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 JUNE 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___ TO ___
Commission 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 August 8, 1996:
Energen Corporation, $0.01 par value 11,113,090 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 JUNE 30, 1996
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.19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings .20
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . .21
SIGNATURES 21
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
Energen Corporation and Subsidiaries
(Unaudited)
Three months ended Nine months ended
June 30, June 30,
(in thousands,
except share data) 1996 1995 1996 1995
Operating Revenues
Natural gas distribution $ 77,225 $ 55,865 $ 312,553 $ 257,232
Oil and gas production
activities 9,903 5,317 24,678 17,559
Other 579 580 1,677 1,757
Intercompany eliminations (577) (808) (1,968) (2,621)
Total operating revenues 87,130 60,954 336,940 273,927
Operating Expenses
Cost of gas 37,577 19,653 161,645 118,669
Operations 25,329 23,633 72,760 68,132
Maintenance 2,657 2,462 8,451 7,368
Depreciation, depletion,
and amortization 10,588 7,017 27,567 21,167
Taxes, other than income taxes 6,968 4,951 24,090 19,835
Total operating expenses 83,119 57,716 294,513 235,171
Operating Income 4,011 3,238 42,427 38,756
Other Income (Expense)
Interest expense, net of
amounts capitalized (3,240) (2,703) (9,926) (8,091)
Other, net 260 966 1,966 2,389
Total other income (expense) (2,980) (1,737) (7,960) (5,702)
Income Before Income Taxes 1,031 1,501 34,467 33,054
Income taxes (40) 372 7,688 7,475
Net Income $ 1,071 $ 1,129 $ 26,779 $ 25,579
Earnings Per Average
Common Share $ 0.10 $ 0.10 $ 2.44 $ 2.34
Dividends Per Common Share $ 0.29 $ 0.28 $ 0.87 $ 0.84
Average Common Shares
Outstanding 11,020 10,897 10,991 10,908
The accompanying Notes are an integral part of these statements.
CONSOLIDATED BALANCE SHEETS
Energen Corporation and Subsidiaries
(Unaudited)
June 30, September 30,
(in thousands) 1996 1995
ASSETS
Property, Plant and Equipment
Utility plant $ 531,419 $ 504,371
Less accumulated depreciation 261,232 247,926
Utility plant, net 270,187 256,445
Oil and gas properties, successful
efforts method 154,406 117,339
Less accumulated depreciation,
depletion and amortization 60,795 51,170
Oil and gas properties, net 93,611 66,169
Other property, net 4,060 4,650
Total property, plant and
equipment, net 367,858 327,264
Current Assets
Cash and cash equivalents 12,051 36,695
Accounts receivable, net of
allowance for doubtful
accounts of $2,312 at June 30, 1996
and $2,533 at September 30, 1995 44,865 30,813
Inventories, at average cost
Storage gas 17,754 20,276
Materials and supplies 7,941 7,711
Liquefied natural gas in storage 1,741 3,539
Deferred gas costs 2,182 1,426
Regulatory asset 2,856 6,321
Deferred income taxes 6,843 9,667
Prepayments and other 9,542 2,583
Total current assets 105,775 119,031
Other Assets
Deferred income taxes 240 0
Deferred charges and other 13,716 12,789
Total other assets 13,956 12,789
TOTAL ASSETS $ 487,589 $ 459,084
The accompanying Notes are an integral part of these statements.
CONSOLIDATED BALANCE SHEETS
Energen Corporation and Subsidiaries
(Unaudited)
June 30, September 30,
(in thousands, except share data) 1996 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, 11,059,576 shares outstanding
at June 30, 1996 and 10,921,733 shares
outstanding at September 30, 1995 111 109
Premium on capital stock 84,512 81,243
Capital surplus 2,802 2,802
Retained earnings 107,232 90,020
Treasury stock at cost, 11,627 shares at
September 30, 1995 0 (250)
Total common shareholders' equity 194,657 173,924
Long-term debt 130,652 131,600
Total capitalization 325,309 305,524
Current Liabilities
Long-term debt due within one year 1,825 1,775
Notes payable to banks 19,000 32,300
Accounts payable 42,548 32,242
Accrued taxes 21,808 11,339
Customers' deposits 17,929 18,218
Amounts due customers (209) 13,231
Supplier refunds 16,860 3,315
Accrued wages and benefits 12,850 10,955
Other 16,679 14,923
Total current liabilities 149,290 138,298
Deferred Credits and Other Liabilities
Deferred income taxes 0 2,540
Accumulated deferred investment tax credits 3,738 4,103
Other 9,252 8,619
Total deferred credits and other liabilities 12,990 15,262
Commitments and Contingencies 0 0
TOTAL CAPITAL AND LIABILITIES $487,589 $459,084
The accompanying Notes are an integral part of these statements.
CONSOLIDATED STATEMENTS OF CASH FLOW
Energen Corporation and Subsidiaries
(Unaudited)
Nine months ended June 30, (in thousands) 1996 1995
Operating Activities
Net Income $ 26,779 $ 25,579
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation, depletion and
amortization 27,567 21,182
Deferred income taxes, net (572) (4,593)
Deferred investment tax credits, net (365) (365)
Gain on sale of assets (670) 0
Net change in:
Accounts receivable (14,052) 1,777
Inventories 4,090 7,754
Deferred gas cost (756) (101)
Accounts payable gas purchases 6,696 7,391
Accounts payable other trade 3,610 (3,845)
Other current assets and liabilities 10,373 11,494
Other, net 1,240 (201)
Net cash provided by operating activities 63,940 66,072
Investing Activities
Additions to property, plant and equipment (68,941) (40,465)
Proceeds from sale of assets 2,478 0
Payments on notes receivable 1,179 632
Other, net (84) 101
Net cash used in investing activities (65,368) (39,732)
Financing Activities
Payment of dividends on common stock (9,567) (9,170)
Issuance of common stock 2,527 116
Purchase of treasury stock (1,978) (740)
Reduction of long-term debt and
preferred stock of subsidiary (898) (9,422)
Proceeds from issuance of medium-term notes 0 33,768
Net change in short-term debt (13,300) (6,000)
Net cash provided by (used in)
financing activities (23,216) 8,552
Net change in cash and cash equivalents (24,644) 34,892
Cash and cash equivalents at beginning of period 36,695 27,526
Cash and Cash Equivalents at End of Period $ 12,051 $ 62,418
The accompanying Notes are an integral part of these statements.
STATEMENTS OF INCOME
Alabama Gas Corporation
(Unaudited)
Three months ended Nine months ended
June 30, June 30,
(in thousands) 1996 1995 1996 1995
Operating Revenues $ 77,225 $ 55,865 $ 312,553 $ 257,232
Operating Expenses
Cost of gas 38,154 20,461 163,613 121,290
Operations 20,333 19,380 60,923 57,589
Maintenance 2,624 2,442 8,332 7,277
Depreciation 5,410 4,870 15,661 14,391
Income taxes
Current 1,760 (291) 11,722 15,339
Deferred, net (938) 1,033 820 (3,742)
Deferred investment tax
credits, net (122) (122) (365) (365)
Taxes, other than income taxes 6,366 4,709 22,814 19,098
Total operating
expenses 73,587 52,482 283,520 230,877
Operating Income 3,638 3,383 29,033 26,355
Other Income
Allowance for funds used
during construction 131 282 818 691
Other, net (88) 166 (528) 409
Total other income 43 448 290 1,100
Interest Charges
Interest on long-term debt 1,733 1,713 5,605 5,150
Other interest expense 568 346 1,706 1,515
Total interest charges 2,301 2,059 7,311 6,665
Net Income Available for Common $ 1,380 $ 1,772 $ 22,012 $ 20,790
The accompanying Notes are an integral part of these statements.
BALANCE SHEETS
Alabama Gas Corporation
(Unaudited)
June 30, September 30,
(in thousands) 1996 1995
ASSETS
Property, Plant and Equipment
Utility plant $ 531,419 $ 504,371
Less accumulated depreciation 261,232 247,926
Utility plant, net 270,187 256,445
Other property, net 398 193
Current Assets
Cash and cash equivalents 3,114 727
Accounts receivable
Gas 33,843 22,215
Merchandise 2,494 1,546
Other 1,047 1,399
Associated Companies 8,066 199
Allowance for doubtful accounts (2,298) (2,000)
Inventories, at average cost
Storage gas 17,754 20,276
Materials and supplies 6,089 5,860
Liquefied natural gas in storage 1,741 3,539
Deferred gas costs 2,182 1,426
Regulatory asset 2,856 6,321
Deferred income taxes 4,742 7,416
Prepayments and other 1,583 2,302
Total current assets 83,213 71,226
Deferred Charges and Other Assets 7,652 7,403
TOTAL ASSETS $ 361,450 $ 335,267
The accompanying Notes are an integral part of these statements.
BALANCE SHEETS
Alabama Gas Corporation
(Unaudited)
June 30, September 30,
(in thousands, except share data) 1996 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 June 30, 1996 and
September 30, 1995 $ 20 $ 20
Premium on capital stock 31,682 31,682
Capital surplus 2,802 2,802
Retained earnings 100,095 87,638
Total common shareholder's equity 134,599 122,142
Cumulative preferred stock,
$0.01 par value, 120,000 shares authorized,
issuable in series $4.70 Series 0 0
Long-term debt 100,000 100,000
Total capitalization 234,599 222,142
Current Liabilities
Long-term debt due within one year 0 0
Notes payable to banks 0 0
Accounts payable 28,919 26,160
Accrued taxes 21,844 10,236
Customers' deposits 17,929 18,218
Supplier refunds due customers 16,860 3,315
Other amounts due customers (209) 13,231
Accrued wages and benefits 6,976 5,228
Other 9,653 9,444
Total current liabilities 101,972 85,832
Deferred Credits and Other Liabilities
Deferred income taxes 15,105 16,343
Accumulated deferred investment
tax credits 3,738 4,103
Regulatory liability 5,244 6,001
Customer advances for construction and other 792 846
Total deferred credits and other
liabilities 24,879 27,293
Commitments and Contingencies 0 0
TOTAL CAPITAL AND LIABILITIES $ 361,450 $ 335,267
The accompanying Notes are an integral part of these statements.
STATEMENTS OF CASH FLOW
Alabama Gas Corporation
(Unaudited)
Nine months ended June 30, (in thousands) 1996 1995
Operating Activities
Net Income $ 22,012 $20,790
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 15,661 14,391
Deferred income taxes, net 820 (3,742)
Deferred investment tax credits (365) (365)
Net change in:
Accounts receivable (11,826) (14)
Inventories 4,091 8,024
Deferred gas costs (756) (101)
Accounts payable gas purchases 6,696 7,391
Accounts payable other trade (3,937) (2,705)
Other current assets and liabilities 19,603 8,838
Other, net (3,245) (519)
Net cash provided by operating
activities 48,754 51,988
Investing Activities
Additions to property, plant and equipment (28,580) (27,992)
Net advances to affiliates (7,967) 0
Other, net (265) (275)
Net cash used in investing activities (36,812) (28,267)
Financing Activities
Payment of dividends on common stock (9,555) (9,170)
Reduction of long-term debt 0 (1,636)
Proceeds from issuance of medium-term notes 0 33,768
Net advances from affiliates 0 544
Net change in short-term debt 0 (4,000)
Net cash provided by (used in)
financing activities (9,555) 19,506
Net change in cash and cash equivalents 2,387 43,227
Cash and cash equivalents at beginning of period 727 156
Cash and Cash Equivalents at End of Period $ 3,114 $ 43,383
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 or early 1997 at which
time it is expected that the Commission will begin reviewing Alagasco's RSE.
While no time table for review has yet been established, on August 8, 1996,
Alagasco filed with the APSC an application to, among other things, extend RSE
and conclude the Energy Act review.
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 the change in 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, the change in O&M expense
per customer exceeds the index range, three-quarters of the difference will be
returned to the customers. To the extent the change in 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 $.2 million remaining at June 30, 1996.
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.
On April 11, 1996, the FERC issued its Order on Rehearing approving the
Settlement with minor modifications. 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 refunded over-collected GSR costs, Alagasco's share of which has been
determined to be $16.9 million. This amount is recorded in the accompanying
financial statements as supplier refunds due customers. 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 from
customers by the end of calendar 1996. Alagasco estimates that it has a
remaining
GSR liability of approximately $1.0 million to be paid through March 1997 and
approximately $1.7 million in other transition costs to be paid through June
1998. Such amounts have been recorded as a liability 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
Nine months ended June 30, (in thousands) 1996 1995
Interest paid, net of amounts capitalized $ 10,846 $ 10,101
Income taxes paid $ 1,745 $ 3,642
Noncash investing activities
(capitalized depreciation and
allowance for funds used during
construction) $ 944 $ 815
Alabama Gas Corporation
Nine months ended June 30, (in thousands) 1996 1995
Interest paid $ 8,866 $ 8,816
Income taxes paid $ 3,535 $ 8,154
Noncash investing activities
(capitalized depreciation
and allowance for funds used
during construction) $ 944 $ 815
4. CONTINGENCIES
Energen, Alagasco, and their affiliates are, from time to time, parties to
various pending or threatened legal proceedings. Certain of these lawsuits
include claims for punitive damages in addition to other specified relief.
Based
upon information presently available, and in light of available legal and other
defenses, contingent liabilities arising from threatened and pending litigation
are not considered material in relation to the respective financial positions of
Energen and Alagasco. It should be noted, however, that Energen, Alagasco and
their affiliates do business in Alabama and other jurisdictions in which the
magnitude and frequency of punitive damage awards bearing little or no relation
to culpability or actual damages continue to rise making it increasingly
difficult to predict litigation results.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results
of Operations
For the third quarter of fiscal 1996, Energen's net income totaled $1,071,000
(10 cents per share) which approximates the level earned in the prior
year's third
quarter of $1,129,000 (10 cents per share). Taurus Exploration, Energen's oil
and gas exploration and production subsidiary, reported modest gains in the
third
quarter largely due to increased production-related income and decreased
administrative expense. Partially offsetting these gains were increased
depreciation, depletion and amortization (DD&A) rates and higher exploration and
interest expenses. Energen's natural gas distribution company, Alabama Gas
Corporation (Alagasco), continued to earn its allowed return on a higher level
of utility investment but contributed slightly less to consolidated earnings for
the three months ended June 30 due to the timing of operation and maintenance
expenses.
For the 1996 fiscal year-to-date, Energen's net income totaled $26,779,000
($2.44 per share). This compares with income of $25,579,000 ($2.34 per share),
for the
first nine months of the prior fiscal year. Alagasco's increased contribution
to consolidated earnings primarily was due to the gas distribution company
earning its allowed return on a higher level of utility investment. Excluding
a $0.5 million gain from a contract buy out in the prior period, Taurus's
year-to-date earnings rose
modestly. Increases in production-related income and gas
prices and decreased administrative expenses were partially offset by increased
DD&A rates and higher exploration and interest expenses.
Natural gas revenues increased significantly in the current quarter and
year-to-date primarily
because of colder weather which resulted in residential sales
volumes rising 41 percent and 22 percent, respectively, and in higher natural
gas
prices. Neither temperature variances nor gas price fluctuations affect
Alagasco's residential operating margins; the APSC-approved temperature
adjustment provision allows customer bills to be adjusted on a real-time basis
to reflect usage under normal temperature conditions, and gas costs are passed
through to the customer through the company's gas supply adjustment rider.
In the third quarter, revenues from oil and gas production activities rose
significantly. Oil volumes more than tripled and natural gas volumes increased
more than 70 percent, the result of current-year acquisitions and prior-year
discoveries coming on line. The impact of higher production was magnified by
increased average sales prices for both gas and oil. In the third quarter,
after
giving effect to hedged volumes, the average sales price per Mcf of natural gas
was $1.81 compared to $1.79 in the prior year, and the average sales price per
barrel of oil was $16.92 compared to $14.37 in the prior year. Increased
production volumes and prices similarly influenced nine month results. Natural
gas and oil production increased 1.6 Bcf equivalent each and, after giving
effect
to hedged volumes, the average sales price per Mcf of natural gas was $1.90
compared to $1.79 in the prior year, and the average sales price per barrel of
oil was $16.09 compared to $15.13 in the prior year. Slightly offsetting the
impact of current year production and pricing increases was the inclusion in the
prior year of revenues associated with the buyout of a long-term sales contract
($0.8 million). Operating and consulting fees did not vary significantly for
the quarter or year-to-date.
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 3.1 Bcf of its gas production at an average contract price of $2.19 per Mcf
and for the sale of 139 MBbl of its oil production at an average contract price
of $18.15 per Bbl. At June 30, 1996, the Company's deferred losses related to
its futures contracts totaled $1.6 million. The program has been extended into
fiscal 1997. Hedges and contracts are in place for the sale of 15.3 Bcf of gas
production with an average contract price of $2.15 per Mcf and for the sale of
88 MBbl of oil at an average contract price of $18.76 per Bbl.
Increased utility volumes, primarily associated with colder weather, and
increased commodity cost of natural gas resulted in an increase in cost of gas
for both periods.
For the quarter, consolidated operations and maintenance expense (O&M)
increased
7.2 percent due primarily to increased marketing expenses at Alagasco and higher
lease operating and exploration expenses at Taurus. For the year-to-date,
increased distribution activities associated with colder weather at Alagasco
combined with the above to create a 7.6 percent increase in O&M.
The significant increase in depreciation expense for the quarter and nine months
is related primarily to increased production volumes, an increased DD&A rate
associated with prior year reserve revisions and the addition of production from
new wells with a higher average DD&A rate at Taurus, plus the effects of normal
plant growth at Alagasco.
The Company's expense for taxes other than income primarily reflects the various
state and local income and 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.
Higher average short-term debt outstanding related to the initial financing of
Taurus's multi-year acquisition and development strategy was primarily
responsible for the increase in interest expense for the quarter and
year-to-date.
The reduction in other income for the quarter was primarily due to the
amortization of the call premium associated with Alagasco's early redemption of
long-term debt during the fourth quarter of fiscal 1995. For the year-to-date,
the impact of this amortization was offset by income from the sale of Taurus
properties during the first quarter.
The variance in income tax expense for the quarter was due largely to the effect
of lower consolidated pretax income coupled with increased recognition of
nonconventional fuel tax credits on an interim basis. For the year-to-date,
higher consolidated pretax income was largely offset by increased recognition of
nonconventional fuel tax credits on an interim basis resulting in relatively
stable tax expense between years. 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.
As previously discussed, the Company's business is seasonal in character and
influenced by weather conditions. Results of operations for the interim periods
are not necessarily indicative of the results that may be expected for the
year.
As more fully discussed in Note 2, Alagasco is subject to regulation by the
APSC,
which is expected to consider renewal of the utility's rate-setting mechanism
following the completion of its review of certain mandates under the Energy
Policy Act of 1992. Changes, if any, to the utility's present rate-setting
assumptions or provisions could have an impact on its net income.
Liquidity and Capital Resources
Weather colder than that of the prior year has continued to impact cash provided
by operations due to its effect on the timing of payment and collection of
certain gas supply costs and its effect on Alagasco's need to utilize and
replenish its storage gas inventory. The impact of these items largely offset
each other for the nine months. 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 $25.6 million increase in cash used in investing activities is largely the
result of Taurus's initial acquisition investment of $26.4 million for producing
oil and gas properties adding approximately 18.6 Bcf of gas and 3.8 Mmbl of oil,
and an additional $13.2 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 nine months was $3.1 million for the acquisition of
two municipal gas systems adding 1,600 additional customers.
The $31.8 million increase in cash used in financing activities is largely the
result of activities in the prior year. During the nine months ended June 30,
1995, Alagasco issued $33.8 million in medium-term notes the proceeds of which
were used to redeem its 9 percent debentures and its 11 percent first mortgage
bonds.
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. In the
five year period beginning with the current fiscal year, Taurus plans to invest
in excess of $400 million for property acquisitions and related development and
an additional $100 million for offshore exploration and development. To this
end, in mid-1995, Taurus entered into a three-and-one-half year agreement with
Sonat Exploration Company committing to invest annually up to between
$25 million
and $50 million as its proportionate share of acquisitions in fiscal years
through 1998. Thus far this year, Taurus has invested $26 million for
conventional oil and gas reserves, including $21 million under terms of the
Sonat
agreement.
On July 31, with an effective date of July 1, Taurus acquired 100 percent
working
interest in the Black Warrior Basin coalbed methane properties of Houston-based
Burlington Resources Inc. for $61 million. The properties are part of
Burlington
Resources' recently announced accelerated divestiture program. In addition to
ownership, Taurus will operate the properties. Current production is located on
more than 19,000 gross acres adjacent to existing Taurus coalbed methane
interests in west central Alabama. The properties include more than 100 economic
wells and estimated net proved reserves of 100 billion cubic feet (Bcf).
Substantially all of the reserves are classified as proved producing, with net
annual production currently exceeding 4.5 Bcf. Through the year 2002,
production
from 43 of the wells qualifies for the Nonconventional Fuels Tax Credit, which
presently is valued at approximately $1 per thousand cubic feet of production
and
increases annually with inflation. Under its existing area of mutual interest
agreements (AMI), Taurus has offered proportionate participation in certain
portions of the acquired properties to two of its coalbed methane partners.
Participation was not exercised in the primary AMI; partners in the second AMI
have until August 20 to exercise their participation rights. If participation
were exercised, the partners' interest would represent less than 20 percent of
the total. Any exercising partner would incur significant operating and
administrative fees payable to Taurus.
The Company has short-term credit facilities of $116 million that it has used
and
will use to initially acquire properties, but long-term debt and equity will be
issued for permanent financing of these investments. The Company expects to
refinance a portion of its current year acquisitions through the issuance of
long-term debt during the fourth quarter of this fiscal year. The exact timing
of the permanent financing for future acquisitions is undeterminable at this
time
as the Company does not know the exact pace of acquisitions.
Consolidated capital and exploration expenditures could approximate $150 million
in fiscal 1996, excluding additional municipal gas system acquisitions. Of
that,
Taurus may invest in excess of $100 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 $48 million in fiscal 1996, excluding
additional municipal gas system acquisition, and primarily represents additions
for normal distribution system expansion.
<PAGE>
Recent Pronouncements of the FASB
In June 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, based on known
facts and circumstances, 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
Company's financial statements.
In June 1996, SFAS No. 125, Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities, was issued and requires adoption by
the Company in its fiscal year 1998. The implementation of SFAS No. 125 is not
expected to have a material impact on the Company's financial statements.
SELECTED BUSINESS SEGMENT DATA
Energen Corporation
Three months ended Nine months ended
June 30, June 30,
(in thousands, except share data) 1996 1995 1996 1995
Natural Gas Distribution
Operating revenues
Residential $ 51,250 $ 36,311 $ 211,315 $ 172,763
Commercial and industrial - small 19,091 12,790 76,520 60,222
Commercial and industrial - large 27 23 758 271
Transportation 6,706 6,981 23,652 23,814
Other 151 (240) 308 162
Total $ 77,225 $ 55,865 $ 312,553 $ 257,232
Volumes sold and transported (Mcf)
Residential 6,695 4,626 32,672 25,132
Commercial and industrial - small 3,028 2,341 13,410 10,679
Commercial and industrial - large 5 7 24 23
Transportation 14,758 14,930 45,932 45,016
Total 24,486 21,904 92,038 80,850
Other data
Depreciation and amortization $ 5,410 $ 4,870 $ 15,661 $ 14,391
Capital expenditures $ 10,977 $ 11,591 $ 29,524 $ 28,807
Operating income $ 4,338 $ 4,003 $ 41,210 $ 37,587
Oil and Gas Exploration and Production
Operating revenues
Natural gas $ 5,774 $ 3,347 $ 14,620 $ 10,859
Oil 3,266 862 6,973 2,557
Other 863 1,108 3,085 4,143
Total $ 9,903 $ 5,317 $ 24,678 $ 17,559
Sales volume - natural gas (Mcf) 3,192 1,866 7,676 6,075
Sales (barrels) 193 60 433 169
Average sales price
- natural gas (per Mcf) $ 1.81 $ 1.79 $ 1.90 $ 1.79
Average sales price
- oil (per barrel) $ 16.92 $ 14.37 $ 16.09 $ 15.13
Other data
Depreciation, depletion
and amortization $ 5,050 $ 2,048 $ 11,516 $ 6,470
Capital expenditures $ 6,016 $ 2,713 $ 40,316 $ 12,450
Exploration expenditures $ 1,771 $ 1,251 $ 2,999 $ 1,867
Operating income $ (197) $ (637) $ 1,920 $ 1,982
Other Businesses
Operating revenues $ 579 $ 580 $ 1,677 $ 1,757
Depreciation and amortization $ 128 $ 99 $ 390 $ 306
Capital expenditures $ 27 $ 5 $ 45 $ 23
Operating income $ 99 $ 108 $ 245 $ 135
Eliminations and Corporate Expenses
Operating loss $ (229) $ (236) $ (948) $ (948)
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Energen, Alagasco, and their affiliates are, from time to time, parties to
various pending or threatened legal proceedings. Certain of these lawsuits
include claims for punitive damages in addition to other specified relief.
Based
upon information presently available, and in light of available legal and other
defenses, contingent liabilities arising from threatened and pending litigation
are not considered material in relation to the respective financial positions of
Energen and Alagasco. It should be noted, however, that Energen, Alagasco and
their affiliates do business in Alabama and other jurisdictions in which the
magnitude and frequency of punitive damage awards bearing little or no relation
to culpability or actual damages continue to rise making it increasingly
difficult to predict litigation results.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
10 (a) Form of Restated Executive Retirement
Supplement Agreement between Energen
Corporation and Certain Executive Officers
10 (b) Form of Severance Compensation Agreement
between Energen Corporation and Certain
Executive Officers
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 June 30,
1996.
<PAGE>
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
August 14, 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
August 14, 1996 By/s/ G. C. Ketcham
G. C. Ketcham
Executive Vice President, Chief
Financial Officer and
Treasurer
August 14, 1996 By/s/ Paula H. Rushing
Paula H. Rushing
Controller of Alagasco
Form Rev. 4/17/96
Exhibit 10(a)
RESTATED EXECUTIVE RETIREMENT SUPPLEMENT AGREEMENT
THIS RESTATED EXECUTIVE RETIREMENT SUPPLEMENT AGREEMENT made
effective as of between Energen Corporation, a
corporation (the "Company"), and
(the "Executive").
R E C I T A L S
The Executive has been employed by the Company and/or one or more
of its subsidiaries for a number of years, and as an employee has
provided capable executive leadership and management so as to enable the
Company to operate efficiently and effectively.
The Company and the Executive heretofore entered into that
certain agreement captioned Executive Retirement Supplement Agreement
and dated _____________, 19___ as heretofore amended (the "Original
Agreement") to provide for payment to the Executive and his eligible
spouse certain deferred compensation in the form of a retirement
supplement under certain circumstances.
The Company and the Executive now desire to amend and restate the
Original Agreement.
NOW, THEREFORE, in consideration of the mutual promises of the
parties and in accordance with the provisions of Section 3.1 of the
Original Agreement, the Original Agreement is hereby amended to read as
follows:
ARTICLE 1--DEFINITIONS
1.1 Agreement: This document, including any attached schedules, and
any amendments to the same.
1.2 Birthday: An anniversary of the Executive's birth regardless of
whether he survives to such anniversary.
1.3 Cause: Termination of employment by the Employer for "Cause"
shall mean termination based on any of the following:
(a) The willful and continued failure by the Executive to
substantially perform such Executive's duties with the Employer (other
than any such failure resulting from such Executive's incapacity due to
physical or mental illness) after a written demand for substantial
performance is delivered to the Executive specifically identifying the
manner in which such Executive has not substantially performed such
Executive's duties;
(b) The engaging by the Executive in willful misconduct which is
demonstrably injurious to the Employer monetarily or otherwise; or
(c) The conviction of the Executive of a felony.
1.4 Code: The Internal Revenue Code of 1986, as the same may from
time to time be amended.
1.5 Committee: The Officers Review Committee of the Board of
Directors of the Company or any person or persons appointed by the Board
of Directors to administer the Agreement.
1.6 Compensation: The sum of A plus B. For purposes of this
definition, A shall equal the average aggregate monthly basic pay from
all Employers for the 36 consecutive calendar months during which the
Executive had the highest average monthly basic pay out of the 60
calendar months immediately preceding the Severance Date. For purposes
of this definition, B shall equal C divided by 12, where C equals the
average of the Executive's three highest annual cash incentive awards
under the Energen Annual Incentive Compensation Plan (or successor
annual cash incentive plan) for the five Company fiscal years
immediately preceding the earlier of (i) the fiscal year during which
the Severance Date occurs or (ii) the fiscal year during which the
Executive's 61st birthday occurs.
1.7 Disability: Total and permanent disability which entitles the
Executive to a disability benefit under the disability program sponsored
and/or maintained by the Company or his Employer.
1.8 Eligibility Date: The earliest date on which the Executive could
be entitled to receive his "primary insurance amount" or any portion
thereof under the federal Social Security Act as amended and in effect
on the Severance Date assuming that the Executive survives to such date.
1.9 Employer: The Company and any and all subsidiaries of the
Company and their respective successors and assigns.
1.10 Lump Sum Election: An election made by the Executive pursuant to
Section 2.5 to receive a lump sum payment in lieu of the Supplemental
Retirement Benefit.
1.11 Normal Retirement Date: The first day of the month on or next
following the Executive's 60th Birthday; provided, however, if the
Executive's employment with an Employer continues beyond such date, the
first day of the month on or next following the date on which the
Executive actually Retires shall be his Normal Retirement Date.
<PAGE>
1.12 Present Value: The present value of a benefit or benefits
determined using the discount rate used to determine the present value
of payments under Section 280G of the Code that is in effect at the date
payment is to be made and the mortality assumptions utilized to
determine actuarial equivalent benefits under the Retirement Plan at
that date.
1.13 Retire or Retirement: Termination of employment (for whatever
reason including death) from all Employers after attaining age 60.
1.14 Retirement Plan: The "Energen Corporation Retirement Income
Plan," as the same may be amended and in effect from time to time
hereafter.
1.15 Retirement Plan Benefit: The monthly amount of retirement
benefit payable to the Executive from the Retirement Plan in the normal
form, with no election of an optional form of payment, calculated under
the terms of the Retirement Plan as in effect on the Severance Date and
with the following assumptions: (i) the Executive will accrue no Years
of Service or partial Years of Service under the Retirement Plan after
the Severance Date; (ii) the first payment to the Executive under the
Retirement Plan will be made on the first day of the month on or next
following the later of the Executive's 60th Birthday or the Severance
Date; and (iii) the Executive will live to the payment date described in
the preceding clause (ii).
1.16 Service: The number of the Executive's completed months of
continuous employment with the Employer ending on the Executive's
Severance Date.
1.17 Service Factor: If the Executive has 240 or more months of
Service then the Service Factor shall equal one (l). At any time prior
to the time when the Executive has both earned a vested benefit under
the Retirement Plan and been continuously employed by an Employer for
five years, the Service Factor shall be 0. Except as otherwise provided
in the foregoing sentences, the Service Factor shall be a fraction, the
numerator of which shall be the number of the Executive's months of
Service and the denominator of which shall be 240.
1.18 Severance Date: The earlier of (i) the first date on which (for
whatever reason) the Executive is no longer employed by an Employer, or
(ii) the date of termination of this Agreement pursuant to Article 3.
1.19 Social Security Benefit: The amount of the monthly benefit, as
estimated by the Committee in a consistent and uniform manner, which,
under the provisions of the federal Social Security Act as amended and
in effect on the Severance Date, such Executive is, or will be, entitled
to receive as his "primary insurance amount" or any portion thereof at
the later of the Eligibility Date or the Normal Retirement Date assuming
(i) that he has or will make appropriate and timely application for such
benefit, (ii) that no event has occurred or will occur by reason of
which the amount of such benefit has been or will be delayed, suspended
or forfeited in whole or in part, (iii) that if the Severance Date
occurs prior to the Executive's 60th Birthday, the Executive will
continue to receive, until his 60th Birthday, earnings at the
Compensation rate taxable as wages by the Social Security Act, and (iv)
that, after the later to occur of the Executive's 60th birthday or
Normal Retirement Date, the Executive will have no further earnings
taxable as wages by the Social Security Act.
1.20 Spouse: The spouse to whom the Executive was married at the date
of his death and throughout the twelve-month period preceding his
Severance Date.
1.21 Supplemental Retirement Benefit: The benefit described in
Section 2.2.
1.22 Supplemental Spouse's Retirement Benefit: The benefit described
in Section 2.3.
1.23 The masculine gender shall be deemed to include the feminine; the
feminine to include the masculine; the singular to include the plural;
and the plural to include the singular in each case where appropriate.
ARTICLE 2 - - BENEFITS
2.1 Eligibility. The Executive and Spouse, as applicable, shall be
entitled to the benefits described in Sections 2.2 and 2.3; provided,
that no benefits shall be paid under this Agreement if (i) the
Executive's employment by an Employer is terminated for Cause, or (ii)
the Severance Date occurs for any reason before the Executive has both
earned a vested benefit under the Retirement Plan and been continuously
employed by an Employer for five years.
2.2 Supplemental Retirement Benefit. Subject to the other provisions
of this Agreement, commencing on the Executive's Normal Retirement Date
the Executive shall be entitled to receive a Supplemental Retirement
Benefit, which shall be payable monthly during the Executive's life with
the last payment being the payment made or due for the month in which
the Executive dies. No benefit shall be payable under this Section 2.2
if the Executive dies on or before the Normal Retirement Date.
The Supplemental Retirement Benefit shall be an amount equal to
the product of "A" multiplied by the Service Factor. With respect to
Supplemental Retirement Benefit payments made for periods commencing
prior to the Eligibility Date, "A" shall equal the amount by which 60%
of Compensation exceeds the Retirement Plan Benefit. With respect to
Supplemental Retirement Benefit payments made for periods commencing on
or after the Eligibility Date, "A" shall equal the amount by which 60%
of Compensation exceeds the sum of the Retirement Plan Benefit plus the
Social Security Benefit.
If the Executive terminates employment due to Disability, (i) the
period that the Executive receives disability benefits from a disability
program sponsored or maintained by an Employer shall be treated as
Service, and (ii) the Supplemental Retirement Benefit shall not
commence, and the Executive shall not be deemed to have had a Severance
Date, while the Executive is receiving disability benefits payable from
a disability program sponsored or maintained by an Employer. For
purposes of this Section 2.2, reclassification under the Retirement Plan
from Disability Retirement to Retirement shall constitute cessation of
disability benefits.
2.3 Supplemental Spouse's Retirement Benefit.
(a) Subject to the other provisions of this Agreement, following
the Executive's death the surviving Spouse shall be entitled to a
Supplemental Spouse's Retirement Benefit, which shall be payable monthly
commencing on the later of (i) the first day of the month following the
month of the Executive's death or (ii) the first day of the month of the
Executive's 55th Birthday, and continuing until the Spouse's death. The
Supplemental Spouse's Retirement Benefit shall be an amount equal to 50%
of the monthly Supplemental Retirement Benefit which the Executive would
have been entitled to receive had death not occurred (based on Service
through the Severance Date and adjusting on the Eligibility Date);
provided that if the Executive's death occurs after the Severance Date,
for each of the first three months following the Executive's death the
Supplemental Spouse's Retirement Benefit shall be 100% of such amount.
(b) If the Executive shall die while a Lump Sum Election is in
effect and while the Executive is still employed by the Employer, the
surviving Spouse shall receive in lieu of the benefit described in
Section 2.3(a) above, a lump sum payment equal to one-half of the
Present Value of the Supplemental Retirement Benefit which the Executive
would have been entitled to receive based on Service through the
Severance Date if the Executive had survived to the Normal Retirement
Date. Such benefit shall be paid as promptly as practicable after the
Executive's death and, in all events, within forty-five (45) days after
the Executive's death. For purposes of this Section 2.3(b), the
determination of whether a Spouse has survived the Executive shall be
made in accordance with the provisions of Section 43-8-43 of the Code of
Alabama of 1975, as the same may from time to time be amended (as of the
date of this Agreement, Section 43-8-43 generally treats a person as
having predeceased a decedent unless the person survives the decedent by
five days).
(c) If the Executive shall die after the Severance Date, while a
Lump Sum Election is in effect, and prior to receipt of the lump sum
payment, the lump sum benefit shall be payable to the Executive's estate
and no Supplemental Spouse's Retirement Benefit shall be payable to the
surviving Spouse, if any.
(d) If the Executive dies after payment of a lump sum pursuant
to Section 2.5, no Supplemental Spouse's Retirement Benefit shall be
payable to the Executive's surviving Spouse, if any.
(e) No benefit shall be payable following the Executive's death
except as provided in this Section 2.3.
2.4 Spouse's Age. If a Spouse who is entitled to a benefit under
this Article 2 is more than ten (10) years younger than the Executive,
any benefit payable to the Spouse under this Section 2.3(a) (but not
2.3(b)) shall be reduced by 1/20 for each full year of age difference
more than ten (10).
<PAGE>
2.5 Payment Elections.
(a) By checking the appropriate box on the signature page
of this Agreement, the Executive may elect to receive, in lieu of the
Supplemental Retirement Benefit to which he will otherwise become
entitled under Section 2.2 hereof, a lump sum payment that is the
Present Value, as of the date payment is made, of such Supplemental
Retirement Benefit. Such payment shall be made as promptly as
practicable after the Executive's Severance Date and, in all events,
within forty-five (45) days after such Severance Date.
(b) By executing and filing with the Company a form
substantially identical to Exhibit I hereof, or such other form as the
Company may prescribe or approve, the Executive may revoke an election
made pursuant to paragraph (a) above or may make any election which
could be made pursuant to such paragraph, but any such election or
revocation of an election shall not become effective if the Executive's
Severance Date occurs within one year from the date such revocation or
election is made.
2.6 Leave of Absence. In the event the Executive is granted a leave
of absence, his employment shall be deemed to continue and shall be
treated as Service, during the period of such leave of absence unless
specifically determined to the contrary by the Committee.
ARTICLE 3 - - AMENDMENT OR TERMINATION OF AGREEMENT
3.1 Subject to Section 3.2 below, the Company reserves the right to
terminate this Agreement at any time by action of its Board of Directors
or the Committee, and the continuance of this Agreement is not
guaranteed to the Executive.
3.2 No termination of this Agreement shall operate to reduce, cancel
or void the Company's obligation to pay benefits provided for under this
Agreement and accrued prior to the Severance Date.
3.3 This Agreement may be amended by written instrument executed by
the Executive and by an officer of the Company thereunto duly authorized
by the Board of Directors of the Company.
ARTICLE 4 - - MISCELLANEOUS
4.1 This Agreement shall under no circumstances be deemed to have any
effect upon the terms or conditions of employment of the Executive. The
establishment and maintenance of this Agreement shall not be construed
as creating or modifying any contract between an Employer and the
Executive nor is it in lieu of any other benefits. This Agreement shall
under no circumstances be deemed to constitute a contract of insurance.
4.2 This Agreement shall not give the Executive the right to be
retained in the employ of an Employer or any right or interest hereunder
other than as specifically provided herein.
4.3 Benefits under this Agreement shall not be subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge or
encumbrance by the Executive or the Spouse and any attempt to so
transfer or encumber the benefits shall be null and void. Benefits
under this Agreement shall not be subject to or liable for the debts,
contracts, liabilities, engagements or torts of the Executive or of the
Spouse nor may the same be subject to attachment or seizure by any
creditor of the Executive or his spouse under any circumstances.
4.4 In the event of the Executive's Retirement, Disability or death,
he or his Spouse, as the case may be, should notify the Committee
promptly, and the Committee will then provide a Claimant's statement
form for completion which should be returned to the Committee together
with evidence of Disability or with an official death certificate, if
applicable. In the event that any claim hereunder is denied, the
Committee will provide adequate notice in writing to the Executive or
Spouse, setting forth the specific reasons for such denial and, in
addition, the Committee will afford a reasonable opportunity for a full
and fair review of those reasons.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has hereunto
set his hand and seal all as of the day and year first above written.
ENERGEN CORPORATION
By:
Its:
EXECUTIVE
ELECTION
I hereby elect to have my benefit paid as provided in
Section 2.2 of this Agreement.
Pursuant to Section 2.5 of this Agreement, I hereby elect to
have my benefit paid in a lump sum.
<PAGE>
EXHIBIT I
ELECTION
PURSUANT TO
RESTATED EXECUTIVE RETIREMENT SUPPLEMENT AGREEMENT
I hereby revoke any and all elections heretofore made by me
pursuant to the terms of that certain Restated Executive Retirement
Supplement Agreement entered into by and between Energen Corporation and
myself dated as of February 28, 1996, and elect to have my benefit
paid as provided in Section 2.2 of such Agreement.
paid in a lump sum pursuant to Section 2.5 of such
Agreement.
I understand that the foregoing election (and revocation, if
applicable), will not become effective if my Severance Date occurs
within one-year from the date of acceptance indicated below.
EXECUTIVE
Accepted by:
ENERGEN CORPORATION
By:
Its:
Date:
Exhibit 10(b)
SEVERANCE COMPENSATION AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into
as of the day of , 199 , by and
between ENERGEN CORPORATION, an Alabama corporation ("Energen"),
and
, ("Executive").
W I T N E S S E T H:
WHEREAS, Executive is an effective and valuable
employee of Energen and/or one or more of its subsidiaries;
WHEREAS, Executive desires certain assurances with
respect to any change in control of Energen;
WHEREAS, Energen recognizes that the uncertainties
involved in a potential or actual change in control of Energen
could result in the distraction or departure of management
personnel such as Executive to the detriment of Energen and its
shareholders; and
WHEREAS, Energen desires to lessen the personal and
economic pressure which
a potential or actual change in control may impose on Executive
and thereby facilitate Executive's ability to bargain
successfully for the best interests of Energen's shareholders in
the event of such a change in control;
NOW, THEREFORE, in consideration of the premises and
the mutual agreements herein contained, Energen and Executive
hereby agree as follows:
Section 1. Definitions. As used in this
Agreement the following words and terms shall have the following
meanings:
(a) "Applicable Period" means the period commencing
with the earliest date that a Change in Control occurs and ending
on the last day of the thirty-sixth calendar month following the
calendar month during which such Change in Control occurred.
Anything in this Agreement to the contrary notwithstanding, if a
Change in Control occurs, and if the Date of
Termination with respect to Executive's employment with Energen
occurs prior to the date on which the Change in Control occurs,
and if it is reasonably demonstrated by Executive that such
termination of employment (i) was at the request of a third party
who has taken steps reasonably calculated to effect the Change in
Control or (ii) otherwise arose in connection with or in
anticipation of the Change in Control, then for all purposes of
this Agreement the "Applicable Period" shall be deemed to have
commenced on the date immediately preceding the Date of
Termination.
(b) "Cause". Termination of employment by Employer
for "Cause" shall mean termination based on any of the following:
(1) The willful and continued failure by the
Executive to substantially perform Executive's duties with
Employer (other than any such failure resulting from Executive's
incapacity due to physical or mental illness) after a written
demand for substantial performance is delivered to Executive
specifically identifying the manner in which Executive has not
substantially performed Executive's duties;
(2) The engaging by Executive in willful
misconduct which is demonstrably injurious to Employer monetarily
or otherwise; or
(3) The conviction of Executive of a felony.
(c) "Change in Control" means the occurrence of
any one or more of the following:
(1) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (a "Person") of beneficial ownership (within the
meaning of Rule 13(d)-3 promulgated under the Exchange Act) of
25% or more of either (i) the then outstanding shares of common
stock of Energen (the "Outstanding Common Stock") or (ii) the
combined voting power of the then outstanding voting securities
of Energen entitled to vote generally in the election of
directors (the "Outstanding Voting Securities"); provided,
however, that for purposes of this subsection (1) any acquisition
by an employee benefit plan (or related trust) sponsored or
maintained by Energen or any corporation controlled by Energen
shall not constitute a Change in Control;
(2) Individuals who, as of June 1, 1996,
constitute the Board of Directors of Energen (the "Incumbent
Board") cease for any reason to constitute at least a majority of
the Board of Directors of Energen (the "Board of Directors");
provided, however that any individual becoming a director
subsequent to the date hereof whose election, or nomination for
election by Energen's shareholders, was approved by a vote of at
least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member
of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board of Directors;
(3) Consummation of a reorganization, merger or
consolidation involving, or sale or other disposition of all or
substantially all of the assets of, Energen (a "Business
Combination"), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Common Stock and Outstanding Voting Securities
immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 75% of, respectively, the then
outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result
of such transaction owns Energen or all or substantially all of
Energen's assets either directly or through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of the
Outstanding Common Stock and Outstanding Voting Securities, as
the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit
plan (or related trust) of Energen or such corporation resulting
from such Business Combination) beneficially owns, directly or
indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then
outstanding voting securities of such corporation except to the
extent that such ownership existed prior to the Business
Combination and (iii) at least a majority
of the members of the board of directors of the corporation
resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board of Directors, providing
for such Business Combination;
(4) The occurrence of one transaction or a series
of transactions, which has the effect of a divestiture by Energen
of 25% or more of the combined voting power of Alabama Gas
Corporation's outstanding voting securities;
(5) The occurrence of any sale, lease or other
transfer, in one transaction or a series of transactions of all
or substantially all of the assets of Alabama Gas Corporation
(other than to Energen or an entity controlled by Energen); or
(6) Any transaction or series of transactions
which is expressly designated by resolution of the Board of
Directors to constitute a Change in Control for purposes of this
Agreement.
(d) "Code" means the Internal Revenue Code of 1986, as
the same may be from time to time amended.
(e) "Compensation" means an amount equal to the sum of
(A) plus (B), where (A) is the Executive's annualized base salary
in effect at the time of a Change in Control, and (B) is the
highest annual bonus awarded Executive by Employer pursuant to
the Energen Annual Incentive Compensation Plan (or any successor
annual cash incentive plan) with respect to the three (3) fiscal
years immediately preceding the fiscal year in which the Change
in Control occurs.
(f) "Date of Termination" means the date that a
termination of Executive's employment with Employer is first
effective.
(g) "Disability" means the total and permanent
disability which entitles Executive to a disability benefit under
a disability program sponsored and/or maintained by
Energen.
(h) "Employer" means Energen and its Subsidiaries.
(i) "Excess Parachute Payment" shall have the same
meaning as the term "excess parachute payment" defined in Section
280G(b)(1) of the Code.
(j) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
(k) "Good Reason" means the occurrence during an
Applicable Period of any of the following events without
Executive's prior written consent:
(1) The assignment to Executive by Employer of
duties inconsistent with Executive's position, authority, duties,
responsibilities and status with Employer immediately prior to a
Change in Control, or a change in Executive's titles or offices
as in effect immediately prior to a Change in Control, or any
removal of Executive from or any failure to reelect Executive
to any of such positions, if such assignment, change, or removal
results in a diminution in Executive's position, authority,
duties, responsibilities or status with Employer immediately
prior to a Change in Control or any other action by Employer
that results in such a diminution in Executive's position,
authority, duties, responsibilities or status;
(2) A reduction in Executive's aggregate rate of
monthly base pay from the Employer;
(3) The termination or material adverse
modification of the Energen Annual Incentive Compensation Plan or
the Energen Corporation 1996 Long-Range Performance Share Plan
(or any other short or long-term incentive compensation plan in
effect immediately prior to a Change in Control) without
substitution of new short or long-term incentives providing
comparable compensation opportunities for Executive.
(4) A failure by Employer to use its best efforts
to provide Executive with either the same fringe benefits
(including retirement benefits and paid vacations) as were
provided to Executive immediately prior to a Change in Control or
a package of fringe benefits that, though one or more of such
benefits may vary from those in effect immediately prior to the
Change in Control, is substantially comparable in all material
respects to the fringe benefits (taken as a whole) in effect
prior to a Change in Control;
(5) Executive's relocation by Employer to any
place more than 25 miles from the location at which Executive
performed the substantial portion of Executive's duties prior
to a Change in Control, except for required travel by Executive
on Employer's business to an extent substantially consistent with
Executive's business travel obligations immediately prior to such
Change in Control;
(6) Any material breach by Energen of any
provision of this Agreement
or any other agreement between Energen and Executive which breach
continues for a period of
thirty days following delivery by Executive to Energen of written
notice of such breach.
<PAGE>
(l) "Independent Auditor" means the firm of certified
public accountants which
at the time of the Change in Control had been most recently
engaged by Energen to prepare
Energen's audited financial statements, or any other firm of
certified public accountants mutually
agreeable to Energen and Executive.
(m) "Notice of Termination" has the meaning set forth
in Section 2(a) of this
Agreement.
(n) ""Parachute Payment" shall have the same meaning
as the term "parachute
payment" defined in Section 280G(b)(2) of the Code.
(o) "Qualified Termination" shall mean
(1) during a Window Period, any termination
(including Retirement) of
Executive's employment, other than for Cause, death or
Disability, and
(2) during the Applicable Period but not during a
Window Period,
(i) any termination by Employer of
Executive's employment
other than for Cause,
(ii) a termination of Executive's employment
which Executive
and Energen agree in writing will constitute a Qualified
Termination for purposes of this
Agreement, and
(iii) a voluntary termination of
Executive's employment by
Executive for Good Reason.
(p) "Reasonable Compensation" shall have the same
meaning as provided for
the term "reasonable compensation" in Section 280G(b)(4) of the
Code.
(q) "Retirement" means termination of Executive's
employment (other than for
Good Reason) by the Executive on or after Executive's having
reached age 60.
(r) "Subsidiary" means any corporation, the majority
of the outstanding voting
stock of which is owned directly or indirectly, by Energen.
(s) "Window Period" shall mean the 30-day period
immediately following the
first anniversary of a Change in Control.
<PAGE>
Section 2. Notice of Termination. During any Applicable
Period:
(a) Any termination (other than for Retirement, death
or Disability) of
Executive's employment, whether by Employer or Executive, shall
be communicated by the
terminating party transmitting or sending the other party a
written notice ("Notice of
Termination") referencing this Agreement and, if such termination
is for Cause or Good Reason,
indicating in reasonable detail the facts and circumstances
providing a basis for such termination.
The failure of Executive or Employer to set forth in the Notice
of Termination any fact or
circumstance which contributes to a showing of Good Reason or
Cause shall not waive any right
of Executive or Energen hereunder or preclude Executive or
Energen from asserting or relying
upon the omitted fact or circumstance in enforcing Executive's or
Energen's rights hereunder.
(b) Subject to (c) below, such termination of
Executive's employment shall be
effective upon delivery of a Notice of Termination or at such
later date as may be specified in the
Notice of Termination.
(c) In the event that each party delivers a Notice of
Termination, the Notice of
Termination first delivered shall establish the effective date of
such Notice of Termination.
Section 3. Severance Payment. In the event of a
Qualified Termination, then
Executive shall, subject to the provisions of Sections 5 and 8
hereof, receive as severance pay an
amount equal to his Compensation multiplied by a factor of [1.5
or 2 or 2.5]. Subject to Section 5
hereof, any severance payment to be made under this Section 3
shall be paid in one payment and
in full on or prior to the thirtieth day following the Date of
Termination.
Section 4. Other Benefits. Subject to Sections 5 and 8
hereof, in the event of a
Qualified Termination (other than Retirement), for a period of
twenty-four months commencing
with the Date of Termination, Executive and the Executive's
family shall continue to be covered
at the expense of Energen by the same or substantially equivalent
hospital, medical, dental, vision,
accident, disability and life insurance coverages as were
provided to Executive and the Executive's
family by Employer immediately prior to the Change in Control;
provided, however, that if
Executive becomes employed with another employer and is eligible
to receive benefits of the type
described above from such other employer, Energen's obligations
under this Section 4 and the
benefits described herein shall be secondary to those provided by
such other employer.
Section 5. Limitation on Benefits.
(a) Basic Rule. Except as otherwise provided in
paragraph (c) below, any
benefits payable or to be provided to the Executive by Employer,
whether pursuant to this
Agreement or otherwise (including, without limitation, Awards
under the Energen Corporation
1992 or 1996 Long-Range Performance Share Plans), which
constitute Parachute Payments shall
be modified or reduced as provided in paragraph (b) below to the
extent necessary so that the
benefits payable or to be provided to Executive under this
Agreement that constitute Parachute
Payments, as well as any payments or benefits provided outside of
this Agreement that constitute
Parachute Payments, shall not cause Employer to have paid an
Excess Parachute Payment. All
provisions of Section 280G of the Code, and the regulations
(proposed, interim, or final)
thereunder, shall be taken into account in computing such amount,
including making appropriate
adjustment to such calculation for amounts established to be
Reasonable Compensation.
(b) Reductions. In the event that the amount of any
Parachute Payment
otherwise payable to or for the benefit of the Executive must be
modified or reduced to comply
with paragraph (a) above, the Executive shall direct which
Parachute Payments are to be modified
or reduced; provided, however, that no increase in the amount of
any payment or any change in
the timing of payment shall be made without the consent of
Energen.
(c) Optimization. Prior to the first date any
Parachute Payment is due to be
made, Energen shall, at its own expense, cause the Independent
Auditor to determine whether X
exceeds Y, where
(i) X is the total amount of Parachute Payments
that would be made to
the Executive, whether pursuant to this Agreement or otherwise,
if the limitation provided for in
paragraph (a) above were not applied, reduced by the total amount
of applicable federal, state, and
local income, payroll and excise taxes that would be payable by
the Executive with respect to such
Parachute Payments, and
(ii) Y is the total amount of Parachute Payments
that would be payable
to the Executive, whether pursuant to this Agreement or
otherwise, if the limitation provided for
in paragraph (a) above were applied, reduced by the total amount
of applicable federal, state and
local income, payroll and excise taxes that would be payable by
the Executive with respect to such
Parachute Payments.
If X exceeds Y, then the limitation provided for in paragraph (a)
above shall not apply. For
purposes of making the determination provided for in this
paragraph (c), the Independent Auditor
shall assume that all Parachute Payments to be made to the
Executive will be subject to federal
income tax at the maximum rate in effect at the time the
determination is made unless the
Executive provides the Independent Auditor with evidence
satisfactory to the Independent Auditor
that it is more probable than not that one or more Parachute
Payments will be taxable at a lower
rate, or lower rates, in which case the Independent Auditor shall
assume that such Parachute
Payments will be taxed at the lower rate or rates.
(d) Subsequent Payments. As a result of various
incentive or other plans,
Executive may be entitled to receive various Parachute Payments
over a period of several years.
In such event, the Independent Auditor may need to update its
Section 5(c) calculations one or
more times. In the event that all or a portion of a Parachute
Payment is not made due to the
limitations of this Section 5, Energen shall not be relieved of
liability for such amount but such
Parachute Payment shall be deferred and included in calculations
with respect to subsequent
Parachute Payments.
<PAGE>
(e) Overpayments and Underpayments. As a result of
uncertainty in the
application of section 280G of the Code at the time of
determinations by the Independent Auditor
hereunder, uncertainties in the valuation of future payments, and
deferrals pursuant to
Section 5(d), it is possible that Parachute Payments will have
been made by Energen which should
not have been made (an "Overpayment") or that additional
Parachute Payments which will not
have been made by Energen could have been made (an
"Underpayment"), consistent in each case
with the other provisions of this Section 5. In the event that
the Independent Auditor, based upon
the assertion of a deficiency by the Internal Revenue Service
against Energen or the Executive
which the Independent Auditor believes has a high probability of
success, determines that an
Overpayment has been made, such Overpayment shall be treated for
all purposes as a loan to the
Executive which the Executive shall repay to Energen, together
with interest at the applicable
federal rate provided for in section 7872(f)(2)(A) of the Code;
provided, however, that no amount
shall be payable by the Executive to Energen if and to the extent
that such payment would not
reduce the amount which is subject to taxation under section 4999
of the Code. In the event that
the Independent Auditor determines that an Underpayment has
occurred, such Underpayment shall
promptly be paid or transferred by Energen to or for the benefit
of the Executive, together with
interest at the applicable federal rate provided for in section
7872(f)(2)(A) of the Code.
Section 6. No Obligation To Seek Further Employment; No
Effect on Other Benefits.
(a) Executive shall not be required to seek other
employment, nor (except as
otherwise provided under Section 4 with respect to insurance
coverages) shall the amount of any
severance payment or other benefit to be made or provided under
this Agreement be reduced by
any compensation or benefit earned by Executive as the result of
employment by another employer
after the Date of Termination, or otherwise.
(b) Subject to Section 5 hereof, any severance payment
or benefit to be made
or provided under this Agreement is in addition to all other
benefits, if any, to which Executive
may be entitled under other agreements, plans or programs of
Energen.
Section 7. Continuing Obligations of Executive. As a
result of and in connection with
Executive's employment by Employer, Executive is involved in a
number of matters of strategic
importance and value to Employer including various projects,
proceedings, planning processes, and
negotiations. Any number of these matters may be ongoing and
continuing after the Date of
Termination. In addition Employee is privy to proprietary and
confidential information of
Employer including without limitation, financial information and
projections, business plans and
strategies, customer and vendor lists and information, and oil
and gas properties and prospects. The
Executive agrees as follows:
(a) Consulting Services. For a period of three years
following the Date
of Termination, Executive agrees to fully assist
and cooperate with
Employer and its representatives (including
outside auditors, counsel
and consultants) with respect to any matters with
which the Executive
was involved during the course of employment with
Employer,
including being available upon reasonable notice
for interviews,
consultation, and litigation preparation. Except
as otherwise agreed
by Executive, Executive's obligation under this
Section 7 (a) shall not
exceed 80 hours during the first year and 20 hours
during each of the
following two years. Such services shall be
provided upon request of
Employer but scheduled to accommodate Executive's
reasonable
scheduling requirements. Executive shall receive
no additional fee
for such services but shall be reimbursed all
reasonable out-of-pocket
expenses.
(b) Non-Compete. For a period of twelve months
following the Date of
Termination, the Executive shall not Compete, (as
defined below ) or
assist others in Competing with the Employer. For
purposes of this
Agreement, "Compete" means (i) solicit in
competition with Alabama
Gas Corporation ("Alagasco") any person or entity
which was a
customer of Alagasco at the Date of Termination,
(ii) offer to acquire
any local gas distribution system in the State of
Alabama; or
(iii) offer to acquire any coalbed methane
interest in the State of
Alabama. Employment by, or an investment of less
than one percent
of equity capital in, a person or entity which
Competes with
Employer does not constitute Competition by
Executive so long as
Executive does not directly participate in, assist
or advise with respect
to such Competition.
(c) Confidentiality. Executive agrees that at all
times following the Date
of Termination, Executive will not, without the
prior written consent
of Energen, disclose to any person, firm or
corporation any
confidential information of Employer which is now
known to
Executive or which hereafter may become known to
Executive as a
result of Executive's employment or association
with Employer,
unless such disclosure is required under the terms
of a valid and
effective subpoena or order issued by a court or
governmental body;
provided, however, that the foregoing shall not
apply to confidential
information which becomes publicly disseminated by
means other
than a breach of this Agreement.
Section 8. Board Resignation. Energen shall have no
obligation under Sections 3 and
4 hereof if Executive shall not, promptly after the Date of
Termination and upon receiving a
written request to do so, resign from each officer and/or
director position which Executive then
holds with Energen and any Subsidiary.
Section 9. Payment of Professional Fees and Expenses.
Energen agrees to pay
promptly as incurred, to the full extent permitted by law, all
legal, accounting and other
professional fees and expenses which Executive may reasonably
incur (i) as a result of any contest
(regardless of the outcome thereof) by Energen, Executive or
others of the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of
performance thereof (including as a result of any contest by
Executive about the amount of any
payment pursuant to this Agreement); plus in each case interest
on any delayed payment at the
applicable Federal rate provided for in Section 7872(f)(2)(A) of
the Code; or (ii) as a result of any
contest by a taxing authority of Executive's tax treatment of any
amounts received under this or
any other Employer agreement or plan to the extent such tax
treatment is consistent with the
determinations made by the Independent Auditor under Section 5.
Section 10. Term. This Agreement shall terminate (except
to the extent of any unpaid
or unfulfilled obligation with respect to a prior termination of
Executive's employment) on the
first to occur of (i) any termination of Executive's employment
with Employer which does not
constitute a Qualified Termination or (ii) expiration of the
Term. The initial "Term" of this
Agreement shall be for a period of three years from the date
hereof. On each anniversary of the
date hereof, the Term shall automatically extend by one year
unless at least thirty days prior to
such an anniversary Energen notifies Executive that there will be
no such extension, in which
event the term shall continue until the later to occur of (i) two
years from such anniversary or
(ii) three years from the date of the most recent Change in
Control, if any.
Section 11. Binding Effect; Successors.
(a) This Agreement shall be binding upon and inure to
the benefit of Executive
and Executive's personal representative and heirs, and Energen
and its successors and assigns
including any successor organization or organizations which shall
succeed to substantially all of
the business and property of Energen, whether by means of merger,
consolidation, acquisition of
assets or otherwise, including operation of law.
(b) Without the prior consent of Energen, Executive
may not assign the
Agreement, except by will or the laws of descent and
distribution.
Section 12. Notice. For purposes of this Agreement,
notices and all other
communications provided for in this Agreement shall be in writing
and shall be deemed to have
been duly given when delivered or mailed by United States
registered mail, return receipt
requested, postage prepaid, as follows:
If to Energen or Employer:
Energen Corporation
2101 Sixth Avenue North
Birmingham, Alabama 35203
Attention: Chairman
If to Executive:
_________________________
_________________________
_________________________
or such other address as either party may have furnished to the
other in writing in accordance
herewith, except that notices of change of address shall be
effective only upon receipt.
Section 13. Miscellaneous. No provisions of this
Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is
agreed to in writing signed by
Executive and Energen. No waiver by either party hereto at any
time of any breach by the other
party hereto of, or compliance with, any condition or provision
of this Agreement to be performed
by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise,
express or implied, with respect to the subject matter hereof
have been made by either party which
are not set forth expressly in this Agreement. This Agreement
shall be governed by and construed
in accordance with the laws of the State of Alabama.
Section 14. Validity. The invalidity or unenforceability
of any provisions of this
Agreement shall not affect the validity or enforceability of any
other provision of this Agreement,
which shall remain in full force and effect.
Section 15. Counterparts. This Agreement may be executed
in one or more
counterparts, each of which shall be deemed to be an original but
all of which together will
constitute one and the same instrument.
Section 16. Amendment and Restatement of Prior Agreement.
This agreement
constitutes a complete amendment and restatement and fully
supersedes that certain Severance
Compensation Agreement between the parties dated
, 19 .
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the date
first above written.
ENERGEN CORPORATION
By
Its
EXECUTIVE
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND> This schedule contains summary financial information extracted from
the Form 10Q for June 30,1996, 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> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> Jun-30-1996
<BOOK-VALUE> PER-BOOK
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<OTHER-PROPERTY-AND-INVEST> 97,671
<TOTAL-CURRENT-ASSETS> 105,775
<TOTAL-DEFERRED-CHARGES> 13,716
<OTHER-ASSETS> 240
<TOTAL-ASSETS> 487,589
<COMMON> 111
<CAPITAL-SURPLUS-PAID-IN> 87,314
<RETAINED-EARNINGS> 107,232
<TOTAL-COMMON-STOCKHOLDERS-EQ> 194,657
0
0
<LONG-TERM-DEBT-NET> 130,652
<SHORT-TERM-NOTES> 19,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 1,825
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 141,455
<TOT-CAPITALIZATION-AND-LIAB> 487,589
<GROSS-OPERATING-REVENUE> 336,940
<INCOME-TAX-EXPENSE> 7,688
<OTHER-OPERATING-EXPENSES> 294,513
<TOTAL-OPERATING-EXPENSES> 302,201
<OPERATING-INCOME-LOSS> 34,739
<OTHER-INCOME-NET> 1,966
<INCOME-BEFORE-INTEREST-EXPEN> 36,705
<TOTAL-INTEREST-EXPENSE> 9,926
<NET-INCOME> 26,779
0
<EARNINGS-AVAILABLE-FOR-COMM> 26,779
<COMMON-STOCK-DIVIDENDS> 9,567
<TOTAL-INTEREST-ON-BONDS> 7,406
<CASH-FLOW-OPERATIONS> 63,940
<EPS-PRIMARY> 2.44
<EPS-DILUTED> 2.44
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND> This schedule contains summary financial information extracted from
the Form 10Q for June 30,1996, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000003146
<NAME> ALABAMA GAS CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> Jun-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 270,187
<OTHER-PROPERTY-AND-INVEST> 398
<TOTAL-CURRENT-ASSETS> 83,213
<TOTAL-DEFERRED-CHARGES> 7,652
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 361,450
<COMMON> 20
<CAPITAL-SURPLUS-PAID-IN> 34,484
<RETAINED-EARNINGS> 100,095
<TOTAL-COMMON-STOCKHOLDERS-EQ> 134,599
0
0
<LONG-TERM-DEBT-NET> 100,000
<SHORT-TERM-NOTES> 0
<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> 126,851
<TOT-CAPITALIZATION-AND-LIAB> 361,450
<GROSS-OPERATING-REVENUE> 312,553
<INCOME-TAX-EXPENSE> 12,177
<OTHER-OPERATING-EXPENSES> 271,343
<TOTAL-OPERATING-EXPENSES> 283,520
<OPERATING-INCOME-LOSS> 29,033
<OTHER-INCOME-NET> 290
<INCOME-BEFORE-INTEREST-EXPEN> 29,323
<TOTAL-INTEREST-EXPENSE> 7,311
<NET-INCOME> 22,012
0
<EARNINGS-AVAILABLE-FOR-COMM> 22,012
<COMMON-STOCK-DIVIDENDS> 9,555
<TOTAL-INTEREST-ON-BONDS> 5,605
<CASH-FLOW-OPERATIONS> 48,754
<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>
