-----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, A5KgKFiwQnLLwZGnZ6FU5CBdHbdunkCVTAMbYFAKrOIYvz4NM+JVa6eGftRnD70g LfTFeQOyRAOqngKSohWVuw== 0000007332-95-000019.txt : 19951119 0000007332-95-000019.hdr.sgml : 19951119 ACCESSION NUMBER: 0000007332-95-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHWESTERN ENERGY CO CENTRAL INDEX KEY: 0000007332 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION & DISTRIBUTION [4923] IRS NUMBER: 710205415 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08246 FILM NUMBER: 95592956 BUSINESS ADDRESS: STREET 1: 1083 SAIN ST STREET 2: P O BOX 1408 CITY: FAYETTEVILLE STATE: AR ZIP: 72702-1408 BUSINESS PHONE: 5015211141 FORMER COMPANY: FORMER CONFORMED NAME: ARKANSAS WESTERN GAS CO DATE OF NAME CHANGE: 19790917 10-Q 1 FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1995 =========================================================================== UNITED STATES 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, 1995 ------------------ 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 1-8246 SOUTHWESTERN ENERGY COMPANY (Exact name of registrant as specified in its charter) Arkansas 71-0205415 (State of incorporation (I.R.S. Employer or organization) Identification No.) 1083 Sain Street, P.O. Box 1408, Fayetteville, Arkansas 72702-1408 (Address of principal executive offices, including zip code) (501) 521-1141 (Registrant's telephone number, including area code) No Change (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 twelve 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 the issuer's classes of common stock, as of the latest practicable date: Class Outstanding at November 3,1995 ---------------------------- ------------------------------ Common Stock, Par Value $.10 24,692,259 =========================================================================== - 1 - PART I FINANCIAL INFORMATION - 2 - SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) ASSETS
September 30, December 31, 1995 1994 --------- --------- ($ in thousands) Current Assets Cash $ 1,036 $ 1,152 Accounts receivable 18,150 32,325 Income taxes receivable 3,860 1,493 Inventories, at average cost 17,907 12,199 Other 3,005 2,353 --------- --------- Total current assets 43,958 49,522 --------- --------- Investments 5,918 4,877 --------- --------- Property, Plant and Equipment, at cost Gas and oil properties, using the full cost method 490,220 435,570 Gas distribution systems 188,037 176,728 Gas in underground storage 35,855 36,629 Other 19,323 18,541 --------- --------- 733,435 667,468 Less: Accumulated depreciation, depletion and amortization 268,913 242,008 --------- --------- 464,522 425,460 --------- --------- Other Assets 6,941 6,216 --------- --------- Total Assets $ 521,339 $ 486,075 ========= =========
The accompanying notes are an integral part of the financial statements. - 3 - SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, December 31, 1995 1994 --------- --------- ($ in thousands) Current Liabilities Current portion of long-term debt $ 6,071 $ 6,071 Accounts payable 15,447 18,670 Interest payable 3,510 1,297 Customer deposits 4,327 4,232 Current portion of deferred income taxes 1,482 1,482 Over-recovered purchased gas costs, net 6,747 3,627 Other 4,419 5,257 --------- --------- Total current liabilities 42,003 40,636 --------- --------- Long-Term Debt, less current portion above 176,029 136,229 --------- --------- Other Liabilities Deferred income taxes 106,154 100,288 Deferred investment tax credits 2,283 2,416 Other 3,683 3,050 --------- --------- 112,120 105,754 --------- --------- Commitments and Contingencies Shareholders' Equity Common stock, $.10 par value; authorized 75,000,000 shares, issued 27,738,084 shares 2,774 2,774 Additional paid-in capital 21,252 21,231 Retained earnings 201,339 199,430 Less: Unamortized cost of 27,358 restricted shares in 1995 and 21,499 restricted shares in 1994, issued under stock incentive plan 282 262 Common stock in treasury, at cost 33,896 19,717 --------- --------- 191,187 203,456 --------- --------- Total Liabilities and Shareholders' Equity $ 521,339 $ 486,075 ========= =========
The accompanying notes are an integral part of the financial statements. - 4 - SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Quarter Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 ---------- ---------- ---------- ---------- ($ in thousands, except per share amounts) Operating Revenues Gas sales $ 22,769 $ 25,526 $ 100,053 $ 120,684 Oil sales 1,135 854 2,830 2,178 Gas transportation 1,264 1,062 3,806 3,581 Other 286 366 1,158 1,400 ---------- ---------- ---------- --------- 25,454 27,808 107,847 127,843 ---------- ---------- ---------- --------- Operating Costs and Expenses Purchased gas costs 3,031 2,385 24,364 27,955 Operating and general 10,660 10,048 32,243 30,668 Depreciation, depletion and amortization 8,861 8,128 27,169 26,098 Taxes, other than income taxes 947 920 3,099 2,799 ---------- ---------- ---------- --------- 23,499 21,481 86,875 87,520 ---------- ---------- ---------- --------- Operating Income 1,955 6,327 20,972 40,323 ---------- ---------- ---------- --------- Interest Expense 2,894 2,275 8,040 6,328 ---------- ---------- ---------- --------- Other Income (Expense) (818) (593) (2,418) (1,547) ---------- ---------- ---------- --------- Income Before Provision for Income Taxes (1,757) 3,459 10,514 32,448 ---------- ---------- ---------- --------- Income Tax Provision (Benefit) Current (2,773) (515) (733) 9,692 Deferred 2,097 1,846 4,781 2,800 ---------- ---------- ---------- --------- (676) 1,331 4,048 12,492 ---------- ---------- ---------- --------- Net Income (Loss) $ (1,081) $ 2,128 $ 6,466 $ 19,956 ========== ========== ========== ========== Weighted Average Common Shares Outstanding 24,741,437 25,684,110 25,277,762 25,684,110 ========== ========== ========== ========== Earnings Per Share $(.04) $ .09 $ .26 $ .78 ===== ===== ===== ===== Dividends Declared Per Share Payable 11/3/95 and 11/4/94 $ .06 $ .06 $ .06 $ .06 ===== ===== ===== =====
The accompanying notes are an integral part of the financial statements. - 5 - SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, 1995 1994 -------- -------- ($ in thousands) Cash Flows From Operating Activities Net income $ 6,466 $ 19,956 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 27,379 26,307 Deferred income taxes 4,781 2,800 Equity in loss of partnership 2,595 1,759 Change in assets and liabilities: Decrease in accounts receivable 14,175 17,141 Increase in income taxes receivable (2,367) (3,512) Increase in inventories (5,708) (1,014) Decrease in accounts payable (3,223) (2,771) Increase in interest payable 2,213 603 Increase in customer deposits 95 3 Increase (decrease) in over-recovered purchased gas costs 3,120 (3,725) Net change in other current assets and liabilities (1,490) (2,192) -------- -------- Net cash provided by operating activities 48,036 55,355 -------- -------- Cash Flows From Investing Activities Capital expenditures (68,291) (54,653) Investment in partnership (3,660) - Other items 2,735 428 -------- -------- Net cash used in investing activities (69,216) (54,225) -------- -------- Cash Flows From Financing Activities Net increase in revolving long-term debt 39,800 9,184 Payments on other long-term debt - (6,000) Purchase of treasury stock (14,179) - Dividends paid (4,557) (4,623) -------- -------- Net cash provided (used) in financing activities 21,064 (1,439) -------- -------- Decrease in cash (116) (309) Cash at beginning of year 1,152 834 -------- -------- Cash at end of period $ 1,036 $ 525 ======== ========
The accompanying notes are an integral part of the financial statements. - 6 - SOUTHWESTERN ENERGY COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1995 1. BASIS OF PRESENTATION The financial statements included herein are unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods. The Company's accounting policies are summarized in the 1994 Annual Report to Shareholders, Notes to Financial Statements. Certain reclassifications have been made to the September 30, 1994, financial statements in order to conform with the 1995 presentation. These reclassifications had no effect on previously reported net income. 2. DIVIDEND PAYABLE A dividend of $.06 per share was declared October 4, 1995, payable November 3, 1995. 3. TREASURY STOCK The Company's Board of Directors authorized during the first quarter of 1995 the repurchase of up to $30,000,000 of the Company's Common Stock. The stock repurchases have been funded by cash flows from operations and the Company's revolving credit facilities. The following table reconciles changes in treasury stock during the nine months ended September 30, 1995 ($ in thousands). Shares Amount Balance at December 31, 1994 2,053,974 $19,717 Shares repurchased 1,000,000 14,259 Shares issued as restricted and stock awards (8,149) (80) --------- ------- Balance at September 30, 1995 3,045,825 $33,896 ========= ======= 4. INTEREST AND INCOME TAXES PAID The following table provides interest and income taxes paid during each period presented. Three months Nine months Periods Ended September 30 1995 1994 1995 1994 ---------------------------------------------------------------------- (in thousands) Interest payments $1,390 $1,768 $6,899 $6,622 Income tax payments $95 $2,379 $895 $13,051 - 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following updates information as to the Company's financial condition provided in the Company's Form 10-K for the year ended December 31, 1994, and analyzes the changes in the results of operations between the three and nine month periods ended September 30, 1995, and the comparable periods of 1994. RESULTS OF OPERATIONS The Company reported a net loss of $1.1 million, or $.04 per share, for the quarter ended September 30, 1995, compared to net income of $2.1 million, or $.09 per share, for the same period in 1994. For the nine months ended September 30, 1995, net income was $6.5 million, or $.26 per share, compared to $20.0 million, or $.78 per share, for the same period in 1994. The comparative decreases in net income for the third quarter and year to date 1995 were primarily the result of lower natural gas prices, reflecting both the general decline in spot market prices and the effect of the settlement approved by the Arkansas Public Service Commission (APSC) to resolve a dispute concerning the Company's pricing of intersegment sales. The settlement, which was effective July 1, 1994, increased the volumes which could be sold by the Company's exploration and production segment to its gas distribution segment, but made the sales price equal to a spot market index plus a premium. The index-based pricing has to date resulted in a lower sales price under the contract affected by the settlement. The settlement and the significant increases in recent years in sales of gas production to unaffiliated purchasers have both caused earnings to become more sensitive to changes in the market price for natural gas. The following tables compare operating revenues and operating income by business segment for the three and nine month periods ended September 30, 1995 and 1994: Quarter Ended Nine Months Ended September 30, September 30, ------------------- --------------------- 1995 1994 1995 1994 -------- ------- -------- -------- (in thousands) Revenues Exploration and production $13,695 $16,476 $ 45,901 $ 61,107 Gas distribution 16,347 17,587 82,740 93,627 Other 69 76 262 227 Eliminations (4,657) (6,331) (21,056) (27,118) ------- ------- -------- -------- $25,454 $27,808 $107,847 $127,843 ======= ======= ======== ======== Operating Income Exploration and production $3,311 $7,051 $14,184 $31,376 Gas distribution (1,220) (636) 7,177 9,261 Corporate expenses (136) (88) (389) (314) ------ ------ ------- ------- $1,955 $6,327 $20,972 $40,323 ====== ====== ======= ======= - 8 - Revenues of the exploration and production segment were down 17% and 25%, respectively, for the three and nine month periods ended September 30, 1995, as compared to the same periods in 1994. Gas production during the third quarter of 1995 was 8.4 billion cubic feet (Bcf), level with the same period in 1994. For the nine months ended September 30, 1995, gas production was 26.1 Bcf, down 5% from 27.6 Bcf for the same period in 1994. The decrease for the nine month period was primarily the result of lower sales from the Company's Gulf of Mexico properties. The Company is in the process of connecting new production, but due to timing considerations, additions to new production have fallen somewhat behind the normal decline from other properties, especially offshore. Sales from the Company's offshore properties were .6 Bcf during the third quarter of 1995 and 2.1 Bcf for the first nine months of 1995, down from 1.2 Bcf and 4.4 Bcf, respectively, for the same periods in 1994. Sales in the first nine months of 1994 were helped by the start of production from a new offshore platform late in 1993. Sales of the Company's onshore gas production were 7.8 Bcf during the third quarter of 1995 and 24.0 Bcf for the nine months ended September 30, 1995, up from 7.2 Bcf and 23.2 Bcf, respectively, for the same periods in 1994. Sales of Arkansas production to unaffiliated purchasers totaled 11.2 Bcf for the first nine months of 1995, down from 12.0 Bcf for the same period in 1994. The Company sold 1.3 Bcf to Arkansas Western Gas Company (AWG), which operates its northwest Arkansas gas distribution system, during the third quarter of 1995, down from 1.7 Bcf for the same period in 1994. Sales in the third quarter of 1994 were helped by increased demand of the utility for storage injection during that period. The Company sold 5.9 Bcf to AWG during the first nine months of 1995, compared to 5.8 Bcf for the same period in 1994. Associated Natural Gas Company (Associated), which operates the Company's gas distribution systems in northeast Arkansas and parts of Missouri, purchased .8 Bcf of the Company's gas production during the third quarter of 1995 and 3.6 Bcf during the first nine months of 1995, compared to .9 Bcf and 3.6 Bcf, respectively, for the same periods in 1994. The Company's average sales price for its gas production was $1.49 per thousand cubic feet (Mcf) for the third quarter of 1995, down 19% from $1.85 per Mcf for the same period in 1994. The average sales price was $1.65 per Mcf for the first nine months of 1995, down 23% from $2.13 per Mcf for the same period of 1994. The Company's oil production increased to 164,022 barrels for the nine months ended September 30, 1995, up from 137,691 barrels for the same period in 1994. The increase was due primarily to additional production from properties acquired in Oklahoma and the Gulf Coast area during the last half of 1994 and the first half of 1995. Operating revenues of the gas distribution segment decreased 7% in the third quarter of 1995 and 12% in the nine months ended September 30, 1995, both as compared to the same periods in 1994. The decreases were due both to a decrease in the average utility rate and lower volumes due to warmer weather. Growth of 3% in 1995 in the average number of utility customers substantially offset the effect of weather which was 4% warmer than normal during the first nine months of 1995 and 5% warmer than in the same period in 1994. Deliveries by the Company's gas distribution systems to sales and end-use transportation customers were 4.2 - 9 - Bcf for the third quarter of 1995 and 22.1 Bcf for the nine months ended September 30, 1995, compared to 4.2 Bcf and 22.2 Bcf, respectively, for the same periods in 1994. AWG delivered a total of 14.7 Bcf to its sales and end-use transportation customers during the first nine months of 1995, up from 14.5 Bcf for the same period in 1994. AWG also transported 8.5 Bcf for delivery off its system during the first nine months of 1995, down from 8.8 Bcf for the same period in 1994. Associated delivered a total of 7.4 Bcf to its customers during the first nine months of 1995, down from 7.7 Bcf for the same period in 1994. The Company's average rate for its utility sales decreased to $4.24 per Mcf during the first nine months of 1995, down from $4.73 per Mcf for the same period in 1994. The decrease reflected lower prices paid for purchases of natural gas which are passed through to customers under automatic adjustment clauses. On July 14, 1995, Associated received an order from the Missouri Public Service Commission (MPSC) disallowing the recovery of $2.2 million of gas costs. The order was the result of audits by the Staff of the MPSC (Staff) for the five-year period ending August 31, 1993. Of the total disallowed, $1.5 million represented a portion of the difference between the price paid by Associated under a long-term firm contract with one of the Company's gas producing subsidiaries and a spot market index price for gas delivered into an interstate pipeline operating in the Arkoma Basin. Staff had recommended disallowance of approximately $3.1 million of such costs. In making its recommendation, Staff acknowledged that Associated had lowered its gas costs and saved its ratepayers money by purchasing gas from its affiliate. The Arkansas Public Service Commission had previously reviewed the costs charged to Arkansas ratepayers under this contract and found them to be proper and allowable for recovery. The MPSC also disallowed the recovery of $.7 million of take-or-pay charges passed through to Associated by its interstate suppliers and allocable to transportation customers of Associated. Associated has appealed the MPSC's decision to the Circuit Court of Cole County, Missouri and that court has stayed the MPSC's order and has directed Associated to pay the money to be refunded under the MPSC's order into the registry of the court while the appeal is pending. The Company does not expect the ultimate outcome of this matter to have a material adverse impact on the results of operations or the financial position of the Company. Operating costs and expenses increased $2.0 million, or 9%, in the third quarter of 1995 and decreased $.6 million, or .7%, for the nine months ended September 30, 1995, both as compared to the same periods in 1994. The increase in the third quarter of 1995, as compared to 1994, was due primarily to higher depreciation, depletion and amortization expense and to higher consolidated purchased gas costs of the Company's gas distribution systems. The increase in depreciation, depletion and amortization expense was due to an increase in the rate of depletion per Mcf equivalent in the third quarter of 1995 as compared to the same period in 1994. The increase in purchased gas costs resulted from a decrease in the elimination of gas purchases related to intercompany transactions, reflecting a lower level of intersegment sales in the third quarter of 1995 as compared to the same period in 1994. The decrease in operating costs and expenses for the nine months ended September 30, 1995, was due primarily to lower purchased gas costs related to lower prices paid for gas supplies, partially offset by increases in both operating and general expenses and depreciation, depletion and amortization expense. - 10 - Total interest expense for the nine months ended September 30, 1995, was up 27%, compared to the same period in 1994. The increase was due to both higher average borrowings and higher average interest rates on the Company's revolving credit facilities. The Company's share of the NOARK Pipeline System's (NOARK) pre-tax loss included in other income was $.9 million for the third quarter of 1995 and $2.6 million for the nine months ended September 30, 1995, compared to $.9 million and $1.8 million, respectively, for the same periods in 1994. The increase in NOARK's pre-tax loss for the first nine months of 1995 resulted primarily from a decrease in firm demand revenues and from an increase in interest expense. The Company, through a subsidiary, holds a 47.93% general partnership interest in NOARK and is the pipeline's operator. The changes in the provisions for current and deferred income taxes recorded in the three and nine month periods ended September 30, 1995, as compared to the same periods in 1994, resulted primarily from the level of taxable income and from the deduction for tax purposes of intangible drilling costs incurred, netted against the turnaround of intangible drilling costs deducted for tax purposes in prior years. Intangible drilling costs are capitalized and amortized over future years for financial reporting purposes under the full cost method of accounting. CHANGES IN FINANCIAL CONDITION Changes in the Company's financial condition at September 30, 1995, as compared to December 31, 1994, primarily reflect the seasonal nature of the gas distribution segment of the Company's business and changes in prices received for gas production of the Company's exploration and production segment. Routine capital expenditures, cash dividends and scheduled debt retirements are predominately funded through cash provided by operations. For the first nine months of 1995, operating activities provided net cash flows of $48.0 million, a $7.4 million decrease from the $55.4 million provided in the first nine months of 1994. The decrease was primarily due to lower net income and the timing of both cash receipts and expenditures. The Company expects its outstanding borrowings to increase during the fourth quarter of 1995 as cash generated from operations will be less than the requirements for capital expenditures and cash dividends. The Company's capital expenditures for the first nine months of 1995 were $68.3 million, compared to $54.7 million for the same period in 1994. The comparative increase was the result of additional oil and gas exploration expenditures, primarily on the onshore Louisiana and Texas Gulf Coast combined with expenditures of $9.2 million to purchase oil and gas producing properties in the same area. The Company originally budgeted $55.2 million in 1995 for the exploration and production segment, approximately level with the total spent in 1994, but currently expects total spending for this segment to be approximately $70.0 - $75.0 million based on current projections of activity through the end of 1995. Total capital spending for the exploration and production segment could be affected by oil and gas property acquisitions which might be identified later in 1995. - 11 - The Company maintains two floating rate revolving credit facilities that provide $80.0 million of medium to long-term capital at current market lending rates. These facilities have been temporarily expanded to $140.0 million to provide additional debt financing and to provide for the prepayment of the outstanding balance on the Company's 10.63% Senior Notes. The Company has given notice of its intent to repay the outstanding balance of its 10.63% Senior Notes by November 17, 1995. A total of $92.1 million was outstanding under these facilities at September 30, 1995, all of which was classified as long-term debt. The Company also had available short-term lines of credit totaling $3.5 million, none of which was outstanding at September 30, 1995. During the first nine months of 1995, the Company's revolving long-term debt increased by $39.8 million. The increase was a result of both higher capital expenditures and repurchases of 1,000,000 shares of the Company's Common Stock under a program authorized by its Board of Directors in the first quarter of 1995. As a result of the increased borrowings, long-term debt at September 30, 1995, accounted for 49% of the Company's capitalization, up from 41% at December 31, 1994. The Company has filed a shelf registration statement with the Securities and Exchange Commission for the issuance of up to $250 million of senior unsecured debt securities. The Company currently anticipates an offering of $125.0 million of senior notes during the last quarter of 1995. The proceeds will be used to repay outstanding balances on the Company's revolving credit facilities and to fund a portion of the Company's capital spending program. Additional debt securities may be issued in the future under the shelf registration statement as circumstances dictate. Accounts receivable have declined since December 31, 1994, due to both seasonally lower deliveries of the gas distribution segment and a decrease in amounts due from unaffiliated purchasers of gas production in the exploration and production segment caused by lower average gas prices and the timing of cash receipts. The increase in income taxes receivable since December 31, 1994, is primarily due to the lower level of taxable income in 1995, resulting from lower operating income and higher intangible drilling costs. The increase in inventories since December 31, 1994, is the result of injections of purchased gas into the Company's unregulated underground gas storage facility. The Company expects to withdraw and sell this gas during the upcoming heating season and has hedged the projected sales to protect against price declines. Accounts payable has declined since December 31, 1994, due primarily to seasonally lower gas purchases of the gas distribution segment. Other changes in current assets and current liabilities between periods resulted primarily from the timing of expenditures. The Company had over-recovered $6.7 million of purchased gas costs at September 30, 1995, which will be refunded to its utility customers through automatic cost of gas adjustment clauses included in its filed rate tariffs. At December 31, 1994, the Company had over-recovered purchased gas costs in the amount of $3.6 million. These amounts are classified as current liabilities. - 12 - PART II OTHER INFORMATION Item 5 - ------ The Company has been advised of a potential claim against it involving the disputed ownership of overriding royalty interests in a number of oil and gas properties, and related matters. The Company has begun discussions with the claimant and has engaged special counsel to assist it in a preliminary investigation of the claim's merits. The Company is unable to predict at this time whether litigation will be commenced in respect of this claim or how the claim will ultimately be resolved. While the amount of the potential claim is significant in the aggregate, management believes, based on its preliminary investigation, that the Company's ultimate liability, if any, will not be material to its consolidated financial position or results of operations. Signatures 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. SOUTHWESTERN ENERGY COMPANY --------------------------- Registrant DATE: November 14, 1995 /s/ GREGORY D. KERLEY ------------------------------ Gregory D. Kerley Vice President - Treasurer and Secretary, and Chief Accounting Officer - 13 - EX-27 2 FINANCIAL DATA SCHEDULE FOR 3RD QTR - 1995
5 1,000 9-MOS DEC-31-1995 SEP-30-1995 1,036 0 18,150 0 17,907 43,958 733,435 (268,913) 521,339 42,003 176,029 2,774 0 0 188,413 521,339 102,883 107,847 0 86,875 0 0 8,040 10,514 4,048 6,466 0 0 0 6,466 .26 0
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