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, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______
COMMISSION 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, 1996
Common stock, no par value 35,130,151 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, 1996
and 1995, the Six Months Ended June 30,
1996 and 1995 and the Twelve Months Ended
June 30, 1996 and 1995 1
Statements of Consolidated Cash Flows
for the Three Months Ended June 30, 1996
and 1995, the Six Months Ended June 30, 1996
and 1995 and the Twelve Months Ended
June 30, 1996 and 1995 2
Consolidated Balance Sheets, June 30, 1996
and 1995 and December 31, 1995 3 - 4
Long-Term Debt, June 30, 1996 and 1995 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 Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
------------------ ----------------------- ------------------------
1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues........... $ 391,767 $ 316,534 $ 1,032,045 $ 721,225 $ 1,736,810 $ 1,362,845
Cost of Energy Purchased .... 296,372 218,721 771,843 477,278 1,205,923 901,206
---------- -------- ----------- --------- ----------- ----------
Net operating revenues.. 95,395 97,813 260,202 243,947 530,887 461,639
---------- -------- ----------- --------- ----------- ----------
Operating Expenses:
Operation................. 50,922 49,620 103,583 97,934 204,150 194,601
Maintenance............... 6,359 6,223 12,267 13,201 25,701 30,091
Depreciation and depletion 20,076 28,800 41,658 57,425 88,858 105,444
Impairment of assets...... - - - - 121,081 -
Taxes other than income... 9,055 8,138 24,308 22,043 44,103 38,944
---------- -------- ----------- --------- ----------- ----------
Total operating expenses 86,412 92,781 181,816 190,603 483,893 369,080
Operating Income............. 8,983 5,032 78,386 53,344 46,994 92,559
---------- -------- ----------- --------- ----------- ----------
Other Income ................ 2,686 447 4,855 (164) 5,406 2,491
Interest Charges............. 9,938 12,678 20,412 25,544 44,966 48,520
---------- -------- ----------- --------- ----------- ----------
Income (Loss)
Before Income Taxes ...... 1,731 (7,199) 62,829 27,636 7,434 46,530
Income Taxes (Benefits)...... 803 (6,037) 23,175 1,044 (7,175) 1,625
---------- -------- ----------- --------- ----------- ----------
Net Income (Loss)............ $ 928 $ (1,162) $ 39,654 $ 26,592 $ 14,609 $ 44,905
========== ======== =========== ========= =========== ==========
Average Common
Shares Outstanding......... 35,113 34,703 35,070 34,666 34,989 34,601
========== ======== =========== ========= =========== ==========
Earnings (Loss) Per Share of
Common Stock.............. $.03 $(.03) $1.13 $.77 $.42 $1.30
==== ===== ===== ==== ==== =====
Dividends Per Share of
Common Stock.............. $ - $ - $.59 $.59 $1.18 $1.17
====== ====== ==== ==== ===== =====
</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,
------------------ ---------------- -------------------
1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net income (loss)......................... $ 928 $ (1,162) $ 39,654 $ 26,592 $ 14,609 $ 44,905
-------- -------- -------- -------- --------- --------
Adjustments to Reconcile Net Income
to Net Cash
Provided by Operating Activities:
Impairment of assets................... - - - - 121,081 -
Depreciation and depletion............. 20,076 28,800 41,658 57,425 88,858 105,444
Deferred income taxes (benefits)....... 2,120 (4,581) 14,944 (14,197) (45,207) (15,332)
Other - net............................ 788 (307) 3,542 2,236 539 447
Changes in other assets and liabilities:
Accounts receivable and
unbilled revenues 109,080 19,900 19,759 (261) (54,255) (4,004)
Gas stored underground............... (7,480) (3,865) 2,278 7,547 (90) (9)
Material and supplies................ (149) (1,740) 1,919 1,034 1,039 2,987
Deferred purchased gas cost.......... (21,535) 834 (30,118) 26,529 (41,917) 16,419
Prepaid expenses and other........... 9,116 (2,802) 8,775 (5,459) 5,480 (15,390)
Regulatory assets.................... 67 (1,449) 432 (1,428) 3,670 (204)
Accounts payable..................... (98,220) 2,429 (29,367) (7,968) 37,392 (21,586)
Accrued taxes........................ (6,590) (1,852) 1,757 (5,536) 5,812 (3,356)
Refunds due customers................ 157 (3,840) 829 (1,048) (4,375) 3,037
Customer credit balances............. 82 816 (8,634) (8,382) (920) 706
Deferred revenue..................... (7,868) - (13,294) - 116,580 -
Other - net.......................... (19,608) (6,983) (5,375) 8,559 (5,378) 5,701
-------- -------- -------- -------- --------- --------
Total adjustments.................. (19,964) 25,360 9,105 59,051 228,309 74,860
-------- -------- -------- -------- --------- --------
Net cash provided (used) by
operating activities........... (19,036) 24,198 48,759 85,643 242,918 119,765
-------- -------- -------- -------- --------- --------
Cash Flows from Investing Activities:
Capital expenditures...................... (23,851) (24,266) (42,682) (54,990) (105,804) (140,658)
Proceeds from sale of property............ 1,078 106 1,503 753 25,360 1,433
-------- -------- -------- -------- --------- --------
Net cash used in
investing activities............. (22,773) (24,160) (41,179) (54,237) (80,444) (139,225)
-------- -------- -------- -------- --------- --------
Cash Flows from Financing Activities:
Issuance of common stock.................. 648 544 1,191 1,202 2,745 2,119
Purchase of treasury stock................ (8) (5) (8) (74) (174) (469)
Dividends paid............................ (7) (10,238) (20,708) (20,462) (41,344) (40,486)
Proceeds from issuance of long-term debt.. - 17,878 - 17,878 (42) 17,776
Repayments and retirements of
long-term debt ......................... (84,823) - (84,823) - (109,323) -
Increase (decrease) in short-term loans... 96,306 (16,785) 92,652 (45,226) 3,578 36,174
-------- -------- -------- -------- --------- --------
Net cash provided (used) by
financing activities........... 12,116 (8,606) (11,696) (46,682) (144,560) 15,114
-------- -------- -------- -------- --------- --------
Increase (decrease) in cash and
cash equivalents............................. (29,693) (8,568) (4,116) (15,276) 17,914 (4,346)
Cash and cash equivalents
at beginning of period....................... 55,746 16,707 30,169 23,415 8,139 12,485
-------- -------- -------- -------- --------- --------
Cash and cash equivalents at end of period... $ 26,053 $ 8,139 $ 26,053 $ 8,139 $ 26,053 $ 8,139
======== ======== ======== ======== ========= ========
Cash paid during the period for:
Interest (net of amount capitalized)...... $ 13,124 $ 15,960 $ 24,812 $ 29,378 $ 41,793 $ 51,600
======== ======== ======== ======== ========= ========
Income taxes.............................. $ 9,025 $ 8,006 $ 9,631 $ 7,541 $ 43,362 $ 14,128
======== ======== ======== ======== ========= ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Thousands)
June 30, December 31,
-------- ------------
1996 1995 1995
-------------------- ----
ASSETS
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents............................... $ 26,053 $ 8,139 $ 30,169
Accounts receivable (less accumulated
provision for doubtful accounts:
June 30, 1996 $13,635; 1995 $12,708;
December 31, 1995, $10,539)........................... 247,712 194,069 240,846
Unbilled revenues ...................................... 2,031 2,346 31,752
Gas stored underground - current inventory ............. 7,644 7,554 9,922
Material and supplies .................................. 10,658 11,842 12,577
Deferred purchased gas cost ............................ 40,278 (1,639) 10,160
Prepaid expenses and other ............................. 33,548 39,028 42,323
------------- ------------ -------------
Total current assets............................... 367,924 261,339 377,749
------------- ------------ -------------
Property, Plant and Equipment:
Exploration and production (successful efforts method).. 888,972 1,010,688 869,329
Energy marketing........................................ 304,853 315,461 295,061
Natural gas distribution................................ 576,204 568,316 568,272
Natural gas transmission................................ 386,843 390,497 388,986
------------- ------------ -------------
Total property, plant and equipment................ 2,156,872 2,284,962 2,121,648
Less accumulated depreciation and depletion .......... 702,405 694,479 664,065
------------- ------------ -------------
Net property, plant and equipment.................. 1,454,467 1,590,483 1,457,583
------------- ------------ -------------
Other Assets:
Regulatory assets ...................................... 84,809 89,815 85,241
Other................................................... 42,632 30,844 41,235
------------- ------------ -------------
Total other assets ................................... 127,441 120,659 126,476
------------- ------------ -------------
Total.............................................. $ 1,949,832 $ 1,972,481 $ 1,961,808
============= ============ =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Thousands)
June 30, December 31,
-------- ------------
1996 1995 1995
---- ---- ----
CAPITALIZATION AND LIABILITIES
<S> <C> <C> <C>
Current Liabilities:
Long-term debt payable within one year............. $ - $ 24,500 $ -
Short-term loans................................... 143,652 224,074 135,000
Accounts payable................................... 152,818 115,426 182,185
Accrued taxes...................................... 19,864 14,052 18,107
Accrued interest................................... 8,786 7,395 14,842
Refunds due customers.............................. 16,832 21,207 16,003
Deferred income taxes.............................. 9,858 (9,569) (1,506)
Customer credit balances........................... 1,125 2,045 9,759
Other.............................................. 21,222 10,161 14,889
------------ ------------- -------------
Total current liabilities..................... 374,157 409,291 389,279
------------ ------------- -------------
Long--Term Debt ....................................... 415,870 415,195 415,527
------------- ------------- -------------
Deferred and Other Credits:
Deferred income taxes.............................. 261,766 339,854 265,737
Deferred investment tax credits.................... 20,441 21,542 20,991
Deferred revenue................................... 116,580 - 129,874
Other.............................................. 23,703 27,530 25,321
------------ ------------- -------------
Total deferred and other credits.............. 422,490 388,926 441,923
------------ ------------- -------------
Capitalization:
Common stockholders' equity:
Common stock, no par value, authorized 80,000
shares; shares issued June 30, 1996,
35,469; June 30, 1995, 35,352;
December 31, 1995, 35,414..................... 225,200 227,670 223,854
Retained earnings ............................... 520,982 547,606 502,036
Treasury stock, shares at cost June 30, 1996,
339; June 30, 1995, 635; December 31, 1995, 407 (7,730) (15,007) (9,673)
Foreign currency translation..................... (1,137) (1,200) (1,138)
------------ ------------- -------------
Total common stockholders' equity............. 737,315 759,069 715,079
------------ ------------- -------------
Total..................................... $ 1,949,832 $ 1,972,481 $ 1,961,808
============ ============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Long-Term Debt
(Thousands)
Annual Maturities
Debt Maturities After One Year
--------------- --------------
June 30, June 30,
--------------- --------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
8 1/4% Debentures, due July 1, 1996 (a)............... $ $ $ $ 75,000
7 1/2% Debentures, due July 1, 1999
($75,000 principal amount net of
unamortized original issue discount) (b).......... 71,768 70,884
9 1/2% Convertible subordinated
debentures, due January 15, 2006.................. 602 811
9.9% Debentures, due April 15, 2013 (c)............... 66,000 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 2003 thru 2023......... 24,500 75,500 75,500
6.8% to 7.6% Series C, due 2007 thru 2018......... 18,000 18,000
Short-term debt to be refinanced (a)(c)............... 84,000
-------- --------- ----------- -----------
Total.......................................... $ - $ 24,500 $ 415,870 $ 415,195
======== ========= =========== ===========
<FN>
(a) 8 1/4% Debentures were retired and financed temporarily with short-term debt. See Note F to the
Consolidated Financial Statements.
(b) Annual sinking fund payments of $3,750,000 are required beginning in 1999.
(c) $9,000,000 retired as of June 30, 1996 through tender offer. See Note F to the Consolidated
Financial Statements.
</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 1995 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, 1996 and 1995 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.
C. The results of operations for the three- and six-month periods ended June
30, 1996 and 1995 are not indicative of results for a full year because of
the seasonal nature of the Company's operations.
D. At June 30, 1996, 2,561,000 shares of Common Stock were reserved as
follows: 55,000 shares for conversion of the 9 1/2% Convertible
Subordinated Debentures, 587,000 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 117,000 shares for issuance under
the Company's Dividend Reinvestment and Stock Purchase Plan.
E. Effective March 29,1996, the Company acquired all of the outstanding
stock of Conogen, Inc. (Conogen) in exchange for 239,316 shares of the
Company's common stock valued at $7 million and subject to an additional
contingent amount. At the time of closing, the Company tendered 68,376
shares of common stock held in treasury with 170,940 shares tendered in
July 1996. The effect of this acquisition on the consolidated financial
statements of the Company is not material. Conogen is a design-builder
and performance contractor in self-funded energy and resource efficiency
projects for commercial, industrial and institutional customers.
F. On June 28, 1996, the Company funded the retirement of $75 million of 8
1/4% Debentures due July 1, 1996.
On June 25, 1996, the Company commenced a tender offer for the purchase of
all of the outstanding 9.9% Debentures due April 15, 2013. As of June 30,
1996, $9 million of the Debentures were tendered for purchase. In July and
August an additional $60 million were tendered for purchase leaving $6
million outstanding.
The retirement of 8 1/4% Debentures and purchase of 9.9% Debentures were
financed temporarily with short-term loans which were repaid with long-term
debt issued in July 1996 as described below. As such, $84 million of
outstanding short-term debt at June 30, 1996 is classified as long-term debt
in the financial statements.
The Company filed a shelf registration with the Securities and Exchange
Commission effective in June 1996 to issue $250 million of long-term debt.
On July 29, 1996 the Company issued $150 million of 30-year Debentures with
a coupon rate of 7 3/4%. The proceeds were used to finance the retirement of
8 1/4% Debentures and purchase of 9.9% Debentures as described above.
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1996
Exploration
and Natural Gas Natural Gas Natural Gas Intersegment
Production Marketing Distribution Transmission Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced ................................... 13,711 28 614 14,353
------- -------- ------- -------- -------- -------
Purchased:
Other producers .......................... 124,701 15,412 1,980 142,093
Inter-segment purchases .................. 601 10,785 1,593 (12,979)
------- -------- ------- -------- -------- -------
Total purchases ...................... 601 135,486 17,005 1,980 (12,979) 142,093
------- -------- ------- -------- -------- -------
Total produced and purchased ..... 14,312 135,486 17,033 2,594 (12,979) 156,446
Deduct:
Net increase (decrease) in gas in storage 2,808
2,808
Extracted natural gas liquids
(equivalent gas volumes) ............... 452 1,909 2,361
System use and unaccounted for ........... 136 420 (540) 23 39
------- -------- ------- -------- -------- -------
Total ............................ 13,724 133,157 14,765 2,571 (12,979) 151,238
======= ======== ======= ======== ======== =======
Gas Sales (MMcf):
Residential ................................ 4,284 4,284
Commercial ................................. 1,982 1,982
Industrial and Utility ..................... 8,499 (1,112) 7,387
Production ................................. 13,711 (104) 13,607
Marketing .................................. 13 133,157 2,571 (11,763) 123,978
------- -------- ------- -------- -------- -------
Total ............................ 13,724 133,157 14,765 2,571 (12,979) 151,238
======= ======== ======= ======== ======== =======
Natural Gas Transported (MMcf) .................... 30,321 979 30,542 (22,648) 39,194
======= ======== ======= ======== ======== =======
Oil Produced and Sold (thousands of bls) .......... 442 442
======== =======
Natural Gas Liquids Sold
(thousands of gallons) .......................... 16,261 57,660 73,921
======== ======== =======
Average Selling Price:
Residential Gas Sales (per Mcf)............. $9.480
Commercial Gas Sales........................ 6.400
Industrial and Utility Gas Sales............ 2.845 N/A
Produced Natural Gas........................ $1.428
Marketed Natural Gas........................ 4.846 $1.989 $2.836
Oil (per barrel)............................ 15.287
Natural Gas Liquids (per gallon)............ .337 .331
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1995
Exploration
and Natural Gas Natural Gas Natural Gas Intersegment
Production Marketing Distribution Transmission Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced................................. 17,564 33 560 18,157
-------- --------- -------- --------- --------- ---------
Purchased:
Other producers........................ 122,209 13,417 1,448 137,074
Inter-segment purchases................ 768 12,921 1,894 (15,583)
-------- --------- -------- --------- --------- ---------
Total purchases.................... 768 135,130 15,311 1,448 (15,583) 137,074
-------- --------- -------- --------- --------- ---------
Total produced and purchased... 18,332 135,130 15,344 2,008 (15,583) 155,231
Deduct:
Net increase (decrease) in gas in storage 2,224 171
2,395
Extracted natural gas liquids
(equivalent gas volumes)............. 485 1,650 2,135
System use and unaccounted for......... 145 422 2,279 (121) 2,725
-------- --------- -------- --------- --------- ---------
Total.......................... 17,702 133,058 10,841 1,958 (15,583) 147,976
======== ========= ======== ========= ========= =========
Gas Sales (MMcf):
Residential.............................. 4,070 4,070
Commercial............................... 58 581
Industrial and Utility................... 6,190 6,190
Production............................... 17,564 (80) 17,484
Marketing................................ 138 133,058 1,958 (15,503) 119,651
-------- --------- -------- --------- --------- ---------
Total.......................... 17,702 133,058 10,841 1,958 (15,583) 147,976
======== ========= ======== ========= ========= =========
Natural Gas Transported (MMcf).................. 30,929 3,126 27,765 (22,206) 39,614
======== ========= ======== ========= ========= =========
Oil Produced and Sold (thousands of bls)........ 500 500
======== =========
Natural Gas Liquids Sold
(thousands of gallons)........................ 16,087 49,791 65,878
======== ========= =========
Average Selling Price:
Residential Gas Sales (per Mcf).......... $9.657
Commercial Gas Sales..................... 9.246
Industrial and Utility Gas Sales......... 1.927 N/A
Produced Natural Gas..................... $1.482
Marketed Natural Gas..................... 2.283 $1.584 $1.936
Oil (per barrel)......................... 17.270
Natural Gas Liquids (per gallon)......... .328 .277
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1996
Exploration
and Natural Gas Natural Gas Natural Gas Intersegment
Production Marketing Distribution Transmission Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced................................. 30,089 62 1,153 31,304
------- --------- ------- ------- -------- --------
Purchased:
Other producers........................ 259,885 32,095 4,616 296,596
Inter-segment purchases................ 1,192 20,684 6,993 (28,869)
------- -------- ------- ------- -------- --------
Total purchases.................... 1,192 280,569 39,088 4,616 (28,869) 296,596
------- -------- ------- ------- -------- --------
Total produced and purchased... 31,281 280,569 39,150 5,769 (28,869) 327,900
Deduct:
Net increase (decrease) in gas in storage (2,491) (2,491)
Extracted natural gas liquids
(equivalent gas volumes)............. 882 3,214 4,096
System use and unaccounted for......... 244 751 2,138 49 3,182
------- -------- ------- ------- -------- --------
Total.......................... 30,155 276,604 39,503 5,720 (28,869) 323,113
======= ======== ======= ======= ======== ========
Gas Sales (MMcf):
Residential.............................. 19,301 19,301
Commercial............................... 8,314 8,314
Industrial and Utility................... 11,888 (1,559) 10,329
Production............................... 30,089 (399) 29,690
Marketing................................ 66 276,604 5,720 (26,911) 255,479
------- -------- ------- ------- -------- --------
Total.......................... 30,155 276,604 39,503 5,720 (28,869) 323,113
======= ======== ======= ======= ======== ========
Natural Gas Transported (MMcf).................. 60,598 3,303 65,412 (54,915) 74,398
======= ======== ======= ======= ======== ========
Oil Produced and Sold (thousands of bls)........ 892 892
======= ========
Natural Gas Liquids Sold
(thousands of gallons)........................ 28,668 96,732 125,400
======= ======== ========
Average Selling Price:
Residential Gas Sales (per Mcf).......... $8.387
Commercial Gas Sales..................... 6.424
Industrial and Utility Gas Sales......... 3.164 N/A
Produced Natural Gas..................... $1.926
Marketed Natural Gas..................... 3.697 $2.459 $3.456
Oil (per barrel)......................... 16.114
Natural Gas Liquids (per gallon)......... .370 .327
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1995
Exploration
and Natural Gas Natural Gas Natural Gas Intersegment
Production Marketing Distribution Transmission Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced................................. 34,826 62 1,092 35,980
------- -------- ------- ------- -------- --------
Purchased:
Other producers........................ 235,690 25,311 3,019 264,020
Inter-segment purchases................ 1,726 23,665 6,924 (32,315)
------- -------- ------- ------- -------- --------
Total purchases ................... 1,726 259,355 32,235 3,019 (32,315) 264,020
------- -------- ------- ------- -------- --------
Total produced and purchased... 36,552 259,355 32,297 4,111 (32,315) 300,000
Deduct:
Net increase (decrease) in gas in storage (2,893) (2,893)
Extracted natural gas liquids
(equivalent gas volumes) ............ 952 3,243 4,195
System use and unaccounted for......... 276 829 6,489 104 7,698
------- -------- ------- ------- -------- --------
Total.......................... 35,324 255,283 28,701 4,007 (32,315) 291,000
======= ======== ======= ======= ======== ========
Gas Sales (MMcf):
Residential.............................. 17,484 17,484
Commercial............................... 2,359 2,359
Industrial and Utility................... 8,858 1 8,859
Production............................... 34,826 (308) 34,518
Marketing................................ 498 255,283 4,006 (32,007) 227,780
------- -------- ------- ------- -------- --------
Total.......................... 35,324 255,283 28,701 4,007 (32,315) 291,000
======= ======== ======= ======= ======== ========
Natural Gas Transported (MMcf).................. 57,522 9,435 58,194 (49,926) 75,225
======= ======== ======= ======= ======== ========
Oil Produced and Sold (thousands of bls)........ 1,011 1,011
======= ========
Natural Gas Liquids Sold
(thousands of gallons)........................ 31,134 98,024 129,158
======= ======== ========
Average Selling Price:
Residential Gas Sales (per Mcf).......... $9.272
Commercial Gas Sales..................... 9.413
Industrial and Utility Gas Sales......... 1.914 N/A
Produced Natural Gas..................... $1.546
Marketed Natural Gas..................... 1.606 $1.593 $2.006
Oil (per barrel)......................... 16.758
Natural Gas Liquids (per gallon)......... .338 .272
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED JUNE 30, 1996
Exploration
and Natural Gas Natural Gas Natural Gas Intersegment
Production Marketing Distribution Transmission Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced ................................ 60,247 140 2,621 63,008
------- -------- ------- -------- -------- --------
Purchased:
Other producers........................ 487,746 48,710 9,633 546,089
Inter-segment purchases................ 2,612 50,575 13,618 (66,805)
------- -------- ------- -------- -------- --------
Total purchases.................... 2,612 538,321 62,328 9,633 (66,805) 546,089
------- -------- ------- -------- -------- --------
Total produced and purchased... 62,859 538,321 62,468 12,254 (66,805) 609,097
Deduct:
Net increase (decrease) in gas in storage (993) (276) (1,269)
Extracted natural gas liquids
(equivalent gas volumes)............. 1,801 6,511 8,312
System use and unaccounted for......... 525 1,572 680 (330) 2,447
------- -------- ------- -------- -------- --------
Total.......................... 60,533 530,238 62,781 12,860 (66,805) 599,607
======= ======== ======= ======== ======== ========
Gas Sales (MMcf):
Residential.............................. 31,311 31,311
Commercial............................... 10,449 10,449
Industrial and Utility................... 21,021 (1) (11,908) 9,112
Production............................... 60,247 (556) 59,691
Marketing................................ 286 530,238 12,861 (54,341) 489,044
------- -------- ------- -------- -------- --------
Total.......................... 60,533 530,238 62,781 12,860 (66,805) 599,607
======= ======== ======= ======== ======== ========
Natural Gas Transported (MMcf).................. 125,481 9,971 126,308 (103,387) 158,373
======= ======== ======= ======== ======== ========
Oil Produced and Sold (thousands of bls)........ 1,813 1,813
======= ========
Natural Gas Liquids Sold
(thousands of gallons)........................ 60,581 196,648 257,229
======= ======== ========
Average Selling Price:
Residential Gas Sales (per Mcf).......... $8.515
Commercial Gas Sales..................... 6.795
Industrial and Utility Gas Sales......... 2.754 N/A
Produced Natural Gas..................... $1.779
Marketed Natural Gas..................... 2.084 $2.074 $2.647
Oil (per barrel)......................... 16.098
Natural Gas Liquids (per gallon)......... .329 .295
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED JUNE 30, 1995
Exploration
and Natural Gas Natural Gas Natural Gas Intersegment
Production Marketing Distribution Transmission Eliminations Consolidated
<S> <C> <C> <C> <C> <C> <C>
Gas Produced, Purchased and Sold (MMcf):
Produced ................................ 67,899 143 2,088 70,130
------- -------- ------- ------- -------- --------
Purchased:
Other producers........................ 447,488 50,067 6,215 503,770
Inter-segment purchases ............... 3,105 48,795 12,819 62 (64,781)
------- -------- ------- ------- -------- --------
Total purchases ................... 3,105 496,283 62,886 6,277 (64,781) 503,770
------- -------- ------- ------- -------- --------
Total produced and purchased .. 71,004 496,283 63,029 8,365 (64,781) 573,900
Deduct:
Net increase (decrease) in gas in storage 487 (181) 306
Extracted natural gas liquids
(equivalent gas volumes) ............ 1,909 6,511 8,420
System use and unaccounted for......... 545 1,643 11,491 306 13,985
------- -------- ------- ------- -------- --------
Total.......................... 68,550 488,129 51,051 8,240 (64,781) 551,189
======= ======== ======= ======= ======== ========
Gas Sales (MMcf):
Residential ............................. 27,287 27,287
Commercial............................... 5,124 5,124
Industrial and Utility................... 18,640 3 (3,211) 15,432
Production............................... 67,899 (3,855) 64,044
Marketing................................ 651 488,129 8,237 (57,715) 439,302
------- -------- ------- ------- -------- --------
Total.......................... 68,550 488,129 51,051 8,240 (64,781) 551,189
======= ======== ======= ======= ======== ========
Natural Gas Transported (MMcf).................. 113,269 13,138 117,529 (93,883) 150,053
======= ======== ======= ======= ======== ========
Oil Produced and Sold (thousands of bls)........ 2,010 2,010
======= ========
Natural Gas Liquids Sold
(thousands of gallons)........................ 60,855 197,554 258,409
======= ======== ========
Average Selling Price:
Residential Gas Sales (per Mcf).......... $9.440
Commercial Gas Sales..................... 8.440
Industrial and Utility Gas Sales......... 2.027 N/A
Produced Natural Gas..................... $1.602
Marketed Natural Gas..................... 1.665 $1.649 $1.993
Oil (per barrel)......................... 16.463
Natural Gas Liquids (per gallon)......... .326 .273
</TABLE>
<PAGE>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Information by Business Segment
(Thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
1996 1995 1996 1995 1996 1995
(Thousands)
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Exploration and production ......... $ 38,382 $ 44,099 $ 93,756 $ 90,443 $ 238,178 $ 190,700
Natural gas marketing .............. 287,256 227,236 718,750 438,241 1,169,812 869,196
Natural gas distribution ........... 79,983 63,656 263,505 225,937 418,618 376,938
Natural gas transmission ........... 26,623 24,985 64,952 56,630 127,183 111,047
Sales between segments ............. (40,477) (43,442) (108,918) (90,026) (216,981) (185,036)
----------- ----------- ----------- ----------- ----------- -----------
Total ..................... $ 391,767 $ 316,534 $ 1,032,045 $ 721,225 $ 1,736,810 $ 1,362,845
=========== =========== =========== =========== =========== ===========
OPERATING INCOME (LOSS):
Exploration and production ....... $ 634 $ (2,611) $ 16,199 $ (880) $ 3,256 $ 14,400
Natural gas marketing ............ 959 1,732 6,508 3,979 (16,316) 6,371
Natural gas distribution ......... (128) 234 34,940 33,021 25,440 39,712
Natural gas transmission ......... 7,518 5,677 20,739 17,224 34,614 32,076
----------- ----------- ----------- ----------- ----------- -----------
Total ..................... $ 8,983 $ 5,032 $ 78,386 $ 53,344 $ 46,994 $ 92,559
=========== =========== =========== =========== =========== ===========
CAPITAL EXPENDITURES:
Exploration and production ....... $ 13,607 $ 14,022 $ 19,937 $ 30,406 $ 34,317 $ 77,278
Natural gas marketing ............ 2,672 2,573 9,523 5,900 27,787 19,053
Natural gas distribution ......... 6,130 6,185 11,714 15,707 38,202 34,830
Natural gas transmission ......... 1,442 1,486 1,508 2,977 5,498 9,497
----------- ----------- ----------- ----------- ----------- -----------
Total ..................... $ 23,851 $ 24,266 $ 42,682 $ 54,990 $ 105,804 $ 140,658
=========== =========== =========== =========== =========== ===========
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
Consolidated net income for the quarter ended June 30, 1996 was $.9 million
or $.03 per share, compared with a loss of $1.2 million or $.03 per share for
the quarter ended June 30, 1995. The increase in income is due to lower
depreciation and depletion and interest expense and higher margins for natural
gas marketing. These increases were partially offset by lower production of
natural gas, lower nonconventional fuels tax credits and an after-tax charge of
$1.2 million in the current period resulting from closing of some of the
Company's natural gas price hedge positions related to production for the second
half of 1996. The hedge positions were closed in response to unprecedented basis
differentials between the New York Mercantile Exchange prices and regional cash
prices.
Consolidated net income for the six months ended June 30, 1996 was $39.7
million or $1.13 per share, compared with $26.6 million or $.77 per share for
the six months ended June 30, 1995. The increase in earnings is due to lower
depreciation and depletion, higher average prices for produced natural gas,
increased retail gas sales reflecting weather that was 9 percent colder than the
prior year, higher margins for natural gas marketing and lower interest expense.
These increases were partially offset by lower nonconventional fuels tax
credits, lower natural gas production and the charge in the current period for
closing natural gas price hedge positions.
Consolidated net income for the twelve months ended June 30, 1996 was $14.6
million or $.42 per share, compared with $44.9 million or $1.30 per share for
the twelve months ended June 30, 1995. Earnings for the current period includes
an after-tax charge of $74.2 million or $2.12 per share recorded in the fourth
quarter of 1995 for the recognition of impairment of assets of $121.2 million,
pursuant to the methodology of Statement of Financial Accounting Standards No.
121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of". The results for the current period also include a
non-recurring after-tax gain of $29.1 million or $.83 per share related to the
Columbia Gas Transmission (Columbia) bankruptcy settlement and $6.6 million or
$.19 per share, resulting from regulatory approval for accelerated recovery of
future gas costs recognized in the fourth and third quarters of 1995,
respectively. The increase in net income, excluding the charge and the effect of
the settlements, was due to lower depreciation and depletion, higher average
prices for produced natural gas, increased retail gas sales reflecting weather
that was 16 percent colder than the prior year, higher margins for natural gas
marketing and lower interest expense. These increases were partially offset by
lower nonconventional fuels tax credits and lower production of natural gas.
<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 from the sale of produced natural
gas, oil and natural gas liquids and from contract drilling were $38.4 million
for the quarter ended June 30, 1996 compared with $44.1 million for the quarter
ended June 30, 1995. The decrease in operating revenues is due primarily to
lower average prices and production for natural gas and lower oil prices. The
lower average prices for produced natural gas in the current period are due in
part to a $2.0 million hedging charge to close natural gas hedge positions
related to production for the second half of 1996. Operating revenues for the
six months ended June 30, 1996 were $93.8 million compared with $90.4 million
for the six months ended June 30, 1995. The increase in operating revenues is
due to higher average prices for produced natural gas partially offset by lower
natural gas production and lower production and prices of oil. Operating
revenues for the twelve months ended June 30, 1996 were $238.2 million compared
with $190.7 million for the twelve months ended June 30, 1995. The 1996 period
includes $40.2 million of nonrecurring amounts from the Columbia bankruptcy
settlement and $11.0 million of additional revenue from direct bill settlements.
The decrease in operating revenues for the current period, excluding the
nonrecurring items, is due primarily to lower production of natural gas and oil
and lower prices for oil. These decreases were partially offset by higher
average prices for produced natural gas.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30,
EXPLORATION AND PRODUCTION 1996 1995 1996 1995 1996 1995
OPERATING REVENUES (THOUSANDS):
<S> <C> <C> <C> <C> <C> <C>
Natural Gas ............................ $19,578 $26,024 $57,939 $53,852 $107,200 $108,775
Oil .................................... 6,757 8,635 14,374 16,942 29,185 33,090
Natural Gas Liquids .................... 5,488 5,278 9,875 10,530 19,946 19,868
Contract Drilling ...................... 5,007 2,857 8,171 5,703 16,792 14,594
Direct Billing Settlements ............. -- -- -- -- 32,582
7,815
Other .................................. 1,552 1,305 3,397 3,416 32,473 6,558
------- ------- ------- ------- ------- -------
Total Revenues ........................ $38,382 $44,099 $93,756 $90,443 $238,178 $190,700
======= ======= ======= ======= ======= =======
SALES QUANTITIES:
Natural Gas (MMcf) .................... 13,711 17,564 30,089 34,826 60,247 67,899
Oil (MBls) ............................. 442 500 892 1,011 1,813 2,010
Natural Gas Liquids
(thousands of gallons) ................ 16,261 16,087 28,668 31,134 60,581 60,855
</TABLE>
Energy purchased amounted to $3.7 million for the quarter ended June 30,
1996 compared with $2.6 million for the quarter ended June 30, 1995. Energy
purchased for the six months ended June 30, 1996 amounted to $8.6 million
compared with $5.4 million for the six months ended June 30, 1995. Energy
purchased for the twelve months ended June 30, 1996 amounted to $14.1 million
compared with $10.3 million for the twelve months ended June 30, 1995. The
increase in purchased energy for the current periods is due to higher prices.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Other operating expenses were $34.1 million for the quarter ended June 30,
1996 compared with $44.1 million for the quarter ended June 30, 1995. Other
operating expenses for the six months ended June 30, 1996 were $69.0 million
compared with $85.9 million for the six months ended June 30, 1995. Other
operating expenses for the twelve months ended June 30, 1996 were $220.9 million
compared with $166.0 million for the twelve months ended June 30, 1995. The
current twelve month period includes a charge of $73.9 million for impairment of
assets. The decrease for the current periods, excluding the charge in the
twelve-month period, is due to decreased depreciation and depletion reflecting
lower depletion rates and lower production.
Operating income was $.6 million for the quarter ended June 30, 1996
compared with an operating loss of $2.6 million for the quarter ended June 30,
1995. The increase in operating income is due to lower depreciation and
depletion, partially offset by lower production of natural gas and lower oil
prices. Operating income for the six months ended June 30, 1996 was $16.2
million compared with a loss of $.9 million for the six months ended June 30,
1995. The increase in operating income reflects higher average prices for
produced natural gas and lower depreciation and depletion, partially offset by
lower production of natural gas and oil and lower oil prices. Operating income
for the twelve months ended June 30, 1996 was $3.3 million compared with $14.4
million for the twelve months ended June 30, 1995. The increase in operating
income, excluding the effect of the nonrecurring items, is due to lower
depreciation and depletion and higher average prices for produced natural gas
partially offset by lower production of natural gas and oil and lower prices for
oil.
ENERGY 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 $287.3 million for the quarter ended June 30,
1996 compared with $227.2 million for the quarter ended June 30, 1995. The
increase in revenues is due to a 26 percent increase in the average price of
marketed gas and higher selling prices and production of natural gas liquids.
Operating revenues for the six months ended June 30, 1996 were $718.7 million
compared with $438.2 million for the six months ended June 30, 1995. The
increase in revenues is due to a 54 percent increase in the average price of
marketed gas, an 8 percent increase in marketed gas volumes and higher selling
prices of natural gas liquids. Operating revenues for the twelve months ended
June 30, 1996 were $1,169.8 million compared with $869.2 million for the twelve
months ended June 30, 1995. The increase in revenues is due to a 26 percent
increase in the average price of marketed gas, a 9 percent increase in marketed
gas volumes and higher selling prices of natural gas liquids.
<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,
ENERGY MARKETING 1996 1995 1996 1995 1996 1995
OPERATING REVENUES (THOUSANDS):
<S> <C> <C> <C> <C> <C> <C>
Natural Gas Marketing ........... $ 264,834 $ 210,787 $ 680,213 $ 406,542 $1,099,814 $ 804,927
Natural Gas Liquids ............. 19,106 13,806 31,640 26,690 57,969 54,027
Transportation .................. 1,478 2,417 3,201 4,710 7,896 9,732
Other ........................... 1,838 226 3,696 299 4,133 510
---------- ---------- ---------- ---------- ---------- ----------
Total Revenues ................. $ 287,256 $ 227,236 $ 718,750 $ 438,241 $1,169,812 $ 869,196
========== ========== ========== ========== ========== ==========
SALES QUANTITIES:
Marketed Natural Gas (MMcf) ..... 133,157 133,058 276,604 255,283 530,238 488,129
Natural Gas Liquids
(thousands of gallons) ......... 57,660 49,791 96,732 98,024 196,648 197,554
Transportation Deliveries (Mmcf) 30,321 30,929 60,598 57,522 125,481 113,269
</TABLE>
Energy purchased was $275.8 million for the quarter ended June 30, 1996
compared with $218.1 million for the quarter ended June 30, 1995. The increase
in energy purchased for the current quarter is due to higher gas prices, higher
volumes of marketed gas and requirements for the higher production of natural
gas liquids. Energy purchased for the six months ended June 30, 1996 was $695.1
million compared with $419.3 million for the six months ended June 30, 1995.
Energy purchased for the twelve months ended June 30, 1996 was $1,130.2 million
compared with $832.8 million for the twelve months ended June 30, 1995. The
increase in energy purchased for the six- and twelve-month periods reflects
higher gas prices and higher volumes of marketed gas.
Other operating expenses were $10.5 million for the quarter ended June 30,
1996 compared with $7.4 million for the quarter ended June 30, 1995. Other
operating expenses for the six months ended June 30, 1996 were $17.1 million
compared with $14.9 million for the six months ended June 30, 1995. The increase
for the current periods is due primarily to higher gas processing expenses
reflecting higher production of natural gas liquids and marketing and
administrative expenses associated with the gas storage service that began in
early 1996. Other operating expenses for the twelve months ended June 30, 1996
were $55.9 million compared with $30.0 million for the twelve months ended June
30, 1995. Other operating expenses for the 1996 period include a charge of $21.2
million for impairment of assets. The increase for the current period, excluding
the charge, reflects higher gas processing expenses and costs associated with
the gas storage service that began in early 1996.
Operating results for the quarter ended June 30, 1996 were $1.0 million
compared with $1.7 million for the quarter ended June 30, 1995. The decrease is
due to lower margins for marketed gas. Operating results for the six months
ended June 30, 1996 were $6.5 million compared with $4.0 million for the six
months ended June 30, 1995. The increase is due to higher margins and sales for
marketed gas. Operating results for the twelve months ended June 30, 1996 were a
loss of $16.3 million compared with income of $6.4 million for the twelve months
ended June 30, 1995. The decrease in operating income for the twelve-month
period, excluding the charge for impairment of assets, is due primarily to
increased operating expenses.
<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 $80.0
million for the quarter ended June 30, 1996 compared with $63.6 million for the
quarter ended June 30, 1995. The increase in revenues is due primarily to an
increase in industrial and utility gas sales and the effect of commercial
customers switching from transportation service to gas sales, partially offset
by lower retail rates to pass through lower regulatory purchased gas costs to
customers. Operating revenues for the six months ended June 30, 1996 were $263.5
million compared with $225.9 million for the six months ended June 30, 1995. The
increase in revenues is due primarily to an increase in retail gas sales
reflecting weather that was 9 percent colder than the prior year, an increase in
industrial and utility gas sales and the effect of commercial customers
switching from transportation service to gas sales, partially offset by lower
retail rates to pass through lower regulatory purchased gas costs to customers.
Operating revenues for the twelve months ended June 30, 1996 were $418.6 million
compared with $376.9 million for the twelve months ended June 30, 1995. The
increase in revenues is due to an increase in retail gas sales reflecting
weather that was 16 percent colder than the 1995 period, an increase in
industrial and utility gas sales and the effect of commercial customers
switching from transportation to gas sales.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30,
NATURAL GAS DISTRIBUTION 1996 1995 1996 1995 1996 1995
OPERATING REVENUES (THOUSANDS):
<S> <C> <C> <C> <C> <C> <C>
Residential Gas Sales ............ $ 40,613 $ 39,303 $161,881 $162,110 $266,626 $257,591
Commercial Gas Sales ............. 12,684 5,372 53,406 22,206 71,004 43,246
Industrial and Utility Gas Sales . 24,177 11,929 37,609 16,954 57,883 37,779
Transportation Service ........... 665 5,660 6,616 21,952 16,394 33,520
Other ............................ 1,844 1,392 3,993 2,715 6,711 4,802
-------- -------- -------- -------- -------- --------
Total Revenues ..................... $ 79,983 $ 63,656 $263,505 $225,937 $418,618 $376,938
======== ======== ======== ======== ======== ========
SALES QUANTITIES (MMCF):
Residential Gas Sales ............ 4,284 4,070 19,301 17,484 31,311
27,287
Commercial Gas Sales ............. 1,982 581 8,314 2,359 10,449 5,124
Industrial and Utility Gas Sales . 8,499 6,190 11,888 8,858 21,021 18,640
Transportation Deliveries ........ 979 3,126 3,303 9,435 9,971 13,138
Heating Degree Days .............. 656 655 3,746 3,451 6,043 5,232
</TABLE>
Energy purchased amounted to $52.7 million for the quarter ended June 30,
1996 compared with $38.0 million for the quarter ended June 30, 1995. Energy
purchased for the six months ended June 30, 1996 was $161.7 million compared
with $134.7 for the six months ended June 30, 1995. Energy purchased for the
twelve months ended June 30, 1996 was $248.7 million compared with $226.5
million for the twelve months ended June 30, 1995. The increase in energy costs
for the current periods is due to higher gas sales, partially offset by the
pass-through of lower regulatory purchased gas costs to retail customers.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Other operating expenses were $27.4 million for the quarter ended June 30,
1996 compared with $25.4 million for the quarter ended June 30, 1995. Other
operating expenses for the six months ended June 30, 1996 were $66.9 million
compared with $58.2 million for the six months ended June 30, 1995. Other
operating expenses were $144.6 million for the twelve months ended June 30, 1996
compared with $110.7 million for the twelve months ended June 30, 1995. Other
operating expenses for the current twelve-month period includes a charge of
$20.8 million for impairment of assets. The increase in other operating expenses
for the current periods, excluding the charge in the twelve-month period, is due
to increased market research and development expenses related to the Company's
new unregulated energy services marketing operation.
Operating results for the quarter ended June 30, 1996 were a loss of $.1
million compared with operating income of $.2 million for the quarter ended June
30, 1995. Operating income for the six months ended June 30, 1996 was $34.9
million compared with $33.0 million for the six months ended June 30, 1995.
Operating income was $25.5 million for the twelve months ended June 30, 1996
compared with $39.7 million for the twelve months ended June 30, 1995. The
increase in operating income for the current periods, excluding the charge for
impairment of assets in the twelve-month period, is due primarily to higher gas
sales, partially offset by increased operating expenses.
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, were $26.7 million for the quarter ended June 30, 1996 compared
with $25.0 million for the quarter ended June 30, 1995. Operating revenues for
the six months ended June 30, 1996 were $65.0 million compared with $56.6
million for the six months ended June 30, 1995. Operating revenues for the
twelve months ended June 30, 1996 were $127.3 million compared with $111.0
million for the twelve months ended June 30, 1995. Operating revenues for the
current twelve month period include $4.8 million related to the Columbia
bankruptcy settlement. The increase in revenues for the current periods,
excluding the effect of the settlement in the twelve-month period, is due
primarily to higher selling prices and increased volumes of marketed natural
gas.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30,
NATURAL GAS TRANSMISSION 1996 1995 1996 1995 1996 1995
OPERATING REVENUES (THOUSANDS):
<S> <C> <C> <C> <C> <C> <C>
Industrial and Utility Gas Sales ... $ 363 $ 363 $ 726 $ 726 $ 1,451 $ 1,322
Marketed Gas Sales ................. 7,291 3,791 19,770 8,036 34,042 16,416
Transportation Service ............. 14,167 14,950 34,547 35,799 66,714 69,387
Storage Service .................... 3,572 4,352 7,192 8,743 14,358 17,442
Other .............................. 1,230 1,529 2,717 3,326 10,618 6,480
--------- --------- --------- --------- --------- ---------
Total Revenues .................... $ 26,623 $ 24,985 $ 64,952 $ 56,630 $ 127,183 $ 111,047
========= ========= ========= ========= ========= =========
SALES QUANTITIES (MMCF):
Industrial and Utility Gas Sales ... -- -- -- 1 (1) 3
Marketed Gas Sales ................. 2,571 1,958 5,720 4,006 12,861 8,237
Transportation Deliveries .......... 30,542 27,765 65,412 58,194 126,308 117,529
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Energy purchased amounted to $2.9 million for the quarter ended June 30,
1996 compared with $2.8 million for the quarter ended June 30, 1995. Energy
purchased for the six months ended June 30, 1996 was $12.4 million compared with
$6.1 million for the six months ended June 30, 1995. Energy purchased for the
twelve months ended June 30, 1996 was $23.7 million compared with $12.6 million
for the twelve months ended June 30, 1995. The increase in energy costs for the
current periods is due to higher prices for marketed gas and an increase in
marketed gas volumes.
Other operating expenses were $16.2 million for the quarter ended June 30,
1996 compared with $16.5 million for the quarter ended June 30, 1995. Other
operating expenses for the six months ended June 30, 1996 were $31.9 million
compared with $33.4 million for the six months ended June 30, 1995. Other
operating expenses for the twelve months ended June 30, 1996 were $69.1 million
compared with $66.4 million for the twelve months ended June 30, 1995. Other
operating expenses for the current twelve-month period include a charge of $5.2
million for impairment of assets. Operating expenses for the current periods,
excluding the charge in the twelve-month period, remained substantially the
same.
Operating income was $7.6 million for the quarter ended June 30, 1996,
compared with $5.7 million for the quarter ended June 30, 1995. Operating income
for the six months ended June 30, 1996 was $20.7 million compared with $17.1
million for the six months ended June 30, 1995. Operating income was $34.5
million for the twelve months ended June 30, 1996 compared with $32.0 million
for the twelve months ended June 30, 1995. The increase in operating income for
the current periods, excluding the effect of the Columbia settlement and the
charge for impairment of assets in the twelve-month period, is due to higher
prices for marketed gas, an increase in marketed natural gas sales and lower
operating expenses.
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. A total of $129.5 million has been authorized for the
1996 capital expenditure program, with $63.8 allocated to exploration and
production, $30.7 million for natural gas marketing, $24.6 million for natural
gas distribution and $10.4 million for natural gas transmission. Capital
expenditures for the six months ended June 30, 1996 were $42.7 million.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Short-term loans are also used as interim financing for a portion of
capital expenditures. The Company expects to finance its 1996 capital
expenditures with cash generated from operations and temporarily with short-term
loans.
CAPITAL RESOURCES AND LIQUIDITY
FINANCING ACTIVITIES
The Company has adequate borrowing capacity to meet its financing
requirements. The Company has a 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 June
30, 1996, $227.3 million of commercial paper was outstanding, including $84.0
million classified as long-term debt as described in Note F to the Consolidated
Financial Statements, at an average interest rate of 5.41 percent. Adequate
credit is expected to continue to be available in the future.
See Note F to the Consolidated Financial Statements for a description of
changes in the Company's long-term debt.
BALANCE SHEET CHANGES
The increase in accounts receivable is due to the higher sales of marketed
gas. 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.
<PAGE>
PART II. OTHER INFORMATION
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
None
(b) Reports on Form 8-K during the quarter ended June 30, 1996:
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/ Jeffrey C. Swoveland
------------------------
Jeffrey C. Swoveland
Vice President - Finance and Treasurer
Date: August 14, 1996
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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