SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED DECEMBER 31, 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 IRS Employer
File State of Identification
Number Registrant Incorporation Number
1-7810 Energen Corporation Alabama 63-0757759
2-38960 Alabama Gas Corporation Alabama 63-0022000
2101 Sixth Avenue North
Birmingham, Alabama 35203
Telephone Number 205/326-2700
Alabama Gas Corporation, a wholly owned subsidiary of Energen Corporation, meets
the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and
is therefore filing this Form with reduced disclosure format pursuant to General
Instruction H(2).
Indicate by a check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities and Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. YES X NO
Indicate the number of shares outstanding of each of the issuers' classes of
common stock, as of February 9, 1996:
Energen Corporation, $0.01 par value 11,008,419 shares
Alabama Gas Corporation, $0.01 par value 1,972,052 shares
ENERGEN CORPORATION AND ALABAMA GAS CORPORATION
FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 1995
TABLE OF CONTENTS
Page
PART I: FINANCIAL INFORMATION (Unaudited)
Item 1.Financial Statements
(a)Consolidated Statements of Income of Energen Corporation 4
(b)Consolidated Balance Sheets of Energen Corporation 5
(c)Consolidated Statements of Cash Flows of Energen Corporation 7
(d)Statements of Income of Alabama Gas Corporation 8
(e)Balance Sheets of Alabama Gas Corporation 9
(f)Statements of Cash Flows of Alabama Gas Corporation 11
(g)Notes to Unaudited Financial Statements 12
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations 15
Selected Business Segment Data of Energen Corporation 17
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-k 18
SIGNATURES 20
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ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
Energen Corporation and Subsidiaries
(Unaudited)
Three months ended December 31,
(in thousands, except share data) 1995 1994
Operating Revenues
Natural gas distribution $ 73,185 $ 67,226
Oil and gas production activities 5,796 5,931
Other 536 594
Intercompany eliminations (694) (944)
Total operating revenues 78,823 72,807
Operating Expenses
Cost of gas 34,084 31,050
Operations 23,569 21,614
Maintenance 2,603 2,264
Depreciation, depletion and amortization 7,810 6,962
Taxes, other than income taxes 5,984 5,636
Total operating expenses 74,050 67,526
Operating Income 4,773 5,281
Other Income (Expense)
Interest expense (3,381) (2,749)
Other, net 1,543 853
Total other income (expense) (1,838) (1,896)
Income Before Income Taxes 2,935 3,385
Income taxes 657 649
Net Income $ 2,278 $ 2,736
Earnings Per Average Common Share $ 0.21 $ 0.25
Dividends Per Common Share $ 0.29 $ 0.28
Average Common Shares Outstanding 10,949 10,920
The accompanying Notes are an integral part of these statements.<PAGE>
CONSOLIDATED BALANCE SHEETS
Energen Corporation and Subsidiaries
(Unaudited)
December 31,September 30,
(in thousands) 1995 1995
ASSETS
Property, Plant and Equipment
Utility plant $ 511,113 $ 504,371
Less accumulated depreciation 252,368 247,926
Utility plant, net 258,745 256,445
Oil and gas properties, successful efforts method 134,281 117,339
Less accumulated depreciation,
depletion and amortization 52,484 51,170
Oil and gas properties, net 81,797 66,169
Other property, net 4,387 4,650
Total property, plant and equipment, net 344,929 327,264
Current Assets
Cash and cash equivalents 3,158 36,695
Accounts receivable, net of allowance for doubtful
accounts of $2,208 at December 31, 1995 and
$2,533 at September 30, 1995 50,224 30,813
Inventories, at average cost
Storage gas 17,156 20,276
Materials and supplies 7,485 7,711
Liquified natural gas in storage 3,318 3,539
Regulatory asset 5,007 6,321
Deferred gas costs 14,692 1,426
Deferred income taxes 7,257 9,667
Prepayments and other 4,625 2,583
Total current assets 112,922 119,031
Other Assets
Notes receivable 2,820 3,095
Deferred charges and other 9,351 9,694
Total other assets 12,171 12,789
TOTAL ASSETS $ 470,022 $ 459,084
The accompanying Notes are an integral part of these statements.<PAGE>
CONSOLIDATED BALANCE SHEETS
Energen Corporation and Subsidiaries
(Unaudited)
December 31,September 30,
(in thousands) 1995 1995
CAPITAL AND LIABILITIES
Capitalization
Preferred stock, cumulative $0.01 par value,
5,000,000
shares authorized $ - $ -
Common shareholders' equity
Common stock, $0.01 par value; 30,000,000
shares authorized,
10,979,966 shares outstanding at
December 31, 1995 and
10,910,106 shares outstanding
at September 30, 1995 110 109
Premium on capital stock 82,696 81,243
Capital surplus 2,802 2,802
Retained earnings 89,121 90,020
Treasury stock at cost,
4,600 shares at December 31, 1995
And 11,627 shares at September 30, 1995 (110) (250)
Total common shareholders' equity 174,619 173,924
Long-term debt 131,494 131,600
Total capitalization 306,113 305,524
Current Liabilities
Long-term debt due within one year 1,775 1,775
Notes payable to banks 28,000 32,300
Accounts payable 53,560 32,242
Accrued taxes 10,162 11,339
Customers' deposits 18,354 18,218
Amounts due customers 10,704 16,546
Accrued wages and benefits 11,667 10,955
Other 16,000 14,923
Total current liabilities 150,222 138,298
Deferred Credits and Other Liabilities
Deferred income taxes 2,404 2,540
Accumulated deferred investment tax credits 3,982 4,103
Other 7,301 8,619
Total deferred credits and other liabilities 13,687 15,262
Commitments and Contingencies - -
TOTAL CAPITAL AND LIABILITIES $ 470,022 $ 459,084
The accompanying Notes are an integral part of these statements.<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOW
Energen Corporation and Subsidiaries
(Unaudited)
Three months ended December 31, (in thousands) 1995 1994
Operating Activities
Net Income $ 2,278 $ 2,736
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 7,814 6,966
Deferred income taxes, net 2,042 (103)
Deferred investment tax credits, net (121) (121)
Gain on sale of properties (581) -
Net change in:
Accounts receivable (19,411) (10,933)
Inventories 3,567 (789)
Deferred gas cost (13,266) (7,445)
Accounts payable gas purchases 18,548 11,318
Accounts payable other trade 2,770 (3,612)
Other current assets and liabilities (5,891) 2,903
Other, net 643 (125)
Net cash provided by (used in)
operating activities (1,608) 795
Investing Activities
Additions to property, plant and equipment (26,664) (12,558)
Proceeds from sale of properties 2,123 -
Payments on notes receivable 275 228
Other, net 30 4
Net cash used in investing activities (24,236) (12,326)
Financing Activities
Payment of dividends on common stock (3,178) (3,058)
Issuance of common stock - 61
Purchase of treasury stock (109) (49)
Reduction of long-term debt (106) (6,422)
Net change in short-term debt (4,300) (4,000)
Net cash used in
financing activities (7,693) (13,468)
Net change in cash and cash equivalents (33,537) (24,999)
Cash and cash equivalents at beginning of period 36,695 27,526
Cash and Cash Equivalents at End of Period $ 3,158 $ 2,527
The accompanying Notes are an integral part of these statements.<PAGE>
STATEMENTS OF INCOME
Alabama Gas Corporation
(Unaudited)
Three months ended December 31, (in thousands) 1995 1994
Operating Revenues $ 73,185 $ 67,226
Operating Expenses
Cost of gas 34,778 31,994
Operations 19,943 18,357
Maintenance 2,574 2,228
Depreciation 5,108 4,737
Income taxes
Current (1,139) 1,062
Deferred, net 2,194 (118)
Deferred investment tax credits, net (122) (122)
Taxes, other than income taxes 5,725 5,392
Total operating expenses 69,061 63,530
Operating Income 4,124 3,696
Other Income
Allowance for funds used during construction 341 186
Other, net 136 158
Total other income 477 344
Interest Charges
Interest on long-term debt 2,138 1,757
Other interest expense 477 532
Total interest charges 2,615 2,289
Net Income Available for Common $ 1,986 $ 1,751
The accompanying Notes are an integral part of these statements.
BALANCE SHEETS
Alabama Gas Corporation
(Unaudited)
December 31,September 30,
(in thousands) 1995 1995
ASSETS
Property, Plant and Equipment
Utility plant $ 511,113 $ 504,371
Less accumulated depreciation 252,368 247,926
Utility plant, net 258,745 256,445
Other property, net 246 193
Current Assets
Cash and cash equivalents (48) 727
Accounts receivable
Gas 39,332 22,215
Merchandise 1,916 1,546
Other 1,982 1,598
Allowance for doubtful accounts (2,200) (2,000)
Inventories, at average cost
Storage gas 17,156 20,276
Materials and supplies 5,920 5,860
Liquified natural gas in storage 3,318 3,539
Deferred gas costs 14,692 1,426
Regulatory asset 5,007 6,321
Deferred income taxes 5,038 7,416
Prepayments and other 2,061 2,302
Total current assets 94,174 71,226
Deferred Charges and Other Assets 7,409 7,403
TOTAL ASSETS $ 360,574 $ 335,267
The accompanying Notes are an integral part of these statements.<PAGE>
BALANCE SHEETS
Alabama Gas Corporation
(Unaudited)
December 31,September 30,
(in thousands) 1995 1995
CAPITAL AND LIABILITIES
Capitalization
Common shareholder's equity
Common stock, $0.01 par value; 3,000,000 shares authorized,
1,972,052 shares outstanding at December 31, 1995 and
September 30, 1995 $ 20 $ 20
Premium on capital stock 31,682 31,682
Capital surplus 2,802 2,802
Retained earnings 86,454 87,638
Total common shareholder's equity 120,958 122,142
Cumulative preferred stock,
$0.01 par value, 120,000 shares
authorized, issuable in series $4.70 Series - -
Long-term debt 100,000 100,000
Total capitalization 220,958 222,142
Current Liabilities
Long-term debt due within one year
Notes payable to banks 10,000 -
Accounts payable 49,806 26,160
Accrued taxes 9,291 10,236
Customers' deposits 18,354 18,218
Supplier refunds due customers 3,498 3,315
Other amounts due customers 7,206 13,231
Accrued wages and benefits 6,420 5,228
Other 8,100 9,444
Total current liabilities 112,675 85,832
Deferred Credits and Other Liabilities
Deferred income taxes 16,391 16,343
Accumulated deferred investment tax credits 3,982 4,103
Regulatory liability 5,722 6,001
Customer advances for construction and other 846 846
Total deferred credits and other liabilities 26,941 27,293
Commitments and Contingencies
TOTAL CAPITAL AND LIABILITIES $ 360,574 $ 335,267
The accompanying Notes are an integral part of these statements.
STATEMENTS OF CASH FLOW
Alabama Gas Corporation
(Unaudited)
Three months ended December 31, (in thousands) 1995 1994
Operating Activities
Net Income $ 1,986 $ 1,751
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,108 4,737
Deferred income taxes, net 2,194 (118)
Deferred investment tax credits (122) (122)
Net change in:
Accounts receivable (17,043) (9,349)
Inventories 2,653 (416)
Deferred gas cost (13,266) (7,445)
Accounts payable gas purchases 18,548 11,318
Accounts payable other trade 1,910 (1,978)
Other current assets and liabilities (7,883) 416
Other, net (381) (175)
Net cash used in
operating activities (6,296) (1,381)
Investing Activities
Additions to property, plant and equipment (7,050) (9,551)
Other, net (82) (57)
Net cash used in
investing activities (7,132) (9,608)
Financing Activities
Payment of dividends on common stock (3,170) (3,060)
Reduction of long-term debt - (62)
Net advances from affiliates 5,823 17,346
Net change in short-term debt 10,000 (2,000)
Net cash provided by
financing activities 12,653 12,224
Net change in cash and cash equivalents (775) 1,235
Cash and cash equivalents at beginning of period 727 156
Cash and Cash Equivalents at End of Period $ (48) $ 1,391
The accompanying Notes are an integral part of these statements.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Energen Corporation and Alabama Gas Corporation
1. BASIS OF PRESENTATION
All adjustments to the unaudited financial statements which
are, in the opinion of management, necessary for a fair
statement of the results of operations for the interim
periods have been recorded. Such adjustments consisted only
of normal recurring items. The consolidated financial
statements and notes thereto should be read in conjunction
with the financial statements and notes for the years ended
September 30, 1995, 1994, and 1993 included in the 1995
Annual Report of Energen Corporation (the Company) on Form
10-K. Certain reclassifications were made to conform prior
years' financial statements to the current quarter
presentation. The Company's primary business is seasonal in
character and influenced by weather conditions. Results of
operations for the interim periods are not necessarily
indicative of the results which may be expected for the
fiscal year.
2. REGULATORY
As an Alabama utility, Alagasco is subject to regulation by
the APSC which, in 1983, established the Rate Stabilization
and Equalization (RSE) rate-setting process. RSE was
extended for the third time on December 3, 1990, for a
three-year period. Under the terms of that extension, RSE
shall continue after November 30, 1993, unless, after notice
to the Company, the Commission votes to either modify or
discontinue its operation. On October 4, 1993, the
Commission unanimously voted to extend RSE until such time as
certain hearings mandated by the Energy Policy Act of 1992
(Energy Act) in connection with integrated resource planning
and demand side management programs are completed. The
Energy Act proceedings are expected to conclude during fiscal
1996 at which time it is expected that the Commission will
begin reviewing Alagasco's RSE. No time table for review has
yet been established.
Under RSE as extended, the APSC conducts quarterly reviews to
determine, based on Alagasco's projections and fiscal
year-to-date performance, whether Alagasco's return on equity
for the fiscal year will be within the allowed range of 13.15
percent to 13.65 percent. Reductions in rates can be made
quarterly to bring the projected return within the allowed
range; increases, however, are allowed only once each fiscal
year, effective December 1, and cannot exceed 4 percent of
prior-year revenues. RSE limits the utility's equity upon
which a return is permitted to 60 percent of total
capitalization and provides for certain cost control measures
designed to monitor the Company's operations and maintenance
(O&M) expense. If O&M expense per customer falls within 1.25
percentage points above or below the Consumer Price Index For
All Urban Customers (index range), no adjustment is required.
If, however, O&M expense per customer exceeds the index
range, three-quarters of the difference will be returned to
the customers. To the extent O&M expense per customer is
less than the index range, the utility will benefit by one-half of
the difference through future rate adjustments.
Under RSE as extended, an $8.2 million annual increase in
revenue became effective December 1, 1995.
Effective December 15, 1990, the APSC approved a temperature
adjustment to customers' monthly bills to remove the effect
of departures from normal temperature on Alagasco's earnings.
The calculation is performed monthly, and the adjustments to
customers' bills are made in the same month the weather
variation occurs.
The Company's rate schedules for natural gas distribution
charges contain a Gas Supply Adjustment (GSA) rider,
established in 1993. The rider permits the pass through to
customers of changes in the cost of gas supply, including Gas
Supply Realignment (GSR) surcharges imposed by the Company's
suppliers resulting from changes in gas supply purchases
related to the implementation of FERC Order 636.
On June 12, 1995, the APSC approved Alagasco's application to
issue $50 million of new debt. A portion of the proceeds was
used to redeem all of Alagasco's 9 percent debentures and 11
percent First Mortgage Bonds. In connection with the early
call of the redeemed debt, Alagasco paid an early call
premium of approximately $1.3 million during the fourth
quarter of fiscal 1995. Because the APSC Order authorized
Alagasco to collect the early call premium through customer
rates during the fiscal year ending September 30, 1996,
Alagasco recorded a regulatory asset of $1.3 million during
the quarter ended September 30, 1995, with approximately $1
million remaining at December 31, 1995.
In accordance with APSC-directed regulatory accounting
procedures, Alagasco in 1989 began returning to customers
excess utility deferred taxes which resulted from a reduction
in the federal statutory tax rate from 46 percent to 34
percent using the average rate assumption method. This method
provides for the return to ratepayers of excess deferred
taxes over the lives of the related assets. In 1993 those
excess taxes were reduced as a result of a federal tax rate
increase from 34 percent to 35 percent. Approximately $2.9
million of the remaining excess utility deferred taxes is
being returned to ratepayers over approximately 15 years.
FERC Regulation: On March 15, 1995, Southern Natural Gas
Company (Southern) filed a comprehensive settlement with the
FERC in the form of a Stipulation and Agreement (the
Settlement) to resolve all issues in Southern's six pending
rate cases, as well as to resolve all GSR and transition cost
issues resulting from the implementation of FERC Order 636.
The Settlement is supported by parties representing more than
90 percent of the firm transportation demand on Southern's
system, including local distribution companies (including
Alagasco), municipal distribution systems, major gas
producers, large industrial end users, marketers, and state
commissions (including the APSC).
On September 29, 1995, the FERC issued its Order Accepting
Settlement, Severing Contesting parties, and Issuing
Certificates and Approving Abandonment (Settlement Order).
The Settlement Order approves the Settlement with minor
modifications. Contesting parties had 30 days from the date
of the Settlement Order to file motions for rehearing and
several such motions were timely filed. Until such motions
are ruled on by the FERC, the Settlement Order is not
considered to be final.
Specifically, the Settlement provides for the following: (1)
the resolution of all cost of service and rate design issues
in Southern's six pending rate cases and the establishment of
reduced rates for the purpose of calculating rate case
refunds; (2) the implementation of reduced settlement rates
on an interim basis for supporting parties commencing March
1, 1995 (by order dated April 4, 1995, FERC approved these
interim rates pending its final review of the merits of the
Settlement); (3) the resolution of all GSR and other
transition cost issues resulting from FERC Order 636; (4)
lower GSR cost recovery through the reduction and earlier
payout of GSR costs; (5) a three-year moratorium on general
rate increases; and (6) the resolution and disposition of all
rate case and GSR refunds for supporting parties. With
respect to this last point, the Settlement provides that all
rate case refunds will be used to offset a portion of
Southern's remaining GSR liability. In addition, as a result
of the recalculated GSR surcharges for the period January 1,
1994, to February 28, 1995, Southern will refund over-collected GSR costs.
Neither the total amount of this refund
nor Alagasco's share has yet been determined; therefore, no
amounts have been recorded in the financial statements. In
the Settlement filing with FERC, Southern has represented
that the Settlement will allow Southern and the supporting
parties to resolve all issues relating to GSR and other
transition costs, the majority of which costs will be collected
by the end of calendar 1996. Alagasco estimates that it has a
remaining GSR liability of approximately $1.7 million to be
paid through December 1996 and approximately $2.3 million in
other transition costs to be paid through June 1998 and that
it has recorded such amounts in the financial statements.
Because these costs will be recovered in full from Alagasco's
customers in a timely manner through the GSA rider of
Alagasco's Tariff, the Company has recorded a corresponding
regulatory asset in the accompanying financial statements.
3. SUPPLEMENTAL CASH FLOW INFORMATION
Energen Corporation
Three months ended December 31, (in thousands) 1995 1994
Interest paid, net of amounts capitalized $ 4,660 $ 4,736
Income taxes paid $ (88) $ (51)
Noncash investing activities (capitalized depreciation
and allowance for funds used during construction) $ 387 $ 227
Alabama Gas Corporation
Three months ended December 31, (in thousands) 1995 1994
Interest paid $ 4,501 $ 4,414
Income taxes paid $ (181) $ 1,712
Noncash investing activities (capitalized depreciation
and allowance for funds used during construction) $ 387 $ 227
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Consolidated net income for the first quarter of fiscal 1996
was $2,278,000 ($0.21 per share) down from the prior year's
first quarter results of $2,736,000 ($0.25 per share). While
increased contribution from Alabama Gas Corporation (Alagasco)
reflected the utility earning its allowed return on a higher
level of investment, earnings from Taurus Exploration, Inc.
(Taurus) were negatively affected by several factors including
increased depreciation, depletion, and amortization (DD&A) and
increased exploration expense.
Two factors created a majority of the 9 percent increase in
utility natural gas revenues for the quarter. Weather colder
than that of the prior year resulted in a 3.1 Bcf increase in
gas sales volumes to residential customers. Alagasco's
operating margins, however, are unaffected due to the
APSC-approved temperature adjustment provision which
allows for the adjustment of customers' bills on a
real-time basis to reflect usage under normal temperature
conditions. Also, revenue from commercial and
industrial customers was greater because
of increased usage by existing customers and customer
additions.
Revenues from oil and gas production activities did not vary
significantly from those of the prior year. Production
revenues were virtually unchanged as the impact of increased
total production volumes was offset by decreased oil and gas
prices. After giving effect to hedged volumes, the average per
Mcf sales price of natural gas was $1.74 compared to $1.81 in
the prior year, and the average per barrel sales price of oil
was $14.40 compared to $15.84 in the prior year. Operating
fees represent a percentage of net proceeds on certain
coalbed methane properties, as defined by the related
operating agreements, and vary with changes in natural gas
prices, production volumes, and operating expenses. Revenues
from operating fees remained virtually the same in the current
year. While natural gas prices have increased 20 percent, the
prior year quarter includes a one-time asset disposition fee
offsetting the impact of increased prices.
To hedge its exposure to energy price fluctuations on oil and
gas production over the remainder of this fiscal year, Taurus
has entered into contracts for the sale of 5.1 Bcf of its gas
production at an average contract price of $1.79 per Mcf and
for the sale of 294 MBbl of its oil production at an average
contract price of $17.75 per Bbl. Based on current estimates
for fiscal 1996 production (excluding additional producing
property acquisitions), approximately 72 percent of gas
production and 52 percent of oil production are hedged. At
December 31, 1995, the Company's deferred losses related to
its futures contracts totalled $1.1 million. The program has
been extended into fiscal 1997 for the sale of 5.6 Bcf of gas
production with an average contract price of $1.91 per Mcf.
The increase in cost of gas for the quarter was due primarily
to the 3.4 Bcf increase in gas sales volumes, primarily to
residential customers.
Consolidated operations and maintenance expense for the
quarter increased 10 percent due largely to increased labor
and related expenses at Alagasco and increased exploration
expense at Taurus.
A 12 percent increase in depreciation for the quarter is
related primarily to an increased DD&A rate associated with
prior year reserve revisions at Taurus and the effects of
normal plant growth at Alagasco.
The Company's expense for taxes other than income primarily
reflects various state and local business taxes paid by
Alagasco as well as various payroll-related taxes. State and
local business taxes are generally based on gross receipts of
Alagasco and fluctuate accordingly.
Medium-term notes outstanding for the full quarter and a
higher average short-term debt outstanding contributed to the
increase in interest expense for the current quarter.
During the current quarter, based on a periodic review of
profitability, Taurus sold proved properties which resulted in
other income of approximately $580,000.
Income tax expense for the quarter did not vary significantly
as the effect of lower consolidated pretax income was offset
by decreased recognition of nonconventional fuel tax credits
on an interim basis. The Company's effective tax rates are
expected to remain lower than statutory federal rates through
December 31, 2002, as tax credits generated each year are
expected to be fully recognized in the financial statements.
Liquidity and Capital Resources
Several factors combined to create the $2.4 million decrease
in operating cash flows. The factor having the most impact was
the timing of the collection of certain gas supply adjustment
costs from customers. Also influencing the change was a 2 Bcf
decrease in Alagasco's storage gas inventory as weather colder
than that of the prior year necessitated greater use of the
inventory to meet system requirements. Fluctuations in
receivables and payables have been influenced by greater
throughput in the current year and are also the result of
timing of payments.
The increase in cash used in investing activities is largely
the result of Taurus investing $15 million for producing oil
and gas properties adding approximately 3.9 Bcf of gas and 3
Mmbl of oil, and an additional $6.1 million in offshore
exploration and development. Offsetting that impact was the
receipt of proceeds from the sale of certain proved producing
properties at Taurus. Included in Alagasco's capital
expenditures for the quarter was the $1.9 million acquisition
of an 1,100 customer municipal gas system.
In the first quarter of the prior year, the Company repaid
$6.3 million in notes payable leading to the majority of the
decrease in cash used in financing activities for the current
quarter.
Future Capital Expenditures and Liquidity
The most significant event influencing the Company's future
capital expenditures and liquidity is Taurus's plan to
increase its level of investment in the exploration and
production business in order to generate desired earnings
growth, increase shareholder return, and increase total market
capitalization. Therefore, during the next five years, Taurus
plans to invest $400 million for property acquisitions and
related development and an additional $100 million for
offshore exploration and development. To help facilitate this
strategy, Taurus has entered into a three-and-one-half year
agreement with Sonat Exploration Company committing to invest
up to between $25 million and $50 million as its proportionate
share of acquisitions in fiscal years 1996 through 1998. The
Company has short-term credit facilities of $110 million that
it anticipates using to initially acquire properties, but
long-term debt and equity will be issued for permanent
financing of these investments. The exact timing of the
permanent financing is undeterminable at this time as the
Company does not know the exact pace of acquisitions.
Consolidated capital and exploration expenditures could
approximate $129 million in fiscal 1996, excluding municipal
gas system acquisitions. Of that, Taurus may invest $85
million for property acquisitions and related development, as
well as offshore exploration and development. Taurus's
ability to invest in property acquisitions will be
significantly influenced by industry trends as the producing
property acquisition market has historically been cyclical.
Alagasco expects to invest $44 million in fiscal 1996,
excluding municipal gas system acquisition, and primarily
represents additions for normal distribution system expansion.
Recent Pronouncements of the FASB
In March 1995, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standard (SFAS) No.
121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of. The Company is
required to adopt this Statement in its 1997 fiscal year but
implementation is not expected to have a material impact on
the Company's financial statements.
In October 1995, SFAS No. 123, Accounting for Stock-Based
Compensation, was issued and also requires adoption by the
Company in its fiscal year 1997. The implementation of SFAS
No. 123 is not expected to have a material impact on the
financial statements.
<PAGE>
SELECTED BUSINESS SEGMENT DATA
Energen Corporation
Three months ended December 31,
(in thousands, except share data) 1995 1994
Natural Gas Distribution
Operating revenues
Residential $ 47,737 $ 44,350
Commercial and industrial - small 16,870 15,545
Commercial and industrial - large 56 31
Transportation 8,157 7,566
Other 365 (266)
Total $ 73,185 $ 67,226
Volumes sold and transported (thousands of Mcf)
Residential 7,790 5,287
Commercial and industrial - small 3,376 2,466
Commercial and industrial - large 9 8
Transportation 16,247 14,290
Total 27,422 22,051
Other data
Depreciation and amortization $ 5,108 $ 4,737
Capital expenditures $ 7,437 $ 9,778
Operating income $ 5,057 $ 4,518
Oil and Gas Exploration and Production
Operating revenues
Natural gas $ 3,418 $ 3,948
Oil 1,303 792
Other 1,075 1,191
Total $ 5,796 $ 5,931
Sales volume - natural gas (thousands of Mcf) 1,965 2,181
Sales volume - oil (thousands of barrels) 91 50
Average sales price - natural gas (per Mcf) $ 1.74 $ 1.81
Average sales price - oil (per barrel) $ 14.40 $ 15.84
Other data
Depreciation, depletion and amortization $ 2,571 $ 2,118
Capital expenditures $ 19,615 $ 3,007
Exploration expenditures $ 1,053 $ 429
Operating income (loss) $ (138) $ 1,154
Other Business
Operating revenues $ 536 $ 594
Depreciation and amortization $ 131 $ 24
Capital expenditures $ - $ -
Operating income $ 95 $ 49
Eliminations and Corporate Expenses
Operating loss $ (241) $ (440)
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
27.1 Financial data schedule of Energen Corporation (for SEC purposes only)
27.2 Financial data schedule of Alabama Gas Corporation (for SEC purposes
only)
b. Reports on Form 8-K
No reports on Form 8-K were filed for the three months ended
December 31,1995.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
ENERGEN CORPORATION
ALABAMA GAS CORPORATION
February 13, 1996 By/s/ Rex J. Lysinger
Rex J. Lysinger
Chairman of the Board of Directors of
Energen and all subsidiaries, Chief
Executive Officer of Energen
February 13, 1996 By/s/ G. C. Ketcham
G. C. Ketcham
Executive Vice President, Chief
Financial Officer and Treasurer
February 13, 1996 By/s/ Paula H. Rushing
Paula H. Rushing
Controller of Alagasco
<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND> This schedule contains summary financial information extracted from
the Form 10Q for December 31,1995, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000277595
<NAME> ENERGEN CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 258,745
<OTHER-PROPERTY-AND-INVEST> 86,184
<TOTAL-CURRENT-ASSETS> 112,922
<TOTAL-DEFERRED-CHARGES> 9,351
<OTHER-ASSETS> 2,820
<TOTAL-ASSETS> 470,022
<COMMON> 110
<CAPITAL-SURPLUS-PAID-IN> 85,388
<RETAINED-EARNINGS> 89,121
<TOTAL-COMMON-STOCKHOLDERS-EQ> 174,619
0
0
<LONG-TERM-DEBT-NET> 131,494
<SHORT-TERM-NOTES> 28,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 1,775
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 134,134
<TOT-CAPITALIZATION-AND-LIAB> 470,022
<GROSS-OPERATING-REVENUE> 78,823
<INCOME-TAX-EXPENSE> 657
<OTHER-OPERATING-EXPENSES> 74,050
<TOTAL-OPERATING-EXPENSES> 74,707
<OPERATING-INCOME-LOSS> 4,116
<OTHER-INCOME-NET> 1,543
<INCOME-BEFORE-INTEREST-EXPEN> 5,659
<TOTAL-INTEREST-EXPENSE> 3,381
<NET-INCOME> 2,278
0
<EARNINGS-AVAILABLE-FOR-COMM> 2,278
<COMMON-STOCK-DIVIDENDS> 3,178
<TOTAL-INTEREST-ON-BONDS> 2,747
<CASH-FLOW-OPERATIONS> (1,608)
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<CIK> 0000003146
<NAME> ALABAMA GAS CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 258,745
<OTHER-PROPERTY-AND-INVEST> 246
<TOTAL-CURRENT-ASSETS> 94,174
<TOTAL-DEFERRED-CHARGES> 7,409
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 360,574
<COMMON> 20
<CAPITAL-SURPLUS-PAID-IN> 34,484
<RETAINED-EARNINGS> 86,454
<TOTAL-COMMON-STOCKHOLDERS-EQ> 120,958
0
0
<LONG-TERM-DEBT-NET> 100,000
<SHORT-TERM-NOTES> 10,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 129,616
<TOT-CAPITALIZATION-AND-LIAB> 360,574
<GROSS-OPERATING-REVENUE> 73,185
<INCOME-TAX-EXPENSE> 933
<OTHER-OPERATING-EXPENSES> 68,128
<TOTAL-OPERATING-EXPENSES> 69,061
<OPERATING-INCOME-LOSS> 4,124
<OTHER-INCOME-NET> 477
<INCOME-BEFORE-INTEREST-EXPEN> 4,601
<TOTAL-INTEREST-EXPENSE> 2,615
<NET-INCOME> 1,986
0
<EARNINGS-AVAILABLE-FOR-COMM> 1,986
<COMMON-STOCK-DIVIDENDS> 3,170
<TOTAL-INTEREST-ON-BONDS> 2,138
<CASH-FLOW-OPERATIONS> (6,296)
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>Earnings per share is calculated for Energen Corporation (parent company of
Alagasco) and is not calculated for Alagasco separately as amount would not be
meaningful.
</FN>
</TABLE>
