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, 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 September 30, 1996
----- ------------------
Common stock, no par value 35,323,988 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,
1996 and 1995, the Nine Months Ended
September 30, 1996 and 1995 and the
Twelve Months Ended September 30,
1996 and 1995 1
Statements of Consolidated Cash Flows
for the Three Months Ended September 30, 1996
and 1995, the Nine Months Ended September 30, 1996
and 1995 and the Twelve Months Ended
September 30, 1996 and 1995 2
Consolidated Balance Sheets, September 30, 1996
and 1995 and December 31, 1995 3 - 4
Long-Term Debt, September 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 6 - 7
Gas Produced, Purchased and Sold 8 - 13
Information by Business Segment 14
Management's Discussion and Analysis of
Financial Condition and Results of Operations 15 - 22
PART II. OTHER INFORMATION 23
SIGNATURE 24
<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,
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Operating Revenues........... $ 357,011 $ 270,992 $ 1,389,056 $ 992,217 $ 1,822,829 $ 1,336,125
Cost of Energy Purchased..... 262,943 171,604 1,034,786 648,882 1,297,261 872,721
---------- -------- ----------- --------- ----------- ----------
Net operating revenues.. 94,068 99,388 354,270 343,335 525,568 463,404
---------- -------- ----------- --------- ----------- ----------
Operating Expenses:
Operation................. 54,543 45,369 158,126 143,303 213,325 192,987
Maintenance............... 7,653 6,443 19,920 19,644 26,911 28,207
Depreciation and depletion 20,805 26,726 62,463 84,151 82,937 108,905
Impairment of assets...... - - - - 121,081 -
Taxes other than income... 7,207 6,392 31,515 28,435 44,918 39,135
---------- -------- ----------- --------- ----------- ----------
Total operating expenses 90,208 84,930 272,024 275,533 489,172 369,234
---------- -------- ----------- --------- ----------- ----------
Operating Income............. 3,860 14,458 82,246 67,802 36,396 94,170
Other Income................. (751) (1,427) 4,104 (1,591) 6,082 254
Interest Charges............. 10,311 12,674 30,723 38,218 42,603 49,807
---------- -------- ----------- --------- ----------- ----------
Income (Loss)
Before Income Taxes....... (7,202) 357 55,627 27,993 (125) 44,617
Income Taxes (Benefits)...... (3,515) (1,327) 19,660 (283) (9,364) 409
---------- -------- ----------- --------- ----------- ----------
Net Income (Loss)............ $ (3,687) $ 1,684 $ 35,967 $ 28,276 $ 9,239 $ 44,208
========== ======== =========== ========= =========== ==========
Average Common
Shares Outstanding......... 35,267 34,846 35,143 34,733 35,107 34,686
========== ======== =========== ========= =========== ==========
Earnings (Loss) Per Share of
Common Stock.............. $(.10) $.05 $1.02 $.81 $.26 $1.27
===== ==== ===== ==== ==== =====
Dividends Per Share of
Common Stock.............. $.29 $.29 $.88 $.88 $1.18 $1.18
==== ==== ==== ==== ===== =====
</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,
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Cash Flows from Operating Activities:
Net income (loss)......................... $ (3,687) $ 1,684 $ 35,967 $ 28,276 $ 9,239 $ 44,208
-------- -------- -------- -------- --------- --------
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Impairment of assets................... - - - - 121,081 -
Depreciation and depletion............. 20,805 26,726 62,463 84,151 82,937 108,905
Deferred income taxes (benefits)....... 10,951 6,560 25,895 (7,637) (40,816) (14,598)
Other - net............................ (424) (2,577) 3,118 (341) 2,692 (237)
Changes in other assets and liabilities:
Accounts receivable and unbilled
revenues 58,876 30,019 78,635 29,758 (25,398) (2,262)
Gas stored underground............... (10,466) (5,668) (8,188) 1,879 (4,888) 1,989
Material and supplies................ 1,587 (2,224) 3,506 (1,190) 4,850 (561)
Deferred purchased gas cost.......... (16,581) (13,958) (46,699) 12,571 (44,540) 19,187
Prepaid expenses and other........... (36,358) (13,406) (27,583) (18,865) (17,472) (21,663)
Accounts payable..................... (459) (6,696) (29,826) (14,664) 43,629 (4,285)
Accrued taxes........................ (2,675) (3,605) (918) (9,141) 6,742 861
Accrued interest..................... (2,418) 4,596 (8,474) (1,041) (5,623) 631
Refunds due customers................ 109 (5,656) 938 (6,704) 1,390 (5,758)
Customer credit balances............. 5,258 7,692 (3,376) (690) (3,354) 3,940
Deferred revenue..................... (6,518) - (19,812) - 110,062 -
Other - net.......................... 2,409 (6,006) 3,522 6,762 5,315 4,436
-------- -------- -------- -------- --------- --------
Total adjustments.................. 24,096 15,797 33,201 74,848 236,607 90,585
-------- -------- -------- -------- --------- --------
Net cash provided by
operating activities........... 20,409 17,481 69,168 103,124 245,846 134,793
-------- -------- -------- -------- --------- --------
Cash Flows from Investing Activities:
Capital expenditures...................... (38,493) (26,954) (81,175) (81,944) (117,343) (127,542)
Proceeds from sale of property............ 40 3,468 1,543 4,221 21,932 4,611
-------- -------- -------- -------- --------- --------
Net cash used in
investing activities (38,453) (23,486) (79,632) (77,723) (95,411) (122,931)
-------- -------- -------- -------- --------- --------
Cash Flows from Financing Activities:
Issuance of common stock.................. 496 536 1,687 1,738 2,705 2,230
Purchase of treasury stock................ - (7) (8) (81) (167) (476)
Dividends paid............................ (10,418) (10,312) (31,126) (30,774) (41,450) (40,959)
Proceeds from issuance of long-term debt.. 144,919 - 144,919 17,878 144,877 17,776
Repayments and retirements of long-term debt (65,617) (14,500) (150,440) (14,500) (160,440) (14,500)
Increase (decrease) in short-term loans... (38,003) 51,878 54,649 6,652 (86,303) 37,952
-------- -------- -------- -------- --------- --------
Net cash provided (used) by
financing activities........... (31,377) 27,595 19,681 (19,087) (140,778) 2,023
-------- -------- -------- -------- --------- --------
Increase in cash and cash equivalents........ 13,333 21,590 9,217 6,314 9,657 13,885
Cash and cash equivalents at
beginning of period 26,053 8,139 30,169 23,415 29,729 15,844
-------- -------- -------- --------- --------- --------
Cash and cash equivalents at end of period... $ 39,386 $ 29,729 $ 39,386 $ 29,729 $ 39,386 $ 29,729
======== ======== ======== ======== ========= ========
Cash paid during the period for:
Interest (net of amount capitalized)...... $ 6,659 $ 7,601 $ 31,471 $ 36,979 $ 40,851 $ 46,104
======== ======== ======== ======== ========= ========
Income taxes.............................. $ 486 $ 4,725 $ 10,117 $ 12,266 $ 39,123 $ 15,350
======== ======== ======== ======== ========= ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Thousands)
September 30, December 31,
1996 1995 1995
ASSETS
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents............................... $ 39,386 $ 29,729 $ 30,169
Accounts receivable (less accumulated
provision for doubtful accounts:
September 30, 1996 $12,966; 1995 $9,912;
December 31, 1995, $10,539)........................... 186,206 163,486 240,846
Unbilled revenues ...................................... 5,330 5,706 31,752
Gas stored underground - current inventory.............. 18,110 13,222 9,922
Material and supplies................................... 9,071 14,066 12,577
Deferred purchased gas cost............................. 56,859 12,319 10,160
Prepaid expenses and other.............................. 69,906 52,434 42,323
------------- ------------ -------------
Total current assets............................... 384,868 290,962 377,749
------------- ------------ -------------
Property, Plant and Equipment:
Exploration and production (successful efforts method).. 893,340 1,012,384 869,329
Energy marketing........................................ 310,336 321,576 295,061
Natural gas distribution................................ 583,751 576,716 568,272
Natural gas transmission................................ 392,135 391,047 388,986
------------- ------------ -------------
Total property, plant and equipment................ 2,179,562 2,301,723 2,121,648
Less accumulated depreciation and depletion........... 713,512 719,190 664,065
------------- ------------ -------------
Net property, plant and equipment.................. 1,466,050 1,582,533 1,457,583
------------- ------------ -------------
Other Assets:
Regulatory assets....................................... 72,638 89,706 85,241
Other................................................... 56,156 46,857 41,235
------------- ------------ -------------
Total other assets.................................... 128,794 136,563 126,476
------------- ------------ -------------
Total.............................................. $ 1,979,712 $ 2,010,058 $ 1,961,808
============= ============ =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Thousands)
September 30, December 31,
1996 1995 1995
CAPITALIZATION AND LIABILITIES
<S> <C> <C> <C>
Current Liabilities:
Long-term debt payable within one year............. $ - $ 10,000 $ -
Short-term loans................................... 189,649 275,952 135,000
Accounts payable................................... 152,359 108,730 182,185
Accrued taxes...................................... 17,189 10,447 18,107
Accrued interest................................... 6,368 11,991 14,842
Refunds due customers.............................. 16,941 15,551 16,003
Deferred income taxes.............................. 17,354 2,391 (1,506)
Customer credit balances........................... 6,383 9,737 9,759
Other.............................................. 15,782 12,759 14,889
------------ ------------- -------------
Total current liabilities..................... 422,025 457,558 389,279
------------ ------------- -------------
Long--Term Debt ....................................... 421,920 415,313 415,527
------------- ------------- -------------
Deferred and Other Credits:
Deferred income taxes.............................. 253,178 334,774 265,737
Deferred investment tax credits.................... 20,164 21,266 20,991
Deferred revenue................................... 110,062 - 129,874
Other.............................................. 23,519 29,533 25,321
------------ ------------- -------------
Total deferred and other credits.............. 406,923 385,573 441,923
------------ ------------- -------------
Capitalization:
Common stockholders' equity:
Common stock, no par value, authorized
80,000 shares; shares issued
September 30, 1996, 35,492; September 30, 1995,
35,383; December 31, 1995, 35,414............. 227,038 222,982 223,854
Retained earnings ............................... 506,877 538,978 502,036
Treasury stock, shares at cost September 30, 1996,
168; September 30, 1995, 402;
December 31, 1995, 407........................ (3,998) (9,514) (9,673)
Foreign currency translation..................... (1,073) (832) (1,138)
------------ ------------- -------------
Total common stockholders' equity............. 728,844 751,614 715,079
------------ ------------- -------------
Total..................................... $ 1,979,712 $ 2,010,058 $ 1,961,808
============ ============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
Long-Term Debt
(Thousands)
Annual Maturities
Debt Maturities After One Year
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
8 1/4% Debentures, due July 1, 1996................... $ $ $ $ 75,000
7 1/2% Debentures, due July 1, 1999
($75,000 principal amount net of
unamortized original issue discount) (a).......... 72,013 71,103
7 3/4% Debentures, due July 15, 2026.................. 150,000
9 1/2% Convertible subordinated
debentures, due January 15, 2006.................. 527 710
9.9% Debentures, due April 15, 2013 (b)............... 5,880 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......... 10,000 75,500 75,500
6.8% to 7.6% Series C, due 2007 thru 2018......... 18,000 18,000
-------- --------- ----------- -----------
Total.......................................... $ - $ 10,000 $ 421,920 $ 415,313
======== ========= =========== ===========
<FN>
(a) Not redeemable prior to maturity.
(b) $69,120,000 retired as of September 30, 1996 through tender offer.
See Note G 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 September 30, 1996 and 1995 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, 1996 and 1995 are not indicative of results for a full year
because of the seasonal nature of the Company's operations.
D. In September 1996 and 1995, the Pennsylvania Public Utility Commission
(PUC) approved Equitable Gas Company's collection of $7.8 million and
$18.8 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, 1996 and 1995 includes approximately $4.7 and
$11.3 million, respectively, related to the settlement. Approximately
$10.2 million from the settlement remains to be recovered in future gas
cost filings with the PUC over the next two years.
E. At September 30, 1996, 2,539,000 shares of Common Stock were reserved as
follows: 49,000 shares for conversion of the 9 1/2% Convertible
Subordinated Debentures, 584,000 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 104,000 shares for issuance under
the Company's Dividend Reinvestment and Stock Purchase Plan.
F. 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.
In September 1996, the Company purchased all of the outstanding stock of
Pequod Associates, Inc. (Pequod) for $1.7 million. The effect of this
acquisition on the consolidated financial statements of the Company is not
material. Pequod is an engineering consulting firm specializing in water
efficiency and program development, energy efficiency studies, and technical
training for water agency personnel.
<PAGE>
G. 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 September
30, 1996, $69.1 million of the Debentures were tendered for purchase leaving
$5.9 million outstanding.
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 SEPTEMBER 30, 1996
Exploration Energy 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................................. 13,696 30 631 14,357
-------- --------- -------- --------- --------- ---------
Purchased:
Other producers........................ 132,631 14,181 1,717 148,529
Inter-segment purchases................ 647 320 2,576 (3,543)
-------- --------- -------- --------- --------- ---------
Total purchases.................... 647 132,951 16,757 1,717 (3,543) 148,529
-------- --------- -------- --------- --------- ---------
Total produced and purchased... 14,343 132,951 16,787 2,348 (3,543) 162,886
Deduct:
Net increase (decrease) in gas
in storage 3,597 3,597
Extracted natural gas liquids
(equivalent gas volumes)............. 464 1,972 2,436
System use and unaccounted for......... 143 418 836 25 1,422
-------- --------- -------- --------- --------- ---------
Total.......................... 13,736 130,561 12,354 2,323 (3,543) 155,431
======== ========= ======== ========= ========= =========
Gas Sales (MMcf):
Residential.............................. 2,087 2,087
Commercial............................... 1,012 1,012
Industrial and Utility................... 9,255 1,512 10,767
Production............................... 13,696 (24) 13,672
Marketing................................ 40 130,561 2,323 (5,031) 127,893
-------- --------- -------- --------- --------- ---------
Total.......................... 13,736 130,561 12,354 2,323 (3,543) 155,431
======== ========= ======== ========= ========= =========
Natural Gas Transported (MMcf).................. 31,260 758 34,503 (22,934) 43,587
======== ========= ======== ========= ========= =========
Oil Produced and Sold (thousands of bls)........ 420 420
======== =========
Natural Gas Liquids Sold
(thousands of gallons)........................ 17,172 59,613 76,785
======== ========= =========
Average Selling Price:
Residential Gas Sales (per Mcf).......... $10.852
Commercial Gas Sales..................... 5.878
Industrial and Utility Gas Sales......... 2.694
Produced Natural Gas..................... $1.633
Marketed Natural Gas..................... 2.400 $1.891 $1.365
Oil (per barrel)......................... 14.705
Natural Gas Liquids (per gallon)......... .301 .333
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, 1995
Exploration Energy 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 N/A
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>
NINE MONTHS ENDED SEPTEMBER 30, 1996
Exploration Energy 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................................. 43,785 92 1,784 45,661
-------- -------- ------- ------- -------- --------
Purchased:
Other producers........................ 392,516 46,276 6,333 445,125
Inter-segment purchases................ 1,839 21,004 9,569 (32,412)
------- -------- ------- ------- --------
Total purchases.................... 1,839 413,520 55,845 6,333 (32,412) 445,125
------- -------- ------- ------- -------- --------
Total produced and purchased... 45,624 413,520 55,937 8,117 (32,412) 490,786
Deduct:
Net increase (decrease)
in gas in storage 1,106 1,106
Extracted natural gas liquids
(equivalent gas volumes)............. 1,346 5,186 6,532
System use and unaccounted for......... 387 1,169 2,974 74 4,604
------- -------- ------- ------- -------- --------
Total.......................... 43,891 407,165 51,857 8,043 (32,412) 478,544
======= ======== ======= ======= ======== ========
Gas Sales (MMcf):
Residential.............................. 21,388 21,388
Commercial............................... 9,326 9,326
Industrial and Utility................... 21,143 (47) 21,096
Production............................... 43,785 (423) 43,362
Marketing................................ 106 407,165 8,043 (31,942) 383,372
------- -------- ------- ------- -------- --------
Total.......................... 43,891 407,165 51,857 8,043 (32,412) 478,544
======= ======== ======= ======= ======== ========
Natural Gas Transported (MMcf).................. 91,858 4,061 99,915 (77,849) 117,985
======= ======== ======= ======= ======== ========
Oil Produced and Sold (thousands of bls)........ 1,312 1,312
======= ========
Natural Gas Liquids Sold
(thousands of gallons)........................ 45,840 156,345 202,185
======= ======== ========
Average Selling Price:
Residential Gas Sales (per Mcf).......... $8.628
Commercial Gas Sales..................... 6.364
Industrial and Utility Gas Sales......... 2.958
Produced Natural Gas..................... $1.834
Marketed Natural Gas..................... 3.208 $2.277 $2.852
Oil (per barrel)......................... 15.663
Natural Gas Liquids (per gallon)......... .328 .329
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1995
Exploration Energy 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>
TWELVE MONTHS ENDED SEPTEMBER 30, 1996
Exploration Energy 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 ................................ 59,841 127 2,660 62,628
------- -------- ------- -------- -------- --------
Purchased:
Other producers........................ 504,871 54,134 9,255 568,260
Inter-segment purchases................ 2,531 39,289 13,804 (55,624)
------- -------- ------- -------- --------
Total purchases.................... 2,531 544,160 67,938 9,255 (55,624) 568,260
------- -------- ------- -------- -------- --------
Total produced and purchased... 62,372 544,160 68,065 11,915 (55,624) 630,888
Deduct:
Net increase (decrease) in gas in storage (629) 1 (628)
Extracted natural gas liquids
(equivalent gas volumes)............... 1,817 6,805 8,622
System use and unaccounted for......... 530 1,583 (504) 34 1,643
------- -------- ------- -------- -------- --------
Total.......................... 60,025 535,772 69,198 11,880 (55,624) 621,251
======= ======== ======= ======== ======== ========
Gas Sales (MMcf):
Residential.............................. 31,494 31,494
Commercial............................... 11,064 11,064
Industrial and Utility................... 26,640 (3) (8,018) 18,619
Production............................... 59,841 (552) 59,289
Marketing................................ 184 535,772 11,883 (47,054) 500,785
------- -------- ------- -------- -------- --------
Total.......................... 60,025 535,772 69,198 11,880 (55,624) 621,251
======= ======== ======= ======== ======== ========
Natural Gas Transported (MMcf).................. 118,570 8,594 132,812 (106,452) 153,524
======= ======== ======= ======== ======== ========
Oil Produced and Sold (thousands of bls)........ 1,751 1,751
======= ========
Natural Gas Liquids Sold
(thousands of gallons)........................ 61,554 205,250 266,804
======= ======== ========
Average Selling Price:
Residential Gas Sales (per Mcf).......... $8.506
Commercial Gas Sales..................... 6.632
Industrial and Utility Gas Sales......... 2.871
Produced Natural Gas..................... $1.828
Marketed Natural Gas..................... 2.870 $2.170 $2.640
Oil (per barrel)......................... 15.774
Natural Gas Liquids (per gallon)......... .331 .315
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED SEPTEMBER 30, 1995
Exploration Energy 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>
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,
1996 1995 1996 1995 1996 1995
(Thousands)
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES:
Exploration and production...... $ 53,735 $ 57,080 $ 147,491 $ 147,523 $ 234,833 $ 195,050
Energy marketing................ 282,443 200,399 1,001,193 638,640 1,251,856 844,240
Natural gas distribution........ 55,005 36,052 318,510 261,989 437,571 366,966
Natural gas transmission........ 22,551 25,660 87,503 82,290 124,074 111,386
Sales between segments.......... (56,723) (48,199) (165,641) (138,225) (225,505) (181,517)
-------- --------- --------- --------- ---------- ----------
Total.................. $357,011 $ 270,992 $1,389,056 $ 992,217 $1,822,829 $1,336,125
======== ========= ========= ========== ========== ==========
OPERATING INCOME (LOSS):
Exploration and production.... $ 10,870 $ 14,296 $ 27,068 $ 13,416 $ (171) $ 17,790
Energy marketing.............. (5,027) (74) 1,481 3,905 (21,269) 5,314
Natural gas distribution...... (5,609) (6,192) 29,331 26,829 26,023 37,641
Natural gas transmission...... 3,626 6,428 24,366 23,652 31,813 33,425
-------- --------- --------- --------- ---------- ---------
Total.................. $ 3,860 $ 14,458 $ 82,246 $ 67,802 $ 36,396 $ 94,170
======== ========= ========= ========= ========== ==========
CAPITAL EXPENDITURES:
Exploration and production.... $ 20,420 $ 7,679 $ 40,357 $ 38,085 $ 47,058 $ 58,119
Energy marketing.............. 9,011 6,258 18,534 12,158 30,540 23,261
Natural gas distribution...... 8,526 10,590 20,240 26,297 36,138 36,485
Natural gas transmission...... 536 2,427 2,044 5,404 3,607 9,677
-------- --------- --------- --------- ---------- ---------
Total.................. $ 38,493 $ 26,954 $ 81,175 $ 81,944 $ 117,343 $ 127,542
======== ========= ========= ========= ========== ==========
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
Operating results for the quarter ended September 30, 1996 were a loss of
$3.7 million or $.10 per share, compared with income of $1.7 million or $.05 per
share for the quarter ended September 30, 1995. The 1995 period includes $6.5
million or $.19 per share resulting from the Pennsylvania Public Utility
Commission approval for accelerated collection of gas costs as described in Note
D to the Consolidated Financial Statements. The improved results, excluding the
nonrecurring income in the 1995 period, are due to lower depreciation and
depletion expense, higher prices for produced natural gas and lower interest
expense. These benefits were partially offset by lower nonconventional fuels tax
credits and start-up costs for ERI Services, the Company's full-service energy
marketing subsidiary.
Consolidated net income for the nine months ended September 30, 1996 was
$36.0 million or $1.02 per share, compared with $28.3 million or $.81 per share
for the nine months ended September 30, 1995. The increase in earnings is due to
lower depreciation and depletion, higher prices for produced natural gas and
lower interest expense. These increases were partially offset by lower
nonconventional fuels tax credits and lower natural gas production.
Consolidated net income for the twelve months ended September 30, 1996 was
$9.2 million or $.26 per share, compared with $44.2 million or $1.27 per share
for the twelve months ended September 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
recognized in the fourth quarter of 1995. The increase in net income, excluding
the charge and the effect of the settlement, was due to lower depreciation and
depletion, higher average prices for produced natural gas, increased retail gas
sales, 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 $53.7 million
for the quarter ended September 30, 1996 compared with $57.1 million for the
quarter ended September 30, 1995 which includes $11.0 million of additional
revenues from direct billing settlements. Operating revenues of $147.5 million
for the nine months ended September 30, 1996 were unchanged from the nine months
ended September 30, 1995. The increase in operating revenues for the current
quarter and nine-month period, excluding the $11.0 million of additional
revenues in the 1995 periods, is due to higher average prices for produced
natural gas, higher contract drilling revenues and amortization of a portion of
deferred revenues partially offset by lower natural gas production and lower
production and prices of oil. Operating revenues for the twelve months ended
September 30, 1996 were $234.8 million compared with $195.1 million for the
twelve months ended September 30, 1995. The 1996 period includes $40.2 million
of nonrecurring amounts from the Columbia bankruptcy settlement and the 1995
period includes $11.0 million of additional revenue from direct bill
settlements. The increase in operating revenues for the current period,
excluding the nonrecurring items, is due primarily to higher average prices for
produced natural gas and higher contract drilling revenues partially offset by
lower natural gas production and lower production and prices of oil.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
EXPLORATION AND PRODUCTION .... 1996 1995 1996 1995 1996 1995
OPERATING REVENUES (THOUSANDS):
<S> <C> <C> <C> <C> <C> <C>
Natural Gas ................... $ 22,360 $ 20,196 $ 80,299 $ 74,048 $109,364 $102,223
Oil ........................... 6,176 7,741 20,550 24,683 27,620 32,645
Natural Gas Liquids ........... 5,167 4,765 15,042 15,295 20,348 20,475
Contract Drilling ............. 6,079 4,272 14,250 9,975 18,599 14,357
Direct Billing
Settlements ................ 7,815 18,807 7,815 18,807 21,590 18,807
Other ......................... 6,138 1,299 9,535 4,715 37,312 6,543
-------- -------- -------- -------- -------- --------
Total Revenues ............... $ 53,735 $ 57,080 $147,491 $147,523 $234,833 $195,050
======== ======== ======== ======== ======== ========
SALES QUANTITIES:
Natural Gas (MMcf) ......... 13,696 14,102 43,785 48,928 59,841 66,361
Oil (MBls) .................. 420 482 1,312 1,493 1,751 1,999
Natural Gas Liquids
(thousands of
gallons) .................. 17,172 16,199 45,840 47,333 61,554 62,813
</TABLE>
Energy purchased amounted to $3.5 million for the quarter ended September
30, 1996 compared with $2.4 million for the quarter ended September 30, 1995.
Energy purchased for the nine months ended September 30, 1996 amounted to $12.2
million compared with $7.8 million for the nine months ended September 30, 1995.
Energy purchased for the twelve months ended September 30, 1996 amounted to
$15.3 million compared with $10.4 million for the twelve months ended September
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 $39.3 million for the quarter ended September
30, 1996 compared with $40.4 million for the quarter ended September 30, 1995.
The decrease in operating expenses is due to decreased depreciation and
depletion, reflecting lower depletion rates, partially offset by higher
exploration expense. Other operating expenses for the nine months ended
September 30, 1996 were $108.2 million compared with $126.3 million for the nine
months ended September 30, 1995. Other operating expenses for the twelve months
ended September 30, 1996 were $219.7 million compared with $166.9 million for
the twelve months ended September 30, 1995. The current twelve month period
includes a charge of $73.9 million for impairment of assets. The decrease for
the nine- and twelve-month 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 $10.9 million for the quarter ended September 30, 1996
compared with $14.3 million for the quarter ended September 30, 1995. Operating
income for the nine months ended September 30, 1996 was $27.1 million compared
with $13.4 million for the nine months ended September 30, 1995. Operating
results for the twelve months ended September 30, 1996 were a loss of $.2
million compared with income of $17.8 million for the twelve months ended
September 30, 1995. The increase in operating income for the current periods,
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 and electricity, sale of produced natural gas liquids, and
intrastate transportation of natural gas in Louisiana, were $282.4 million for
the quarter ended September 30, 1996 compared with $200.4 million for the
quarter ended September 30, 1995. The increase in revenues is due to a 29
percent increase in the average price of marketed gas, initial sales of
electricity and higher selling prices and production of natural gas liquids.
Operating revenues for the nine months ended September 30, 1996 were $1,001.2
million compared with $638.6 million for the nine months ended September 30,
1995. The increase in revenues is due to a 47 percent increase in the average
price of marketed gas, a 7 percent increase in marketed gas volumes, higher
selling prices of natural gas liquids and initial sales of electricity.
Operating revenues for the twelve months ended September 30, 1996 were $1,251.9
million compared with $844.2 million for the twelve months ended September 30,
1995. The increase in revenues is due to a 38 percent increase in the average
price of marketed gas, an 8 percent increase in marketed gas volumes, higher
selling prices and production of natural gas liquids and initial electricity
sales.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
ENERGY MARKETING ......................... 1996 1995 1996 1995 1996 1995
OPERATING REVENUES (THOUSANDS):
<S> <C> <C> <C> <C> <C> <C>
Natural Gas Marketing .................. $ 246,926 $ 183,923 $ 927,139 $ 590,465 $1,162,817 $ 780,138
Electricity Marketing .................. 10,180 -- 12,701 -- 12,701 --
Natural Gas Liquids .................... 19,862 13,263 51,502 39,953 64,568 53,635
Transportation ......................... 2,955 3,076 6,156 7,786 7,775 9,921
Other .................................. 2,520 137 3,695 436 3,995 546
---------- ---------- ---------- ---------- ---------- ----------
Total Revenues ........................ $ 282,443 $ 200,399 $1,001,193 $ 638,640 $1,251,856 $ 844,240
========== ========== ========== ========== ========== ==========
SALES QUANTITIES:
Marketed Natural Gas (MMcf) ............ 130,561 125,027 407,165 380,310 535,772 495,207
Natural Gas Liquids
(thousands of gallons) ................ 59,613 51,011 156,345 149,035 205,250 196,433
Transportation
Deliveries (Mmcf) ..................... 31,260 38,171 91,858 95,693 118,570 121,475
</TABLE>
Energy purchased was $271.4 million for the quarter ended September 30,
1996 compared with $191.9 million for the quarter ended September 30, 1995.
Energy purchased for the nine months ended September 30, 1996 was $966.5 million
compared with $611.3 million for the nine months ended September 30, 1995.
Energy purchased for the twelve months ended September 30, 1996 was $1,209.6
million compared with $807.9 million for the twelve months ended September 30,
1995. The increase in energy purchased for the current periods reflects higher
gas prices, higher volumes of marketed gas, higher requirements for the
production of natural gas liquids and initial electricity sales.
Other operating expenses were $16.1 million for the quarter ended September
30, 1996 compared with $8.5 million for the quarter ended September 30, 1995.
Other operating expenses for the nine months ended September 30, 1996 were $33.2
million compared with $23.4 million for the nine months ended September 30,
1995. The increase for the current quarter and nine-month period 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 September 30, 1996 were $63.5 million compared with
$31.0 million for the twelve months ended September 30, 1995. The 1996 period
includes 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 September 30, 1996 were a loss of
$5.1 million compared with a loss of $74,000 for the quarter ended September 30,
1995. Operating income for the nine months ended September 30, 1996 was $1.5
million compared with $3.9 million for the nine months ended September 30, 1995.
The decrease for the current quarter and nine-month period is due to lower
margins for marketed natural gas. Operating results for the twelve months ended
September 30, 1996 were a loss of $21.2 million compared with income of $5.3
million for the twelve months ended September 30, 1995. The decrease in
operating income for the twelve-month period, excluding the charge for
impairment of assets, is due primarily to lower margins for marketed natural gas
and natural gas liquids and 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 $55.0
million for the quarter ended September 30, 1996 compared with $36.1 million for
the quarter ended September 30, 1995. Operating revenues for the nine months
ended September 30, 1996 were $318.5 million compared with $262.0 million for
the nine months ended September 30, 1995. Operating revenues for the twelve
months ended September 30, 1996 were $437.5 million compared with $367.0 million
for the twelve months ended September 30, 1995. The increase in revenues for the
current periods is due primarily to an increase in industrial and utility gas
sales, the effect of commercial customers switching from transportation service
to gas sales and higher retail gas sales for the nine- and twelve-month periods.
These increases were partially offset by lower retail rates to pass through
lower regulatory purchased gas costs to customers.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
NATURAL GAS DISTRIBUTION ....................... 1996 1995 1996 1995 1996 1995
OPERATING REVENUES (THOUSANDS):
<S> <C> <C> <C> <C> <C> <C>
Residential Gas Sales ........................ $ 22,648 $ 21,399 $184,529 $183,509 $267,875 $258,062
Commercial Gas Sales ......................... 5,949 3,582 59,355 25,788 73,371 39,161
Industrial and
Utility Gas Sales .......................... 24,929 6,339 62,538 23,293 76,473 28,503
Transportation Service ....................... 1,398 3,360 8,014 25,312 14,432 36,177
Other ........................................ 81 1,372 4,074 4,087 5,420 5,063
-------- -------- -------- -------- -------- --------
Total Revenues ................................. $ 55,005 $ 36,052 $318,510 $261,989 $437,571 $366,966
======== ======== ======== ======== ======== ========
SALES QUANTITIES (MMCF):
Residential Gas Sales ........................ 2,087 1,904 21,388 19,388 31,494 27,266
Commercial Gas Sales ......................... 1,012 397 9,326 2,756 11,064 4,275
Industrial and
Utility Gas Sales .......................... 9,255 3,636 21,143 12,494 26,640 14,910
Transportation Deliveries .................... 758 2,135 4,061 11,570 8,594 14,110
Heating Degree Days .......................... 109 79 3,855 3,530 6,073 6,005
</TABLE>
Energy purchased amounted to $39.1 million for the quarter ended September
30, 1996 compared with $18.9 million for the quarter ended September 30, 1995.
Energy purchased for the nine months ended September 30, 1996 was $200.7 million
compared with $153.5 for the nine months ended September 30, 1995. Energy
purchased for the twelve months ended September 30, 1996 was $268.8 million
compared with $217.3 million for the twelve months ended September 30, 1995. The
increase in energy costs for the current periods is due to higher gas sales and
higher prices related to industrial and utility gas sales, partially offset by
the pass-through of lower regulatory purchased gas costs to retail customers.
Other operating expenses were $21.5 million for the quarter ended September
30, 1996 compared with $23.4 million for the quarter ended September 30, 1995.
The decrease in operating expenses is due to lower distribution and maintenance
expenses. Other operating expenses for the nine months ended September 30, 1996
were $88.4 million compared with $81.7 million for the nine months ended
September 30, 1995. Other operating expenses were $142.6 million for the twelve
months ended September 30, 1996 compared with $112.1 million for the twelve
months ended September 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 nine- and
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
twelve-month 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 September 30, 1996 were a loss of
$5.6 million compared with a loss of $6.2 million for the quarter ended
September 30, 1995. Operating income for the nine months ended September 30,
1996 was $29.4 million compared with $26.8 million for the nine months ended
September 30, 1995. Operating income was $26.1 million for the twelve months
ended September 30, 1996 compared with $37.6 million for the twelve months ended
September 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
for the nine- and twelve-month periods.
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 $22.6 million for the quarter ended September 30, 1996
compared with $25.7 million for the quarter ended September 30, 1995. The
decrease in revenues reflects lower marketed gas sales. Operating revenues for
the nine months ended September 30, 1996 were $87.5 million compared with $82.3
million for the nine months ended September 30, 1995. Operating revenues for the
twelve months ended September 30, 1996 were $124.1 million compared with $111.4
million for the twelve months ended September 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 nine- and twelve-month
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 NINE MONTHS ENDED TWELVE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 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 ............................. $ 362 $ 363 $ 1,088 $ 1,089 $ 1,450 $ 1,452
Marketed Gas Sales ...................... 3,172 5,837 22,942 13,873 31,377 17,988
Transportation Service .................. 14,164 14,197 48,711 49,996 66,681 68,720
Storage Service ......................... 3,638 3,581 10,830 12,324 14,415 16,663
Other ................................... 1,215 1,682 3,932 5,008 10,151 6,563
--------- --------- --------- --------- --------- ---------
Total Revenues ......................... $ 22,551 $ 25,660 $ 87,503 $ 82,290 $ 124,074 $ 111,386
========= ========= ========= ========= ========= =========
SALES QUANTITIES (MMCF):
Industrial and Utility
Gas Sales .............................. -- 2 -- 3 (3) (25)
Marketed Gas Sales ...................... 2,323 3,301 8,043 7,307 11,883 9,385
Transportation
Deliveries ............................ 34,503 27,999 99,915 86,193 132,812 109,193
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (CONTINUED)
Energy purchased amounted to $4.2 million for the quarter ended September
30, 1996 compared with $4.6 million for the quarter ended September 30, 1995.
Energy purchased for the nine months ended September 30, 1996 was $16.5 million
compared with $10.7 million for the nine months ended September 30, 1995. Energy
purchased for the twelve months ended September 30, 1996 was $23.2 million
compared with $13.9 million for the twelve months ended September 30, 1995. The
increase in energy costs for the nine- and twelve-month periods is due to higher
prices for marketed gas and an increase in marketed gas volumes.
Other operating expenses for the quarter ended September 30, 1996 were
$14.8 million compared with $14.7 million for the quarter ended September 30,
1995. Other operating expenses for the nine months ended September 30, 1996 were
$46.7 million compared with $48.1 million for the nine months ended September
30, 1995. Other operating expenses for the twelve months ended September 30,
1996 were $69.2 million compared with $64.2 million for the twelve months ended
September 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, remained substantially the same.
Operating income was $3.6 million for the quarter ended September 30, 1996,
compared with $6.4 million for the quarter ended September 30, 1995. The
decrease in operating income reflects lower marketed gas sales. Operating income
for the nine months ended September 30, 1996 was $24.3 million compared with
$23.7 million for the nine months ended September 30, 1995. Operating income was
$31.7 million for the twelve months ended September 30, 1996 compared with $33.4
million for the twelve months ended September 30, 1995. The increase in
operating income for the twelve-month period, excluding the effect of the
Columbia settlement and the charge for impairment of assets, is due to higher
margins and sales of marketed natural gas.
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 nine months ended September 30, 1996 were $81.2 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 continue to finance capital
expenditures with cash generated from operations and temporarily with short-term
loans.
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
September 30, 1996, $189.6 million of commercial paper was outstanding at an
average interest rate of 5.35 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 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 is due to financing interests in equipment. The increase in other
assets is due to deferral, pursuant to regulatory treatment, of expenses related
to issuance of new long term debt and re-purchase of 9.9% Debentures.
<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 September 30,
1996:
Form 8-K dated July 19, 1996, containing press release announcing
earnings for the second quarter of 1996.
<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: November 14, 1996
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