UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 1998
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
http://www.en
ergen.com
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 11, 1998:
Energen Corporation, $0.01 par value 29,244,719
shares
Alabama Gas Corporation, $0.01 par value
1,972,052 shares
<PAGE>
ENERGEN CORPORATION AND ALABAMA GAS CORPORATION
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1998
Page TABLE OF
CONTENTS
PART I: FINANCIAL INFORMATION
(Unaudited)
Item 1. Financial Statements
(a) Consolidated Statements of Income of
Energen Corporation
3
(b) Consolidated Balance Sheets of Energen
Corporation 4
(c) Consolidated Statements of Cash Flows of
Energen Corporation
6
(d) Statements of Income of Alabama Gas Corporation
7
(e) Balance Sheets of Alabama Gas Corporation
8
(f) Statements of Cash Flows of Alabama Gas Corporation
10
(g) Notes to Unaudited Financial Statements 11
Item 2. Management's Discussion and Analysis of Financial
Condition and
Results of Operations 15
Selected Business Segment Data of Energen Corporation 20
PART II: OTHER INFORMATION
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
SIGNATURES 22
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
ENERGEN CORPORATION
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine
months ended June 30,
June 30,
(in thousands, 1998 1997 1998 1997
except share data)
<S> <C> <C> <C>
<C>
Operating Revenues
Natural gas
distribution $66,327 $70,147 $323,829
$313,603
Oil and gas
Production
activities 34,385 20,732
100,744 57,220
Total operating
Revenues 100,712 90,879
424,573 370,823
Operating Expenses
Cost of gas 28,066 30,519
159,112 155,891
Operations and
Maintenance 36,997 30,814
105,523 92,917
Depreciation,
depletion and
amortization 19,401 14,413
61,553 37,435
Taxes, other than
income taxes 9,442 6,889 34,011
26,783
Total operating
Expenses 93,906 82,635 360,199
313,026 Operating Income 6,806 8,244
64,374 57,797 Other Income (Expense)
Interest expense (7,490) (5,404)
(22,391) (16,205) Other, net 427
348 1,752 2,678
Total other income
(expense) (7,063) (5,056)
(20,639) (13,527) Income (Loss) Before
Income Taxes (257) 3,188
43,735 44,270 Income tax (benefit)
Expense (172) 181
(2,599) 7,555
Net Income (Loss) $ (85) $ 3,007 $46,334
$36,715 Basic Earnings Per Avg.
Common Share* $0.00 $ 0.11 $ 1.60
$ 1.49
Diluted Earnings Per
Avg. Common Share* $0.00 $ 0.11 $ 1.58
$ 1.48
Dividends Per
Common Share* $0.155 $0.15 $ 0.465
$ 0.45
Basic Avg. Common Shares
Outstanding* 29,160 26,218 29,024
24,655
*Share amounts reflect a 2-for-1 stock split effective
March 2, 1998
The accompanying Notes are an integral part of these
statements </TABLE>
<PAGE>
CONSOLIDATED BALANCE SHEETS
ENERGEN CORPORATION
<TABLE>
<CAPTION>
June 30, 1998
September 30,1997 in thousands) (unaudited)
ASSETS
Current Assets
<S> <C>
<C>
Cash and cash equivalents $ 3,420
$105,402 Accounts receivable, net
of allowance for doubtful
accounts of $3,854 at
June 30,1998, and $3,185
at September 30, 1997 69,887
70,676
Inventories, at average cost
Storage gas 19,221 25,367
Materials and supplies 8,011 7,281
Liquified natural gas
in storage 3,440 3,630
Deferred gas cost 2,068 2,512
Deferred income taxes 12,788 7,438
Prepayments and other 11,160 19,859
Total current assets 129,995
242,165
Property, Plant and Equipment Oil and gas
properties,
successful efforts method 549,191
454,210
Less accumulated
depreciation, depletion
and amortization 127,904
87,554
Oil and gas properties,
Net 421,287
366,656
Utility plant 615,961
583,630
Less accumulated
depreciation 301,871
287,749
Utility plant, net 314,090
295,881
Other property, net 4,157 4,466
Total property, plant
and equipment, net 739,534
667,003
Other Assets
Deferred income taxes 12,624 1,144
Deferred charges and other 8,827 9,485
Total other assets 21,451
10,629
TOTAL ASSETS $890,980
$919,797
The accompanying Notes are an integral part of
these financial statements.
</TABLE>
<PAGE>
CONSOLIDATED BALANCE SHEETS ENERGEN CORPORATION
<TABLE>
<CAPTION>
June 30, 1998
September 30, 1997 (in thousands,
(unaudited)
except share data)
CAPITAL AND LIABILITIES
Current Liabilities
<S> <C> <C>
Long-term debt due within one year $ 1,859 $ 1,855
Notes payable to banks 33,000 202,000
Accounts payable 36,405 49,196
Accrued taxes 24,468 18,300
Customers' deposits 16,932 16,399
Amounts due customers 11,495 7,347
Accrued wages and benefits 14,347 13,719
Other 24,329 21,935
Total current liabilities 162,835 330,751
Deferred Credits and Other Liabilities
Other 8,314 8,301
Total deferred credits and
other liabilities 8,314 8,301
Commitments and Contingencies - -
Capitalization
Preferred stock, cumulative
$0.01 par value, 5,000,000
shares authorized -
-
Common shareholders' equity*
Common stock, $0.01
par value;
75,000,000 shares
authorized,
29,195,502 shares outstanding at
June 30, 1998, and
28,796,218 shares outstanding
at September 30, 1997 292 288
Premium on capital stock 193,549 185,841
Capital surplus 2,802 2,802
Retained earnings 145,042 112,212
Total common shareholders'
equity 341,685 301,143
Long-term debt 378,146 279,602
Total capitalization 719,831 580,745
TOTAL CAPITAL AND LIABILITIES $890,980
$919,797
*Share amounts reflect a 2-for-1 stock split effective March
2, 1998
The accompanying Notes are an integral part of these financial
statements. </TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
ENERGEN CORPORATION
(Unaudited)
[CAPTION]
<TABLE>
Nine months ended June 30,
(in thousands) 1998 1997
Operating Activities
<S> <C> <C>
Net income $46,334 $36,715
Adjustments to reconcile
net income
to net cash
provided
by (used
in)
operating
activities:
Depreciatio
n,
depletion
and amortization 61,553 37,435
Deferred income taxes, net (17,189) (2,313)
Deferred investment tax
credits, net (351) (365)
Net change in:
Accounts receivable 789 (8,579)
Inventories 5,606 3,130
Deferred gas cost 444 (479)
Accounts payable -
gas purchases (3,947) 3,713
Accounts payable - trade (8,844) 945
Other current assets
and liabilities 22,570 (11,230)
Other, net 3,846 394
Net cash provided by
operating activities 110,811 59,366
Investing Activities
Additions to property, plant
and equipment (134,338)
(171,541) Other, net
2,253 3,061
Net cash used in
investing activities (132,085)
(168,480)
Financing Activities
Payment of dividends on
common stock (13,500) (11,217)
Issuance of common stock 4,121 52,968
Reduction of long-term debt (870) (923)
Proceeds from issuance of
long-term debt 98,541 84,416
Payment of note payable issued
to purchase U.S. Treasury
securities (98,636) -
Net change in short-term debt (70,364) (24,366)
Net cash provided by (used in)
financing activities (80,708) 100,878
Net change in cash and cash
equivalents (101,982) (8,236)
Cash and cash equivalents at
beginning of period 105,402
17,074
Cash and Cash Equivalents at
end of period $ 3,420
$ 8,838
The accompanying Notes are an integral part of these financial
statements. </TABLE>
<PAGE>
STATEMENTS OF INCOME
ALABAMA GAS CORPORATION (Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine
months ended
June 30,
June 30,
(in thousands) 1998 1997 1998
1997
<S> <C> <C> <C>
<C>
Operating Revenues $66,327 $70,147
$323,829 $313,603
Operating Expenses
Cost of gas 28,496 31,074
160,674 157,667
Operations and
maintenance 24,737 22,684
73,230 71,477
Depreciation 6,318 5,906
18,747 17,463
Income taxes
Current 108 2,216
21,130 14,498
Deferred, net (514) (1,249)
(6,261) (833)
Deferred investment
tax credits, net (117) (122) (351)
(365)
Taxes, other than
income taxes 5,668 5,356 23,838
22,396
Total operating
expenses 64,696 65,865
291,007 282,303
Operating Income 1,631 4,282
32,822 31,300
Other Income
Allowance for funds
used during construction 127 84 311
385
Other, net 25 38 271
327
Total other income 152 122 582
712
Interest Charges
Interest on long-term
debt 2,210 2,210
6,632 6,632
Other interest expense 159 493
1,230 1,709
Total interest charges 2,369 2,703 7,862
8,341
Net Income (Loss) $ (586) $1,701
$25,542 $23,671
The accompanying Notes are an integral part of these financial
statements. </TABLE>
<PAGE>
BALANCE SHEETS
ALABAMA GAS CORPORATION
<TABLE>
<CAPTION>
June 30, 1998
September 30, 1997 (in thousands) (unaudited)
ASSETS
Property, Plant and Equipment
<S> <C> <C>
Utility plant $615,961
$583,630
Less accumulated depreciation 301,871
287,749
Utility plant, net 314,090
295,881
Other property, net 346
347
Current Assets
Cash and cash equivalents 2,901
2,580 Accounts receivable
Gas 39,402
36,098
Merchandise 2,010
2,001
Other 1,484
1,442
Allowance for doubtful accounts (3,815)
(3,156) Inventories, at average cost
Storage gas 19,221
25,367
Materials and supplies 5,879
5,391
Liquified natural gas in storage 3,440
3,630
Deferred gas cost 2,068
2,512
Deferred income taxes 10,945
5,675
Prepayments and other 3,693
6,696
Total current assets 87,228
88,236
Deferred Charges and Other Assets 4,249
5,917 TOTAL ASSETS $405,913
$390,381
The accompanying Notes are an integral part of these
financial statements.
</TABLE>
<PAGE>
BALANCE SHEETS
ALABAMA GAS CORPORATION
<TABLE>
<CAPTION>
June 30, 1998
September 30, 1997 (in thousands, (unaudited)
except share data)
CAPITAL AND LIABILITIES
<S> <C>
<C>
Capitalization
Common shareholder's equity
Common stock, $0.01
par value;
3,000,000 shares
authorized,
1,972,052 shares
outstanding at June
30, 1998, and
September 30, 1997 $ 20
$ 20
Premium on capital stock 31,682
31,682
Capital surplus 2,802
2,802
Retained earnings 125,160
106,894
Total common shareholder's
equity 159,664
141,398
Cumulative preferred
stock,
$0.01 par value,
120,000 shares
authorized, issuable
in series -
$4.70 Series - -
Long-term debt 125,000
125,000
Total capitalization 284,664
266,398
Current Liabilities
Notes payable to banks 2,000
11,000
Accounts payable
Trade 22,613
28,923
Affiliated companies 2,496
4,984
Accrued taxes 28,647
16,745
Customers' deposits 16,932
16,399
Other amounts due customers 11,495 7,347
Accrued wages and benefits 4,975 3,879
Other 9,265
10,481
Total current liabilities 98,423
99,758
Deferred Credits and
Other Liabilities
Deferred income taxes 16,181
16,739 Accumulated deferred investment
tax credits 2,778 3,130
Regulatory liability 3,062 3,651
Customer advances for
construction and other 805
705
Total deferred credits and
other liabilities 22,826
24,225
Commitments and Contingencies - -
TOTAL CAPITAL AND LIABILITIES $405,913
$390,381
The accompanying Notes are an integral part of these
financial statements.
</TABLE>
<PAGE>
STATEMENTS OF CASH FLOWS
ALABAMA GAS CORPORATION
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended June 30,
(in thousands) 1998
1997 <S>
<C> <C>
Operating Activities
Net income $ 25,542
$23,671 Adjustments to reconcile net
income
to net
cash
provide
d by
(used
in) operating activities:
Depreciation and amortization 18,747
17,463 Deferred income taxes, net
(6,261) (833)
Deferred investment tax credits (351) (365)
Net change in:
Accounts receivable (2,696)
(4,924)
Inventories 5,848
3,061
Deferred gas cost 444 (479)
Accounts payable - gas purchases (3,947)
3,713
Accounts payable - other trade (2,363)
(3,373)
Other current assets
and liabilities 19,590
(15,630)
Other, net 1,176
(806)
Net cash provided by
operating activities 55,729
21,498
Investing Activities
Additions to property,
plant and equipment (37,130)
(28,663) Net advances from affiliates
(2,488) 6,379 Other, net
486 1,012
Net cash used in investing
activities (39,132)
(21,272) Financing Activities
Payment of dividends on
common stock (7,276)
(6,720) Net change in short-term debt
(9,000) 8,000
Net cash provided by
(used in) financing activities (16,276)
1,280
Net change in cash and
cash equivalents 321
1,506
Cash and cash equivalents at
beginning of period 2,580
803
Cash and Cash Equivalents at
End of Period $ 2,901
$ 2,309
The accompanying Notes are an integral part of these financial
statements. </TABLE>
<PAGE>
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
of normal recurring items and
immaterial adjustments. The consolidated financial statements
and notes thereto should be read in conjunction with
the financial statements and notes for the years ended September
30, 1997, 1996, and 1995, included in the 1997 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
natural gas distribution 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. REORGANIZATION UNDER THE NAME OF ENERGEN RESOURCES CORPORATION
Following the close of business on September 30, 1998, Taurus
Exploration, Inc. (Taurus), Energen's wholly owned oil and gas
subsidiary, plans to merge into its wholly owned subsidiary Taurus
Exploration U.S.A., Inc. (Taurus U.S.A.). Taurus U.S.A. will be the
surviving corporation of the merger and at the time of the merger,
Taurus U.S.A.
will change its name to Energen Resources Corporation (Energen
Resources). Effective July 22, 1998, Taurus began doing business
as Energen Resources. References in this document to Energen
Resources refer to Taurus and Taurus U.S.A., collectively.
3. REGULATORY
As an Alabama utility, Alabama Gas Corporation (Alagasco) is
subject to regulation by the Alabama Public Service Commission
(APSC)
which, in 1983, established the Rate Stabilization and Equalization
(RSE) ratesetting process. RSE was
extended with modifications in 1985, 1987 and 1990. On October 7,
1996, RSE was extended, without change, for a five-year period
through January 1, 2002. Under the terms of that extension, RSE
will continue after
January 1, 2002, unless, after notice to the Company and a hearing,
the Commission votes to either modify or discontinue its operation.
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
Alagasco'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 is returned to customers. To the extent
the change is less than the index range, the utility benefits by
one-half of the difference through future rate adjustments. Under
RSE as extended, an $11.8 million annual increase in revenue became
effective December 1, 1997 and a $2.5 million annual decrease in
revenue became effective July 1, 1998.
Alagasco calculates a temperature adjustment to customers' 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 billing
cycle the weather variation occurs.
Alagasco's rate schedules for natural gas distribution charges
contain a Gas Supply Adjustment (GSA) rider, established in
1993, which permits the passthrough to customers of changes in the
cost of gas supply, including Gas Supply Realignment (GSR)
surcharges imposed by Alagasco's suppliers resulting from changes
in gas supply purchases related to the implementation of Federal
Energy Regulatory Commission (FERC) Order 636. The APSC on October
7, 1996, issued an order providing for the refund to customers
prior to January 31, 1997, of approximately $17 million of
supplier refunds, including interest.
The Company refunded these amounts to customers during January
1997. The refunds were collected from a variety of sources and
most relate to the settlement of rate case and FERC Order 636
proceedings of Southern Natural Gas Company.
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. Remaining
excess utility deferred taxes of $2.1 million are being returned
to ratepayers over approximately 13 years. At June 30, 1998, and
September 30, 1997, a regulatory liability related to income taxes
of $3.1 million and $3.7 million, respectively, was included in the
consolidated financial statements.
4. CAPITAL STOCK
On January 28, 1998, Energen announced a 2-for-1 split of the
Company's common stock. The split was in
the form of a 100 percent stock dividend and was payable
on March 2, 1998, to shareholders of record on February 13, 1998.
All pershare amounts and the number of shares of capital stock
outstanding have been
adjusted to reflect the stock split.
Effective January 30, 1998, the Restated Certificate of
Incorporation of Energen Corporation was amended to increase
Energen's
authorized common stock, par value $0.01 per share, from 30,000,000
shares to 75,000,000 shares.
5. DERIVATIVE COMMODITY INSTRUMENTS
Energen Resources enters into derivative commodity instruments to
hedge its exposure to the impact of price fluctuations on oil and
gas production. Such instruments include regulated natural gas and
crude oil futures contracts traded on the New York Mercantile
Exchange and overthe-counter swaps and basis hedges with major
energy derivative product specialists. These transactions are
accounted for
under the hedge method of accounting. Under this
method, any unrealized gains and losses are recorded as a current
receivable/payable and a deferred
gain/loss. Realized gains and losses are deferred until the
revenues from the related hedged volumes are recognized in the
income statement. These realized deferred gains and losses are
reflected in current liabilities or current assets, respectively.
Cash flows from derivative instruments are recognized as
incurred through changes in working capital. The Company had
deferred losses of $6.7 million and $12.9 million on the balance
sheet at June 30,1998, and September 30, 1997, respectively.
At June 30, 1998, Energen Resources had entered into contracts and
swaps for 10.0 Bcf of its remaining estimated 1998 flowing gas
production at an average contract price of $2.11 per Mcf and for
183 MBbl of its remaining estimated flowing oil production at an
average contract price of $19.06 per barrel. The program has been
extended into fiscal year 1999 with contracts
and swaps in place for 25.8 Bcf of flowing gas production at an
average contract price of $2.32 per Mcf and for 540 MBbl of
flowing oil production at an average contract price of $17.31 per
barrel. Realized prices are anticipated to be lower than hedged
prices due to basis differences and other factors. To help mitigate
this variance, the Company has hedged the basis difference on
6.4 Bcf of its remaining 1998 and 1999 San Juan production.
All hedge transactions are subject to the Company's risk
management policy, approved by the Board of Directors, which does
not permit speculative positions. To apply the hedge method of
accounting, management must demonstrate that a high correlation
exists between the value of the derivative commodity instrument and
the value of the item hedged. Management uses the historic
relationships between the derivative instruments and the sales
prices of the hedged volumes to ensure that a high level of
correlation exists.
6. ACCOUNTING FOR LONG-LIVED ASSETS
Statement of Financial Accounting Standards (SFAS) No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be
Disposed Of, requires that an impairment loss be recognized when
the carrying amount of an asset exceeds the sum of the
undiscounted estimated future cash flows of the asset.
Accordingly, during the second fiscal quarter ending March 31,
1998, Energen Resources recorded a pre-tax writedown of $4.7 million
on certain oil and gas properties, adjusting the carrying amount
of the properties to their fair value based upon expected future
discounted cash flows. This writedown primarily reflects the
impact of the recent decline in crude oil prices. The expense was
recorded as additional depreciation, depletion and amortization.
As of June 30, 1998, the Company expects to dispose of additional
oil and gas properties with a carrying value of $8.5 million. No
gain or loss has been recognized as the Company estimates that
the fair value of the properties will exceed their carrying
amount.
7. RECENT PRONOUNCEMENTS OF THE FASB
In June 1997, the FASB issued SFAS No. 130, Reporting
Comprehensive Income,
which requires the reporting and display of comprehensive
income and its components in an entity's financial statements,
and SFAS No. 131, Disclosures about Segments of an Enterprise and
Related Information, which specifies revised guidelines for
determining an entity's operating segments and the type and level of
financial information to be required. In February 1998, the FASB
issued SFAS No. 132, Employers' Disclosures
about Pensions and Other Postretirement Benefits, which revises
employers' disclosures about pension and other postretirement
benefit plans. The Company is required to adopt these statements in
fiscal year 1999. The impact of these pronouncements on the
Company currently is being evaluated and is not expected to be
material.
In June 1998, the FASB issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, which establishes
accounting and reporting standards for derivative instruments.
The Company is required to adopt this statement in fiscal year
2000.
The impact of this pronouncement on the Company is currently being
evaluated.
8. SUBSEQUENT EVENT
During August 1998, the Company entered into an agreement for the
trade of substantially all of its Gulf of
Mexico interests for the Permian Basin interests of EEX
Corporation (EEX). This transaction is expected to close by
September 30, 1998, and has an effective date of January 1, 1998.
The Company will receive approximately 58 Bcfe of primarily proved
developed reserves and EEX will receive an estimated 38 Bcfe of
proved natural gas reserves along with interest in thirty offshore
blocks and $9 million in cash.
9. RECONCILIATION OF EARNINGS PER SHARE*
<TABLE>
<CAPTION>
(in thousands, except Per Share Per
Share
per share amounts) Income Shares Amount Income
Shares Amount
Three months ended Three
months ended June 30, 1998
June 30, 1997
<S> <C> <C> <C> <C>
<C> <C> Basic EPS
Income available to
common stockholders $(85) 29,160 $ 0.00 $ 3,007
26,218 $ 0.11 Effect of Dilutive Securities
Long-range performance
shares 155
130
Non-qualified stock
options 236
129
Diluted EPS
Income available to
common stockholders
plus assumed
conversions $ (85) 29,551 $0.00 $ 3,007
26,477 $ 0.11
Nine months ended Nine
months ended
June 30, 1998 June
30, 1997
Basic EPS
Income available to
common stockholders $46,334 29,024 $1.60 $36,715
24,655 $1.49
Effect of Dilutive Securities
Long-range performance
shares 148
119
Non-qualified stock
options 203
109
Diluted EPS
Income available to
common
stockhol
ders
plus
assumed
conversions $46,334 29,375 $1.58 $36,715 24,883
$1.48
*Share amounts reflect a 2-for-1 stock split effective March 2,
1998 (see Note 4)
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Energen's results of operations were a net loss of $85,000 ($0.00
per share) for the three months ended June 30, 1998,
down from net income of $3.0 million ($0.11 per
share) recorded in the same period last year. Energen
Resources Corporation (Energen Resources), Energen's oil and
gas exploration and production subsidiary, formerly known as
Taurus Exploration Inc. (see Note 2), realized net income of
$440,000 in the current quarter as compared with $1.3 million in
the same period last year. Gains resulting from production-related
income were more than offset by reduced nonconventional fuels
tax credit recognition on an interim basis and increased
interest expense. Alagasco, Energen's natural gas utility,
reported a net loss of $589,000 in the current quarter as compared
with net income of $1.7 million in the same period last year
primarily due to timing in the recovery of utility rates. The
utility earned its allowed return on a higher level of equity
representing investment
in utility plant. For the 1998 fiscal year-to-date, Energen's net
income totaled $46.3 million ($1.60 per share) compared with $36.7
million ($1.49 per share) for the same period last year.
Energen Resources' net income totaled $20.6 million and compared
favorably with $12.7 million of net income in the first nine months
of fiscal 1997. Gains resulting from production related income
and higher nonconventional fuels tax credits were partially
offset
by a writedown of certain oil and gas properties in the second
quarter and increased interest expense. Alagasco's earnings
increased $1.9 million to $25.5 million as the utility continued
to earn its allowed return on a higher level of equity
representing investment in utility plant.
Natural Gas Distribution
Natural gas distribution revenues decreased $3.8 million in quarter
comparisons and increased $10.2 million for the year-to-date. For
the quarter, a deferral of revenue for future rate reductions was
made to bring Alagasco's projected return on equity within the RSE
allowed range of 13.15 percent to 13.65 percent. Decreased gas
purchase volumes resulted in a 8.3 percent decrease in cost of
gas. For the year-to-date, weather that was 10.8 percent colder
than the same period last year contributed to a 11.1 percent
increase in residential sales volumes, which combined with
increased contribution from commercial and
industrial customers for an increase in total sales volumes of 9
percent. Partially offsetting the increase in sales volumes was a
deferral of revenue under RSE requirements. Increased gas
purchase volumes were offset by a decrease in the commodity cost
of gas, resulting in a relatively stable cost of gas.
Operations and maintenance expenses increased $2.1 million for
the current quarter and $1.8 million in the year-to-date
primarily due to a one-time reduction in expense in the prior
year resulting from a change in the salaried employee vacation
policy and an increase in bad debt expenses.
A slight increase in depreciation expense for the quarter and
year-to-date comparisons was due to normal growth of the utility's
distribution system. Taxes other than income primarily reflect
various state and local business taxes as well as payrollrelated
taxes.
State and local business taxes are generally based on gross
receipts and fluctuate accordingly.
As discussed more fully in Note 3, Alagasco is subject to
regulation by the APSC. On October 7,1996, the APSC issued an
order extending
the Company's current rate-setting mechanism through January 1,
2002. Under the terms of that extension, RSE will continue after
January 1, 2002, unless, after notice to the Company and a hearing,
the Commission votes to either modify or discontinue its operation.
Oil and Gas Exploration and Production
Revenues from oil and gas production activities rose 65.9
percent to $34.4 million for the three months ended June 30,
1998, and 76 percent to $100.7 million for the year-to-date,
primarily reflecting Energen Resources' current
and prior-year property acquisitions. Natural gas comprised almost
80 percent of Energen Resources' production for both the current
quarter and the yeartodate. For the quarter, natural gas
production increased 52.6 percent to
11.9 Bcf and oil volumes increased 49
percent to 361 MBbl. For the year-to-date, natural
gas
production increased 72.7 percent to 33.2 Bcf and oil volumes
increased
68.3 percent to 981 MBbl. Energen Resources' high BTU-content
natural gas reserves in the San Juan Basin yielded 239 MBbl in
natural gas liquids in the current quarter and 609 MBbl for the
yearto-date.
Realized natural gas prices increased over the prior period but
oil prices declined in period comparisons. For the quarter, gas
sales prices increased 12.2 percent to $2.20 per Mcf. Oil prices
decreased 18.4 percent to $14.71 per barrel. For the year-to-
date,
gas sales prices increased 4.1 percent to $2.28
while oil prices decreased 13 percent to $15.98 per barrel. Natural
gas liquids sold for an average price of $8.55 per barrel for the
quarter and $9.27 per barrel for the year-to-date.
Energen Resources enters into derivative commodity instruments to
hedge its exposure to the impact of price fluctuations on oil and
gas production. Such instruments include regulated natural gas and
crude oil futures contracts traded on the New York Mercantile
Exchange and over-the-counter swaps and basis hedges with major
energy derivative product specialists. All hedge transactions are
subject to the Company's risk management policy, approved by
the Board of Directors, which does not permit speculative
positions. At June 30, 1998, Energen Resources had entered into
contracts and swaps for 10.0 Bcf of its
remaining estimated 1998 flowing gas production at an average
contract price of $2.11 per Mcf and for 183 MBbl of its remaining
estimated flowing oil production at an average contract price of
$19.06 per barrel. The program has been extended into fiscal year
1999 with contracts and swaps in place for 25.8 Bcf of flowing gas
production at an average contract price of
$2.32 per Mcf and for 540 MBbl of flowing oil production at an
average contract price of $17.31 per barrel. Realized prices are
anticipated to be lower than hedged prices due to
basis differences and other factors. To help mitigate this variance,
the Company has hedged the basis difference on 6.4 Bcf of its
remaining 1998 and 1999 San Juan production.
O&M expense increased $4.1 million for the quarter and $11.4
million in the current year-to-date primarily due to significant
growth in production and acquisition activity at Energen
Resources. Lease operating expenses rose by $5.2 million and
$13.7 million for the quarter and year-to-date, respectively, due to
the acquisition of oil and gas properties. Exploration expense
increased $0.3 million for the quarter but was lower by $0.8
million year-to-date primarily due to reduced drilling activity.
Energen Resources' significantly higher production volumes
generated the majority of the $4.6 million increase in
depreciation, depletion and amortization (DD&A) for the quarter and
the $22.8 million increase for the yearto-date. During the
previous fiscal quarter, Energen Resources recorded additional
DD&A expense of $4.7 million to writedown certain oil and gas
properties under SFAS No. 121, primarily due to lower oil prices.
The average depletion rate for the quarter decreased to $0.82 as
compared to $0.90 for the
same period last year, due to accelerated production of certain
long-lived properties with decreased depletion rates. The average
depletion rate was $0.87 in the year-to-date, excluding the effect
of the writedown, compared to $0.85 in the prior-year period.
Energen Resources' expense for taxes other than income primarily
reflects production-related taxes which were $2.2 million higher
this quarter and $5.8 million higher for the yearto-date as a
result of increased production.
Non-Operating Items
Interest expense for the Company increased $2.1 million in the
quarter and $6.2 million in the year-to-date.
To help fund growth at Energen Resources, Energen issued $85 million
of mediumterm notes (MTNs) in July 1997 and $100 million of MTNs
in February 1998. The Company had decreased average borrowings
under its shortterm credit facilities for the quarter which
partially
offset the increase in interest expense on MTNs. For the year-
todate the Company had increased its average borrowings under
its short-term credit facilities in connection with the growth at
Energen Resources.
The Company's effective tax rates are lower than statutory federal
tax rates primarily due to the recognition of nonconventional
fuels tax credits and the amortization of investment tax credits.
As nonconventional fuels tax credits are generated each year
through December 31, 2002 and are expected to be fully recognized in
the financial statements, effective tax rates are expected to
continue to remain lower
than statutory federal rates. Income tax expense decreased in
the current quarter due to lower consolidated pretax income,
partially offset by decreased recognition of nonconventional fuels
tax credits. In year-to-date comparisons, income tax expense
decreased due to both increased production of nonconventional fuels
and the resulting recognition of such tax credits on an interim
basis.
FINANCIAL POSITION AND LIQUIDITY
Current year operating cash flow was $110.8 million compared to
$59.4 million in the prior year. The Company benefited from
increased net income primarily resulting from significantly
higher oil and gas production. Other working capital items, which
are highly influenced by throughput and timing of payments, combined
to create the remaining increase. Negatively affecting cashflow in
the prior year was the utility's payout of $17 million of
supplier refunds to customers in January 1997.
The Company invested $132.1 million through the nine months ended
June 30,1998 primarily in the addition of property, plant and
equipment. Energen Resources invested $97.8 million in capital
expenditures for the year-to-date related to the acquisition and
development of oil and gas properties. Utility capital
expenditures totaled $37.0 million and represented primarily
normal system distribution expansion and support facilities.
The Company used $80.7 million for financing activities through the
nine months ended June 30,1998. In February 1998, the Company
issued $100 million of longterm debt redeemable February 15, 2028.
The 7.125 percent MTNs were priced at 99.416 percent to yield
7.173 percent. The $98.5 million in proceeds were
used to repay borrowings under Energen's short-term credit
facilities
incurred to finance
Energen Resources' growth activity. For tax planning purposes,
the Company borrowed $98.6 million in September 1997 to invest in
short-term federal obligations. The Treasuries matured in early
October and the proceeds were used to repay the debt.
FUTURE CAPITAL RESOURCES AND LIQUIDITY
The Company plans to continue to implement its diversified growth
strategy. Over the five-year period ending September 30, 2002,
Energen Resources plans to
invest approximately $750 million to $800 million
to acquire and develop producing oil and gas properties and to
participate in exploration and related development. In fiscal 1998,
Energen Resources plans to spend in excess of $120 million,
including $70
million spent on property acquisitions year-to-date. It should be
noted that Energen Resources' continued ability to invest in
property acquisitions will
be significantly influenced by industry trends as the producing
property acquisition market historically has been cyclical. From
time to time, Energen Resources also may be engaged in negotiations
to sell, trade or otherwise dispose of previously acquired or
developed oil and gas properties.
During the first quarter of 1998, Energen Resources acquired
approximately 79 Bcfe of proved oil and natural gas reserves in
the Permian Basin of west Texas from B.C. Oil and Gas Ltd. and
certain affiliated companies for $43.3 million. More than half
of the proved reserves are behind-pipe and undeveloped, and
Energen Resources plans to spend an additional $17 million over the
next two to three years to fully develop the behind-pipe, water
flood and undeveloped reserve potential. Oil accounts for
70 percent of the estimated proved
reserves. The properties include approximately 350 producing
wells, of which Energen Resources will operate 248. Energen
Resources also purchased an estimated 4.5 Bcfe of
predominantly natural gas reserves in southwest Mississippi from
Oxy USA Inc. for $7.1 million. In the second quarter, Energen
Resources closed on a $17 million purchase of Gulf of Mexico
properties from Chateau Oil and Gas Inc. In April 1998, Energen
Resources subsequently sold approximately 20 percent of its share
to a third party who will serve as the operating partner.
Energen Resources' retained portion of the acquisition includes
an estimated 9.8 Bcf of natural gas reserves in the Gulf of
Mexico. Approximately 45 percent of the
proved reserves are developed and producing, and Energen Resources
plans to spend another $0.7 million over the next several years to
bring on-line the 55 percent of behind-pipe reserves.
To finance Energen Resources' investment program, the Company will
continue to utilize its short-term credit facilities to supplement
internally generated cash flow, with long-term debt and equity
providing permanent financing. In December 1997, Energen filed a
$400 million shelf registration for debt and common stock. Under
that registration, in February 1998 Energen issued $100 million of
Series B MTNs, the proceeds from which were used to repay shortterm
debt. During the first quarter, Energen increased its available
short-term credit facilities to $228 million to accommodate its
growth plans. Depending on the Company's level of activity in
acquiring oil and gas properties, Energen may issue common equity
during fiscal year 1999.
Utility capital expenditures for normal
distribution system renewal and expansion plus support facilities
could approximate
$60 million in fiscal 1998. Alagasco also will maintain an
investment in storage working gas which is expected to
approximate $24 million at the end of fiscal 1998. The utility
anticipates funding these capital requirements through
internally generated capital and the utilization of short-term
credit facilities.
Year 2000 Issues
Energen has and continues to evaluate its computer software and
hardware to assess modifications needed for the Year 2000. Over
the past three years, a substantial investment by the Company
has been made in software and computer infrastructure that either
can be upgraded or complies with Year 2000 requirements. A
full time senior management level position was established and a
primary contractor was selected in 1996 to address the Year 2000
issue. The plan of work established involves the following
phases: inventory, assessment, testing, certification and change
control. A number of inventory reviews have been completed and
will continue to be updated in the future. Tools to test, age and
evaluate data software and hardware have been purchased, are
installed and being utilized for Year 2000 compliance. Test plans
for items
identified as critical systems are either being deployed or
currently developed. A third party assessment of Year 2000
readiness is scheduled to be conducted by an outside entity for
both information technology and noninformation technology systems
at the end of fiscal year 1998.
With respect to material third party relationships, the Company,
in
addition to responding to questions concerning the Year 2000
issues from customers and regulators, is inquiring of certain
vendors and partners for information designed to determine
their ability to continue uninterrupted supply of materials
or services to the Company. This process is scheduled for
completion by the end of fiscal year 1998.
To date, the Company has incurred approximately $380,000 of Year
2000 related costs which are being expensed as incurred. The
Company's Year 2000 remediation is expected to be completed by the
end of calendar year 1999 with an estimated total cost of $1.8
million.
Management expects that Year 2000 issues will be addressed on a
schedule and in a manner that will prevent such issues from
having a material effect on the Company's results of operations,
liquidity or financial condition. While the Company has and will
be pursuing Year 2000 compliance, there can be no assurance that
the Company and its vendors will be successful in identifying
and addressing all material Year 2000 issues.
Specific Year 2000 contingency plans are scheduled to be
incorporated into the previously established Energen Business
Resumption Plan during fiscal year 1999. The Company's contingency
plan identifies alternate recovery locations, contact lists, and
other equipment, as well as, special resource requirements.
Forward-Looking Statements and Risks
Certain statements in this report, including statements of
future plans, objectives and expected performance of the Company
and its subsidiaries, are forward-looking statements that are
dependent on certain events, risks and uncertainties that may be
outside the Company's control which could cause actual results to
differ materially from those anticipated. Some of these include, but
are not limited to, economic and competitive conditions,
inflation rates, legislative and regulatory changes, financial
market conditions, future business decisions, Year 2000 issues, and
other uncertainties, all of which are difficult to
predict. There are numerous uncertainties inherent in estimating
quantities of proved oil and gas reserves and in projecting future
rates of production and timing of development expenditures. The
total amount or timing of actual future production may vary
significantly from reserves and production estimates. In the
event Energen Resources is unable to invest fully its planned
acquisition expenditures, future operating revenues and proved
reserves could be negatively affected. The drilling of
exploratory wells can involve significant risk including that
related to timing, success rates and cost overruns. These risks
can be impacted by
lease and rig availability, complex geology and other factors.
Results of operations and cash flows also could be affected by
future oil and gas prices. Although Energen Resources makes use of
futures, swaps and fixed price contracts to mitigate risk,
fluctuations in oil and gas prices may affect the Company's
financial position and results of operations.
OTHER
Recent Pronouncements of the FASB
In June 1997, the FASB issued SFAS No. 130, Reporting
Comprehensive Income, which requires the reporting and display
of comprehensive income and its components in an entity's
financial statements, and SFAS No. 131, Disclosures about Segments
of an Enterprise and Related Information, which specifies revised
guidelines for determining an entity's operating segments and the
type and level of financial information to be required. In February
1998, the FASB issued SFAS No. 132,
Employers' Disclosures about Pensions and Other Postretirement
Benefits, which revises employers' disclosures about pension and
other postretirement benefit plans. The Company is required to
adopt these statements in fiscal year 1999. The impact of
these pronouncements on the Company currently is being evaluated
and is not expected to be material.
In June 1998, the FASB issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, which establishes
accounting and reporting standards for derivative instruments.
The Company is required to adopt this statement in fiscal year
2000. The impact of this pronouncement on the Company is currently
being evaluated.
<PAGE>
SELECTED BUSINESS SEGMENT DATA
ENERGEN CORPORATION
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
(in thousands, except June 30, June 30,
sales price data) 1998 1997 1998
1997
<S> <C> <C> <C>
<C>
Natural Gas Distribution
Operating revenues
Residential $43,683 $42,218 $219,257
$210,113
Commercial and
industrial - small 16,214 15,769 79,414 75,310
Transportation 7,894 7,805
27,746 25,648
Other (1,464) 4,355
(2,588) 2,532
Total $66,327 $70,147
$323,829 $313,603
Gas delivery volumes (MMcf)
Residential 5,113 4,528
28,969 26,079
Commercial and
industrial - small 2,496 2,221
12,172 10,974
Transportation 17,906 15,432
50,424 46,962
Total 25,515 22,181
91,565 84,015
Other data
Depreciation and
amortization $6,318 $ 5,906
$18,747 $17,463
Capital expenditures $13,607 $12,098
$36,987 $28,212
Operating income $1,108 $ 5,121
$47,340 $44,592
Oil and Gas Exploration
and Production
Operating revenues
Natural gas $26,323 $15,321
$75,764 $42,131
Oil 5,314 4,372
15,681 10,703
Natural gas liquids 2,041 -
5,643 -
Other 707 1,039
3,656 4,386
Total $34,385 $20,732
$100,744 $57,220
Sales volume
Natural gas (MMcf) 11,948 7,831
33,225 19,240
Oil (MBbl) 361 243
981 583
Natural gas liquids (MBbl) 239 -
609 -
Average sales price
Natural gas (Mcf) $ 2.20 $ 1.96
$2.28 $2.19
Oil (barrel) $14.71 $ 18.03
$15.98 $18.37
Natural gas liquids
(barrel) $ 8.55 - $9.27 -
Other data
Depreciation, depletion
and amortization $13,083 $ 8,505
$42,806 $19,970
Capital expenditures $10,300 $39,472
$97,794 $143,003
Exploration expenditures $1,367 $ 1,716 $2,857
$3,662
Operating income $5,922 $ 3,356 $17,806 $14,462
</TABLE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
Rule 14a-4 Notice.
Pursuant to Rule 14a-4 of the Proxy Rules under the Securities
Exchange Act of 1934, if a shareholder fails to notify Energen on
or before November 4, 1998, of a proposal which such shareholder
intends to present at Energen's January 1999
annual meeting other than through inclusion of such proposal in
Energen's proxy materials for the meeting, then if the proposal is
presented at the January 1999 annual meeting, management proxies
may use their discretionary voting authority with respect to such
proposal.
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)
27.3 Restated financial data schedule of Energen Corporation
(for SEC purposes only)
b. Reports on Form 8-K
A report on Form 8-K dated June 24, 1998 was filed with the
Commission to report the adoption of a new Shareholder Rights
Plan to replace the existing Rights Plan when it expires at the
close of business on July 27, 1998.
<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 11, 1998 By/s/ Wm. Michael Warren, Jr.
Wm. Michael Warren, Jr.
Chairman,
President and
Chief Executive
Officer of
Energen,
Chairman and Chief
Executive Officer
of Alagasco August 11, 1998 By/s/ G. C.
Ketcham
G. C. Ketcham
Executive Vice
President, Chief
Financial Officer
and Treasurer of
Energen and
Alagasco
August 11, 1998 By/s/ Grace B. Carr
Grace B. Carr
Controller of Energen
August 11, 1998 By/s/ Paula H. Rushing
Paula H. Rushing
Vice President -
Finance
of Alagasco
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE FINANCIAL STATEMENTS OF ENERGEN
CORPORATION FOR THE NINE-MONTHS ENDED JUNE 30, 1998,
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-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 314,090
<OTHER-PROPERTY-AND-INVEST> 425,444
<TOTAL-CURRENT-ASSETS> 129,995
<TOTAL-DEFERRED-CHARGES> 21,451
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 890,980
<COMMON> 292
<CAPITAL-SURPLUS-PAID-IN> 193,549
<RETAINED-EARNINGS> 147,844
<TOTAL-COMMON-STOCKHOLDERS-EQ> 341,685
0
0
<LONG-TERM-DEBT-NET> 378,146
<SHORT-TERM-NOTES> 33,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 1,859
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 136,290
<TOT-CAPITALIZATION-AND-LIAB> 890,980
<GROSS-OPERATING-REVENUE> 424,573
<INCOME-TAX-EXPENSE> (2,599)
<OTHER-OPERATING-EXPENSES> 360,199
<TOTAL-OPERATING-EXPENSES> 357,600
<OPERATING-INCOME-LOSS> 64,374
<OTHER-INCOME-NET> (20,639)
<INCOME-BEFORE-INTEREST-EXPEN> 68,725
<TOTAL-INTEREST-EXPENSE> 22,391
<NET-INCOME> 46,334
0
<EARNINGS-AVAILABLE-FOR-COMM> 46,334
<COMMON-STOCK-DIVIDENDS> (13,500)
<TOTAL-INTEREST-ON-BONDS> 17,570
<CASH-FLOW-OPERATIONS> 110,811
<EPS-PRIMARY> 1.60
<EPS-DILUTED> 1.58
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE
FINANCIAL STATEMENTS OF ALABAMA GAS CORPORATION FOR
THE NINEMONTHS
ENDED JUNE 30, 1998, 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-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-30-1998
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 314,090
<OTHER-PROPERTY-AND-INVEST> 346
<TOTAL-CURRENT-ASSETS> 87,228
<TOTAL-DEFERRED-CHARGES> 4,249
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 405,913
<COMMON> 20
<CAPITAL-SURPLUS-PAID-IN> 34,484
<RETAINED-EARNINGS> 125,160
<TOTAL-COMMON-STOCKHOLDERS-EQ> 159,664
0
0
<LONG-TERM-DEBT-NET> 125,000
<SHORT-TERM-NOTES> 2,000
<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> 119,249
<TOT-CAPITALIZATION-AND-LIAB> 405,913
<GROSS-OPERATING-REVENUE> 323,829
<INCOME-TAX-EXPENSE> 14,518
<OTHER-OPERATING-EXPENSES> 276,489
<TOTAL-OPERATING-EXPENSES> 291,007
<OPERATING-INCOME-LOSS> 32,822
<OTHER-INCOME-NET> 582
<INCOME-BEFORE-INTEREST-EXPEN> 33,404
<TOTAL-INTEREST-EXPENSE> 7,862
<NET-INCOME> 25,542
0
<EARNINGS-AVAILABLE-FOR-COMM> 25,542
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 6,632
<CASH-FLOW-OPERATIONS> 55,729
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>Alabama Gas Corporation (Alagasco) is a subsidiary of
Energen Corporation.
Earnings per share is not calculated for Alagasco as amount
would
not
be meaningful.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE FINANCIAL STATEMENTS OF ENERGEN
CORPORATION FOR THE NINE-MONTHS ENDED JUNE 30, 1997, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<CIK> 0000277595
<NAME> ENERGEN CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 286,894
<OTHER-PROPERTY-AND-INVEST> 290,637
<TOTAL-CURRENT-ASSETS> 115,282
<TOTAL-DEFERRED-CHARGES> 11,101
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 704,321
<COMMON> 262
<CAPITAL-SURPLUS-PAID-IN> 145,506
<RETAINED-EARNINGS> 124,031
<TOTAL-COMMON-STOCKHOLDERS-EQ> 269,799
0
0
<LONG-TERM-DEBT-NET> 279,622
<SHORT-TERM-NOTES> 34,000
<LONG-TERM-NOTES-PAYABLE> 0
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0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
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<TOT-CAPITALIZATION-AND-LIAB> 704,321
<GROSS-OPERATING-REVENUE> 370,823
<INCOME-TAX-EXPENSE> 7,555
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<OPERATING-INCOME-LOSS> 57,797
<OTHER-INCOME-NET> (13,527)
<INCOME-BEFORE-INTEREST-EXPEN> 52,920
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<NET-INCOME> 36,715
0
<EARNINGS-AVAILABLE-FOR-COMM> 36,715
<COMMON-STOCK-DIVIDENDS> 11,217
<TOTAL-INTEREST-ON-BONDS> 10,654
<CASH-FLOW-OPERATIONS> 59,371
<EPS-PRIMARY> 1.49
<EPS-DILUTED> 1.48
</TABLE>
