<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1995 OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
____________ TO ______________
Commission file number 1-3183
ENSERCH CORPORATION
(Exact name of registrant as specified in its charter)
Texas 75-0399066
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ENSERCH Center, 300 South St. Paul, Dallas, Texas 75201
(Address of principal executive offices) (Zip Code)
214-651-8700
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding twelve months (or for such shorter
period that the Registrant was required to file such reports) and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
----- -----
Number of shares of Common Stock of Registrant outstanding as of
November 8, 1995: 68,467,648.
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
ENSERCH CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------- ------------------
1995 1994 1995 1994
---- ---- ---- ----
(In thousands except per share amounts)
<S> <C> <C> <C> <C>
Revenues
Natural gas and oil exploration and production . . . . . . . $ 66,807 $ 41,426 $ 156,455 $ 136,636
Natural gas pipeline & GPM . . . . . . . . . . . . . . . . . 237,233 352,992 742,577 926,539
Natural gas distribution . . . . . . . . . . . . . . . . . . 132,522 129,356 640,503 631,667
Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,938 13,258 28,462 31,424
Less intercompany revenues . . . . . . . . . . . . . . . . . (32,953) (43,413) (144,649) (186,504)
-------- -------- --------- ---------
Total . . . . . . . . . . . . . . . . . . . . . 414,547 493,619 1,423,348 1,539,762
-------- -------- --------- ---------
Costs and Expenses
Gas purchase . . . . . . . . . . . . . . . . . . . . . . . . 241,255 357,056 876,926 1,043,356
Operating expenses . . . . . . . . . . . . . . . . . . . . . 99,229 93,267 290,374 267,846
Depreciation and amortization. . . . . . . . . . . . . . . . 50,940 32,441 120,698 99,756
Gross receipts and production taxes. . . . . . . . . . . . . 8,438 8,152 37,822 38,237
Payroll, ad valorem and other taxes. . . . . . . . . . . . . 10,571 6,386 29,820 23,823
-------- -------- --------- ---------
Total . . . . . . . . . . . . . . . . . . . . . 410,433 497,302 1,355,640 1,473,018
-------- -------- --------- ---------
Operating Income (Loss) . . . . . . . . . . . . . . . . . . . . 4,114 (3,683) 67,708 66,744
Other Income (Expense) - Net. . . . . . . . . . . . . . . . . . (536) (837) (1,352) (2,812)
Interest and Other Financing Costs. . . . . . . . . . . . . . . 26,018 17,962 62,523 51,245
-------- -------- --------- ---------
Income (Loss) Before Income Taxes and
Minority Interest . . . . . . . . . . . . . . . . . . . . . . (22,440) (22,482) 3,833 12,687
Income Taxes (Benefit). . . . . . . . . . . . . . . . . . . . . (8,857) (7,661) 1,033 4,101
Minority Interest . . . . . . . . . . . . . . . . . . . . . . . 188 104 387 423
-------- -------- --------- ---------
Income (Loss) from Continuing Operations. . . . . . . . . . . . (13,771) (14,925) 2,413 8,163
Income from Discontinued Operations . . . . . . . . . . . . . . 399 1,704
-------- -------- --------- ---------
Net Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . (13,771) (14,526) 2,413 9,867
Provision for Dividends on Preferred Stock. . . . . . . . . . . 2,866 2,980 8,883 8,596
-------- -------- --------- ---------
Earnings (Loss) Applicable to Common Stock. . . . . . . . . . . $(16,637) $(17,506) $ (6,470) $ 1,271
======== ======== ========= =========
Per Share of Common Stock
Loss from continuing operations after provision
for dividends on preferred stock . . . . . . . . . . . . . $ (.24) $ (.27) $ (.09) $
Discontinued operations. . . . . . . . . . . . . . . . . . . .01 .02
-------- -------- --------- ---------
Earnings (loss) applicable to common stock . . . . . . . . . $ (.24) $ (.26) $ (.09) $ .02
======== ======== ========= =========
Cash dividends declared. . . . . . . . . . . . . . . . . . . $ .05 $ .05 $ .15 $ .15
======== ======== ========= =========
Average Common and Dilutive Common
Equivalent Shares Outstanding . . . . . . . . . . . . . . . . 68,271 68,011 68,193 68,034
======== ======== ========= =========
Operating Income (Loss) of Major Businesses
Natural gas and oil exploration and production. . . . . . . . $ (971) $ 1,825 $ (4,961) $ 18,025
Natural gas pipeline & GPM. . . . . . . . . . . . . . . . . . 5,908 641 41,753 31,869
Natural gas distribution. . . . . . . . . . . . . . . . . . . (1,561) (6,367) 34,561 21,116
Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,509 2,952 1,994 3,200
<FN>
See accompanying Notes.
</TABLE>
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<PAGE>
<PAGE>
<TABLE>
ENSERCH CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED STATEMENTS OF CONSOLIDATED
CASH FLOWS (UNAUDITED)
<CAPTION>
Nine Months Ended
September 30
------------------------
1995 1994
---- ----
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Income from continuing operations . . . . . . . . . . . . . . . . . . . $ 2,413 $ 8,163
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . 120,698 99,756
Deferred income-tax expense (benefit). . . . . . . . . . . . . . . . . . (7,850) 3,051
Recoveries of gas-purchase contract settlements. . . . . . . . . . . . . 31,964 29,586
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,662 (3,985)
Changes in current operating assets and liabilities
Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . 75,010 47,630
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . 26,653 (24,474)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . (72,225) (33,065)
Other current liabilities. . . . . . . . . . . . . . . . . . . . . . . (11,105) (17,743)
Litigation judgment payable. . . . . . . . . . . . . . . . . . . . . . (62,498)
--------- --------
Net cash flows from operating activities . . . . . . . . . . . . . . 180,220 46,421
--------- --------
INVESTING ACTIVITIES
Purchase of businesses, net of cash acquired. . . . . . . . . . . . . . (341,650)
Additions to property, plant and equipment. . . . . . . . . . . . . . . (198,034) (191,087)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15,989) 504
Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . (36,774) (118,667)
--------- --------
Net cash flows used for investing activities. . . . . . . . . . . . (592,447) (309,250)
--------- --------
FINANCING ACTIVITIES
Change in commercial paper and other short-term borrowings. . . . . . . 65,259 255,778
Borrowing under EEX bank revolving credit agreement and bridge loan . . 500,000
Repayment of DALEN bank debt assumed at acquisition . . . . . . . . . . (115,000)
Issuance of mandatorily redeemable preferred
securities of subsidiary. . . . . . . . . . . . . . . . . . . . . . . 150,000
Issuance of EEX common stock. . . . . . . . . . . . . . . . . . . . . . 207,872
Retirement of EEX revolving credit agreement and bridge loan. . . . . . (360,000)
Issuance of senior long-term debt . . . . . . . . . . . . . . . . . . . 149,032 149,320
Retirement of senior long-term debt . . . . . . . . . . . . . . . . . . (156,697) (109,683)
Issuance of Series F Preferred Stock. . . . . . . . . . . . . . . . . . 72,836
Retirement of Series D Preferred Stock. . . . . . . . . . . . . . . . . (75,000)
Change in advances under lease arrangements . . . . . . . . . . . . . . (2,224) (20,523)
Change in assignments of future gas purchase credits. . . . . . . . . . (10,520) (7,389)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (850)
Issuance of ENSERCH common stock. . . . . . . . . . . . . . . . . . . . 3,432 2,856
Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . (19,150) (18,727)
--------- --------
Net cash flows from financing activities. . . . . . . . . . . . . . 411,154 249,468
--------- --------
Net Decrease in Cash and Equivalents. . . . . . . . . . . . . . . . . . . (1,073) (13,361)
Cash and Equivalents at Beginning of Period . . . . . . . . . . . . . . . 9,811 32,920
--------- --------
Cash and Equivalents at End of Period . . . . . . . . . . . . . . . . . . $ 8,738 $ 19,559
========= ========
<FN>
See accompanying Notes.
</TABLE>
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<PAGE>
<PAGE>
<TABLE>
ENSERCH CORPORATION AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(September 30, 1995 Unaudited)
<CAPTION>
September 30 December 31
1995 1994
------------ -----------
(In thousands)
<S> <C> <C>
ASSETS
Current Assets
Cash and equivalents. . . . . . . . . . . . . . . . . . . . . . . . . $ 8,738 $ 9,811
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . 200,404 224,500
Gas stored underground. . . . . . . . . . . . . . . . . . . . . . . . 117,076 114,862
Advances and prepayments for gas. . . . . . . . . . . . . . . . . . . 16,479 28,622
Gas-purchase settlements recoverable from customers . . . . . . . . . 9,737 23,943
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,751 128,706
---------- ----------
Total current assets. . . . . . . . . . . . . . . . . . . . . . . . 431,185 530,444
---------- ----------
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,483 56,165
---------- ----------
Property, Plant and Equipment (full-cost
method for gas and oil properties). . . . . . . . . . . . . . . . . . 4,375,469 3,803,202
Less accumulated depreciation and amortization. . . . . . . . . . . . (1,656,634) (1,549,717)
---------- ----------
Net property, plant and equipment . . . . . . . . . . . . . . . . . 2,718,835 2,253,485
---------- ----------
Other Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,630 48,443
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,262,133 $2,888,537
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Commercial paper and other short-term borrowings. . . . . . . . . . . $ 219,500 $ 154,241
Current portion of senior long-term debt. . . . . . . . . . . . . . . 12,000 10,600
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . 228,394 331,920
Accrued interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 14,726 35,885
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . 89,070 95,635
Liabilities for discontinued operations . . . . . . . . . . . . . . . 52,003 59,259
---------- ----------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . 615,693 687,540
---------- ----------
Senior Long-term Debt . . . . . . . . . . . . . . . . . . . . . . . . . 857,455 715,721
---------- ----------
Convertible Subordinated Debentures . . . . . . . . . . . . . . . . . . 90,750 90,750
---------- ----------
Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 276,431 280,051
---------- ----------
Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 226,420 201,187
---------- ----------
Mandatorily Redeemable Preferred Securities of Subsidiary . . . . . . . 150,000
---------- ----------
Minority Interest in Equity of Subsidiary . . . . . . . . . . . . . . . 156,785 12,101
---------- ----------
Shareholders' Equity
Adjustable rate preferred stock . . . . . . . . . . . . . . . . . . . 175,000 175,000
---------- ----------
Common shareholders' equity
Common stock (100,000 shares authorized;
68,453 and 68,158 shares outstanding) . . . . . . . . . . . . . . 304,616 303,301
Paid in capital . . . . . . . . . . . . . . . . . . . . . . . . . . 338,193 334,672
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . 72,532 89,054
Treasury stock. . . . . . . . . . . . . . . . . . . . . . . . . . . (90)
Unamortized restricted stock compensation . . . . . . . . . . . . . (1,652) (840)
---------- ---------
Common shareholders' equity . . . . . . . . . . . . . . . . . . . 713,599 726,187
---------- ---------
Shareholders' equity. . . . . . . . . . . . . . . . . . . . . . 888,599 901,187
---------- ---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,262,133 $2,888,537
========== ==========
<FN>
See accompanying Notes.
</TABLE>
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<PAGE>
<PAGE>
ENSERCH CORPORATION AND SUBSIDIARY COMPANIES
Notes to Condensed Consolidated Financial Statements
1. On June 8, 1995, the Corporation's subsidiary Enserch Exploration, Inc.
(EEX) acquired all the capital stock of DALEN Corporation for cash of $340
million and assumed DALEN's bank debt of $115 million. The acquisition
has been accounted for as a purchase. The assets acquired and the
liabilities assumed were recorded at their fair value, and essentially all
of the valuation adjustment was assigned to gas and oil properties.
Following is a summary of pro forma results of operations of the
Corporation assuming the DALEN acquisition had occurred at the beginning
of the periods presented:
<TABLE>
<CAPTION>
Nine Months Ended
September 30
--------------------------------
1995 1994
------------ ------------
(In thousands, except per share)
<S> <C> <C>
Revenues $1,471,672 $1,653,175
Net Income (Loss) (7,922) 844
Loss Applicable to Common
Stock (16,805) (7,752)
Loss Applicable to Common
Stock - per share (.25) (.11)
</TABLE>
EEX borrowed $350 million under a four-year revolving credit agreement (at
a floating interest rate) and $150 million under a bridge loan to pay the
purchase price of $340 million for the capital stock of DALEN, repay
DALEN's bank debt of $115 million and reduce advances from ENSERCH by $45
million. In September 1995, the borrowing under the revolving credit
agreement was reduced to $140 million, mostly with the net proceeds of
$208 million received from the public offering of 20 million shares of EEX
common stock. The bridge loan was repaid in August 1995 with the proceeds
from a $150 million mandatorily redeemable preferred securities offering
by a subsidiary of EEX for which EEX is also obligated. The dividends on
the subsidiary preferred securities are reflected in interest and other
financing costs in the statement of consolidated income.
2. On June 29, 1995, ENSERCH purchased the principal operating assets of
Sunrise Energy Services, Inc. and subsidiaries (Sunrise), a nonregulated
marketer of natural gas, for approximately $9 million in cash, including
some $8 million of cost in excess of net assets acquired that is being
amortized on the straight-line method over twenty years. The acquired
Sunrise operations had revenues of approximately $76 million for the six
months ended June 30, 1995 and $185 million for the nine months ended
September 30, 1994. Sunrise revenues decreased from 1994 to 1995 due to
the decline in natural-gas prices and because certain activities were not
conducted in the 1995 period. Operating results of the Sunrise operations
for these periods were not significant. The Sunrise operations do not
constitute a significant acquisition; therefore, pro forma information is
not presented.
-4-
<PAGE>
<PAGE>
3. Effective June 30, 1995, the Corporation exchanged 1,204,098 shares of
ENSERCH common stock for 100% of the outstanding shares of DGS Holdings
Corp. (DGS), which through its subsidiary is a major marketer of natural
gas and natural-gas services. The pooling-of-interests method is being
used to account for the transaction. Accordingly, the Corporation's
financial statements have been restated for all periods presented to
include the results of DGS in the Natural Gas Pipeline & GPM segment.
DGS's net income for the 1995 and 1994 periods was impacted by significant
financing expenses that will not be incurred under ENSERCH ownership. The
1994 results reflect significant severance and other costs relating to an
acquisition at yearend 1993. Revenues and net income of DGS for the
periods preceding the acquisition were as follows (in thousands):
Six Months Ended June 30, 1995:
Revenues $120,030
Net Income 527
Nine Months Ended September 30, 1994:
Revenues $184,185
Net Loss (264)
4. On September 26, 1995, EEX sold 20 million shares of its common stock to
the public for net proceeds of approximately $208 million after expenses,
and ENSERCH's ownership percentage was reduced from 99.2% to 83.4%.
ENSERCH's increase in the equity of EEX as a result of the stock sale, net
of the reduction in its ownership percentage, was $59 million. In
accordance with the full cost accounting method, the credit arising from
the sale transaction was treated as a reduction of the carrying value of
gas and oil properties, with no gain recognized on the sale since the sale
did not significantly alter the relationship between capitalized costs and
proved reserves.
5. At September 30, 1995, ENSERCH's full cost ceiling amount attributable to
the properties acquired in the DALEN acquisition was approximately $112
million ($73 million after tax) less than the unamortized cost of
producing properties acquired. ENSERCH believes that the DALEN properties
have significant exploration and development potential. ENSERCH expects
to be able to utilize its expertise, particularly with respect to tight
sands reservoirs, to enhance production and cash flows from these
properties because of the geologic similarity and proximity of DALEN's
major producing properties to ENSERCH's properties. ENSERCH believes that
the unamortized cost of the gas and oil properties acquired in the DALEN
acquisition is recoverable from future production. ENSERCH requested and
was granted a waiver of the full cost ceiling limitation on these
properties by the Securities and Exchange Commission through June 30,
1996. If an excess exists after that date, a write-off may be required.
ENSERCH's full cost ceiling amount at September 30, 1995 (exclusive of the
DALEN acquisition) was approximately $37 million ($24 million after tax)
greater than the recorded cost of its gas and oil properties.
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<PAGE>
6. Earnings per share applicable to common stock are based on the weighted
average number of common shares outstanding during the periods, including
common equivalent shares when dilutive. Fully diluted earnings per share
are not presented since the assumed exercise of stock options and
conversion of debentures would not be dilutive.
7. In the opinion of management, all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of the results of
operations for the interim periods included herein have been made.
Certain prior-period amounts have been reclassified to reflect the
realignment of business segments effective with the second quarter of
1995. Components of current liabilities in the December 1994 balance
sheet have been reclassified to conform to the 1995 presentation.
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<PAGE>
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
ENSERCH Corporation:
We have reviewed the accompanying condensed consolidated balance sheet of
ENSERCH Corporation and subsidiary companies as of September 30, 1995, the
related condensed statements of consolidated income for the three months and
nine months ended September 30, 1995 and 1994, and the condensed statements
of consolidated cash flows for the nine months ended September 30, 1995 and
1994. These financial statements are the responsibility of the Corporation's
management. The consolidated financial statements give retroactive effect to
the combination of ENSERCH Corporation and DGS Holdings Corp., which has been
accounted for as a pooling-of-interests as described in Note 3 of the Notes
to Condensed Consolidated Financial Statements.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical review
procedures to financial data and making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective
of which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such condensed consolidated financial statements for them
to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of ENSERCH Corporation and
subsidiary companies as of December 31, 1994, and the related consolidated
statements of income, cash flows and common shareholders' equity for the year
then ended prior to restatement for the combination described in Note 3 of the
Notes to Condensed Consolidated Financial Statements (not presented herein);
and in our report dated February 10, 1995, we expressed an unqualified opinion
on those consolidated financial statements. We also audited the adjustments
that were applied to restate the December 31, 1994 consolidated balance sheet
of ENSERCH Corporation and subsidiary companies. In our opinion, such
adjustments are appropriate and have been properly applied and the information
set forth in the accompanying condensed consolidated balance sheet as of
December 31, 1994, is fairly stated in all material respects, in relation to
the restated consolidated balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
Dallas, Texas
October 30, 1995
-7-
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
CONSOLIDATED RESULTS - ENSERCH had a loss applicable to common stock of
$16.6 million ($.24 per share) for the third quarter of 1995, compared with
a loss of $17.5 million ($.26 per share) for the third quarter of 1994.
Operating income for the 1995 third quarter was $4.1 million versus an
operating loss of $3.7 million for the third quarter of 1994. Operating
results were significantly improved in the Natural Gas Pipeline & GPM and
Natural Gas Distribution segments, while operating income from the Natural
Gas and Oil Exploration and Production segment decreased primarily due to
lower natural-gas prices. Interest expense and other financing costs for the
third quarter of 1995 of $26 million were $8.1 million higher than in the
1994 third quarter, principally due to $455 million of debt issued and
assumed in the acquisition of DALEN Corporation (DALEN) in June of this year.
Net proceeds of $208 million received in late September from the sale of
20 million shares of Enserch Exploration, Inc. (EEX) common stock reduced
debt associated with the acquisition.
For the first nine months of 1995, the loss applicable to common stock was
$6.5 million ($.09 per share), compared with earnings of $1.3 million
($.02 per share) for the like period of 1994. Income from continuing
operations was $2.4 million versus $8.2 million for the same period of 1994.
Although mild weather adversely impacted results by some $11 million,
operating income increased to $68 million from $67 million for the year-ago
period; however, interest expense and other financing costs of $63 million
were $11 million higher.
ACQUISITIONS - ENSERCH's subsidiary EEX acquired for cash all of the capital
stock of DALEN on June 8, 1995. The acquisition of DALEN achieves the goals
of increasing reserves and lowering average reserve life. On June 29, 1995,
ENSERCH purchased the principal operating assets of Sunrise Energy Services,
Inc. and subsidiaries (Sunrise), a nonregulated marketer of natural gas.
Effective June 30, 1995, ENSERCH exchanged 1,204,098 shares of its common
stock for all of the common stock of DGS Holdings Corp. (DGS). DGS, through
its subsidiary, is a major marketer of natural gas and natural-gas services.
The DGS and Sunrise acquisitions expand ENSERCH's energy services
capabilities in trading and other services and broaden its marketing
relationships into new areas on the West Coast and in the Midwest and
Northeast. The "purchase" method was used to account for the DALEN and
Sunrise acquisitions; therefore, consolidated results include results of
operations for these businesses from the date of acquisition. The "pooling
of interests" method was used to account for the DGS transaction, and
consolidated results for all periods presented have been restated to include
the results of DGS.
NATURAL GAS AND OIL EXPLORATION AND PRODUCTION - Operating results for the
1995 third quarter and the first nine months of 1995 were favorably impacted
by the acquisition of DALEN. However, a significant reduction in natural-gas
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<PAGE>
<PAGE>
sales prices, which was partially offset by an improvement in prices for oil,
caused an overall decline from results for the comparable periods in 1994.
The table of Operating Data on page 16 provides revenue statistics and other
information, including contributions by DALEN.
Exploration and Production operations had a 1995 third-quarter operating loss
of $1.0 million, compared with income of $1.8 million for the 1994 third
quarter. DALEN operations contributed operating income of $1.9 million,
increasing revenues by $29.5 million and operating expenses by $27.6 million.
The following comparison of period-to-period operating results excludes the
impact of DALEN. Operating income was $4.7 million below the third quarter
of 1994. Revenues were down $4.1 million (10%) from the prior third quarter
due to both lower natural-gas prices and sales volumes, partially offset by
improved prices and sales volumes for oil. Operating expenses for the third
quarter were $.6 million (1%) higher than in the 1994 third quarter, with
increased maintenance costs and slightly higher depreciation and amortization
mostly offset by reductions in general and administrative costs and
production taxes.
For the first nine months of 1995, Exploration and Production operations had
an operating loss of $5 million versus income of $18 million for the same
period a year ago. DALEN contributed operating income of $2.0 million,
increasing revenues by $40.2 million and operating expenses by $38.2 million.
Excluding the impact of DALEN, operating income for the first nine months of
1995 was $25 million lower than in the 1994 period. Revenues decreased
$20 million (15%) due to significantly lower prices and sales volumes for
natural gas, partially offset by improved prices and sales volumes for oil.
Operating expenses for the nine months were $4.6 million (4%) higher than in
the year-ago period primarily due to higher maintenance costs and franchise
taxes. Also, 1995 expenses included an overall $1.5 million addition to the
provision for the uninsured portion of injuries and damages claims, while
1994 expenses benefited from a $2.0 million reduction in such provisions.
Partially offsetting were lower depreciation and amortization expense and
reduced revenue related taxes, with both differences resulting from decreased
sales volumes.
-9-
<PAGE>
<PAGE>
ENSERCH manages a portion of the risk associated with fluctuations in the
price of natural gas and oil through the use of hedging techniques such as
gas and oil swaps, collars and futures agreements. The table below
summarizes the impact of hedging activities on revenues and average sales
prices for the third quarter and nine months of 1995 and 1994.
<TABLE>
<CAPTION>
Third Quarter Nine Months
---------------- -----------------
1995 1994 1995 1994
---- ---- ---- ----
<C> <S> <S> <S> <S>
Natural gas:
Increase in revenues (in millions) $1.8 $1.6 $5.9 $2.1
Impact on average sales price
(per thousand cubic feet) .06 .10 .09 .04
Oil:
Increase (decrease) in revenues
(in millions) .3 (.8) (.3) (.6)
Impact on average sales price
(per barrel) .29 (1.71) (.12) (.37)
</TABLE>
At September 30, 1995, ENSERCH had outstanding swaps, collars and futures
agreements extending through December 1996 to exchange payments on
approximately 4.7 billion cubic feet (Bcf) of gas and 582 thousand barrels of
oil on which ENSERCH had $1.3 million of net unrealized gains. At
September 30, 1995, realized gains on hedging activities of $.7 million were
deferred.
In the third quarter of 1995, a Mobil Corporation (Mobil) affiliate completed
a transaction in which it acquired a 40% working interest in EEX's Garden
Banks project. EEX now owns a 60% working interest in the project and
remains the operator. EEX received cash, property interests and future work
commitments on the project. In addition, ENSERCH was relieved of operating
lease obligations of approximately $140 million on the Garden Banks project,
as well as a portion of the future capital expenditure requirements.
Sales of production from two wells on Garden Banks Block 388 commenced in
late September and had a negligible impact on third-quarter results.
However, operating results for the remainder of 1995 are expected to be
adversely affected, since revenues from the initial production from these two
wells are not expected to be sufficient to cover operating costs,
amortization and the equipment lease costs on the floating production
platform and related facilities. Some operating costs and amortization vary
with production, but other costs and the equipment lease costs are
essentially fixed and decline on a per unit basis only as production
increases. Operating results are expected to improve in 1996 as production
begins from several additional development wells in the Garden Banks project
and as the related equipment lease and other fixed costs are spread over
greater production. Drilling began in November 1995 on a third well on
Block 388, which is expected to be on-stream in early 1996. A second well
-10-
<PAGE>
<PAGE>
currently being drilled on Block 387 is expected to be completed in the
fourth quarter of 1995, and production from the two wells on Block 387 should
commence during the first quarter of 1996 following the tie-back to the
system on Block 388.
In October 1995, another affiliate of Mobil completed a transaction to
purchase a 40% interest in EEX's Green Canyon project, and an affiliate of
Reading & Bates Corp. completed its purchase of a 20% interest in the
project. EEX, which now has a 40% working interest in the project and remains
the operator, received cash, an interest in a gas and oil property and future
work commitments.
After giving effect to the acquisition of DALEN in June and the then pending
sales of a 40% interest in the Garden Banks project and a 60% interest in the
Green Canyon project, ENSERCH's estimated net proved reserves at June 30,
1995 were 1.8 trillion cubic feet of natural gas equivalent.
At September 30, 1995, ENSERCH's full cost ceiling amount attributable to the
acquired DALEN properties was approximately $112 million ($73 million after
tax) less than the unamortized cost of producing properties acquired.
ENSERCH believes the DALEN properties have significant exploration and
development potential. ENSERCH expects to be able to utilize its expertise,
particularly with respect to tight sands reservoirs, to enhance production
and cash flows from these properties because of the geologic similarity and
proximity of DALEN's major producing properties to ENSERCH's properties.
ENSERCH believes that the unamortized cost of the gas and oil properties
acquired in the DALEN acquisition is recoverable from future production and
was not in fact impaired at September 30, 1995. ENSERCH requested and was
granted a waiver of the full cost ceiling limitation on these properties by
the Securities and Exchange Commission through June 30, 1996. If an excess
exists after that date, a write-off may be required.
In September 1995, EEX sold 20 million shares of its common stock to the
public, increasing the public ownership interest in EEX from less than
one percent to 16.6%. As a result of the stock sale, ENSERCH's equity
interest in EEX, net of the change due to the reduction in percentage of
ownership, increased $59 million. In accordance with the full cost
accounting method, the credit arising from the sale transaction was treated
as a reduction in the carrying value of the gas and oil properties.
ENSERCH's full cost ceiling amount at September 30, 1995 (exclusive of the
DALEN acquisition) was approximately $37 million ($24 million after tax)
greater than the recorded cost of its gas and oil properties. Since gas and
oil prices are subject to seasonal and other fluctuations, a decline in
prices from September 1995 levels or other factors, without mitigating
circumstances, could cause a future write-down of capitalized costs and a
non-cash charge against income.
NATURAL GAS PIPELINE & GPM - Operating income from the Natural Gas Pipeline
& GPM segment increased to $5.9 million for this year's third quarter from
-11-
<PAGE>
<PAGE>
$.6 million for the like period a year ago. Improved results came from
higher pipeline transportation volumes and revenue, margin from natural gas
marketing sales and better natural gas processing results. For the first
nine months of 1995, operating income for this business segment was
$42 million, compared with $32 million in the year-ago period, with improved
results from both pipeline and gas processing operations.
Third-quarter 1995 operating income from pipeline operations was
$5.0 million, compared with breakeven income in the third quarter of 1994.
Revenues for the third quarter of $33.6 million were $6.2 million (23%)
higher than in the third quarter last year. Pipeline throughput for the 1995
third quarter totaled 131 Bcf, 16.2 Bcf (14%) greater than in the 1994
period. For the first nine months of 1995, operating income from pipeline
operations was $35 million, $5.8 million (20%) better than in the like period
a year ago. Revenues for the year-to-date period were about the same as in
the 1994 period, with pipeline throughput of 417 Bcf slightly less than in
the year-ago period. Heating degree days for the nine-month period were some
8% lower than in the 1994 period and 16% below normal. The below normal
heating weather reduced operating income for pipeline operations by an
estimated $5 million. Operating expenses for the nine months were up
$2.8 million (4%) from the year-earlier period. However, unrecovered
gas-purchase costs, which fluctuate from period to period due to various
factors such as temperature extremes, metering variances and billing
estimates, were $7.9 million (43%) less than in the same period of 1994.
Operating income from natural gas marketing operations for the third quarter
of 1995 was $.2 million versus $.8 million in the 1994 third quarter, with an
improvement in gas sales margin more than offset by higher operating
expenses. The volume of gas sold for the 1995 third quarter of 108 Bcf was
26% lower than in the third quarter last year as a result of discontinuing
some low-margin wholesale sales. For the first nine months of 1995, gas
marketing operations had operating income of $4.0 million versus $4.7 million
in the 1994 period, with the margin on gas sales up $1.2 million (7%) from
the 1994 period but operating expenses $1.8 million higher. Gas sales
volumes for the first nine months of 1995 were 322 Bcf, 25.7 Bcf (7%) lower
than in the year-earlier period.
Natural gas processing activities contributed third-quarter 1995 operating
income of $.7 million, compared with last year's third-quarter loss of
$.2 million. The improvement was primarily attributable to lower
depreciation expense associated with plants that became fully depreciated at
the end of 1994. The average sales price per barrel for the third quarter of
1995 of $11.22 was down 3% from the 1994 third quarter, while sales volumes
of 1.5 million barrels were 3% higher than in the same period of 1994.
During the first nine months of 1995, natural gas processing operations had
operating income of $3.2 million versus a loss of $1.5 million for the
year-earlier period, with sales volumes up 4%, the average sales price 5%
higher and depreciation expense lower, as noted above.
-12-
<PAGE>
<PAGE>
At September 30, 1995, Lone Star Pipeline Company had an unrecovered balance
of gas-purchase contract settlements of $29 million, including $18 million
that represented prepayments expected to be recouped under contracts covering
future gas purchases. The remaining $11 million represented amounts to be
recovered from customers under existing gas-cost recovery provisions. At
September 30, 1995, outstanding supplier claims approximated $10 million.
Lone Star Pipeline Company expects to recoup or recover the remaining
balances of gas settlement payments made to date, as well as any future
payments made in settlement of remaining claims.
NATURAL GAS DISTRIBUTION - Natural Gas Distribution operations had a loss of
$1.6 million for the 1995 third quarter, substantially improved from a loss
of $6.4 million in the 1994 third quarter. The improvement was primarily due
to an 11% decrease in operating expenses principally resulting from cost
reduction measures, including reduced compensation, employee benefits and
maintenance costs. The overall margin on gas sales was down slightly from
the 1994 period, with a higher margin on sales to residential and commercial
customers more than offset by lower margins on industrial and electric-
generation sales. The total volume of gas sold in the third quarter of 1995
of 21.0 Bcf was 4% above the third quarter of 1994 due to increased sales to
electric-generation customers.
Operating income for the first nine months of 1995 was $35 million versus
$21 million for the year-earlier period. The improved results reflect a
slight increase in gas sales margin and a $12.6 million (8%) reduction in
operating expenses, with more than half of the decrease in expenses
attributable to lower compensation and employee benefit costs. Total gas
sales volumes of 105 Bcf were down 4% from the like period of 1994.
Residential and commercial sales volumes of 86.3 Bcf declined 4% from the
year-earlier period, with heating degree days some 8% lower than in the 1994
period. The milder-than-normal winter weather, as mentioned above, adversely
impacted operating income for this segment by an estimated $6 million.
Future results are expected to benefit from 1995 efforts to seek higher rates
throughout the distribution system. Rate increases granted to date in 1995
will increase annual revenues by approximately $8.4 million assuming normal
winter weather. In addition, a 4.6% or $8.8 million annual increase has been
requested from the City of Dallas.
POWER Power activities, comprised of Enserch Development Corporation (EDC)
and Lone Star Energy Company, had 1995 third-quarter operating income of
$2.5 million, compared with $3.0 million for the same period a year ago.
Year-to-date 1995 operating income for Power operations was $2.0 million
versus $3.2 million in the same period of 1994. Results for the 1995 periods
reflect a $1.0 million credit to business insurance expense resulting from
favorable experience from prior years' injuries and damages claims and the
recognition of $1.3 million of previously deferred revenues for development
fees on projects completed in prior years as a result of certain
contingencies being satisfied.
-13-
<PAGE>
<PAGE>
LIQUIDITY AND FINANCIAL RESOURCES - Operating activities of continuing
operations for the first nine months of 1995 provided net cash flows of
$180 million, a significant improvement from the $46 million provided in the
year-earlier period, which reflected a $62 million payment relating to an
adverse judgment in litigation that became final in 1993. Changes in other
assets and liabilities resulted in a year-to-year improvement in cash flows
of $19 million. Also, changes in current operating assets and liabilities in
1995 provided $18 million versus a $28 million requirement in 1994, exclusive
of the litigation payment. The $27 million provided by a decrease in other
current assets included a $24 million recovery of expenditures on the Garden
Banks project from the increase in the leasing program and the collection of
$10 million of previously deferred billings on the Bellingham, Washington
cogeneration facilities developed by EDC.
Investing activities required net cash flows of $592 million, including
$333 million for the DALEN acquisition and $9 million for the Sunrise
acquisition, compared with $309 million in the year-ago period. Discontinued
operations required cash of $37 million in the first nine months of 1995,
principally for the repurchase of previously sold receivables that are
expected to be recovered. In the first nine months of 1994, discontinued
operations required cash of $119 million, which was essentially recovered in
the fourth quarter of 1994 upon the sale of Enserch Environmental.
Property, plant and equipment additions for 1995 are expected to total
approximately $278 million, including $175 million for Natural Gas and Oil
Exploration and Production, $43 million for Natural Gas Pipeline & GPM,
$59 million for Natural Gas Distribution and $1 million for other
requirements. Expenditures for the Natural Gas and Oil Exploration and
Production segment for 1995 have been reduced $39 million from the originally
planned level of $160 million for that segment because of low natural-gas
prices. Capital expenditures for 1995 exploration and development of the
DALEN properties following the acquisition by EEX are estimated to be
$54 million. The expenditures are being funded from internal cash flow, plus
external financings as required. Costs of the floating production platform
and related facilities for the Garden Banks project, which are financed by an
operating lease arrangement, are not included in these amounts. Following
the completion of the transaction with the Mobil affiliate in the third
quarter of 1995, ENSERCH's obligation under the Garden Banks lease
arrangement was reduced by $140 million to approximately $210 million.
In June 1995, EEX borrowed $350 million under a four-year revolving credit
agreement and $150 million under a bridge loan to pay the purchase price of
$340 million for the capital stock of DALEN, repay DALEN's bank debt of
$115 million and reduce advances from ENSERCH by $45 million. In September
1995, EEX used the $208 million proceeds from the public sale of 20 million
shares of its common stock to reduce the borrowing under the revolving credit
agreement. The bridge loan was repaid on August 4, 1995 with the proceeds
from $150 million of mandatorily redeemable preferred securities issued by a
-14-
<PAGE>
<PAGE>
subsidiary of EEX for which EEX is also obligated. The dividends on the
preferred securities are included in interest and other financing costs.
Also in June 1995, ENSERCH issued $150 million of 7 1/8% Notes due 2005, with
the proceeds used to prepay a variable rate note due in 1998.
Consolidated senior long-term and convertible debt, including current
maturities, as a percentage of total capitalization was 44.5% at
September 30, 1995, compared with 47.2% at the end of 1994. ENSERCH has bank
lines in the form of a three-year revolving agreement totaling $600 million,
all of which were unused at September 30, 1995. In addition, as noted above,
EEX has a $350 million four-year revolving credit agreement, $210 million of
which was unused at September 30, 1995.
-15-
<PAGE>
<PAGE>
<TABLE>
ENSERCH CORPORATION AND SUBSIDIARY COMPANIES
Natural Gas and Oil Exploration and Production Operating Data (Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
------------------ -----------------
1995 1994 1995 1994
----- ------ ----- ------
<S> <C> <C> <C> <C>
Operating Income (Loss)(in millions) (a). . . . . . . . . . $ (1.0) $ 1.8 $ (5.0) $ 18.0
====== ====== ====== ======
Revenues (in millions)(a)
Natural gas (b). . . . . . . . . . . . . . . . . . . . . $ 46.8 $ 33.4 $ 113.8 $ 111.8
Oil and condensate . . . . . . . . . . . . . . . . . . . 17.0 7.5 37.7 23.2
Natural gas liquids. . . . . . . . . . . . . . . . . . . 1.4 .5 3.1 1.3
Other revenues - net . . . . . . . . . . . . . . . . . . 1.6 1.8 .3
------ ------ ------ ------
Total revenues. . . . . . . . . . . . . . . . . . . . $ 66.8 $ 41.4 $ 156.4 $ 136.6
====== ====== ====== ======
Sales Volumes (a)
Natural gas (MMcf) (b) . . . . . . . . . . . . . . . . . 9,083 16,258 63,536 51,667
Oil and condensate (MBbl). . . . . . . . . . . . . . . . 1,018 487 2,236 1,523
Average Sales Price (a)
Natural gas (per Mcf). . . . . . . . . . . . . . . . . . 1.61 $ 2.06 $ 1.79 $ 2.16
Oil and condensate (per Bbl) . . . . . . . . . . . . . . 16.72 15.29 16.86 15.23
Data in Equivalent Energy Content (per Mcfe) (c)
Production revenue . . . . . . . . . . . . . . . . . . . $ 1.81 $ 2.13 $ 1.96 $ 2.21
Production and operating costs (d) . . . . . . . . . . . .36 .39 .41 .38
Depreciation and amortization. . . . . . . . . . . . . . 1.07 1.06 1.07 1.05
Net Wells
Drilled. . . . . . . . . . . . . . . . . . . . . . . . . 14 13 53 48
Productive . . . . . . . . . . . . . . . . . . . . . . . 7 9 33 30
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(a) The separate results of EEX and DALEN are as follows: September 30, 1995 September 30, 1995
------------------ ------------------
EEX DALEN EEX DALEN*
------ ------ ------ ------
<S> <C> <C> <C> <C>
Operating Income (Loss)(in millions) . . . . . . . . $ (2.9) $ 1.9 $ (7.0) $ 2.0
====== ====== ====== ======
Revenues (in millions)
Natural gas (b) . . . . . . . . . . . . . . . . . $ 26.7 $ 20.1 $ 86.2 $ 27.6
Oil and condensate. . . . . . . . . . . . . . . . 8.6 8.4 26.5 11.2
Natural gas liquids and other revenues - net. . . 2.0 1.0 3.5 1.4
------ ------ ------ ------
Total revenues . . . . . . . . . . . . . . . . $ 37.3 $ 29.5 $ 116.2 $ 40.2
====== ====== ====== ======
Sales Volumes
Natural gas (MMcf) (b). . . . . . . . . . . . . . 15,428 13,655 45,291 18,245
Oil and condensate (MBbl) . . . . . . . . . . . . 514 504 1,570 666
Average Sales Price
Natural gas (per Mcf) . . . . . . . . . . . . . . $ 1.73 $ 1.47 $ 1.90 $ 1.51
Oil and condensate (per Bbl) . . . . . . . . . . 16.85 16.59 16.91 16.74
<FN>
*From date of acquisition on June 8, 1995.
(b) Excludes products purchased for resale. Includes affiliated revenues and volumes.
(c) Oil and natural gas liquids are converted to Mcf equivalents (Mcfe) on the basis of one barrel equals
6.0 Mcfe.
(d) Excludes related production, severance and ad valorem taxes.
</TABLE>
-16-
<PAGE>
<PAGE>
<TABLE>
ENSERCH CORPORATION AND SUBSIDIARY COMPANIES
Natural Gas Pipeline & Gathering, Processing and Marketing Operating Data (Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
Sepetmber 30 September 30
------------------ ----------------
1995 1994(d) 1995 1994(d)
---- ------ ---- ------
<S> <C> <C> <C> <C>
Operating Income (Loss)(in millions)
Pipeline . . . . . . . . . . . . . . . . . . . . . . . . $ 5.0 $ $ 34.5 $ 28.7
Natural Gas Marketing . . . . . . . . . . . . . . . . . . .2 .8 4.0 4.7
Natural Gas Processing. . . . . . . . . . . . . . . . . . .7 (.2) 3.2 (1.5)
------ ------ ------ ------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . $ 5.9 $ .6 $ 41.7 $ 31.9
====== ====== ====== ======
Revenues (in millions)
Pipeline (a). . . . . . . . . . . . . . . . . . . . . . . $ 33.6 $ 27.4 $116.9 $115.6
------ ------ ------ ------
Natural Gas Marketing
On-System . . . . . . . . . . . . . . . . . . . . . . . 46.7 51.6 136.7 166.2
Off-System. . . . . . . . . . . . . . . . . . . . . . . 135.1 251.7 421.6 583.3
------ ------ ------ ------
Total. . . . . . . . . . . . . . . . . . . . . . . . . 181.8 303.3 558.3 749.5
------ ------ ------ -------
Natural Gas Processing
Natural gas liquids (b) . . . . . . . . . . . . . . . . 17.0 17.0 52.4 47.9
Other(c). . . . . . . . . . . . . . . . . . . . . . . . 4.8 5.3 15.0 13.5
------ ------ ------ ------
Total. . . . . . . . . . . . . . . . . . . . . . . . . 21.8 22.3 67.4 61.4
------ ------ ------ ------
Total revenues . . . . . . . . . . . . . . . . . . . . $237.2 $353.0 $742.6 $926.5
====== ====== ====== ======
Volumes
Pipeline throughput (Bcf) . . . . . . . . . . . . . . . . 130.9 114.7 417.2 419.8
====== ====== ====== ======
Natural Gas Marketing (Bcf)
On-System . . . . . . . . . . . . . . . . . . . . . . . 26.8 25.8 77.5 78.6
Off-System . . . . . . . . . . . . . . . . . . . . . . 81.2 120.7 244.2 268.8
------ ------ ------ ------
Total. . . . . . . . . . . . . . . . . . . . . . . . . 108.0 146.5 321.7 347.4
====== ====== ====== ======
Natural Gas Processing (MBbl) . . . . . . . . . . . . . . 1,518 1,468 4,468 4,278
====== ====== ====== ======
Average Sales Prices
Natural Gas Marketing (per Mcf)
On-System . . . . . . . . . . . . . . . . . . . . . . . $ 1.74 $ 2.00 $ 1.76 $ 2.12
Off-System . . . . . . . . . . . . . . . . . . . . . . 1.66 2.08 1.73 2.17
------ ------ ------ ------
Total . . . . . . . . . . . . . . . . . . . . . . . . $ 1.68 $ 2.07 $ 1.74 $ 2.16
====== ====== ====== =======
Natural Gas Liquids (per Bbl)(b). . . . . . . . . . . . . $11.22 $11.61 $11.73 $ 11.19
====== ====== ====== =======
<FN>
(a) Includes transportation services for affiliates and third-parties and other miscellaneous revenues.
(b) Represents revenues from sales of plant production.
(c) Includes revenues from natural gas liquids purchased for resale, gathering fees and other miscellaneous
revenues.
(d) 1994 amounts have been restated for the realignment of business segments and the pooling-of-interests
transaction with DGS.
</TABLE>
-17-
<PAGE>
<PAGE>
<TABLE>
ENSERCH CORPORATION AND SUBSIDIARY COMPANIES
Natural Gas Distribution Operating Data (Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
----------------- ---------------
1995 1994(b) 1995 1994(b)
----- ------ ----- ------
<S> <C> <C> <C> <C>
Operating Income (Loss)(in millions). . . . . . . . . . . . $ (1.6) $ (6.4) $ 34.6 $ 21.1
====== ====== ====== ======
Natural Gas Sales Revenues by Customer (in millions)
Residential & commercial. . . . . . . . . . . . . . . . . $ 95.8 $ 95.5 $547.7 $536.3
Industrial. . . . . . . . . . . . . . . . . . . . . . . . 10.5 11.4 43.1 46.9
Electric generation . . . . . . . . . . . . . . . . . . . 21.2 17.4 34.5 33.4
------ ------ ------ ------
Total gas sales revenues . . . . . . . . . . . . . . . . 127.5 124.3 625.3 616.6
Gas transportation revenues(a). . . . . . . . . . . . . . . 2.7 2.7 8.5 8.5
Other revenues. . . . . . . . . . . . . . . . . . . . . . . 2.3 2.4 6.7 6.6
------ ------ ------ ------
Total revenues . . . . . . . . . . . . . . . . . . . $132.5 $129.4 $640.5 $631.7
====== ====== ====== ======
Natural Gas Sales Volumes by Customer (Bcf)
Residential & commercial. . . . . . . . . . . . . . . . . 13.2 13.2 86.3 89.9
Industrial. . . . . . . . . . . . . . . . . . . . . . . . 2.5 2.7 10.4 11.3
Electric generation . . . . . . . . . . . . . . . . . . . 5.3 4.3 8.4 8.1
------ ------ ------ ------
Total gas sales volumes. . . . . . . . . . . . . . . . . 21.0 20.2 105.1 109.3
====== ====== ====== ======
Natural Gas Sales Revenues (per Mcf)
Residential & commercial. . . . . . . . . . . . . . . . . $ 7.29 $ 7.22 $ 6.35 $ 5.97
Industrial. . . . . . . . . . . . . . . . . . . . . . . . 4.20 4.18 4.14 4.13
Electric generation . . . . . . . . . . . . . . . . . . . 3.99 4.08 4.12 4.15
Natural Gas Purchase Cost (per Mcf) . . . . . . . . . . . . $ 4.14 $ 4.29 $ 4.18 $ 4.03
<FN>
(a) Transportation volumes are included in Natural Gas Pipeline & Gathering, Processing and Marketing
statistics.
(b) 1994 amounts have been restated for the realignment of business segments.
</TABLE>
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<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On October 30, 1995, a lawsuit was filed in the Supreme Court of
Western Australia by Woodside Petroleum Ltd. and its joint venture
partners against the Corporation, a former subsidiary of the
Corporation and others. Plaintiffs seek damages of approximately $18
million from the Corporation based on an indemnity arrangement and
approximately $208 million from the other defendants for alleged
breaches of contract and breaches of a trade practice act, all in
connection with the construction of an offshore gas and condensate
drilling production platform. The current owner of the former
subsidiary has notified the Corporation that it also intends to seek
indemnification from the Corporation. The Corporation has just begun
its review of the relevant documents and facts in order to determine
the extent, if any, of its potential liability in the lawsuit.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
15 Letter of Deloitte & Touche LLP dated
October 30, 1995, regarding unaudited
interim financial statements.
23.1 Consent of Deloitte & Touche LLP (included
in Exhibit 15.)
(b) Reports on Form 8-K
No reports were filed on Form 8-K for the three
months ended September 30, 1995.
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<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ENSERCH Corporation
(Registrant)
Date: November 13, 1995 By /s/ M. E. Rescoe
---------------------------
M. E. Rescoe, Senior Vice
President, Finance and
Chief Financial Officer
Date: November 13, 1995 By /s/ J. W. Pinkerton
---------------------------
J. W. Pinkerton,
Vice President and Controller,
Chief Accounting Officer
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<PAGE>
EXHIBIT (15)
ENSERCH Corporation:
We have made a review in accordance with standards established by the American
Institute of Certified Public Accountants of the unaudited interim condensed
consolidated financial information of ENSERCH Corporation and subsidiary
companies for the periods ended September 30, 1995 and 1994, as indicated in
our report dated October 30, 1995; because we did not perform an audit, we
expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended September 30, 1995, is
being used in Registration Statements No. 2-59259, No. 33-40589, No. 33-
47911 and No. 2-77572 on Form S-8, and in Registration Statements No. 33-
15623, No. 33-52525 and No. 33-61635 on Form S-3.
We also are aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that
Act.
DELOITTE & TOUCHE LLP
Dallas, Texas
November 13, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ENSERCH
CORPORATION FORM 10-Q FOR THE PERIOD ENDING SEPTEMBER 30, 1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<NAME> ENSERCH CORPORATION
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<PERIOD-END> SEP-30-1995
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