June 30, 1996 were $66.9 million compared with $58.2 million for the six months ended June 30, 1995. Other operating expenses were $144.6 million for the twelve months ended June 30, 1996 compared with $110.7 million for the twelve months ended June 30, 1995. Other operating expenses for the current twelve-month period includes a charge of $20.8 million for impairment of assets. The increase in other operating expenses for the current periods, excluding the charge in the twelve-month period, is due to increased market research and development expenses related to the Company's new unregulated energy services marketing operation. Operating results for the quarter ended June 30, 1996 were a loss of $.1 million compared with operating income of $.2 million for the quarter ended June 30, 1995. Operating income for the six months ended June 30, 1996 was $34.9 million compared with $33.0 million for the six months ended June 30, 1995. Operating income was $25.5 million for the twelve months ended June 30, 1996 compared with $39.7 million for the twelve months ended June 30, 1995. The increase in operating income for the current periods, excluding the charge for impairment of assets in the twelve-month period, is due primarily to higher gas sales, partially offset by increased operating expenses. NATURAL GAS TRANSMISSION Operating revenues, which are derived from the interstate transportation and storage of natural gas subject to federal regulation, and the marketing of natural gas, were $26.7 million for the quarter ended June 30, 1996 compared with $25.0 million for the quarter ended June 30, 1995. Operating revenues for the six months ended June 30, 1996 were $65.0 million compared with $56.6 million for the six months ended June 30, 1995. Operating revenues for the twelve months ended June 30, 1996 were $127.3 million compared with $111.0 million for the twelve months ended June 30, 1995. Operating revenues for the current twelve month period include $4.8 million related to the Columbia bankruptcy settlement. The increase in revenues for the current periods, excluding the effect of the settlement in the twelve-month period, is due primarily to higher selling prices and increased volumes of marketed natural gas.
THREE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED JUNE 30, JUNE 30, JUNE 30, NATURAL GAS TRANSMISSION 1996 1995 1996 1995 1996 1995 OPERATING REVENUES (THOUSANDS): Industrial and Utility Gas Sales ... $ 363 $ 363 $ 726 $ 726 $ 1,451 $ 1,322 Marketed Gas Sales ................. 7,291 3,791 19,770 8,036 34,042 16,416 Transportation Service ............. 14,167 14,950 34,547 35,799 66,714 69,387 Storage Service .................... 3,572 4,352 7,192 8,743 14,358 17,442 Other .............................. 1,230 1,529 2,717 3,326 10,618 6,480 --------- --------- --------- --------- --------- --------- Total Revenues .................... $ 26,623 $ 24,985 $ 64,952 $ 56,630 $ 127,183 $ 111,047 ========= ========= ========= ========= ========= ========= SALES QUANTITIES (MMCF): Industrial and Utility Gas Sales ... -- -- -- 1 (1) 3 Marketed Gas Sales ................. 2,571 1,958 5,720 4,006 12,861 8,237 Transportation Deliveries .......... 30,542 27,765 65,412 58,194 126,308 117,529
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Energy purchased amounted to $2.9 million for the quarter ended June 30, 1996 compared with $2.8 million for the quarter ended June 30, 1995. Energy purchased for the six months ended June 30, 1996 was $12.4 million compared with $6.1 million for the six months ended June 30, 1995. Energy purchased for the twelve months ended June 30, 1996 was $23.7 million compared with $12.6 million for the twelve months ended June 30, 1995. The increase in energy costs for the current periods is due to higher prices for marketed gas and an increase in marketed gas volumes. Other operating expenses were $16.2 million for the quarter ended June 30, 1996 compared with $16.5 million for the quarter ended June 30, 1995. Other operating expenses for the six months ended June 30, 1996 were $31.9 million compared with $33.4 million for the six months ended June 30, 1995. Other operating expenses for the twelve months ended June 30, 1996 were $69.1 million compared with $66.4 million for the twelve months ended June 30, 1995. Other operating expenses for the current twelve-month period include a charge of $5.2 million for impairment of assets. Operating expenses for the current periods, excluding the charge in the twelve-month period, remained substantially the same. Operating income was $7.6 million for the quarter ended June 30, 1996, compared with $5.7 million for the quarter ended June 30, 1995. Operating income for the six months ended June 30, 1996 was $20.7 million compared with $17.1 million for the six months ended June 30, 1995. Operating income was $34.5 million for the twelve months ended June 30, 1996 compared with $32.0 million for the twelve months ended June 30, 1995. The increase in operating income for the current periods, excluding the effect of the Columbia settlement and the charge for impairment of assets in the twelve-month period, is due to higher prices for marketed gas, an increase in marketed natural gas sales and lower operating expenses. CAPITAL RESOURCES AND LIQUIDITY OPERATING ACTIVITIES Cash required for operations is impacted primarily by the seasonal nature of the Company's distribution 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. In addition, short-term loans are 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 its distribution, transmission and storage plant, and continuing development and expansion of its resource production activities. A total of $129.5 million has been authorized for the 1996 capital expenditure program, with $63.8 allocated to exploration and production, $30.7 million for natural gas marketing, $24.6 million for natural gas distribution and $10.4 million for natural gas transmission. Capital expenditures for the six months ended June 30, 1996 were $42.7 million. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Short-term loans are also used as interim financing for a portion of capital expenditures. The Company expects to finance its 1996 capital expenditures with cash generated from operations and temporarily with short-term loans. CAPITAL RESOURCES AND LIQUIDITY FINANCING ACTIVITIES The Company has adequate borrowing capacity to meet its financing requirements. The Company has a revolving Credit Agreement with a group of banks providing $500 million of available credit. The agreement requires a facility fee of one-tenth of one percent. Bank loans and commercial paper, supported by available credit, are used to meet short-term financing requirements. At June 30, 1996, $227.3 million of commercial paper was outstanding, including $84.0 million classified as long-term debt as described in Note F to the Consolidated Financial Statements, at an average interest rate of 5.41 percent. Adequate credit is expected to continue to be available in the future. See Note F to the Consolidated Financial Statements for a description of changes in the Company's long-term debt. BALANCE SHEET CHANGES The increase in accounts receivable is due to the higher sales of marketed gas. The changes in deferred purchased gas cost are due to the timing of pass-through of gas costs to ratepayers. Changes in deferred purchased gas costs generally do not affect results of operations due to regulatory procedures for purchased gas cost recovery in rates. PART II. OTHER INFORMATION Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: None (b) Reports on Form 8-K during the quarter ended June 30, 1996: None. Signature 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/ Jeffrey C. Swoveland ------------------------ Jeffrey C. Swoveland Vice President - Finance and Treasurer Date: August 14, 1996 EX-27 2 FDS JUNE 1996 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 0000033213 1000 3-MOS DEC-31-1996 JUN-30-1996 26,053 0 249,743 13,635 18,302 367,924 2,156,872 702,405 1,949,832 374,157 415,870 0 0 217,470 519,845 1,949,832 391,767 391,767 0 382,784 0 1,507 9,938 1,731 803 928 0 0 0 928 0.03 0.03
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