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 1-3551
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 September 30, 1995
Common stock, no par value 34,980,707 shares
<PAGE>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Index
Page No.
PART I. FINANCIAL STATEMENTS:
Statements of Consolidated Income for the Three
Months Ended September 30, 1995 and 1994, the
Nine Months Ended September 30, 1995 and 1994
and the Twelve Months Ended September 30,
1995 and 1994 1
Statements of Consolidated Cash Flows
for the Three Months Ended September 30, 1995
and 1994, the Nine Months Ended September 30,
1995 and 1994, and the Twelve Months Ended
September 30, 1995 and 1994 2
Consolidated Balance Sheets, September 30, 1995
and 1994 and December 31, 1994 3 - 4
Long-Term Debt, September 30, 1995 and 1994 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 - 21
PART II. OTHER INFORMATION 22
SIGNATURE 23
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Statements of Consolidated Income
(Thousands Except Per Share Amounts)
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues........... $ 270,992 $297,712 $ 992,217 $ 1,053,372 $ 1,336,125 $ 1,397,820
Cost of Gas Purchased ....... 171,604 200,089 648,882 703,066 872,721 920,217
--------- -------- ----------- ----------- ----------- -----------
Net operating revenues.... 99,388 97,623 343,335 350,306 463,404 477,603
--------- -------- ----------- ----------- ----------- -----------
Operating Expenses:
Operation ................ 45,369 46,983 143,303 143,115 192,987 192,345
Maintenance .............. 6,443 8,327 19,644 23,174 28,207 31,590
Depreciation and depletion 26,726 23,265 84,151 68,593 108,905 90,286
Taxes other than income .. 6,392 6,201 28,435 31,544 39,135 43,119
--------- -------- ----------- ----------- ----------- -----------
Total operating expenses 84,930 84,776 275,533 266,426 369,234 357,340
--------- -------- ----------- ----------- ----------- -----------
Operating Income ............ 14,458 12,847 67,802 83,880 94,170 120,263
Other Income ................. (1,427) 810 (1,591) 1,318 254 2,761
Interest Charges ............ 12,674 11,387 38,218 32,316 49,807 42,536
--------- -------- ----------- ----------- ----------- -----------
Income Before Income Taxes .. 357 2,270 27,993 52,882 44,617 80,488
Income Taxes (Benefits) ..... (1,327) (111) (283) 8,085 409 10,474
--------- -------- ----------- ----------- ----------- -----------
Net Income ................ $ 1,684 $ 2,381 $ 28,276 $ 44,797 $ 44,208 $ 70,014
========= ======== =========== =========== =========== ===========
Average Common
Shares Outstanding........ 34,846 34,526 34,733 34,503 34,686 34,492
====== ====== ====== ====== ====== ======
Earnings Per Share of
Common Stock............... $.05 $.07 $.81 $1.30 $1.27 $2.03
==== ==== ==== ===== ===== =====
Dividends Per Share of
Common Stock............... $.29 $.28 $.88 $.85 $1.18 $1.14
==== ==== ==== ==== ===== =====
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Statements of Consolidated Cash Flows
(Thousands)
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
1995 1994 1995 1994 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net income............................... $ 1,684 $ 2,381 $ 28,276 $ 44,797 $ 44,208 $ 70,014
-------- -------- --------- -------- --------- --------
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and depletion............ 26,726 23,265 84,151 68,593 108,905 90,286
Deferred income taxes (benefits)...... 6,560 5,826 (7,637) 1,902 (14,598) (4,444)
Other - net........................... (2,577) (1,893) (341) 1,462 (237) 2,773
Changes in other assets and liabilities:
Accounts receivable and unbilled
revenues 30,019 28,277 29,758 32,743 (2,262) (13,357)
Gas stored underground.............. (5,668) (7,666) 1,879 2,848 1,989 13,236
Material and supplies............... (2,224) 1,324 (1,190) (1,244) (561) (2,493)
Deferred purchased gas cost......... (13,958) (16,726) 12,571 (14,358) 19,187 (10,545)
Prepaid expenses and other.......... (13,406) (7,133) (18,865) (6,794) (21,663) 4,308
Regulatory assets................... 109 (290) (1,319) (2,877) 195 (11,951)
Accounts payable.................... (6,696) (23,997) (14,664) (30,793) (4,285) (20,377)
Accrued taxes....................... (3,605) (7,822) (9,141) (5,772) 861 (2,812)
Refunds due customers............... (5,656) 3,139 (6,704) 7,103 (5,758) 7,955
Customer credit balances............ 7,692 4,458 (690) (1,781) 3,940 (1,703)
Other - net......................... (1,519) (690) 7,040 7,637 4,872 11,160
-------- -------- --------- -------- --------- --------
Total adjustments................... 15,797 72 74,848 58,669 90,585 62,036
-------- -------- --------- -------- --------- --------
Net cash provided by operating
activities...................... 17,481 2,453 103,124 103,466 134,793 132,050
-------- -------- --------- -------- --------- --------
Cash Flows from Investing Activities:
Capital expenditures..................... (26,954) (40,070) (81,944) (100,576) (127,542) (134,327)
Proceeds from sale of property........... 3,468 290 4,221 805 4,611 1,147
-------- -------- --------- -------- --------- --------
Net cash used in
investing activities (23,486) (39,780) (77,723) (99,771) (122,931) (133,180)
--------- --------- --------- -------- --------- --------
Cash Flows from Financing Activities:
Issuance of common stock................. 536 425 1,738 1,299 2,230 1,362
Purchase of treasury stock............... (7) 0 (81) 0 (476) (10)
Dividends paid........................... (10,312) (9,839) (30,774) (29,501) (40,959) (39,323)
Proceeds from issuance of long-term debt. 0 0 17,878 43,185 17,776 43,112
Repayments and retirements of
long-term debt (14,500) 0 (14,500) (1,971) (14,500) (1,971)
Increase (decrease) in short-term loans.. 51,878 50,100 6,652 (15,900) 37,952 5,500
-------- -------- --------- -------- --------- --------
Net cash provided (used) by
financing activities............ 27,595 40,686 (19,087) (2,888) 2,023 8,670
-------- -------- --------- -------- --------- --------
Increase in cash and cash equivalents....... 21,590 3,359 6,314 807 13,885 7,540
Cash and cash equivalents at beginning
of period 8,139 12,485 23,415 15,037 15,844 8,304
-------- --------- -------- --------- -------- --------
Cash and cash equivalents at end of period.. $ 29,729 $ 15,844 $ 29,729 $ 15,844 $ 29,729 $ 15,844
======== ======== ========= ======== ========= ========
Cash paid during the period for:
Interest (net of amount capitalized)..... $ 7,601 $ 12,287 $ 36,979 $ 30,980 $ 46,104 $ 37,764
======== ======== ========= ======== ========= ========
Income taxes............................. $ 4,725 $ 2,952 $ 12,266 $ 9,463 $ 15,350 $ 14,215
======== ======== ========= ======== ========= ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Thousands)
September 30, December 31,
1995 1994 1994
ASSETS
<S> <C> <C> <C>
Property, Plant and Equipment:
Exploration and production (successful efforts method).. $ 1,012,384 $ 962,272 $ 983,328
Natural gas marketing................................... 321,576 302,302 309,579
Natural gas distribution................................ 576,716 543,088 552,789
Natural gas transmission................................ 391,047 386,120 387,921
------------- ------------ -------------
Total.............................................. 2,301,723 2,193,782 2,233,617
Less accumulated depreciation and depletion .......... 719,190 621,312 637,951
------------- ------------ -------------
Net property, plant and equipment.................. 1,582,533 1,572,470 1,595,666
------------- ------------ -------------
Current Assets:
Cash and cash equivalents............................... 29,729 15,844 23,415
Accounts receivable (less accumulated
provision for doubtful accounts:
September 30, 1995 $9,912; 1994 $10,986;
December 31, 1994, $10,890)........................... 163,486 159,110 172,178
Unbilled revenues ...................................... 5,706 6,746 25,794
Gas stored underground - current inventory ............. 13,222 15,211 15,101
Material and supplies .................................. 14,066 13,505 12,876
Deferred purchased gas cost ............................ 12,319 31,506 24,890
Prepaid expenses and other ............................. 52,434 30,771 33,569
------------- ------------ -------------
Total current assets............................... 290,962 272,693 307,823
------------- ------------ -------------
Other Assets:
Regulatory assets ...................................... 89,706 89,901 88,387
Other................................................... 46,857 27,604 27,246
------------- ------------ -------------
Total other assets ................................... 136,563 117,505 115,633
------------- ------------ -------------
Total.............................................. $ 2,010,058 $ 1,962,668 $ 2,019,122
============= ============ =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Thousands)
September 30, December 31,
1995 1994 1994
CAPITALIZATION AND LIABILITIES
<S> <C> <C> <C>
Capitalization:
Common stockholders' equity:
Common stock, no par value,
authorized 80,000 shares; shares issued
September 30, 1995, 35,383; September 30, 1994, 35,153;
December 31, 1994, 35,173........................... $ 222,982 $ 224,437 $ 224,963
Retained earnings ..................................... 538,978 535,729 541,476
Treasury stock, shares at cost September 30, 1995,
402; September 30, 1994,
618; December 31, 1994, 632......................... (9,514) (14,538) (14,933)
Foreign currency translation........................... (832) (807) (1,504)
-------------- ------------- -------------
Total common stockholders' equity................. 751,614 744,821 750,002
Long-term debt........................................... 415,313 408,117 398,282
-------------- ------------- -------------
Total capitalization............................ 1,166,927 1,152,938 1,148,284
-------------- ------------- -------------
Current Liabilities:
Long-term debt payable within one year................... 10,000 14,500 24,500
Short-term loans......................................... 275,952 238,000 269,300
Accounts payable......................................... 108,730 113,015 123,394
Accrued taxes............................................ 10,447 9,586 19,588
Accrued interest......................................... 11,991 11,360 13,032
Refunds due customers.................................... 15,551 21,309 22,255
Deferred income taxes.................................... 2,391 6,245 4,444
Customer credit balances................................. 9,737 5,797 10,427
Other.................................................... 12,759 12,936 11,955
-------------- ------------- -------------
Total current liabilities....................... 457,558 432,748 498,895
-------------- ------------- -------------
Deferred and Other Credits:
Deferred income taxes.................................... 334,774 329,159 326,597
Deferred investment tax credits.......................... 21,266 22,363 22,082
Other.................................................... 29,533 25,460 23,264
-------------- ------------- -------------
Total deferred and other credits................ 385,573 376,982 371,943
-------------- ------------- -------------
Total........................................ $ 2,010,058 $ 1,962,668 $ 2,019,122
============== ============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Long-Term Debt
(Thousands)
Annual Maturities
Debt Maturities After One Year
September 30, September 30,
1995 1994 1995 1994
<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) (b)...... 71,103 70,266
9 1/2% Convertible subordinated
debentures, due January 15, 2006.............. 710 2,351
9.9% Debentures, due April 15, 2013 (c)............... 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..... 10,000 14,500 75,500 85,500
6.8% to 7.6% Series C, due 2007 thru 2018..... 18,000
-------- -------- ---------- ----------
Total....................................... $ 10,000 $ 14,500 $ 415,313 $ 408,117
======== ======== ========== ==========
<FN>
(a) The 8 1/4% Debentures will be retired using proceeds from issuance
of the remaining Medium-Term Notes--Series C.
(b) Not redeemable prior to maturity.
(c) Annual sinking fund payments of $3,750,000 are required
beginning in 1999.
</FN>
</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 1994 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 September 30, 1995 and 1994 and the results of
operations for the three, nine and twelve months then ended and cash flows
for the three, nine and twelve months then ended. All of the adjustments are
of a normal recurring nature.
C. The results of operations for the three- and nine-month periods ended
September 30, 1995 and 1994 are not indicative of results for a full year
because of the seasonal nature of the Company's operations.
D. In September 1995 and 1994, the Pennsylvania Public Utility Commission
(PUC) approved Equitable Gas Company's collection of $18.8 million and
$7.8 million, respectively, related to the direct billing settlement with
Kentucky West Virginia Gas Company, an affiliate, for the recovery of
higher NGPA prices on natural gas produced between 1978 and 1983 as
approved by the Federal Energy Regulatory Commission in 1989. The 1995
amount includes $11.0 million for accelerated collection of amounts that
would have otherwise been approved by the PUC, and recognized in income,
in later years. As a result of the PUC approvals, net income for the
periods ended September 30, 1995 and 1994 includes approximately $11.1
milion and $4.7 million, respectively, related to the settlement.
Approximately $18 million from the settlement remains to be recovered in
future gas cost filings with the PUC over the next three years.
E. At September 30, 1995, 2,652,000 shares of Common Stock were reserved as
follows: 65,000 shares for conversion of the 9 1/2% Convertible
Subordinated Debentures, 631,000 shares for issuance under the Key
Employee Restricted Stock Option and Stock Appreciation Rights Incentive
Compensation Plan, 1,726,000 shares for issuance under the Long-Term
Incentive Plan, 76,000 shares for issuance under the Non-Employee
Directors' Stock Incentive Plan, and 154,000 shares for issuance under
the Company's Dividend Reinvestment and Stock Purchase Plan.
F. The Company filed a shelf registration with the Securities and Exchange
Commission effective June 4, 1994 to issue $100 million of Medium-Term
Notes--Series C. As of September 30, 1995, $18 million of Medium-Term
Notes--Series C have been issued. Proceeds from issuance of the remaining
amount available under the shelf registration will be used to retire the 8
1/4% Debentures due July 1, 1996.
G. In July 1995, the Company acquired all of the outstanding stock of
Independent Energy Corporation (IEC) in exchange for 232,564 shares of the
Company's common stock. The Company used shares held in treasury for the
acquisition which is being accounted for as a pooling of interests. IEC is
engaged in the development, construction, operation and ownership of private
power and cogeneration projects.
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 1995
Exploration Natural Gas Natural Gas Natural Gas Intersegment
and Production Marketing Distribution Transmission Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced .................................... 14,102 43 592 14,737
------ ------- ------ ------- ------- -------
Purchased:
Other producers........................... 115,506 8,757 2,095 126,358
Inter-segment purchases .................. 728 11,606 2,390 (14,724)
------ ------- ------ ------- -------
Total purchases ....................... 728 127,112 11,147 2,095 (14,724) 126,358
------ ------- ------ ------- ------- -------
Total produced and purchased ........ 14,830 127,112 11,190 2,687 (14,724) 141,095
Deduct:
Net increase (decrease) in gas in storage. 3,233 (277) 2,956
Extracted natural gas liquids
(equivalent gas volumes) .............. 448 1,678 2,126
System use and unaccounted for............ 138 407 2,020 (339) 2,226
------ ------- ------ ------- ------- -------
Total................................ 14,244 125,027 5,937 3,303 (14,724) 133,787
====== ======= ====== ======= ======= =======
Gas Sales (MMcf):
Residential.................................. 1,904 1,904
Commercial................................... 397 397
Industrial and Utility....................... 3,636 2 (2,378) 1,260
Production................................... 14,102 (28) 14,074
Marketing.................................... 142 125,027 3,301 (12,318) 116,152
------ ------- ------ ------- ------- -------
Total................................ 14,244 125,027 5,937 3,303 (14,724) 133,787
====== ======= ====== ======= ======= =======
Natural Gas Transported (MMcf).................. 38,171 2,135 27,999 (19,869) 48,436
======= ====== ======== ======= =======
Oil Produced and Sold (thousands of bls)........ 482 482
====== =======
Natural Gas Liquids Sold (thousands of gallons) 16,199 51,011 67,210
======= ====== ======
Average Selling Price:
Residential Gas Sales (per Mcf)............. $ 11.239
Commercial Gas Sales........................ 9.023
Industrial and Utility Gas Sales............ 1.743
Produced Natural Gas........................ $ 1.432
Marketed Natural Gas........................ 1.155 $1.471 $1.768
Oil (per barrel)............................ 16.060
Natural Gas Liquids (per gallon)............ .294 .260
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 1994
Exploration Natural Gas Natural Gas Natural Gas Intersegment
and Production Marketing Distribution Transmission Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced .................................... 15,640 41 544 16,225
------ ------- ------ -------- ------- -------
Purchased:
Other producers........................... 106,161 12,371 1,678 120,210
Inter-segment purchases .................. 609 13,909 2,187 (1) (16,704)
------ ------- ------ -------- -------
Total purchases ....................... 609 120,070 14,558 1,677 (16,704) 120,210
------ ------- ------ -------- ------- -------
Total produced and purchased ........ 16,249 120,070 14,599 2,221 (16,704) 136,435
Deduct:
Net increase (decrease) in gas in storage. 3,365 (181) 3,184
Extracted natural gas liquids
(equivalent gas volumes)............... 460 1,716 2,176
System use and unaccounted for............ 130 405 697 219 1,451
------ ------- ------ -------- ------- -------
Total................................ 15,659 117,949 10,537 2,183 (16,704) 129,624
====== ======= ====== ======== ======= =======
Gas Sales (MMcf):
Residential.................................. 1,925 1,925
Commercial................................... 1,246 1,246
Industrial and Utility....................... 7,366 30 (3,068) 4,328
Production................................... 15,640 (1,292) 14,348
Marketing.................................... 19 117,949 2,153 (12,344) 107,777
------ ------- ------ -------- ------- -------
Total................................ 15,659 117,949 10,537 2,183 (16,704) 129,624
====== ======= ====== ======== ======= =======
Natural Gas Transported (MMcf).................. 29,965 1,163 36,335 (26,854) 40,609
======= ====== ======== ======= =======
Oil Produced and Sold (thousands of bls)........ 493 493
====== =======
Natural Gas Liquids Sold (thousands of gallons) 14,241 52,132 66,373
====== ====== =======
Average Selling Price:
Residential Gas Sales (per Mcf)............. $10.872
Commercial Gas Sales........................ 6.153
Industrial and Utility Gas Sales............ 2.120 $7.767
Produced Natural Gas........................ $ 1.710
Marketed Natural Gas........................ 1.789 $1.770 1.981
Oil (per barrel)............................ 16.604
Natural Gas Liquids (per gallon)............ .292 .262
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1995
Exploration Natural Gas Natural Gas Natural Gas Intersegment
and Production Marketing Distribution Transmission Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced..................................... 48,928 105 1,684 50,717
------ ------- ------ --------- ------- -------
Purchased:
Other producers........................... 347,487 27,849 5,114 380,450
Inter-segment purchases................... 2,454 38,980 9,314 (50,748)
------ ------- ------ --------- -------
Total purchases........................ 2,454 386,467 37,163 5,114 (50,748) 380,450
------ ------- ------ --------- ------- -------
Total produced and purchased ........ 51,382 386,467 37,268 6,798 (50,748) 431,167
Deduct:
Net increase (decrease) in gas in storage. 340 (277) 63
Extracted natural gas liquids
(equivalent gas volumes)............... 1,400 4,921 6,321
System use and unaccounted for............ 414 1,236 2,290 (235) 3,705
------ ------- ------ --------- ------- -------
Total................................ 49,568 380,310 34,638 7,310 (50,748) 421,078
====== ======= ====== ========= ======= =======
Gas Sales (MMcf):
Residential.................................. 19,388 19,388
Commercial................................... 2,756 2,756
Industrial and Utility....................... 12,494 3 (6,087) 6,410
Production................................... 48,928 (336) 48,592
Marketing.................................... 640 380,310 7,307 (44,325) 343,932
------ ------- ------ --------- ------- -------
Total................................ 49,568 380,310 34,638 7,310 (50,748) 421,078
====== ======= ====== ========= ======= =======
Natural Gas Transported (MMcf).................. 95,693 11,570 86,193 (69,795) 123,661
======= ====== ========= ======= =======
Oil Produced and Sold (thousands of bls)........ 1,493 1,493
====== =======
Natural Gas Liquids Sold (thousands of gallons) 47,333 149,035 196,368
======= ======= =======
Average Selling Price:
Residential Gas Sales (per Mcf)............. $9.465
Commercial Gas Sales........................ 9.357
Industrial and Utility Gas Sales............ 1.864
Produced Natural Gas........................ $ 1.513
Marketed Natural Gas........................ 1.506 $1.553 $1.899
Oil (per barrel)............................ 16.532
Natural Gas Liquids (per gallon)............ .323 .268
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1994
Exploration Natural Gas Natural Gas Natural Gas Intersegment
and Production Marketing Distribution Transmission Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced..................................... 45,074 103 1,419 46,596
------ ------- ------ -------- ------- -------
Purchased:
Other producers........................... 284,073 33,247 5,745 323,065
Inter-segment purchases................... 1,753 36,699 9,255 409 (48,116)
------ ------- ------ -------- -------
Total purchases........................ 1,753 320,772 42,502 6,154 (48,116) 323,065
------ ------- ------ -------- ------- -------
Total produced and purchased ........ 46,827 320,772 42,605 7,573 (48,116) 369,661
Deduct:
Net increase (decrease) in gas in storage. 226 (181) 45
Extracted natural gas liquids
(equivalent gas volumes)............... 1,049 4,825 5,874
System use and unaccounted for............ 341 1,193 2,086 285 3,905
------ ------- ------ -------- ------- -------
Total................................ 45,437 314,754 40,293 7,469 (48,116) 359,837
====== ======= ====== ======== ======= =======
Gas Sales (MMcf):
Residential.................................. 21,692 21,692
Commercial................................... 8,162 8,162
Industrial and Utility....................... 10,439 416 (3,433) 7,422
Production................................... 45,074 (4,982) 40,092
Marketing.................................... 363 314,754 7,053 (39,701) 282,469
------ ------- ------ -------- ------- -------
Total................................ 45,437 314,754 40,293 7,469 (48,116) 359,837
====== ======= ====== ======== ======= =======
Natural Gas Transported (MMcf).................. 77,944 6,071 100,472 (83,369) 101,118
======= ====== ======== ======= =======
Oil Produced and Sold (thousands of bls)........ 1,480 1,480
====== =======
Natural Gas Liquids Sold (thousands of gallons) 35,552 147,095 182,647
======= ======= =======
Average Selling Price:
Residential Gas Sales (per Mcf)............. $8.796
Commercial Gas Sales........................ 6.565
Industrial and Utility Gas Sales............ 2.552 $4.678
Produced Natural Gas........................ $ 2.077
Marketed Natural Gas........................ 1.876 $2.035 2.429
Oil (per barrel)............................ 14.376
Natural Gas Liquids (per gallon)............ .283 .254
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED SEPTEMBER 30, 1995
Exploration Natural Gas Natural Gas Natural Gas Intersegment
and Production Marketing Distribution Transmission Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced..................................... 66,361 145 2,136 68,642
------- -------- ------- ------- -------- --------
Purchased:
Other producers........................... 453,124 40,234 6,632 499,990
Inter-segment purchases................... 3,224 50,201 13,022 63 (66,510)
------- -------- ------- ------- --------
Total purchases........................ 3,224 503,325 53,256 6,695 (66,510) 499,990
------- -------- ------- ------- -------- --------
Total produced and purchased......... 69,585 503,325 53,401 8,831 (66,510) 568,632
Deduct:
Net increase (decrease) in gas in storage. 355 (277) 78
Extracted natural gas liquids
(equivalent gas volumes)............... 1,897 6,473 8,370
System use and unaccounted for............ 553 1,645 6,595 (252) 8,541
------- -------- ------- ------- -------- --------
Total................................ 67,135 495,207 46,451 9,360 (66,510) 551,643
======= ======== ======= ======= ======== ========
Gas Sales (MMcf):
Residential.................................. 27,266 27,266
Commercial................................... 4,275 4,275
Industrial and Utility....................... 14,910 (25) (6,230) 8,655
Production................................... 66,361 (2,591) 63,770
Marketing.................................... 774 495,207 9,385 (57,689) 447,677
------- -------- ------- ------- -------- --------
Total................................ 67,135 495,207 46,451 9,360 (66,510) 551,643
======= ======== ======= ======= ======== ========
Natural Gas Transported (MMcf).................. 121,475 14,110 109,193 (86,898) 157,880
======== ======= ======= ======== ========
Oil Produced and Sold (thousands of bls)........ 1,999 1,999
======= ========
Natural Gas Liquids Sold (thousands of gallons) 62,813 196,433 259,246
======== ======== ========
Average Selling Price:
Residential Gas Sales (per Mcf)............. $9.465
Commercial Gas Sales........................ 9.160
Industrial and Utility Gas Sales............ 1.912
Produced Natural Gas........................ $ 1.540
Marketed Natural Gas........................ 1.568 $1.575 $1.917
Oil (per barrel)............................ 16.331
Natural Gas Liquids (per gallon)............ .326 .273
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED SEPTEMBER 30, 1994
Exploration Natural Gas Natural Gas Natural Gas Intersegment
and Production Marketing Distribution Transmission Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced..................................... 59,892 140 2,090 62,122
------- -------- ------- ------- -------- --------
Purchased:
Other producers........................... 356,958 45,968 7,836 410,762
Inter-segment purchases................... 2,654 49,040 10,780 785 (63,259)
------- -------- ------- ------- --------
Total purchases........................ 2,654 405,998 56,748 8,621 (63,259) 410,762
------- -------- ------- ------- -------- --------
Total produced and purchased......... 62,546 405,998 56,888 10,711 (63,259) 472,884
Deduct:
Net increase (decrease) in gas in storage. (207) (79) (286)
Extracted natural gas liquids
(equivalent gas volumes)............... 1,841 7,987 9,828
System use and unaccounted for............ 341 1,994 3,950 226 6,511
------- -------- ------- ------- -------- --------
Total................................ 60,364 396,017 53,145 10,564 (63,259) 456,831
======= ======== ======= ======= ======== ========
Gas Sales (MMcf):
Residential.................................. 31,156 31,156
Commercial................................... 10,986 10,986
Industrial and Utility....................... 11,003 714 (3,720) 7,997
Production................................... 59,892 (4,982) 54,910
Marketing.................................... 472 396,017 9,850 (54,557) 351,782
------- -------- ------- ------- -------- --------
Total................................ 60,364 396,017 53,145 10,564 (63,259) 456,831
======= ======== ======= ======= ======== ========
Natural Gas Transported (MMcf).................. 106,602 8,717 130,671 (113,836) 132,154
======== ======= ======= ======== ========
Oil Produced and Sold (thousands of bls)........ 1,994 1,994
======= ========
Natural Gas Liquids Sold (thousands of gallons) 50,812 198,797 249,609
======= ======== ========
Average Selling Price:
Residential Gas Sales (per Mcf)............. $8.740
Commercial Gas Sales........................ 6.705
Industrial and Utility Gas Sales............ 2.654 $3.178
Produced Natural Gas........................ $ 2.134
Marketed Natural Gas........................ 1.871 $2.080 2.402
Oil (per barrel)............................ 14.353
Natural Gas Liquids (per gallon)............ .287 .255
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Information by Business Segment
(Thousands)
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
1995 1994 1995 1994 1995 1994
(Thousands)
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Exploration and production.. $ 57,080 $ 52,730 $ 147,523 $ 148,268 $ 195,050 $ 200,029
Natural gas marketing....... 200,399 225,355 638,640 685,178 844,240 884,540
Natural gas distribution.... 36,052 46,024 261,989 285,498 366,966 394,370
Natural gas transmission ... 25,660 25,321 82,290 87,673 111,386 120,233
Sales between segments ..... (48,199) (51,718) (138,225) (153,245) (181,517) (201,352)
---------- --------- --------- ---------- ---------- ---------
Total.................. $ 270,992 $ 297,712 $ 992,217 $1,053,372 $1,336,125 $1,397,820
=========== ========= ========= ========== ========== =========
OPERATING INCOME (LOSS):
Exploration and production.. $ 14,296 $ 10,906 $ 13,416 $ 26,469 $ 17,790 $ 33,573
Natural gas marketing ...... (74) 983 3,905 2,680 5,314 4,242
Natural gas distribution.... (6,192) (4,121) 26,829 32,368 37,641 47,374
Natural gas transmission ... 6,428 5,079 23,652 22,363 33,425 35,074
---------- --------- --------- ---------- ---------- ---------
Total.................. $ 14,458 $ 12,847 $ 67,802 $ 83,880 $ 94,170 $ 120,263
========== ========= ========= ========== ========== =========
CAPITAL EXPENDITURES:
Exploration and production.. $ 7,679 $ 27,020 $ 38,085 $ 64,426 $ 58,119 $ 85,400
Natural gas marketing....... 6,258 1,868 12,158 4,662 23,261 6,512
Natural gas distribution.... 10,590 8,935 26,297 22,524 36,485 29,654
Natural gas transmission.... 2,427 2,247 5,404 8,964 9,677 12,761
---------- --------- --------- ---------- ---------- ---------
Total.................. $ 26,954 $ 40,070 $ 81,944 $ 100,576 $ 127,542 $ 134,327
========== ========= ========= ========== ========== ==========
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
Consolidated net income for the quarter ended September 30, 1995 was $1.7
million or $.05 per share, compared with $2.4 million or $.07 per share for the
quarter ended September 30, 1994. Earnings for 1995 include $6.5 million or $.19
per share, resulting from the Pennsylvania Public Utility Commission's approval
for accelerated collection of gas costs as described in Note D to the
consolidated financial statements. The decrease in income, excluding the effect
of the accelerated collection of gas costs, is due to a 16 percent decline in
average wellhead gas prices, lower margins for natural gas marketing and lower
earnings from distribution operations.
Consolidated net income for the nine months ended September 30, 1995 was
$28.3 million or $.81 per share, compared with $44.8 million or $1.30 per share
for the nine months ended September 30, 1994. The decrease in income, excluding
the effect of the accelerated collection of gas costs, is due to a 27 percent
decline in average wellhead gas prices, lower margins from natural gas marketing
and lower retail gas sales reflecting 10 percent warmer weather. The impact of
these items was partially offset by a 9 percent increase in natural gas
production.
Consolidated net income for the twelve months ended September 30, 1995 was
$44.2 million or $1.27 per share, compared with $70.0 million or $2.03 per share
for the twelve months ended September 30, 1994. The decrease in income,
excluding the effect of the accelerated collection of gas costs is due primarily
to a 28 percent decline in average wellhead gas prices, lower margins from
natural gas marketing and lower retail utility gas sales reflecting 13 percent
warmer weather. The impact of these items was partially offset by an 11 percent
increase in natural gas production.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS
EXPLORATION AND PRODUCTION
Operating revenues, which are derived primarily from the sale of produced
natural gas, oil and natural gas liquids and from contract drilling were $57.1
million for the quarter ended September 30, 1995 compared with $52.7 million for
the quarter ended September 30, 1994. The 1995 period includes $11.0 million of
additional revenue from direct bill settlements as described in Note D to the
consolidated financial statements. The decrease in operating revenue, excluding
the effect of the additional revenue from the direct bill settlements, is due
primarily to a 16 percent decline in average wellhead gas prices and a 10
percent decline in natural gas production. Operating revenues for the nine
months ended September 30, 1995 were $147.5 million compared with $148.3 million
for the nine months ended September 30, 1994. Operating revenues for the twelve
months ended September 30, 1995 were $195.1 million compared with $200.0 million
for the twelve months ended September 30, 1994. The decrease in revenues for the
nine-month and twelve-month periods, excluding the effect of the additional
revenue from the direct bill settlements, is due primarily to lower wellhead
prices for natural gas partially offset by increased production of natural gas,
higher oil prices and increased production and prices for natural gas liquids.
3 MONTHS ENDED 9 MONTHS ENDED 12 MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
EXPLORATION AND PRODUCTION 1995 1994 1995 1994 1995 1994
OPERATING REVENUES (THOUSANDS):
Natural Gas.......... $20,196 $26,748 $74,048 $93,635 $102,223 $127,829
Oil.................. 7,741 8,186 24,683 21,277 32,645 28,620
Natural Gas Liquids.. 4,765 4,158 15,295 10,064 20,475 14,600
Contract Drilling.... 4,272 4,509 9,975 11,045 14,357 15,089
Direct Billing
Settlements 18,807 7,815 18,807 7,815 18,807 7,815
Other................ 1,299 1,314 4,715 4,432 6,543 6,076
------- ------- ------- ------- -------- -------
Total Revenues..... $57,080 $52,730 $147,523 $148,268 $195,050 $200,029
====== ====== ======= ======= ======= =======
SALES QUANTITIES:
Natural Gas (MMcf)... 14,102 15,640 48,928 45,074 66,361 59,892
Oil (MBls)........... 482 493 1,493 1,480 1,999 1,994
Natural Gas Liquids .
(thousands of gallons) 16,199 14,241 47,333 35,552 62,813 50,812
Gas purchased of $2.4 million for the quarter ended September 30, 1995 and
$7.8 million for the nine months ended September 30, 1995 was substantially the
same as the 1994 amounts of $2.3 million and $8.0 million, respectively. Gas
purchased for the twelve months ended September 30, 1995 amounted to $10.4
million compared with $12.5 million for the twelve months ended September 30,
1994. The decrease in gas purchased for the twelve month period is due to lower
prices partially offset by higher requirements reflecting increased production
of natural gas liquids.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Other operating expenses were $40.4 million for the quarter ended September
30, 1995 compared with $39.5 million for the quarter ended September 30, 1994.
The increase for the quarter is due to increased depreciation and depletion
reflecting higher depletion rates. Other operating expenses for the nine months
ended September 30, 1995 were $126.3 million compared with $113.8 million for
the nine months ended September 30, 1994. Other operating expenses for the
twelve months ended September 30, 1995 were $166.9 million compared with $154.1
million for the twelve months ended September 30, 1994. Increases for the nine
and twelve month periods are attributed to increased depreciation and depletion
reflecting the higher level of natural gas production and higher depletion
rates.
Operating income was $14.3 million for the quarter ended September 30, 1995
compared with $10.9 million for the quarter ended September 30, 1994. Operating
income for the nine months ended September 30, 1995 was $13.4 million compared
with $26.5 million for the nine months ended September 30, 1994. Operating
income for the twelve months ended September 30, 1995 was $17.8 million compared
with $33.5 million for the twelve months ended September 30, 1994. The decrease
in operating income for the current periods, excluding the effect of the
additional revenue from the direct billing settlements, reflects lower wellhead
prices for natural gas partially offset by increased gas production for the
nine- and twelve-month periods.
NATURAL GAS MARKETING
Operating revenues, which are derived primarily from the marketing of
natural gas, sale of produced natural gas liquids, and intrastate transportation
of natural gas in Louisiana, were $200.4 million for the quarter ended September
30, 1995 compared with $225.4 million for the quarter ended September 30, 1994.
The decrease in revenues is due to a 17 percent decline in the average price of
marketed gas which was partially offset by a 6 percent increase in marketed gas
volumes. Operating revenues for the nine months ended September 30, 1995 were
$638.6 million compared with $685.2 million for the nine months ended September
30, 1994. The decrease in revenues is due to a 24 percent decrease in the
average price of marketed gas, partially offset by a 21 percent increase in
marketed gas volumes and higher production and prices for natural gas liquids.
Operating revenues for the twelve months ended September 30, 1995 were $844.2
million compared with $884.5 million for the twelve months ended September 30,
1994. A 24 percent decline in the average price of marketed gas and decreased
production of natural gas liquids were partially offset by a 25 percent increase
in marketed gas volumes and higher prices for natural gas liquids.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
3 MONTHS ENDED 9 MONTHS ENDED 12 MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
NATURAL GAS MARKETING 1995 1994 1995 1994 1995 1994
OPERATING REVENUES (THOUSANDS):
Natural Gas Marketing $183,923 $208,712 $590,465 $640,409 $780,138 $823,888
Natural Gas Liquids.. 13,263 13,655 39,953 37,431 53,635 50,786
Transportation....... 3,076 2,887 7,786 7,131 9,921 9,599
Other................ 137 101 436 207 546 267
------- ------- ------- ------- ------- -------
Total Revenues..... $200,399 $225,355 $638,640 $685,178 $844,240 $884,540
======= ======= ======= ======= ======= =======
SALES QUANTITIES:
Marketed Natural Gas
(MMcf) 125,027 117,949 380,310 314,754 495,207 396,017
Natural Gas Liquids
(thousands of gallons) 51,011 52,132 149,035 147,095 196,433 198,797
Gas purchased was $191.9 million for the quarter ended September 30, 1995
compared with $216.9 million for the quarter ended September 30, 1994. The
decrease in gas purchased reflects lower gas prices partially offset by an
increase in purchased volumes. Gas purchased for the nine months ended September
30, 1995 amounted to $611.3 million compared with $660.8 million for the nine
months ended September 30, 1994. Gas purchased for the twelve months ended
September 30, 1995 was $807.9 million compared with $852.1 million for the
twelve months ended September 30, 1994. The decrease in gas purchased for the
nine- and twelve-month periods reflects lower prices for purchased gas partially
offset by higher volumes of marketed gas and higher requirements for liquids
production.
Other operating expenses were $8.5 million for the quarter ended September
30, 1995 compared with $7.5 million for the quarter ended September 30, 1994.
Other operating expenses were $23.4 million for the nine months ended September
30, 1995 compared with $21.7 million for the nine months ended September 30,
1994. Other operating expenses for the twelve months ended September 30, 1995
were $31.0 million compared with $28.2 million for the twelve months ended
September 30, 1994. The increase for the current periods reflects marketing
operations in Canada which began in October 1994 and marketing and
administrative expenses associated with the gas storage service to begin in
early 1996.
Operating results for the quarter ended September 30, 1995 were a loss of
$74,000 compared with income of $1.0 million for the quarter ended September 30,
1994. The decrease is due to lower margins for marketed gas sales. Operating
income for the nine months ended September 30, 1995 was $3.9 million compared
with $2.7 million for the nine months ended September 30, 1994. Operating income
for the twelve months ended September 30, 1995 was $5.3 million compared with
$4.2 million for the twelve months ended September 30, 1994. The increase in
operating income for the nine- and twelve-month periods reflects higher margins
from liquids processing, partially offset by lower margins for marketed gas
sales.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
NATURAL GAS DISTRIBUTION
Operating revenues, which are derived from the sale and transportation of
natural gas primarily to retail customers at state regulated rates, were $36.1
million for the quarter ended September 30, 1995 compared with $46.0 million for
the quarter ended September 30, 1994. The decrease in revenues is due primarily
to a decrease in industrial sales, which was partially offset by an increase in
utility sales which are at lower rates, and the effect of commercial customers
switching from gas sales to transportation service. Operating revenues for the
nine months ended September 30, 1995 were $262.0 million compared with $285.5
million for the nine months ended September 30, 1994. Operating revenues for the
twelve months ended September 30, 1995 were $367.0 million compared with $394.4
million for the twelve months ended September 30, 1994. The decrease in revenues
for the nine- and twelve-month periods is due to the effect of commercial
customers switching from gas sales to transportation service, lower retail gas
sales reflecting warmer weather and a change in the mix of industrial and
utility gas sales.
3 MONTHS ENDED 9 MONTHS ENDED 12 MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
NATURAL GAS DISTRIBUTION 1995 1994 1995 1994 1995 1994
OPERATING REVENUES (THOUSANDS):
Residential Gas Sales. $21,399 $20,928 $183,509 $190,803 $258,062 $272,298
Commercial Gas Sales.. 3,582 7,667 25,788 53,583 39,161 73,666
Industrial and Utility
Gas Sales 6,339 15,615 23,293 26,643 28,503 29,201
Transportation Service 3,360 703 25,312 10,885 36,177 14,581
Other................. 1,372 1,111 4,087 3,584 5,063 4,624
------ ------ ------ ------ ------ ------
Total Revenues...... $36,052 $46,024 $261,989 $285,498 $366,966 $394,370
====== ====== ======= ======= ======= =======
SALES QUANTITIES (MMCF):
Residential Gas Sales. 1,904 1,925 19,388 21,692 27,266 31,156
Commercial Gas Sales.. 397 1,246 2,756 8,162 4,275 10,986
Industrial and Utility
Gas Sales 3,636 7,366 12,494 10,439 14,910 11,003
Transportation
Deliveries 2,135 1,163 11,570 6,071 14,110 8,717
Heating Degree Days... 79 90 3,530 3,916 6,005 5,609
Gas purchased amounted to $18.9 million for the quarter ended September 30,
1995 compared with $28.0 million for the quarter ended September 30, 1994. Gas
purchased for the nine months ended September 30, 1995 amounted to $153.5
million compared with $169.1 million for the nine months ended September 30,
1994. Gas purchased for the twelve months ended September 30, 1995 was $217.3
million compared with $232.9 million for the twelve months ended September 30,
1994. The decrease in gas costs for the current periods is due to lower gas
sales, partially offset by the pass-through of higher costs in rates to retail
customers.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Other operating expenses of $23.4 million for the quarter ended September
30, 1995 were substantially the same as the $22.1 million for the quarter ended
September 30, 1994. Other operating expenses were $81.7 million for the nine
months ended September 30, 1995 compared with $84.0 million for the nine months
ended September 30, 1994. Other operating expenses were $112.1 million for the
twelve months ended September 30, 1995 compared with $114.1 million for the
twelve months ended September 30, 1994. The decrease in operating expenses for
the nine- and twelve- month periods is due primarily to lower gross receipts tax
attributable to the decrease in retail revenues.
Operating results for the quarter ended September 30, 1995 were a loss of
$6.2 million compared with a loss of $4.1 million for the quarter ended
September 30, 1994. Operating income was $26.8 million for the nine months ended
September 30, 1995 compared with $32.4 million for the nine months ended
September 30, 1994. Operating income for the twelve months ended September 30,
1995 was $37.6 million compared with $47.4 million for the twelve months ended
September 30, 1994. The decrease in operating income for the current periods is
due primarily to lower margins reflecting lower gas sales.
NATURAL GAS TRANSMISSION
Operating revenues, which are derived from the interstate transportation
and storage of natural gas subject to federal regulation, and the marketing of
natural gas, of $25.7 million for the quarter ended September 30, 1995 were
substantially the same as the $25.3 million for the quarter ended September 30,
1994. Operating revenues for the nine months ended September 30, 1995 amounted
to $82.3 million compared with $87.7 million for the nine months ended September
30, 1994. Operating revenues for the twelve months ended September 30, 1995 were
$111.4 million compared with $120.2 million for the twelve months ended
September 30, 1994. The decrease in revenues for the nine- and twelve-month
periods is due primarily to lower selling prices for marketed natural gas.
3 MONTHS ENDED 9 MONTHS ENDED 12 MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
NATURAL GAS TRANSMISSION 1995 1994 1995 1994 1995 1994
OPERATING REVENUES (THOUSANDS):
Industrial and Utility
Gas Sales $ 363 $ 233 $ 1,089 $ 1,946 $ 1,452 $ 2,269
Marketed Gas Sales... 5,837 4,265 13,873 17,129 17,988 23,661
Transportation Service 14,197 14,864 49,996 51,234 68,720 71,872
Storage Service...... 3,581 4,360 12,324 12,654 16,663 16,215
Other................ 1,682 1,599 5,008 4,710 6,563 6,216
------ ------ ------- ------ -------- -------
Total Revenues..... $25,660 $25,321 $82,290 $87,673 $111,386 $120,233
====== ====== ====== ====== ======= =======
SALES QUANTITIES (MMCF):
Industrial and Utility
Gas Sales 2 30 3 416 (25) 714
Marketed Gas Sales... 3,301 2,153 7,307 7,053 9,385 9,850
Transportation
Deliveries 27,999 36,335 86,193 100,472 109,193 130,671
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Gas purchased amounted to $4.6 million for the quarter ended September 30,
1995 compared with $3.4 million for the quarter ended September 30, 1994. The
increase in gas costs for the quarter is due to an increase in marketed gas
sales. Gas purchased for the nine months ended September 30, 1995 amounted to
$10.7 million compared with $15.0 million for the nine months ended September
30, 1994. Gas purchased for the twelve months ended September 30, 1995 was $13.9
million compared with $19.9 million for the twelve months ended September 30,
1994. The decrease in gas costs for the nine- and twelve-month periods reflects
lower prices for marketed gas.
Other operating expenses were $14.7 million for the quarter ended September
30, 1995 compared with $16.9 million for the quarter ended September 30, 1994.
Other operating expenses were $48.1 million for the nine months ended September
30, 1995 compared with $50.3 million for the nine months ended September 30,
1994. Other operating expenses for the twelve months ended September 30, 1995
were $64.2 million compared with $65.2 million for the twelve months ended
September 30, 1994. The decrease for the current periods is due to lower
provisions for rate refunds reflecting final FERC approved rates that went into
effect July 1, 1995.
Operating income was $6.4 million for the quarter ended September 30, 1995
compared with $5.1 million for the quarter ended September 30,1994. Operating
income was $23.5 million for the nine months ended September 30, 1995 compared
with $22.4 million for the nine months ended September 30, 1994. Operating
income increased for the three- and nine-month periods due to provisions made in
the 1994 periods for rate refunds. Operating income for the twelve months ended
September 30, 1995 amounted to $33.3 million compared with $35.1 million for the
twelve months ended September 30, 1994. The decrease in income is due to lower
marketed natural gas sales.
CAPITAL RESOURCES AND LIQUIDITY
OPERATING ACTIVITIES
Cash required for operations is impacted primarily by the seasonal nature
of the Company's distribution 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. In addition,
short-term loans are 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 its distribution, transmission and
storage plant, and continuing development and expansion of its resource
production activities. Capital expenditures for the nine months ended September
30, 1995 were $81.9 million.
Short-term loans are also used as interim financing for a portion of
capital expenditures. The Company expects to finance its 1995 capital
expenditures with cash generated from operations and temporarily with short-term
loans.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
CAPITAL RESOURCES AND LIQUIDITY
FINANCING ACTIVITIES
The Company has adequate borrowing capacity to meet its financing
requirements. In January 1995, the Company established a five-year revolving
Credit Agreement with a group of banks providing $500 million of available
credit. The agreement requires a facility fee of one-tenth of one percent. Bank
loans and commercial paper, supported by available credit, are used to meet
short-term financing requirements. At September 30, 1995, $223.0 million of
commercial paper and $53.0 million of bank loans were outstanding at an average
interest rate of 5.9 percent. Adequate credit is expected to continue to be
available in the future.
In April 1995, Columbia Gas filed its bankruptcy reorganization plan, which
is subject to approval by the bankruptcy court, that includes settlement of
Equitable's producer claims for abrogation of long-term contracts by Columbia.
Based upon the plan, Equitable expects to net approximately $25 million of
pre-tax income, after pro-rata distribution to claim co-owners. In addition,
Equitable will also receive approximately $19 million related to direct billing
settlements previously approved by the FERC. The expected after tax cash
proceeds from these settlements is approximately $35 million.
In October 1995, the Company sold all of its gas and oil properties in the
Northern Appalachian Basin areas of New York, Pennsylvania and West Virginia.
The properties comprise less than 4 percent of the exploration and production
segment's total gas and oil production and reserves. The Company operates the
majority of these properties, with its working interest averaging approximately
25 percent.
The Company has reached an agreement, subject to final terms and conditions
at closing, for the sale of Appalachian gas properties which produce
non-conventional fuels. The Company will retain an interest in the properties
that will increase as certain financial targets are met. Anticipated proceeds to
the Company, after taxes and fees, will be approximately $110 million.
The proceeds to be received from the Columbia Gas bankruptcy settlement and
the sales of properties described above will be used to restructure about $150
million of long- and short-term debt. A portion of the proceeds may be used to
repurchase up to one million shares of the Company's outstanding stock.
BALANCE SHEET CHANGES
The changes in deferred purchased gas cost are due to the timing of
pass-through of gas costs to ratepayers. Changes in deferred purchased gas costs
generally do not affect results of operations due to regulatory procedures for
purchased gas cost recovery in rates. The increase in prepaid expenses and other
current assets reflects higher prepayment of federal income taxes.
The Company is currently assessing the valuation of its long-lived assets
using the methodology prescribed in Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of". It
is the Company's intention to complete this study and record any writedown of
assets in the fourth quarter of 1995.
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
Effective September 11, 1995, Clifford L. Alexander, Jr. resigned
as a member of the Board of Directors of the Company due to other
commitments. Mr. Alexander was a director since 1987. The Company
has begun a search to fill the vacancy.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
None.
(b) Reports on Form 8-K during the quarter ended September 30,
1995:
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)
Dan C. Eaton
Vice President -
Strategic & Financial Planning
Date: November 14, 1995
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