-----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, EcGZuZ06bjFpQ7sDsSrD7LrP2pi1WP+sDbwVPAcZfFuPgsdNnY9+dBrtLAj2h4Yj sSl1vSenoyCE2X0SjFA8aw== 0000033213-96-000013.txt : 19961118 0000033213-96-000013.hdr.sgml : 19961118 ACCESSION NUMBER: 0000033213-96-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 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: 96666289 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 THIRD QUARTER 1996 FORM 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 SEPTEMBER 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 September 30, 1996 ----- ------------------ Common stock, no par value 35,323,988 shares EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Index Page No. PART I. FINANCIAL STATEMENTS: Statements of Consolidated Income for the Three Months Ended September 30, 1996 and 1995, the Nine Months Ended September 30, 1996 and 1995 and the Twelve Months Ended September 30, 1996 and 1995 1 Statements of Consolidated Cash Flows for the Three Months Ended September 30, 1996 and 1995, the Nine Months Ended September 30, 1996 and 1995 and the Twelve Months Ended September 30, 1996 and 1995 2 Consolidated Balance Sheets, September 30, 1996 and 1995 and December 31, 1995 3 - 4 Long-Term Debt, September 30, 1996 and 1995 5 Notes to Consolidated Financial Statements 6 - 7 Gas Produced, Purchased and Sold 8 - 13 Information by Business Segment 14 Management's Discussion and Analysis of Financial Condition and Results of Operations 15 - 22 PART II. OTHER INFORMATION 23 SIGNATURE 24
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Statements of Consolidated Income (Thousands Except Per Share Amounts) Three Months Ended Nine Months Ended Twelve Months Ended September 30, September 30, September 30, 1996 1995 1996 1995 1996 1995 Operating Revenues........... $ 357,011 $ 270,992 $ 1,389,056 $ 992,217 $ 1,822,829 $ 1,336,125 Cost of Energy Purchased..... 262,943 171,604 1,034,786 648,882 1,297,261 872,721 ---------- -------- ----------- --------- ----------- ---------- Net operating revenues.. 94,068 99,388 354,270 343,335 525,568 463,404 ---------- -------- ----------- --------- ----------- ---------- Operating Expenses: Operation................. 54,543 45,369 158,126 143,303 213,325 192,987 Maintenance............... 7,653 6,443 19,920 19,644 26,911 28,207 Depreciation and depletion 20,805 26,726 62,463 84,151 82,937 108,905 Impairment of assets...... - - - - 121,081 - Taxes other than income... 7,207 6,392 31,515 28,435 44,918 39,135 ---------- -------- ----------- --------- ----------- ---------- Total operating expenses 90,208 84,930 272,024 275,533 489,172 369,234 ---------- -------- ----------- --------- ----------- ---------- Operating Income............. 3,860 14,458 82,246 67,802 36,396 94,170 Other Income................. (751) (1,427) 4,104 (1,591) 6,082 254 Interest Charges............. 10,311 12,674 30,723 38,218 42,603 49,807 ---------- -------- ----------- --------- ----------- ---------- Income (Loss) Before Income Taxes....... (7,202) 357 55,627 27,993 (125) 44,617 Income Taxes (Benefits)...... (3,515) (1,327) 19,660 (283) (9,364) 409 ---------- -------- ----------- --------- ----------- ---------- Net Income (Loss)............ $ (3,687) $ 1,684 $ 35,967 $ 28,276 $ 9,239 $ 44,208 ========== ======== =========== ========= =========== ========== Average Common Shares Outstanding......... 35,267 34,846 35,143 34,733 35,107 34,686 ========== ======== =========== ========= =========== ========== Earnings (Loss) Per Share of Common Stock.............. $(.10) $.05 $1.02 $.81 $.26 $1.27 ===== ==== ===== ==== ==== ===== Dividends Per Share of Common Stock.............. $.29 $.29 $.88 $.88 $1.18 $1.18 ==== ==== ==== ==== ===== =====
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Statements of Consolidated Cash Flows (Thousands) Three Months Ended Nine Months Ended Twelve Months Ended September 30, September 30, September 30, 1996 1995 1996 1995 1996 1995 Cash Flows from Operating Activities: Net income (loss)......................... $ (3,687) $ 1,684 $ 35,967 $ 28,276 $ 9,239 $ 44,208 -------- -------- -------- -------- --------- -------- Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Impairment of assets................... - - - - 121,081 - Depreciation and depletion............. 20,805 26,726 62,463 84,151 82,937 108,905 Deferred income taxes (benefits)....... 10,951 6,560 25,895 (7,637) (40,816) (14,598) Other - net............................ (424) (2,577) 3,118 (341) 2,692 (237) Changes in other assets and liabilities: Accounts receivable and unbilled revenues 58,876 30,019 78,635 29,758 (25,398) (2,262) Gas stored underground............... (10,466) (5,668) (8,188) 1,879 (4,888) 1,989 Material and supplies................ 1,587 (2,224) 3,506 (1,190) 4,850 (561) Deferred purchased gas cost.......... (16,581) (13,958) (46,699) 12,571 (44,540) 19,187 Prepaid expenses and other........... (36,358) (13,406) (27,583) (18,865) (17,472) (21,663) Accounts payable..................... (459) (6,696) (29,826) (14,664) 43,629 (4,285) Accrued taxes........................ (2,675) (3,605) (918) (9,141) 6,742 861 Accrued interest..................... (2,418) 4,596 (8,474) (1,041) (5,623) 631 Refunds due customers................ 109 (5,656) 938 (6,704) 1,390 (5,758) Customer credit balances............. 5,258 7,692 (3,376) (690) (3,354) 3,940 Deferred revenue..................... (6,518) - (19,812) - 110,062 - Other - net.......................... 2,409 (6,006) 3,522 6,762 5,315 4,436 -------- -------- -------- -------- --------- -------- Total adjustments.................. 24,096 15,797 33,201 74,848 236,607 90,585 -------- -------- -------- -------- --------- -------- Net cash provided by operating activities........... 20,409 17,481 69,168 103,124 245,846 134,793 -------- -------- -------- -------- --------- -------- Cash Flows from Investing Activities: Capital expenditures...................... (38,493) (26,954) (81,175) (81,944) (117,343) (127,542) Proceeds from sale of property............ 40 3,468 1,543 4,221 21,932 4,611 -------- -------- -------- -------- --------- -------- Net cash used in investing activities (38,453) (23,486) (79,632) (77,723) (95,411) (122,931) -------- -------- -------- -------- --------- -------- Cash Flows from Financing Activities: Issuance of common stock.................. 496 536 1,687 1,738 2,705 2,230 Purchase of treasury stock................ - (7) (8) (81) (167) (476) Dividends paid............................ (10,418) (10,312) (31,126) (30,774) (41,450) (40,959) Proceeds from issuance of long-term debt.. 144,919 - 144,919 17,878 144,877 17,776 Repayments and retirements of long-term debt (65,617) (14,500) (150,440) (14,500) (160,440) (14,500) Increase (decrease) in short-term loans... (38,003) 51,878 54,649 6,652 (86,303) 37,952 -------- -------- -------- -------- --------- -------- Net cash provided (used) by financing activities........... (31,377) 27,595 19,681 (19,087) (140,778) 2,023 -------- -------- -------- -------- --------- -------- Increase in cash and cash equivalents........ 13,333 21,590 9,217 6,314 9,657 13,885 Cash and cash equivalents at beginning of period 26,053 8,139 30,169 23,415 29,729 15,844 -------- -------- -------- --------- --------- -------- Cash and cash equivalents at end of period... $ 39,386 $ 29,729 $ 39,386 $ 29,729 $ 39,386 $ 29,729 ======== ======== ======== ======== ========= ======== Cash paid during the period for: Interest (net of amount capitalized)...... $ 6,659 $ 7,601 $ 31,471 $ 36,979 $ 40,851 $ 46,104 ======== ======== ======== ======== ========= ======== Income taxes.............................. $ 486 $ 4,725 $ 10,117 $ 12,266 $ 39,123 $ 15,350 ======== ======== ======== ======== ========= ========
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Thousands) September 30, December 31, 1996 1995 1995 ASSETS Current Assets: Cash and cash equivalents............................... $ 39,386 $ 29,729 $ 30,169 Accounts receivable (less accumulated provision for doubtful accounts: September 30, 1996 $12,966; 1995 $9,912; December 31, 1995, $10,539)........................... 186,206 163,486 240,846 Unbilled revenues ...................................... 5,330 5,706 31,752 Gas stored underground - current inventory.............. 18,110 13,222 9,922 Material and supplies................................... 9,071 14,066 12,577 Deferred purchased gas cost............................. 56,859 12,319 10,160 Prepaid expenses and other.............................. 69,906 52,434 42,323 ------------- ------------ ------------- Total current assets............................... 384,868 290,962 377,749 ------------- ------------ ------------- Property, Plant and Equipment: Exploration and production (successful efforts method).. 893,340 1,012,384 869,329 Energy marketing........................................ 310,336 321,576 295,061 Natural gas distribution................................ 583,751 576,716 568,272 Natural gas transmission................................ 392,135 391,047 388,986 ------------- ------------ ------------- Total property, plant and equipment................ 2,179,562 2,301,723 2,121,648 Less accumulated depreciation and depletion........... 713,512 719,190 664,065 ------------- ------------ ------------- Net property, plant and equipment.................. 1,466,050 1,582,533 1,457,583 ------------- ------------ ------------- Other Assets: Regulatory assets....................................... 72,638 89,706 85,241 Other................................................... 56,156 46,857 41,235 ------------- ------------ ------------- Total other assets.................................... 128,794 136,563 126,476 ------------- ------------ ------------- Total.............................................. $ 1,979,712 $ 2,010,058 $ 1,961,808 ============= ============ =============
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Thousands) September 30, December 31, 1996 1995 1995 CAPITALIZATION AND LIABILITIES Current Liabilities: Long-term debt payable within one year............. $ - $ 10,000 $ - Short-term loans................................... 189,649 275,952 135,000 Accounts payable................................... 152,359 108,730 182,185 Accrued taxes...................................... 17,189 10,447 18,107 Accrued interest................................... 6,368 11,991 14,842 Refunds due customers.............................. 16,941 15,551 16,003 Deferred income taxes.............................. 17,354 2,391 (1,506) Customer credit balances........................... 6,383 9,737 9,759 Other.............................................. 15,782 12,759 14,889 ------------ ------------- ------------- Total current liabilities..................... 422,025 457,558 389,279 ------------ ------------- ------------- Long--Term Debt ....................................... 421,920 415,313 415,527 ------------- ------------- ------------- Deferred and Other Credits: Deferred income taxes.............................. 253,178 334,774 265,737 Deferred investment tax credits.................... 20,164 21,266 20,991 Deferred revenue................................... 110,062 - 129,874 Other.............................................. 23,519 29,533 25,321 ------------ ------------- ------------- Total deferred and other credits.............. 406,923 385,573 441,923 ------------ ------------- ------------- Capitalization: Common stockholders' equity: Common stock, no par value, authorized 80,000 shares; shares issued September 30, 1996, 35,492; September 30, 1995, 35,383; December 31, 1995, 35,414............. 227,038 222,982 223,854 Retained earnings ............................... 506,877 538,978 502,036 Treasury stock, shares at cost September 30, 1996, 168; September 30, 1995, 402; December 31, 1995, 407........................ (3,998) (9,514) (9,673) Foreign currency translation..................... (1,073) (832) (1,138) ------------ ------------- ------------- Total common stockholders' equity............. 728,844 751,614 715,079 ------------ ------------- ------------- Total..................................... $ 1,979,712 $ 2,010,058 $ 1,961,808 ============ ============= =============
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Long-Term Debt (Thousands) Annual Maturities Debt Maturities After One Year September 30, September 30, 1996 1995 1996 1995 8 1/4% Debentures, due July 1, 1996................... $ $ $ $ 75,000 7 1/2% Debentures, due July 1, 1999 ($75,000 principal amount net of unamortized original issue discount) (a).......... 72,013 71,103 7 3/4% Debentures, due July 15, 2026.................. 150,000 9 1/2% Convertible subordinated debentures, due January 15, 2006.................. 527 710 9.9% Debentures, due April 15, 2013 (b)............... 5,880 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......... 10,000 75,500 75,500 6.8% to 7.6% Series C, due 2007 thru 2018......... 18,000 18,000 -------- --------- ----------- ----------- Total.......................................... $ - $ 10,000 $ 421,920 $ 415,313 ======== ========= =========== =========== (a) Not redeemable prior to maturity. (b) $69,120,000 retired as of September 30, 1996 through tender offer. See Note G 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 September 30, 1996 and 1995 and the results of operations for the three, nine and twelve months then ended and cash flows for the three, nine and twelve months then ended. All of the adjustments are of a normal recurring nature. C. The results of operations for the three- and nine-month periods ended September 30, 1996 and 1995 are not indicative of results for a full year because of the seasonal nature of the Company's operations. D. In September 1996 and 1995, the Pennsylvania Public Utility Commission (PUC) approved Equitable Gas Company's collection of $7.8 million and $18.8 million, respectively, related to the direct billing settlement with Kentucky West Virginia Gas Company, an affiliate, for the recovery of higher NGPA prices on natural gas produced between 1978 and 1983 as approved by the Federal Energy Regulatory Commission in 1989. The 1995 amount includes $11.0 million for accelerated collection of amounts that would have otherwise been approved by the PUC, and recognized in income, in later years. As a result of the PUC approvals, net income for the periods ended September 30, 1996 and 1995 includes approximately $4.7 and $11.3 million, respectively, related to the settlement. Approximately $10.2 million from the settlement remains to be recovered in future gas cost filings with the PUC over the next two years. E. At September 30, 1996, 2,539,000 shares of Common Stock were reserved as follows: 49,000 shares for conversion of the 9 1/2% Convertible Subordinated Debentures, 584,000 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 104,000 shares for issuance under the Company's Dividend Reinvestment and Stock Purchase Plan. F. 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. In September 1996, the Company purchased all of the outstanding stock of Pequod Associates, Inc. (Pequod) for $1.7 million. The effect of this acquisition on the consolidated financial statements of the Company is not material. Pequod is an engineering consulting firm specializing in water efficiency and program development, energy efficiency studies, and technical training for water agency personnel. G. 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 September 30, 1996, $69.1 million of the Debentures were tendered for purchase leaving $5.9 million outstanding. 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 SEPTEMBER 30, 1996 Exploration Energy Natural Gas Natural Gas Intersegment and Production Marketing Distribution Transmission Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced................................. 13,696 30 631 14,357 -------- --------- -------- --------- --------- --------- Purchased: Other producers........................ 132,631 14,181 1,717 148,529 Inter-segment purchases................ 647 320 2,576 (3,543) -------- --------- -------- --------- --------- --------- Total purchases.................... 647 132,951 16,757 1,717 (3,543) 148,529 -------- --------- -------- --------- --------- --------- Total produced and purchased... 14,343 132,951 16,787 2,348 (3,543) 162,886 Deduct: Net increase (decrease) in gas in storage 3,597 3,597 Extracted natural gas liquids (equivalent gas volumes)............. 464 1,972 2,436 System use and unaccounted for......... 143 418 836 25 1,422 -------- --------- -------- --------- --------- --------- Total.......................... 13,736 130,561 12,354 2,323 (3,543) 155,431 ======== ========= ======== ========= ========= ========= Gas Sales (MMcf): Residential.............................. 2,087 2,087 Commercial............................... 1,012 1,012 Industrial and Utility................... 9,255 1,512 10,767 Production............................... 13,696 (24) 13,672 Marketing................................ 40 130,561 2,323 (5,031) 127,893 -------- --------- -------- --------- --------- --------- Total.......................... 13,736 130,561 12,354 2,323 (3,543) 155,431 ======== ========= ======== ========= ========= ========= Natural Gas Transported (MMcf).................. 31,260 758 34,503 (22,934) 43,587 ======== ========= ======== ========= ========= ========= Oil Produced and Sold (thousands of bls)........ 420 420 ======== ========= Natural Gas Liquids Sold (thousands of gallons)........................ 17,172 59,613 76,785 ======== ========= ========= Average Selling Price: Residential Gas Sales (per Mcf).......... $10.852 Commercial Gas Sales..................... 5.878 Industrial and Utility Gas Sales......... 2.694 Produced Natural Gas..................... $1.633 Marketed Natural Gas..................... 2.400 $1.891 $1.365 Oil (per barrel)......................... 14.705 Natural Gas Liquids (per gallon)......... .301 .333
THREE MONTHS ENDED SEPTEMBER 30, 1995 Exploration Energy Natural Gas Natural Gas Intersegment and Production Marketing Distribution Transmission Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced................................. 14,102 43 592 14,737 -------- --------- -------- --------- --------- --------- Purchased: Other producers........................ 115,506 8,757 2,095 126,358 Inter-segment purchases................ 728 11,606 2,390 (14,724) -------- --------- -------- --------- --------- --------- Total purchases.................... 728 127,112 11,147 2,095 (14,724) 126,358 -------- --------- -------- --------- --------- --------- Total produced and purchased... 14,830 127,112 11,190 2,687 (14,724) 141,095 Deduct: Net increase (decrease) in gas in storage 3,233 (277) 2,956 Extracted natural gas liquids (equivalent gas volumes)............. 448 1,678 2,126 System use and unaccounted for......... 138 407 2,020 (339) 2,226 -------- --------- -------- --------- --------- --------- Total.......................... 14,244 125,027 5,937 3,303 (14,724) 133,787 ======== ========= ======== ========= ========= ========= Gas Sales (MMcf): Residential.............................. 1,904 1,904 Commercial............................... 397 397 Industrial and Utility................... 3,636 2 (2,378) 1,260 Production............................... 14,102 (28) 14,074 Marketing................................ 142 125,027 3,301 (12,318) 116,152 -------- --------- -------- --------- --------- --------- Total.......................... 14,244 125,027 5,937 3,303 (14,724) 133,787 ======== ========= ======== ========= ========= ========= Natural Gas Transported (MMcf).................. 38,171 2,135 27,999 (19,869) 48,436 ======== ========= ======== ========= ========= ========= Oil Produced and Sold (thousands of bls)........ 482 482 ======== ========= Natural Gas Liquids Sold (thousands of gallons)........................ 16,199 51,011 67,210 ======== ========= ========= Average Selling Price: Residential Gas Sales (per Mcf).......... $11.239 Commercial Gas Sales..................... 9.023 Industrial and Utility Gas Sales......... 1.743 N/A Produced Natural Gas..................... $1.432 Marketed Natural Gas..................... 1.155 $1.471 $1.768 Oil (per barrel)......................... 16.060 Natural Gas Liquids (per gallon)......... .294 .260
NINE MONTHS ENDED SEPTEMBER 30, 1996 Exploration Energy Natural Gas Natural Gas Intersegment and Production Marketing Distribution Transmission Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced................................. 43,785 92 1,784 45,661 -------- -------- ------- ------- -------- -------- Purchased: Other producers........................ 392,516 46,276 6,333 445,125 Inter-segment purchases................ 1,839 21,004 9,569 (32,412) ------- -------- ------- ------- -------- Total purchases.................... 1,839 413,520 55,845 6,333 (32,412) 445,125 ------- -------- ------- ------- -------- -------- Total produced and purchased... 45,624 413,520 55,937 8,117 (32,412) 490,786 Deduct: Net increase (decrease) in gas in storage 1,106 1,106 Extracted natural gas liquids (equivalent gas volumes)............. 1,346 5,186 6,532 System use and unaccounted for......... 387 1,169 2,974 74 4,604 ------- -------- ------- ------- -------- -------- Total.......................... 43,891 407,165 51,857 8,043 (32,412) 478,544 ======= ======== ======= ======= ======== ======== Gas Sales (MMcf): Residential.............................. 21,388 21,388 Commercial............................... 9,326 9,326 Industrial and Utility................... 21,143 (47) 21,096 Production............................... 43,785 (423) 43,362 Marketing................................ 106 407,165 8,043 (31,942) 383,372 ------- -------- ------- ------- -------- -------- Total.......................... 43,891 407,165 51,857 8,043 (32,412) 478,544 ======= ======== ======= ======= ======== ======== Natural Gas Transported (MMcf).................. 91,858 4,061 99,915 (77,849) 117,985 ======= ======== ======= ======= ======== ======== Oil Produced and Sold (thousands of bls)........ 1,312 1,312 ======= ======== Natural Gas Liquids Sold (thousands of gallons)........................ 45,840 156,345 202,185 ======= ======== ======== Average Selling Price: Residential Gas Sales (per Mcf).......... $8.628 Commercial Gas Sales..................... 6.364 Industrial and Utility Gas Sales......... 2.958 Produced Natural Gas..................... $1.834 Marketed Natural Gas..................... 3.208 $2.277 $2.852 Oil (per barrel)......................... 15.663 Natural Gas Liquids (per gallon)......... .328 .329
NINE MONTHS ENDED SEPTEMBER 30, 1995 Exploration Energy Natural Gas Natural Gas Intersegment and Production Marketing Distribution Transmission Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced ............................... 48,928 105 1,684 50,717 ------- -------- ------- -------- --------- -------- Purchased: Other producers........................ 347,487 27,849 5,114 380,450 Inter-segment purchases................ 2,454 38,980 9,314 (50,748) ------- -------- ------- -------- -------- -------- Total purchases.................... 2,454 386,467 37,163 5,114 (50,748) 380,450 ------- -------- ------- -------- -------- -------- Total produced and purchased..... 51,382 386,467 37,268 6,798 (50,748) 431,167 Deduct: Net increase (decrease) in gas in storage 340 (277) 63 Extracted natural gas liquids (equivalent gas volumes)............. 1,400 4,921 6,321 System use and unaccounted for......... 414 1,236 2,290 (235) 3,705 ------- -------- ------- --------- -------- -------- Total............................ 49,568 380,310 34,638 7,310 (50,748) 421,078 ======= ======== ======= ======== ======== ======== Gas Sales (MMcf): Residential.............................. 19,388 19,388 Commercial............................... 2,756 2,756 Industrial and Utility................... 12,494 3 (6,087) 6,410 Production............................... 48,928 (336) 48,592 Marketing ............................... 640 380,310 7,307 (44,325) 343,932 ------- -------- ------- -------- -------- -------- Total............................ 49,568 380,310 34,638 7,310 (50,748) 421,078 ======= ======== ======= ======== ======== ======== Natural Gas Transported (MMcf).................. 95,693 11,570 86,193 (69,795) 123,661 ======= ======== ======= ======== ======== ======== Oil Produced and Sold (thousands of bls)........ 1,493 1,493 ======= ======== Natural Gas Liquids Sold (thousands of gallons)........................ 47,333 149,035 196,368 ======= ======== ======== Average Selling Price: Residential Gas Sales (per Mcf).......... $9.465 Commercial Gas Sales..................... 9.357 Industrial and Utility Gas Sales......... 1.864 Produced Natural Gas..................... $1.513 Marketed Natural Gas..................... 1.506 $1.553 $1.899 Oil (per barrel)......................... 16.532 Natural Gas Liquids (per gallon)......... .323 .268
TWELVE MONTHS ENDED SEPTEMBER 30, 1996 Exploration Energy Natural Gas Natural Gas Intersegment and Production Marketing Distribution Transmission Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced ................................ 59,841 127 2,660 62,628 ------- -------- ------- -------- -------- -------- Purchased: Other producers........................ 504,871 54,134 9,255 568,260 Inter-segment purchases................ 2,531 39,289 13,804 (55,624) ------- -------- ------- -------- -------- Total purchases.................... 2,531 544,160 67,938 9,255 (55,624) 568,260 ------- -------- ------- -------- -------- -------- Total produced and purchased... 62,372 544,160 68,065 11,915 (55,624) 630,888 Deduct: Net increase (decrease) in gas in storage (629) 1 (628) Extracted natural gas liquids (equivalent gas volumes)............... 1,817 6,805 8,622 System use and unaccounted for......... 530 1,583 (504) 34 1,643 ------- -------- ------- -------- -------- -------- Total.......................... 60,025 535,772 69,198 11,880 (55,624) 621,251 ======= ======== ======= ======== ======== ======== Gas Sales (MMcf): Residential.............................. 31,494 31,494 Commercial............................... 11,064 11,064 Industrial and Utility................... 26,640 (3) (8,018) 18,619 Production............................... 59,841 (552) 59,289 Marketing................................ 184 535,772 11,883 (47,054) 500,785 ------- -------- ------- -------- -------- -------- Total.......................... 60,025 535,772 69,198 11,880 (55,624) 621,251 ======= ======== ======= ======== ======== ======== Natural Gas Transported (MMcf).................. 118,570 8,594 132,812 (106,452) 153,524 ======= ======== ======= ======== ======== ======== Oil Produced and Sold (thousands of bls)........ 1,751 1,751 ======= ======== Natural Gas Liquids Sold (thousands of gallons)........................ 61,554 205,250 266,804 ======= ======== ======== Average Selling Price: Residential Gas Sales (per Mcf).......... $8.506 Commercial Gas Sales..................... 6.632 Industrial and Utility Gas Sales......... 2.871 Produced Natural Gas..................... $1.828 Marketed Natural Gas..................... 2.870 $2.170 $2.640 Oil (per barrel)......................... 15.774 Natural Gas Liquids (per gallon)......... .331 .315
TWELVE MONTHS ENDED SEPTEMBER 30, 1995 Exploration Energy Natural Gas Natural Gas Intersegment and Production Marketing Distribution Transmission Eliminations Consolidated Gas Produced, Purchased and Sold (MMcf): Produced................................... 66,361 145 2,136 68,642 ------- -------- ------- -------- -------- -------- Purchased: Other producers......................... 453,124 40,234 6,632 499,990 Inter-segment purchases................. 3,224 50,201 13,022 63 (66,510) ------- -------- ------- -------- -------- Total purchases....................... 3,224 503,325 53,256 6,695 (66,510) 499,990 ------- -------- ------- -------- -------- -------- Total produced and purchased ...... 69,585 503,325 53,401 8,831 (66,510) 568,632 Deduct: Net increase (decrease) in gas in storage 355 (277) 78 Extracted natural gas liquids (equivalent gas volumes) ............. 1,897 6,473 8,370 System use and unaccounted for.......... 553 1,645 6,595 (252) 8,541 ------- -------- ------- -------- -------- -------- Total.............................. 67,135 495,207 46,451 9,360 (66,510) 551,643 ======= ======== ======= ======== ======== ======== Gas Sales (MMcf): Residential................................ 27,266 27,266 Commercial ................................ 4,275 4,275 Industrial and Utility..................... 14,910 (25) (6,230) 8,655 Production................................. 66,361 (2,591) 63,770 Marketing.................................. 774 495,207 9,385 (57,689) 447,677 ------- -------- ------- -------- -------- -------- Total.............................. 67,135 495,207 46,451 9,360 (66,510) 551,643 ======= ======== ======= ======== ======== ======== Natural Gas Transported (MMcf).................. 121,475 14,110 109,193 (86,898) 157,880 ======= ======== ======= ======== ======== ======== Oil Produced and Sold (thousands of bls)........ 1,999 1,999 ======= ======== Natural Gas Liquids Sold (thousands of gallons)........................ 62,813 196,433 259,246 ======= ======== ======== Average Selling Price: Residential Gas Sales (per Mcf).......... $9.465 Commercial Gas Sales..................... 9.160 Industrial and Utility Gas Sales......... 1.912 Produced Natural Gas..................... $ 1.540 Marketed Natural Gas..................... 1.568 $1.575 $1.917 Oil (per barrel)......................... 16.331 Natural Gas Liquids (per gallon)......... .326 .273
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES Information by Business Segment (Thousands) Three Months Ended Nine Months Ended Twelve Months Ended September 30, September 30, September 30, 1996 1995 1996 1995 1996 1995 (Thousands) OPERATING REVENUES: Exploration and production...... $ 53,735 $ 57,080 $ 147,491 $ 147,523 $ 234,833 $ 195,050 Energy marketing................ 282,443 200,399 1,001,193 638,640 1,251,856 844,240 Natural gas distribution........ 55,005 36,052 318,510 261,989 437,571 366,966 Natural gas transmission........ 22,551 25,660 87,503 82,290 124,074 111,386 Sales between segments.......... (56,723) (48,199) (165,641) (138,225) (225,505) (181,517) -------- --------- --------- --------- ---------- ---------- Total.................. $357,011 $ 270,992 $1,389,056 $ 992,217 $1,822,829 $1,336,125 ======== ========= ========= ========== ========== ========== OPERATING INCOME (LOSS): Exploration and production.... $ 10,870 $ 14,296 $ 27,068 $ 13,416 $ (171) $ 17,790 Energy marketing.............. (5,027) (74) 1,481 3,905 (21,269) 5,314 Natural gas distribution...... (5,609) (6,192) 29,331 26,829 26,023 37,641 Natural gas transmission...... 3,626 6,428 24,366 23,652 31,813 33,425 -------- --------- --------- --------- ---------- --------- Total.................. $ 3,860 $ 14,458 $ 82,246 $ 67,802 $ 36,396 $ 94,170 ======== ========= ========= ========= ========== ========== CAPITAL EXPENDITURES: Exploration and production.... $ 20,420 $ 7,679 $ 40,357 $ 38,085 $ 47,058 $ 58,119 Energy marketing.............. 9,011 6,258 18,534 12,158 30,540 23,261 Natural gas distribution...... 8,526 10,590 20,240 26,297 36,138 36,485 Natural gas transmission...... 536 2,427 2,044 5,404 3,607 9,677 -------- --------- --------- --------- ---------- --------- Total.................. $ 38,493 $ 26,954 $ 81,175 $ 81,944 $ 117,343 $ 127,542 ======== ========= ========= ========= ========== ==========
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Operating results for the quarter ended September 30, 1996 were a loss of $3.7 million or $.10 per share, compared with income of $1.7 million or $.05 per share for the quarter ended September 30, 1995. The 1995 period includes $6.5 million or $.19 per share resulting from the Pennsylvania Public Utility Commission approval for accelerated collection of gas costs as described in Note D to the Consolidated Financial Statements. The improved results, excluding the nonrecurring income in the 1995 period, are due to lower depreciation and depletion expense, higher prices for produced natural gas and lower interest expense. These benefits were partially offset by lower nonconventional fuels tax credits and start-up costs for ERI Services, the Company's full-service energy marketing subsidiary. Consolidated net income for the nine months ended September 30, 1996 was $36.0 million or $1.02 per share, compared with $28.3 million or $.81 per share for the nine months ended September 30, 1995. The increase in earnings is due to lower depreciation and depletion, higher prices for produced natural gas and lower interest expense. These increases were partially offset by lower nonconventional fuels tax credits and lower natural gas production. Consolidated net income for the twelve months ended September 30, 1996 was $9.2 million or $.26 per share, compared with $44.2 million or $1.27 per share for the twelve months ended September 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 recognized in the fourth quarter of 1995. The increase in net income, excluding the charge and the effect of the settlement, was due to lower depreciation and depletion, higher average prices for produced natural gas, increased retail gas sales, 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 $53.7 million for the quarter ended September 30, 1996 compared with $57.1 million for the quarter ended September 30, 1995 which includes $11.0 million of additional revenues from direct billing settlements. Operating revenues of $147.5 million for the nine months ended September 30, 1996 were unchanged from the nine months ended September 30, 1995. The increase in operating revenues for the current quarter and nine-month period, excluding the $11.0 million of additional revenues in the 1995 periods, is due to higher average prices for produced natural gas, higher contract drilling revenues and amortization of a portion of deferred revenues partially offset by lower natural gas production and lower production and prices of oil. Operating revenues for the twelve months ended September 30, 1996 were $234.8 million compared with $195.1 million for the twelve months ended September 30, 1995. The 1996 period includes $40.2 million of nonrecurring amounts from the Columbia bankruptcy settlement and the 1995 period includes $11.0 million of additional revenue from direct bill settlements. The increase in operating revenues for the current period, excluding the nonrecurring items, is due primarily to higher average prices for produced natural gas and higher contract drilling revenues partially offset by lower natural gas production and lower production and prices of oil.
THREE MONTHS ENDED NINE MONTHS ENDED TWELVE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, EXPLORATION AND PRODUCTION .... 1996 1995 1996 1995 1996 1995 OPERATING REVENUES (THOUSANDS): Natural Gas ................... $ 22,360 $ 20,196 $ 80,299 $ 74,048 $109,364 $102,223 Oil ........................... 6,176 7,741 20,550 24,683 27,620 32,645 Natural Gas Liquids ........... 5,167 4,765 15,042 15,295 20,348 20,475 Contract Drilling ............. 6,079 4,272 14,250 9,975 18,599 14,357 Direct Billing Settlements ................ 7,815 18,807 7,815 18,807 21,590 18,807 Other ......................... 6,138 1,299 9,535 4,715 37,312 6,543 -------- -------- -------- -------- -------- -------- Total Revenues ............... $ 53,735 $ 57,080 $147,491 $147,523 $234,833 $195,050 ======== ======== ======== ======== ======== ======== SALES QUANTITIES: Natural Gas (MMcf) ......... 13,696 14,102 43,785 48,928 59,841 66,361 Oil (MBls) .................. 420 482 1,312 1,493 1,751 1,999 Natural Gas Liquids (thousands of gallons) .................. 17,172 16,199 45,840 47,333 61,554 62,813
Energy purchased amounted to $3.5 million for the quarter ended September 30, 1996 compared with $2.4 million for the quarter ended September 30, 1995. Energy purchased for the nine months ended September 30, 1996 amounted to $12.2 million compared with $7.8 million for the nine months ended September 30, 1995. Energy purchased for the twelve months ended September 30, 1996 amounted to $15.3 million compared with $10.4 million for the twelve months ended September 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 $39.3 million for the quarter ended September 30, 1996 compared with $40.4 million for the quarter ended September 30, 1995. The decrease in operating expenses is due to decreased depreciation and depletion, reflecting lower depletion rates, partially offset by higher exploration expense. Other operating expenses for the nine months ended September 30, 1996 were $108.2 million compared with $126.3 million for the nine months ended September 30, 1995. Other operating expenses for the twelve months ended September 30, 1996 were $219.7 million compared with $166.9 million for the twelve months ended September 30, 1995. The current twelve month period includes a charge of $73.9 million for impairment of assets. The decrease for the nine- and twelve-month 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 $10.9 million for the quarter ended September 30, 1996 compared with $14.3 million for the quarter ended September 30, 1995. Operating income for the nine months ended September 30, 1996 was $27.1 million compared with $13.4 million for the nine months ended September 30, 1995. Operating results for the twelve months ended September 30, 1996 were a loss of $.2 million compared with income of $17.8 million for the twelve months ended September 30, 1995. The increase in operating income for the current periods, 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 and electricity, sale of produced natural gas liquids, and intrastate transportation of natural gas in Louisiana, were $282.4 million for the quarter ended September 30, 1996 compared with $200.4 million for the quarter ended September 30, 1995. The increase in revenues is due to a 29 percent increase in the average price of marketed gas, initial sales of electricity and higher selling prices and production of natural gas liquids. Operating revenues for the nine months ended September 30, 1996 were $1,001.2 million compared with $638.6 million for the nine months ended September 30, 1995. The increase in revenues is due to a 47 percent increase in the average price of marketed gas, a 7 percent increase in marketed gas volumes, higher selling prices of natural gas liquids and initial sales of electricity. Operating revenues for the twelve months ended September 30, 1996 were $1,251.9 million compared with $844.2 million for the twelve months ended September 30, 1995. The increase in revenues is due to a 38 percent increase in the average price of marketed gas, an 8 percent increase in marketed gas volumes, higher selling prices and production of natural gas liquids and initial electricity sales. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
THREE MONTHS ENDED NINE MONTHS ENDED TWELVE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, ENERGY MARKETING ......................... 1996 1995 1996 1995 1996 1995 OPERATING REVENUES (THOUSANDS): Natural Gas Marketing .................. $ 246,926 $ 183,923 $ 927,139 $ 590,465 $1,162,817 $ 780,138 Electricity Marketing .................. 10,180 -- 12,701 -- 12,701 -- Natural Gas Liquids .................... 19,862 13,263 51,502 39,953 64,568 53,635 Transportation ......................... 2,955 3,076 6,156 7,786 7,775 9,921 Other .................................. 2,520 137 3,695 436 3,995 546 ---------- ---------- ---------- ---------- ---------- ---------- Total Revenues ........................ $ 282,443 $ 200,399 $1,001,193 $ 638,640 $1,251,856 $ 844,240 ========== ========== ========== ========== ========== ========== SALES QUANTITIES: Marketed Natural Gas (MMcf) ............ 130,561 125,027 407,165 380,310 535,772 495,207 Natural Gas Liquids (thousands of gallons) ................ 59,613 51,011 156,345 149,035 205,250 196,433 Transportation Deliveries (Mmcf) ..................... 31,260 38,171 91,858 95,693 118,570 121,475
Energy purchased was $271.4 million for the quarter ended September 30, 1996 compared with $191.9 million for the quarter ended September 30, 1995. Energy purchased for the nine months ended September 30, 1996 was $966.5 million compared with $611.3 million for the nine months ended September 30, 1995. Energy purchased for the twelve months ended September 30, 1996 was $1,209.6 million compared with $807.9 million for the twelve months ended September 30, 1995. The increase in energy purchased for the current periods reflects higher gas prices, higher volumes of marketed gas, higher requirements for the production of natural gas liquids and initial electricity sales. Other operating expenses were $16.1 million for the quarter ended September 30, 1996 compared with $8.5 million for the quarter ended September 30, 1995. Other operating expenses for the nine months ended September 30, 1996 were $33.2 million compared with $23.4 million for the nine months ended September 30, 1995. The increase for the current quarter and nine-month period 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 September 30, 1996 were $63.5 million compared with $31.0 million for the twelve months ended September 30, 1995. The 1996 period includes 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 September 30, 1996 were a loss of $5.1 million compared with a loss of $74,000 for the quarter ended September 30, 1995. Operating income for the nine months ended September 30, 1996 was $1.5 million compared with $3.9 million for the nine months ended September 30, 1995. The decrease for the current quarter and nine-month period is due to lower margins for marketed natural gas. Operating results for the twelve months ended September 30, 1996 were a loss of $21.2 million compared with income of $5.3 million for the twelve months ended September 30, 1995. The decrease in operating income for the twelve-month period, excluding the charge for impairment of assets, is due primarily to lower margins for marketed natural gas and natural gas liquids and 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 $55.0 million for the quarter ended September 30, 1996 compared with $36.1 million for the quarter ended September 30, 1995. Operating revenues for the nine months ended September 30, 1996 were $318.5 million compared with $262.0 million for the nine months ended September 30, 1995. Operating revenues for the twelve months ended September 30, 1996 were $437.5 million compared with $367.0 million for the twelve months ended September 30, 1995. The increase in revenues for the current periods is due primarily to an increase in industrial and utility gas sales, the effect of commercial customers switching from transportation service to gas sales and higher retail gas sales for the nine- and twelve-month periods. These increases were partially offset by lower retail rates to pass through lower regulatory purchased gas costs to customers.
THREE MONTHS ENDED NINE MONTHS ENDED TWELVE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, NATURAL GAS DISTRIBUTION ....................... 1996 1995 1996 1995 1996 1995 OPERATING REVENUES (THOUSANDS): Residential Gas Sales ........................ $ 22,648 $ 21,399 $184,529 $183,509 $267,875 $258,062 Commercial Gas Sales ......................... 5,949 3,582 59,355 25,788 73,371 39,161 Industrial and Utility Gas Sales .......................... 24,929 6,339 62,538 23,293 76,473 28,503 Transportation Service ....................... 1,398 3,360 8,014 25,312 14,432 36,177 Other ........................................ 81 1,372 4,074 4,087 5,420 5,063 -------- -------- -------- -------- -------- -------- Total Revenues ................................. $ 55,005 $ 36,052 $318,510 $261,989 $437,571 $366,966 ======== ======== ======== ======== ======== ======== SALES QUANTITIES (MMCF): Residential Gas Sales ........................ 2,087 1,904 21,388 19,388 31,494 27,266 Commercial Gas Sales ......................... 1,012 397 9,326 2,756 11,064 4,275 Industrial and Utility Gas Sales .......................... 9,255 3,636 21,143 12,494 26,640 14,910 Transportation Deliveries .................... 758 2,135 4,061 11,570 8,594 14,110 Heating Degree Days .......................... 109 79 3,855 3,530 6,073 6,005
Energy purchased amounted to $39.1 million for the quarter ended September 30, 1996 compared with $18.9 million for the quarter ended September 30, 1995. Energy purchased for the nine months ended September 30, 1996 was $200.7 million compared with $153.5 for the nine months ended September 30, 1995. Energy purchased for the twelve months ended September 30, 1996 was $268.8 million compared with $217.3 million for the twelve months ended September 30, 1995. The increase in energy costs for the current periods is due to higher gas sales and higher prices related to industrial and utility gas sales, partially offset by the pass-through of lower regulatory purchased gas costs to retail customers. Other operating expenses were $21.5 million for the quarter ended September 30, 1996 compared with $23.4 million for the quarter ended September 30, 1995. The decrease in operating expenses is due to lower distribution and maintenance expenses. Other operating expenses for the nine months ended September 30, 1996 were $88.4 million compared with $81.7 million for the nine months ended September 30, 1995. Other operating expenses were $142.6 million for the twelve months ended September 30, 1996 compared with $112.1 million for the twelve months ended September 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 nine- and MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) twelve-month 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 September 30, 1996 were a loss of $5.6 million compared with a loss of $6.2 million for the quarter ended September 30, 1995. Operating income for the nine months ended September 30, 1996 was $29.4 million compared with $26.8 million for the nine months ended September 30, 1995. Operating income was $26.1 million for the twelve months ended September 30, 1996 compared with $37.6 million for the twelve months ended September 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 for the nine- and twelve-month periods. 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 $22.6 million for the quarter ended September 30, 1996 compared with $25.7 million for the quarter ended September 30, 1995. The decrease in revenues reflects lower marketed gas sales. Operating revenues for the nine months ended September 30, 1996 were $87.5 million compared with $82.3 million for the nine months ended September 30, 1995. Operating revenues for the twelve months ended September 30, 1996 were $124.1 million compared with $111.4 million for the twelve months ended September 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 nine- and twelve-month 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 NINE MONTHS ENDED TWELVE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, NATURAL GAS TRANSMISSION .................. 1996 1995 1996 1995 1996 1995 OPERATING REVENUES (THOUSANDS): Industrial and Utility Gas Sales ............................. $ 362 $ 363 $ 1,088 $ 1,089 $ 1,450 $ 1,452 Marketed Gas Sales ...................... 3,172 5,837 22,942 13,873 31,377 17,988 Transportation Service .................. 14,164 14,197 48,711 49,996 66,681 68,720 Storage Service ......................... 3,638 3,581 10,830 12,324 14,415 16,663 Other ................................... 1,215 1,682 3,932 5,008 10,151 6,563 --------- --------- --------- --------- --------- --------- Total Revenues ......................... $ 22,551 $ 25,660 $ 87,503 $ 82,290 $ 124,074 $ 111,386 ========= ========= ========= ========= ========= ========= SALES QUANTITIES (MMCF): Industrial and Utility Gas Sales .............................. -- 2 -- 3 (3) (25) Marketed Gas Sales ...................... 2,323 3,301 8,043 7,307 11,883 9,385 Transportation Deliveries ............................ 34,503 27,999 99,915 86,193 132,812 109,193
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Energy purchased amounted to $4.2 million for the quarter ended September 30, 1996 compared with $4.6 million for the quarter ended September 30, 1995. Energy purchased for the nine months ended September 30, 1996 was $16.5 million compared with $10.7 million for the nine months ended September 30, 1995. Energy purchased for the twelve months ended September 30, 1996 was $23.2 million compared with $13.9 million for the twelve months ended September 30, 1995. The increase in energy costs for the nine- and twelve-month periods is due to higher prices for marketed gas and an increase in marketed gas volumes. Other operating expenses for the quarter ended September 30, 1996 were $14.8 million compared with $14.7 million for the quarter ended September 30, 1995. Other operating expenses for the nine months ended September 30, 1996 were $46.7 million compared with $48.1 million for the nine months ended September 30, 1995. Other operating expenses for the twelve months ended September 30, 1996 were $69.2 million compared with $64.2 million for the twelve months ended September 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, remained substantially the same. Operating income was $3.6 million for the quarter ended September 30, 1996, compared with $6.4 million for the quarter ended September 30, 1995. The decrease in operating income reflects lower marketed gas sales. Operating income for the nine months ended September 30, 1996 was $24.3 million compared with $23.7 million for the nine months ended September 30, 1995. Operating income was $31.7 million for the twelve months ended September 30, 1996 compared with $33.4 million for the twelve months ended September 30, 1995. The increase in operating income for the twelve-month period, excluding the effect of the Columbia settlement and the charge for impairment of assets, is due to higher margins and sales of marketed natural gas. 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 nine months ended September 30, 1996 were $81.2 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 continue to finance capital expenditures with cash generated from operations and temporarily with short-term loans. 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 September 30, 1996, $189.6 million of commercial paper was outstanding at an average interest rate of 5.35 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 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. The increase in prepaid expenses and other current assets is due to financing interests in equipment. The increase in other assets is due to deferral, pursuant to regulatory treatment, of expenses related to issuance of new long term debt and re-purchase of 9.9% Debentures. 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 September 30, 1996: Form 8-K dated July 19, 1996, containing press release announcing earnings for the second quarter of 1996. 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: November 14, 1996 EX-27 2 FINANCIAL DATE SCHEDULE
5 1000 9-MOS DEC-31-1996 SEP-30-1996 39,386 0 191,536 12,966 27,181 384,868 2,179,562 713,512 1,979,712 422,025 421,920 0 0 223,040 505,804 1,979,712 1,389,056 1,389,056 0 1,306,810 0 9,320 30,723 55,627 19,660 35,967 0 0 0 35,967 1.02 1.02
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