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 JUNE 30, 1994
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 1-3551
EQUITABLE RESOURCES, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 25-0464690
(State of incorporation or organization) (IRS Employer Identification No.)
420 Boulevard of the Allies, Pittsburgh, Pennsylvania 15219
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (412) 261-3000
____________
NONE
(Former name, former address and former fiscal year, if changed since last
report)
____________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of issuer's classes of
common stock, as of the close of the period covered by this report.
Outstanding at
Class June 30, 1994
Common stock, no par value 34,521,321 shares
<PAGE>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Index
Page No.
Part I. Financial Statements:
Statements of Consolidated Income for the Three
Months Ended June 30, 1994 and 1993, the Six
Months Ended June 30, 1994 and 1993 and the
Twelve Months Ended June 30, 1994 and 1993 1
Statements of Consolidated Cash Flows
for the Three Months Ended June 30, 1994 and
1993, the Six Months Ended June 30, 1994 and
1993, and the Twelve Months Ended June 30,
1994 and 1993 2
consolidated Balance Sheets, June 30, 1994
and 1993 and December 31, 1993 3 - 4
Long-Term Debt, June 30, 1994 and 1993 5
Notes to Consolidated Financial Statements 6
Gas Produced, Purchased and Sold 7 - 12
Information by Business Segment 13
Management's Discussion and Analysis of
Financial Condition and Results of Operations 14 - 17
Part II. Other Information 18
Signature 19
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Statements of Consolidated Income
(Thousands Except Per Share Amounts)
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues $316,122 $207,782 $755,660 $477,601 $1,372,853 $883,415
Cost of Gas Purchased 221,331 121,903 502,977 259,269 887,865 463,512
Net operating revenues 94,791 85,879 252,683 218,332 484,988 419,903
Operating Expenses:
Operation 45,244 40,032 96,132 80,189 190,363 161,674
Maintenance 7,719 6,984 14,847 13,009 30,862 27,015
Depreciation and
depletion 22,434 16,803 45,328 34,452 87,770 68,378
Taxes other than income 9,340 8,082 25,343 21,355 43,790 38,112
Total operating
expenses 84,737 71,901 181,650 149,005 352,785 295,179
Operating Income 10,054 13,978 71,033 69,327 132,203 124,724
Other Income 176 (145) 508 138 2,076 1,554
Interest Charges 10,931 8,633 20,929 17,697 41,960 34,883
Income (Loss)
Before Income Taxes (701) 5,200 50,612 51,768 92,319 91,395
Income Taxes (Benefits) (6,758) (3,631) 8,196 12,142 16,074 21,474
Net Income $ 6,057 $ 8,831 $ 42,416 $ 39,626 $ 76,245 $ 69,921
Average Common
Shares Outstanding 34,506 31,429 34,492 31,418 33,780 31,390
Earnings Per Share of
Common Stock $.18 $.28 $1.23 $1.26 $2.26 $2.23
Dividends Per Share of
Common Stock $ - $ - $ .57 $ .54 $1.13 $1.07
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Statements of Consolidated Cash Flows
(Thousands)
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net Income $ 6,057 $ 8,831 $ 42,416 $ 39,626 $ 76,245 $ 69,921
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating
Activities:
Depreciation and depletion 22,434 16,803 45,328 34,452 87,770 68,378
Deferred income taxes (benefits) (4,748) (2,221) (3,924) (3,912) 744 1,885
Other - net 275 (268) 3,355 2,002 2,672 (115)
Changes in other assets and liabilities:
Accounts receivable and
unbilled revenues 67,279 28,101 4,466 16,608 (34,494) (14,433)
Gas stored underground (6,134) (21,922) 10,514 (15,838) 21,276 (35,719)
Material and supplies (2,330) (67) (2,568) 1,522 (4,799) 1,134
Deferred purchased gas cost (5,563) (5,284) 2,368 6,310 (17,966) (6,293)
Prepaid expenses and other 4,562 5,509 339 4,347 (5,685) 10,434
Regulatory assets (1,333) (1,787) (2,587) (2,494) (18,750) (5,364)
Accounts payable (28,015) 15,372 (6,796) 12,182 (231) 31,410
Accrued taxes (15,153) (14,564) 2,050 1,224 1,850 368
Refunds due customers 2,055 (1,926) 3,964 (2,363) 8,864 1,658
Other - net 7,133 9,284 2,088 (3,712) 2,889 12,332
Total adjustments 40,462 27,030 58,597 50,328 44,140 65,675
Net cash
provided by operating
activities 46,519 35,861 101,013 89,954 120,385 135,596
Cash Flows from Investing Activities:
Capital expenditures:
Energy resources (25,311) (206,660) (40,200) (225,045) (111,400) (256,336)
Utility services (10,659) (11,312) (20,306) (19,517) (43,955) (45,982)
Proceeds from sale of property 284 319 515 743 1,042 6,785
Net cash used in
investing activities (35,686) (217,653) (59,991) (243,819) (154,313) (295,533)
Cash Flows from Financing Activities:
Issuance of common stock 395 43 874 233 113,053 1,220
Purchase of treasury stock - - - (18) (10) (116)
Dividends paid (9,835) (8,486) (19,662) (16,967) (37,974) (33,485)
Proceeds from issuance of long-
term debt - - 43,185 31,775 43,112 56,134
Repayments and retirements of
long-term debt - - (1,971) (16,445) (1,971) (25,020)
Increase (decrease) in
short-term loans 2,700 214,000 (66,000) 170,500 (96,600) 177,000
Net cash provided (used) by
financing activities (6,740) 205,557 (43,574) 169,078 19,610 175,733
Increase (decrease) in cash
and cash equivalents 4,093 23,765 (2,552) 15,213 (14,318) 15,796
Cash and cash equivalents at beginning
of period 8,392 3,038 15,037 11,590 26,803 11,007
Cash and cash equivalents
at end of period $ 12,485 $ 26,803 $ 12,485 $ 26,803 $ 12,485 $ 26,803
Cash paid during the period for:
Interest (net of
amount capitalized) $ 6,097 $ 4,717 $ 18,693 $ 15,399 $ 37,886 $ 31,571
Income taxes $ 8,792 $ 13,375 $ 6,511 $ 14,589 $ 19,469 $ 19,047
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Thousands)
June 30, December 31,
1994 1993 1993
ASSETS
<S> <C> <C> <C>
Property, Plant and Equipment
(Successful Efforts Method):
Energy resources $1,240,782 $1,171,651 $1,203,599
Less accumulated depreciation
and depletion 332,130 309,413 298,370
Net energy resources 908,652 862,238 905,229
Utility services 919,018 867,485 903,238
Less accumulated depreciation
and depletion 269,023 249,908 260,043
Net utility services 649,995 617,577 643,195
Net property, plant
and equipment 1,558,647 1,479,815 1,548,424
Current Assets:
Cash and cash equivalents 12,485 26,803 15,037
Accounts receivable (less accumulated
provision for doubtful accounts:
June 30, 1994, $13,079; 1993, $11,155;
December 31, 1993, $10,106) 189,802 154,366 171,626
Unbilled revenues 2,238 2,705 27,853
Gas stored underground - current inventory 7,545 28,821 18,059
Material and supplies 14,829 10,030 12,261
Deferred purchased gas cost 14,780 (3,186) 17,148
Deferred income taxes 2,210 7,004 4,805
Prepaid expenses and other 23,638 20,723 23,977
Total current assets 267,527 247,266 290,766
Other Assets:
Regulatory assets 89,611 70,861 87,024
Other 26,664 27,646 25,498
Total other assets 116,275 98,507 112,522
Total $1,942,449 $1,825,588 $1,951,712
</TABLE>
<PAGE>
<TABLE>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Thousands)
June 30, December 31,
1994 1993 1993
CAPITALIZATION AND LIABILITIES
<S> <C> <C> <C>
Capitalization:
Common stockholders' equity:
Common stock, no par value, authorized
80,000 shares; shares issued June 30,
1994, 35,139; June 30, 1993, 32,051;
December 31, 1993, 35,087 $ 224,004 $ 110,429 $ 222,801
Retained earnings 543,187 504,917 520,433
Treasury stock, shares at
cost June 30, 1994,
618; June 30, 1993, 621;
December 31, 1993, 622 (14,538) (14,613) (14,623)
Foreign Currency Translation (1,278) - (581)
Total common stockholders' equity 751,375 600,733 728,030
Long-term debt 422,425 378,670 378,845
Total capitalization 1,173,800 979,403 1,106,875
Current Liabilities:
Long-term debt payable within one year - 1,971 1,971
Short-term loans 187,900 284,500 253,900
Accounts payable 137,012 137,243 143,808
Accrued taxes 17,408 15,558 15,358
Accrued interest 12,988 12,233 12,338
Refunds due customers 18,170 9,306 14,206
Customer credit balances 1,339 1,134 7,578
Other 11,763 11,116 14,061
Total current liabilities 386,580 473,061 463,220
Deferred and Other Credits:
Deferred income taxes 334,527 325,621 336,678
Deferred investment tax credits 22,635 24,126 23,178
Other 24,907 23,377 21,761
Total deferred and other credits 382,069 373,124 381,617
Total $1,942,449 $1,825,588 $1,951,712
</TABLE>
<PAGE>
<TABLE>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Long-Term Debt
(Thousands)
Annual Maturities
Debt Maturities After One Year
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
8 1/4% Debentures, due July 1, 1996 (a) $ $ $ 75,000 $ 75,000
7 1/2% Debentures, due July 1, 1999
($75,000 principal amount net of
unamortized original issue discount) (a) 70,066 69,318
9 1/2% Convertible subordinated
debentures, due January 15, 2006 2,359 2,852
9.9% Debentures, due April 15, 2013 (b) 75,000 75,000
Medium-Term Notes:
7.2% to 9.0% Series A, due 1998 thru 2021 100,000 100,000
5.1% to 7.6% Series B, due 1995 thru 2023 100,000 56,500
Other 1,971
Total $ $1,971 $422,425 $378,670
<F/N>
(a) Not redeemable prior to maturity.
(b) Annual sinking fund payments of $3,750,000 are required beginning in 1999.
</F/N>
</TABLE>
<PAGE>
Equitable Resources, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
A. The accompanying financial statements should be read in conjunction with the
Company's 1993 Annual Report on Form 10-K.
B. In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present fairly the
financial position as of June 30, 1994 and 1993 and the results of operations
for the three, six and twelve months then ended and cash flows for the three,
six and twelve months then ended. All of the adjustments are of a normal
recurring nature. Certain balance sheet information contained in the prior
period comparative information has been reclassified to conform with the
June 30, 1994 presentation.
C. The results of operations for the three- and six-month periods ended June 30,
1994 and 1993 are not indicative of results for a full year because of the
seasonal nature of the Company's operations.
D. At June 30, 1994, 2,906,000 shares of Common Stock were reserved as follows:
214,000 shares for conversion of the 9 1/2% Convertible Subordinated
Debentures, 666,000 shares for issuance under the Key Employee Restricted
Stock Option and Stock Appreciation Rights Incentive Compensation Plan,
1,725,000 shares for issuance under the Long-Term Incentive Plan, 80,000
shares for issuance under the Non-Employee Directors' Stock Incentive Plan,
and 221,000 shares for issuance under the Company's Dividend Reinvestment and
Stock Purchase Plan.
E. The Company filed a shelf registration in March 1992 to issue $100 million of
Medium-Term Notes--Series B to be used primarily to retire short-term loans
incurred to temporarily finance a portion of 1991 acquisitions. Through
December 31, 1993, the Company issued $56.5 million of Medium-Term Notes. The
remaining $43.5 million of Medium-Term Notes were issued during the first
quarter of 1994. These notes have maturity dates ranging from three to
thirty years and a weighted average interest rate of 6.60%.
The Company filed a shelf registration effective June 9, 1994 to issue $100
million of Medium-Term Notes -- Series C to be used to retire short-term
loans. No Series C Notes have been issued.
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended June 30, 1994
Utility Energy
Services Resources Eliminations Consolidated
<S> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced 514 14,151 14,665
Purchased:
Other producers 9,660 97,278 106,938
Inter-segment purchases 2,351 618 (2,969)
Total purchases 12,011 97,896 (2,969) 106,938
Total produced and purchased 12,525 112,047 (2,969) 121,603
Deduct:
Net increase in gas in storage 2,822 2,822
Extracted natural gas liquids
(equivalent gas volumes) 2,205 2,205
System use and unaccounted for 47 533 580
Total 9,656 109,309 (2,969) 115,996
Gas Sales (MMcf):
Residential 4,310 4,310
Commercial 1,733 1,733
Industrial 645 645
Utilities 1,049 1,049
Production 14,151 (102) 14,049
Marketing 1,919 95,158 (2,867) 94,210
Total 9,656 109,309 (2,969) 115,996
Natural Gas Transported (MMcf) 15,788 26,248 (6,922) 35,114
Oil Produced and Sold (thousands of bls) 477 477
Natural Gas Liquids Sold
(thousands of gallons) 64,378 64,378
Average Selling Price
Gas - Utility Sales (per Mcf) $7.262
- Energy Resource Production $ 2.000
- Energy Resource Marketing $ 2.046
Oil (per barrel) $14.443
Natural Gas Liquids (per gallon) $ .259
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended June 30, 1993
Utility Energy
Services Resources Eliminations Consolidated
<S> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced 318 11,831 12,149
Purchased:
Other producers 13,342 40,504 53,846
Inter-segment purchases 1,769 621 (2,390)
Total purchases 15,111 41,125 (2,390) 53,846
Total produced and purchased 15,429 52,956 (2,390) 65,995
Deduct:
Net increase in gas in storage 7,454 7,454
Extracted natural gas liquids
(equivalent gas volumes) 478 478
System use and unaccounted for 1,048 143 1,191
Total 6,927 52,335 (2,390) 56,872
Gas Sales (MMcf):
Residential 4,384 4,384
Commercial 1,244 1,244
Industrial 815 (143) 672
Utilities 6 6
Production 11,831 (780) 11,051
Marketing 40,504 (989) 39,515
Total gas sales 6,449 52,335 (1,912) 56,872
Processed gas extracted 478 (478)
Total 6,927 52,335 (2,390) 56,872
Natural Gas Transported (MMcf) 18,086 (8,925) 9,161
Oil Produced and Sold (thousands of bls) 518 518
Natural Gas Liquids Sold
(thousands of gallons) 14,396 14,396
Average Selling Price
Gas - Utility Sales (per Mcf) $7.661
- Energy Resource Production $ 2.431
- Energy Resource Marketing $ 2.543
Oil (per barrel) $17.611
Natural Gas Liquids (per gallon) $ .336
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1994
Utility Energy
Services Resources Eliminations Consolidated
<S> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced 937 29,434 30,371
Purchased:
Other producers 24,943 177,912 202,855
Inter-segment purchases 7,113 1,584 (8,697)
Total purchases 32,056 179,496 (8,697) 202,855
Total produced and purchased 32,993 208,930 (8,697) 233,226
Deduct:
Net decrease in gas in storage (3,139) (3,139)
Extracted natural gas liquids
(equivalent gas volumes) 3,698 3,698
System use and unaccounted for 1,455 999 2,454
Total 34,677 204,233 (8,697) 230,213
Gas Sales (MMcf):
Residential 19,767 19,767
Commercial 6,916 6,916
Industrial 1,868 1,868
Utilities 1,226 1,226
Production 29,434 (409) 29,025
Marketing 4,900 174,799 (8,288) 171,411
Total 34,677 204,233 (8,697) 230,213
Natural Gas Transported (MMcf) 26,880 47,979 14,350) 60,509
Oil Produced and Sold (thousands of bls) 987 987
Natural Gas Liquids Sold
(thousands of gallons) 116,274 116,274
Average Selling Price
Gas - Utility Sales (per Mcf) $7.620
- Energy Resource Production $ 2.299
- Energy Resource Marketing $ 2.227
Oil (per barrel) $13.269
Natural Gas Liquids (per gallon) $ .255
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1993
Utility Energy
Services Resources Eliminations Consolidated
<S> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced 965 24,926 25,891
Purchased:
Other producers 29,103 75,415 104,518
Inter-segment purchases 5,534 1,278 (6,812)
Total purchases 34,637 76,693 (6,812) 104,518
Total produced and purchased 35,602 101,619 (6,812) 130,409
Deduct:
Net increase in gas in storage 3,271 3,271
Extracted natural gas liquids
(equivalent gas volumes) 984 984
System use and unaccounted for 5,763 294 6,057
Total 26,568 100,341 (6,812) 120,097
Gas Sales (MMcf):
Residential 18,411 18,411
Commercial 4,978 4,978
Industrial 2,178 (294) 1,884
Utilities 17 17
Production 24,926 (3,713) 21,213
Marketing 75,415 (1,821) 73,594
Total gas sales 25,584 100,341 (5,828) 120,097
Processed gas extracted 984 (984)
Total 26,568 100,341 (6,812) 120,097
Natural Gas Transported (MMcf) 28,415 (16,972) 11,443
Oil Produced and Sold (thousands of bls) 1,067 1,067
Natural Gas Liquids Sold
(thousands of gallons) 30,144 30,144
Average Selling Price
Gas - Utility Sales (per Mcf) $7.357
- Energy Resource Production $2.349
- Energy Resource Marketing $2.363
Oil (per barrel) $17.317
Natural Gas Liquids (per gallon) $ .339
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Twelve Months Ended June 30, 1994
Utility Energy
Services Resources Eliminations Consolidated
<S> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced 1,944 58,058 60,002
Purchased:
Other producers 47,710 320,482 368,192
Inter-segment purchases 9,047 3,651 (12,698)
Total purchases 56,757 324,133 (12,698) 368,192
Total produced and purchased 58,701 382,191 (12,698) 428,194
Deduct:
Net decrease in gas in storage (206) (206)
Extracted natural gas liquids
(equivalent gas volumes) 5,719 5,719
System use and unaccounted for 3,951 999 4,950
Total 54,956 375,473 (12,698) 417,731
Gas Sales (MMcf):
Residential 31,336 31,336
Commercial 10,173 10,173
Industrial 3,280 (46) 3,234
Utilities 1,241 1,241
Production 58,058 (415) 57,643
Marketing 8,952 317,415 (12,263) 314,104
Total gas sales 54,982 375,473 (12,724) 417,731
Processed gas extracted (26) 26
Total 54,956 375,473 (12,698) 417,731
Natural Gas Transported (MMcf) 64,737 98,638 (32,006) 131,369
Oil Produced and Sold (thousands of bls) 2,032 2,032
Natural Gas Liquids Sold
(thousands of gallons) 248,321 248,321
Average Selling Price
Gas - Utility Sales (per Mcf) $ 7.777
- Energy Resource Production $ 2.247
- Energy Resource Marketing $ 2.259
Oil (per barrel) $14.172
Natural Gas Liquids (per gallon) $ .268
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Twelve Months Ended June 30, 1993
Utility Energy
Services Resources Eliminations Consolidated
<S> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced 2,284 49,765 52,049
Purchased:
Other producers 53,762 141,838 195,600
Inter-segment purchases 8,716 2,611 (11,327)
Total purchases 62,478 144,449 (11,327) 195,600
Total produced and purchased 64,762 194,214 (11,327) 247,649
Deduct:
Net increase in gas in storage 6,770 6,770
Extracted natural gas liquids
(equivalent gas volumes) 2,015 2,015
System use and unaccounted for 12,812 596 13,408
Total 45,180 191,603 (11,327) 225,456
Gas Sales (MMcf):
Residential 30,006 30,006
Commercial 7,837 7,837
Industrial 5,276 (596) 4,680
Utilities 46 46
Production 49,765 (4,853) 44,912
Marketing 141,838 (3,863) 137,975
Total gas sales 43,165 191,603 (9,312) 225,456
Processed gas extracted 2,015 (2,015)
Total 45,180 191,603 (11,327) 225,456
Natural Gas Transported (MMcf) 63,456 (35,149) 28,307
Oil Produced and Sold (thousands of bls) 2,234 2,234
Natural Gas Liquids Sold
(thousands of gallons) 62,282 62,282
Average Selling Price
Gas - Utility Sales (per Mcf) $7.269
- Energy Resource Production $ 2.267
- Energy Resource Marketing $ 2.363
Oil (per barrel) $18.054
Natural Gas Liquids (per gallon) $ .344
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Information by Business Segment
(Thousands)
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues:
Energy resources $253,187 $150,068 $513,073 $274,521 $ 981,616 $541,852
Utility services 71,220 67,342 268,806 226,687 439,416 390,405
Sales between
segments (8,285) (9,628) (26,219) (23,607) (48,179) (48,842)
Total $316,122 $207,782 $755,660 $477,601 $1,372,853 $883,415
Operating Income:
Energy resources $ 4,449 $ 10,648 $ 17,260 $ 22,806 $ 48,607 $ 51,984
Utility services 5,605 3,330 53,773 46,521 83,596 72,740
Total $ 10,054 $ 13,978 $ 71,033 $ 69,327 $ 132,203 $124,724
Net Income (Loss):
Energy resources $ 4,964 $ 9,291 $ 12,935 $ 17,391 $ 33,544 $ 38,260
Utility services 1,093 (460) 29,481 22,235 42,701 31,661
Total $ 6,057 $ 8,831 $ 42,416 $ 39,626 $ 76,245 $ 69,921
</TABLE>
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
OVERVIEW
Consolidated net income for the quarter ended,
June 30, 1994 was $6.1 million
or $.18 per share, compared with $8.8 million,
or $.28 per share, for the quarter
ended June 30, 1993. The decrease in income is
due primarily to lower prices for
produced natural gas, oil and natural gas liquids.
Consolidated net income for the six
months ended June 30, 1994 was $42.4
million, or $1.23 per share, compared with $39.6 million,
or $1.26 per share for
the six months ended June 30, 1993. Net income for
the twelve months ended June
30, 1994 was $76.2 million, or $2.26 per share,
compared with $69.9 million, or
$2.23 per share, for the twelve months
ended June 30, 1993. The increase in income
for the six- and twelve-month periods is due
primarily to increased margins from
utility service operations and increased natural gas production which were
partially offset by lower selling prices for
produced natural gas, oil and natural gas liquids.
RESULTS OF OPERATIONS
ENERGY RESOURCES
Operating revenues were $253.2 million for
the quarter ended June 30, 1994
compared with $150.1 million for the quarter
ended June 30, 1993, $513.1 million
for the six months ended June 30, 1994
compared with $274.5 million for the six
months ended June 30, 1993, and $981.6 million
for the twelve months ended June
30, 1994 compared with $541.9 million for
the twelve months ended June 30, 1993.
The increase in revenues for the current
eriods is due primarily to increases in
gas marketing activity and production of natural
gas liquids which reflect the June
1993 acquisition of Louisiana Intrastate
Gas Company (LIG). Also,
an increase in natural gas production
of approximately 18 percent for the
six- and twelve-month periods more than offset
the impact of lower wellhead prices.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C>
ENERGY RESOURCES
Operating Revenues (thousands):
Natural Gas:
Production $ 28,308 $ 28,757 $ 67,672 $ 58,556 $130,476 $112,842
Marketing 194,659 103,017 389,270 178,217 716,883 335,217
Oil 6,884 9,117 13,091 18,476 28,791 40,331
Natural Gas Liquids 16,642 4,839 29,682 10,231 66,572 21,397
Direct Billing
Settlements - - - - 7,815 7,815
Other 6,694 4,338 13,358 9,041 31,079 24,250
Total Revenues $253,187 $150,068 $513,073 $274,521 $981,616 $541,852
Sales Quantities:
Natural Gas (MMcf):
Production 14,151 11,831 29,434 24,926 58,058 49,765
Marketing 95,158 40,504 174,799 75,415 317,415 141,838
Oil (MBls) 477 518 987 1,067 2,032 2,234
Natural Gas Liquids
(thousands of
gallons) 64,378 14,396 116,274 30,144 248,321 62,282
</TABLE>
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
Cost of gas purchased amounted to $205.4 million
for the quarter ended June
30, 1994 compared with $105.2 million for
the quarter ended June 30, 1993, $407.3
million for the six months ended June 30, 1994
compared with $182.7 million for the
six months ended June 30, 1993 and $758.3 million for
the twelve months ended June
30, 1994 compared with $344.5 million for
the twelve months ended June 30, 1993.
The increased cost for the current periods
reflects the increase in volume of
marketed natural gas and increased requirements due to the
higher production level of natural
gas liquids.
Other operating expenses were $43.3 million
for the quarter ended June 30,
1994 compared with $34.3 million for the quarter
ended June 30, 1993, $88.5 million
for the six months ended June 30, 1994 compared
with $69.0 million for the six
months ended June 30, 1993 and $174.7 million for
the twelve months ended June 30,
1994 compared with $145.4 million for the twelve months
ended June 30, 1993.
Increases for the current periods are attributed
to the acquisition of LIG, as well
as the higher level of natural gas production.
Operating income was $4.5 million for the quarter
ended June 30, 1994 compared
with $10.6 million for the quarter ended June 30, 1993,
$17.3 million for the six
months ended June 30, 1994 compared with $22.8 million
for the six months ended
June 30, 1993 and $48.6 million for the
twelve months ended June 30, 1994 compared
with $52.0 million for the twelve months
ended June 30, 1993. The decreases for
the current periods are due primarily to lower
selling prices for produced natural
gas, oil and natural gas liquids, a portion of which was
offset by increased production of natural gas.
UTILITY SERVICES
Operating revenues, which are derived
principally from the sale and
transportation of natural gas, were $71.2 million
for the quarter ended June 30,
1994 compared with $67.3 million for the quarter
ended June 30, 1993. The increase
in revenues is the result of increased retail
rates to pass-through higher gas
costs to customers and gas
to commercial and industrial
customers previously using transportation service.
Operating revenues were $268.8
million for the six months ended June 30,
1994 compared with $226.7 million for the
six months ended June 30, 1993 and $439.4
million for the twelve months ended June
30, 1994 compared with $390.4 million for
the twelve months ended June 30, 1993.
The increase in revenues for the six- and twelve-
month periods is the result of increased retail gas
sales to commercial and industrial
customers previously using transportation
service and colder weather. The
implementation of Federal Energy Regulatory Commission (FERC)
Order 636 has resulted in a shift from
pipeline gas sales to marketed gas sales.
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
1994 1993 1994 1993 1994 1993
<S> <C> <C> <C> <C> <C> <C>
UTILITY SERVICES
Operating Revenues (thousands):
Retail Gas Sales $56,171 $47,998 $226,819 $184,390 $356,741 $300,899
Pipeline Gas Sales 15 5,098 77 11,133 1,201 27,129
Transportation Service 6,086 10,361 20,337 23,631 41,466 47,747
Storage Service 2,382 1,376 4,539 2,853 8,613 5,605
Marketed Gas Sales 4,463 - 12,864 - 23,064 -
Other 2,103 2,509 4,170 4,680 8,331 9,025
Total Revenues $71,220 $67,342 $268,806 $226,687 $439,416 $390,405
Sales Quantities (MMcf):
Retail Gas Sales 7,732 5,966 29,756 24,249 45,488 38,941
Pipeline Gas Sales 5 961 21 2,319 516 6,239
Transportation 15,788 18,086 26,880 28,415 64,737 63,456
Marketed Gas 1,919 - 4,900 - 8,952 -
Heating Degree Days
- Actual 644 623 3,826 3,421 6,033 5,625
- Normal 712 712 3,728 3,728 5,968 5,968
</TABLE>
Cost of gas purchased amounted to $23.6 million
for the quarter ended June
30, 1994 compared with $25.6 million for the quarter
ended June 30, 1993. The
decrease in the cost of gas purchased is due primarily to
the cessation of pipeline
sales pursuant to FERC Order 636.
Gas purchases amounted to $120.6
million for the six months ended June
30, 1994, compared with $98.9 million
for the six months ended June 30, 1993 and
$175.3 million for the twelve months ended
June 30, 1994 compared with $165.7
million for the twelve months ended June 30, 1993.
The increase in the cost of
gas purchased for the six- and twelve-month periods
is the result of the increase
in sales volumes and the pass-through of higher
costs in rates to retail
customers.
Other operating expenses amounted to $42.0
million for the quarter ended June
30, 1994 compared with $38.4 million for the
quarter ended June 30, 1993 and $94.4
million for the six months ended June 30, 1994
compared with $81.3 million for the
six months ended June 30, 1993. The
increases for the three- and six-month
periods are attributed primarily to provisions
for estimated interstate rate
refunds and higher taxes other than income
related to increased sales. Other
operating expenses were $180.4 million for
the twelve months ended June 30, 1994
compared with $152.0 million for the
twelve months ended June 30, 1993. The
increase reflects the provision for estimated
interstate rate refunds, higher
taxes other than income related to
increased sales, and increased depreciation.
Operating income was $5.6 million for the
quarter ended June 30, 1994
compared with $3.3 million for the quarter
ended June 30, 1993. The increase in
operating income is due primarily to increased
margins from pipeline operations.
Operating income was $53.8 million for the six
months ended June 30, 1994 compared
with $46.5 million for the six months ended
June 30, 1993 and $83.6 million for
the twelve months ended June 30, 1994
compared with $72.7 million for the twelve
months ended June 30, 1993. The increase
in operating income for the six- and
twelve-month periods is due to increased
retail gas sales reflecting colder
weather and higher margins from pipeline operations.
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations (Continued)
CAPITAL RESOURCES AND LIQUIDITY
Operating Activities
Cash required for operations is impacted
primarily by the seasonal nature of
the Company's utility operations. Gas
purchased for storage during the nonheating
season is financed with short-term loans which
are repaid as gas is withdrawn from
storage and sold during the heating season.
Short-term loans are also used to
provide other working capital requirements
during the nonheating season.
Investing Activities
The Company's business requires major
ongoing expenditures for replacements,
improvements and additions to utility plant and
continuing development and
expansion of its energy resources. A total
of $151.2 million has been authorized
for the 1994 capital expenditure program,
of which 60 percent is allocated to
Energy Resources. Capital expenditures
for the six months ended June 30, 1994
were $60.5 million.
Short-term loans are used as interim
financing for a portion of capital
expenditures. The Company expects to finance
its 1994 capital expenditures with
cash generated from operations and
temporarily with short-term loans.
Financing Activities
The Company believes it has adequate
borrowing capacity to meet its financing
requirements. Bank loans and commercial paper,
supported by available credit, are
used to meet short-term financing requirements.
At June 30, 1994, $168.4 million
of commercial paper and $19.5 million of
bank loans were outstanding at an average
interest rate of 4.36 percent. Lines of credit
currently available to the Company
total $325 million which require commitment
fees averaging one-tenth of one
percent. Adequate lines of credit are he
expected to continue to be available in
the future.
The Company filed a shelf registration effective
June 9, 1994 to issue $100
million of Medium-Term Notes -- Series C to
be used to retire short-term loans.
No Series C Notes have been issued.
Balance Sheet Changes
The changes in deferred purchased
gas cost are due to the timing of pass-
through of gas costs to rate payers. Changes in deferred
purchased gas cost do
not affect results of operations
due to regulatory procedures for recovery of
purchased gas cost in rates. Gas stored underground--
current inventory decreased
reflecting higher withdrawals to meet
the demand caused by colder weather. The
increase in regulatory assets since June 30, 1993
is due primarily to accounting
for income taxes and postretirement benefits other than pensions
applicable to rate regulated operations.
<PAGE>
PART II. OTHER INFORMATION
Item 4. Results of Votes of Security Holders
(a) The Annual Meeting of Shareholders was held on May 27, 1994.
(c) Brief description of matters voted upon:
(1) Elected the named directors to serve three-year terms as
follows:
Shares Voted Shares Voted
Director For Against
Clifford A. Alexander, Jr. 26,748,169 384,593
E. Lawrence Keyes, Jr. 27,013,436 119,326
Thomas A. McConomy 27,009,876 122,886
Malcolm M. Prine 27,008,307 124,455
(2) Ratified appointment of Ernst & Young as independent auditors
for the year ended December 31, 1994. Vote was 26,987,091
shares for; 65,305 shares against and 80,366 shares abstained.
(3) Approved the 1994 Equitable Resources, Inc. Non-Employee
Directors' Stock Incentive Plan. Vote was 21,091,909 shares
for; 3,665,169 shares against and 354,391 shares abstained.
(4) Approved the 1994 Equitable Resources, Inc. Long-Term
Incentive Plan. Vote was 18,344,201 shares for; 6,399,150
shares against and 369,116 shares abstained.
(5) Rejected a shareholder proposal regarding the Coalition for
Environmentally Responsible Economies (CERES) Principles.
Vote was 19,300,301 shares against; 2,374,569 shares for and
3,387,599 shares abstained.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
None
(b) Reports on Form 8-K during the period ended June 30, 1994:
None
<PAGE>
Signature
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.
EQUITABLE RESOURCES, INC.
(Registrant)
s/ Joseph L. Giebel
Joseph L. Giebel
Vice President - Accounting
and Administration
Chief Accounting Officer
Date: August 11, 1994
