UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A No. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
[ ] 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 or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
420 BOULEVARD OF THE ALLIES 15219
PITTSBURGH, PENNSYLVANIA (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (412) 261-3000
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
Common Stock, no par value New York Stock Exchange
Philadelphia Stock
Exchange
7 1/2% Debentures due July 1, 1999 New York Stock Exchange
9 1/2% Convertible Subordinated
Debentures due 2006 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
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 periods
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 by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of voting stock held by nonaffiliates of the
registrant as of February 29, 1996: $1,002,415,784
The number of shares outstanding of the issuer's classes of common
stock as of February 29, 1996: 35,018,892
DOCUMENTS INCORPORATED BY REFERENCE
Part III, a portion of Item 10 and Items 11, 12, and 13 are incorporated by
reference to the Proxy Statement for the Annual Meeting of Stockholders on May
23, 1996, to be filed with the Commission within 120 days after the close of the
Company's fiscal year ended December 31, 1995.
Index to Exhibits - Page 35
<PAGE>
This report is an amendment to the Equitable Resources, Inc. ("Company")
annual report on Form 10-K for the year ended December 31, 1995. The report
is being amended to refile the Report of Independent Auditors which has been
modified by adding a sentence referring to Financial Accounting Standards
Board Statement No. 121. The following items to the Company's annual report
on Form 10-K for the year ended December 31, 1995 are being filed herewith:
Item 8 Financial Statements and Supplementary Data (including
the revised Report of Independent Auditors).
Item 14 Exhibits and Reports on Form 10-K (including a revised
Consent of Independent Auditors).
--------------------------------------
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)
By: /s/ Dan C. Eaton
----------------------------------
Dan C. Eaton
Chief Financial Officer
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PAGE REFERENCE
Report of Independent Auditors 3
Statements of Consolidated Income
for each of the three years in
the period ended December 31, 1995 4
Statements of Consolidated Cash Flows
for each of the three years in the
period ended December 31, 1995 5
Consolidated Balance Sheets
December 31, 1995 and 1994 6 & 7
Statements of Common Stockholders'
Equity for each of the three
years in the period ended
December 31, 1995 8
Long-term Debt, December 31,
1995 and 1994 9
Notes to Consolidated Financial
Statements 10 - 31
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Equitable Resources, Inc.
We have audited the accompanying consolidated balance sheets and statements
of long-term debt of Equitable Resources, Inc., and Subsidiaries at December 31,
1995 and 1994, and the related consolidated statements of income, common
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1995. Our audits also included the financial statement
schedule listed in the Index at Item 14(a). These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Equitable
Resources, Inc., and Subsidiaries at December 31, 1995 and 1994, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1995 in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
As described in Note B to the consolidated financial statements, the
Company adopted the provisions of Statement of Financial Accounting Standards
No. 121, "Accounting for the Impairment of Long-Lived Assets," in 1995.
s/ Ernst & Young LLP
-----------------------------
Ernst & Young LLP
Pittsburgh, Pennsylvania
February 13, 1996
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
------------------------------------------------
(Thousands Except Per Share Amounts)
<S> <C> <C> <C>
Operating Revenues $ 1,425,990 $ 1,397,280 $ 1,094,794
Cost of Energy Purchased 911,357 926,905 644,157
--------------- -------------- --------------
Net operating revenues 514,633 470,375 450,637
--------------- -------------- --------------
Operating Expenses:
Operation 198,502 192,799 174,420
Maintenance 26,635 31,737 29,024
Depreciation and depletion 104,625 93,347 76,894
Impairment of assets 121,081 - -
Taxes other than income 41,838 42,244 39,802
--------------- -------------- --------------
Total operating expenses 492,681 360,127 320,140
--------------- -------------- --------------
Operating Income 21,952 110,248 130,497
Other Income 387 3,163 1,706
Interest Charges 50,098 43,905 38,728
--------------- -------------- --------------
Income (Loss) Before Income Taxes (27,759) 69,506 93,475
Income Taxes (Benefits) (29,307) 8,777 20,020
---------------- -------------- --------------
Net Income $ 1,548 $ 60,729 $ 73,455
=============== ============== ==============
Average Common Shares Outstanding 34,793 34,509 32,359
=============== ============== ==============
Earnings Per Share of Common Stock $ .04 $ 1.76 $ 2.27
=============== ============== ==============
See notes to consolidated financial statements
Pages 10 to 31, inclusive
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
----------- ---------- ----------
(Thousands)
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income $ 1,548 $ 60,729 $ 73,455
---------- ---------- ----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Impairment of assets 121,081 - -
Depreciation and depletion 104,625 93,347 76,894
Deferred income taxes (benefits) (74,348) (5,059) 756
Other - net (767) 1,566 1,319
Changes in other assets and liabilities:
Accounts receivable and unbilled revenues (74,275) 723 (22,352)
Gas stored underground 5,179 2,958 (5,076)
Material and supplies 154 (615) (709)
Deferred purchased gas cost 14,730 (7,742) (14,024)
Regulatory assets 1,810 (1,363) (18,657)
Accounts payable 58,791 (20,414) 18,747
Accrued taxes (1,481) 4,230 1,024
Refunds due customers (6,252) 8,049 2,537
Deferred revenue 129,874 - -
Other - net (867) (1,274) (4,588)
---------- ---------- ----------
Total adjustments 278,254 74,406 35,871
---------- ---------- ----------
Net cash provided by operating activities 279,802 135,135 109,326
---------- ---------- ----------
Cash Flows from Investing Activities:
Capital expenditures (118,112) (146,174) (339,411)
Proceeds from sale of property 24,610 1,195 1,270
---------- ---------- ----------
Net cash used in investing activities (93,502) (144,979) (338,141)
---------- ---------- ----------
Cash Flows from Financing Activities:
Issuance of common stock 2,756 1,791 112,412
Purchase of treasury stock (240) (395) (28)
Dividends paid (41,098) (39,686) (35,279)
Proceeds from issuance of long-term debt 17,836 43,083 31,702
Repayments and retirements of long-term debt (24,500) (1,971) (16,445)
Increase (decrease) in short-term loans (134,300) 15,400 139,900
-------- ---------- ----------
Net cash provided (used) by financing activities (179,546) 18,222 232,262
-------- ---------- ----------
Net Increase in Cash and Cash Equivalents 6,754 8,378 3,447
Cash and Cash Equivalents at Beginning of Year 23,415 15,037 11,590
---------- ---------- ----------
Cash and Cash Equivalents at End of Year $ 30,169 $ 23,415 $ 15,037
========== ========== ==========
Cash Paid During the Year for:
Interest (net of amount capitalized) $ 46,359 $ 40,105 $ 34,592
========== ========== ==========
Income taxes $ 41,272 $ 13,098 $ 27,547
========== ========== ==========
See notes to consolidated financial statements
Pages 10 to 31, inclusive
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1995 AND 1994
ASSETS
1995 1994
-------------------------------
(Thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 30,169 $ 23,415
Accounts receivable (less accumulated provision for
doubtful accounts: 1995, $10,539; 1994, $10,890) 240,846 172,178
Unbilled revenues 31,752 25,794
Gas stored underground - current inventory 9,922 15,101
Material and supplies 12,577 12,876
Deferred purchased gas cost 10,160 24,890
Prepaid expenses and other 42,323 33,569
------------- -------------
Total current assets 377,749 307,823
------------- -------------
Property, Plant and Equipment:
Exploration and production (successful
efforts method) 869,329 983,328
Energy marketing 295,061 309,579
Natural gas distribution 568,272 552,789
Natural gas transmission 388,986 387,921
------------- -------------
Total property, plant and equipment 2,121,648 2,233,617
Less accumulated depreciation and depletion 664,065 637,951
------------- -------------
Net property, plant and equipment 1,457,583 1,595,666
------------- -------------
Other Assets:
Regulatory assets 85,241 88,387
Other 41,235 27,246
-------------- -------------
Total other assets 126,476 115,633
------------- -------------
Total $ 1,961,808 $ 2,019,122
============= =============
See notes to consolidated financial statements
Pages 10 to 31, inclusive
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, DECEMBER 31, 1995 AND 1994
CAPITALIZATION AND LIABILITIES
1995 1994
-------------------------------
(Thousands)
<S> <C> <C>
Current Liabilities:
Long-term debt payable within one year $ - $ 24,500
Short-term loans 135,000 269,300
Accounts payable 182,185 123,394
Accrued taxes 18,107 19,588
Accrued interest 14,842 13,032
Refunds due customers 16,003 22,255
Customer credit balances 9,759 10,427
Other 13,383 16,399
------------- -------------
Total current liabilities 389,279 498,895
------------- -------------
Long-Term Debt 415,527 398,282
------------- -------------
Deferred and Other Credits:
Deferred income taxes 265,737 326,597
Deferred investment tax credits 20,991 22,082
Deferred revenue 129,874 -
Other 25,321 23,264
------------- -------------
Total deferred and other credits 441,923 371,943
------------- -------------
Commitments and Contingencies - -
------------- -------------
Common Stockholders' Equity 715,079 750,002
------------- -------------
Total $ 1,961,808 $ 2,019,122
============= =============
See notes to consolidated financial statements
Pages 10 to 31, inclusive
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF COMMON STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
Common Stock (a) Foreign Common
Shares No Retained Currency Stockholders'
Outstanding Par Value Earnings Translation Equity
-------------------------------------------------------------------
(Thousands)
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1993 31,386 $ 95,300 $ 482,257 $ - $ 577,557
Net income for the year 1993 73,455
Dividends ($1.10 per share) (35,279)
Foreign currency translation (581)
Stock issued:
New stock issuance 3,000 111,570
Conversion of 9 1/2% debentures 51 564
Restricted stock option plan 29 850
Cash paid in lieu of fractional shares (78)
Treasury stock (1) (28)
------ --------- --------- --------
Balance, December 31, 1993 (b) 34,465 208,178 520,433 (581) 728,030
Net income for the year 1994 60,729
Dividends ($1.15 per share) (39,686)
Foreign currency translation (923)
Stock issued:
Conversion of 9 1/2% debentures 31 345
Restricted stock option plan 8 313
Dividend reinvestment plan 47 1,504
Treasury stock (10) (310)
------ --------- --------- --------
Balance, December 31, 1994 (b) 34,541 210,030 541,476 (1,504) 750,002
Net income for the year 1995 1,548
Dividends ($1.18 per share) (41,098)
Foreign currency translation 366
Adjustment for Independent Energy
Corporation pooling of interests 233 26 110
Stock issued:
Conversion of 9 1/2% debentures 146 1,611
Restricted stock option plan 43 1,232
Dividend reinvestment plan 52 1,524
Treasury stock (8) (242)
------ --------- --------- --------
Balance, December 31, 1995 (b)(c)(d) 35,007 $ 214,181 $ 502,036 $ (1,138) $715,079
====== ========= ========= ======== ========
<FN>
(a) Shares authorized: Common - 80,000,000 shares, Preferred - 3,000,000 shares.
(b) Net of treasury stock: 1995 - 407,000 shares ($9,673,000);
1994 - 632,000 shares ($14,933,000); 1993 - 622,000 shares ($14,623,000).
(c) A total of 2,618,000 shares of authorized but unissued common stock was
reserved for the conversion of the 9 1/2% convertible subordinated
debentures, for issuance under the key employee restricted stock option and
stock appreciation rights incentive compensation plan, the long-term
incentive plan, the non-employee directors' stock incentive plan, and for
issuance under the Company's dividend reinvestment and stock purchase plan.
(d) Retained earnings of $369,357,000 is available for dividends on, or
purchase of, common stock pursuant to restrictions imposed by indentures
securing long-term debt.
</FN>
See notes to consolidated financial statements
Pages 10 to 31, inclusive
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
LONG-TERM DEBT
DECEMBER 31, 1995 AND 1994
Annual Debt Maturities After
Maturities One Year
1995 1994 1995 1994
(Thousands)
<S> <C> <C> <C> <C>
8 1/4% Debentures, due July 1, 1996 (a) $ - $ - $ 75,000 $ 75,000
7 1/2% Debentures, due July 1, 1999
($75,000 principal amount, net of
unamortized original issue discount) (b) - - 71,322 70,466
9 1/2% Convertible subordinated
debentures, due January 15, 2006 - - 705 2,316
9.9% Debentures, due April 15, 2013 (c) - - 75,000 75,000
Medium-term notes:
7.2% to 9.0% Series A, due 1998 thru 2021 - - 100,000 100,000
5.1% to 7.6% Series B, due 2003 thru 2023 - 24,500 75,500 75,500
6.8% to 7.6% Series C, due 2007 thru 2018 - - 18,000 -
---------- ---------- ----------- ------------
Total $ - $ 24,500 $ 415,527 $ 398,282
========== ========== =========== ============
<FN>
(a) 8 1/4% Debentures will be retired with proceeds from issuance of new
long-term debt. See Note J to the consolidated financial statements.
(b) Not redeemable prior to maturity.
(c) Annual sinking fund payments of $3,750,000 are required beginning in 1999.
</FN>
See notes to consolidated financial statements
Pages 10 to 31, inclusive
</TABLE>
<PAGE>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995
A. Summary of Significant Accounting Policies
(1) PRINCIPLES OF CONSOLIDATION: The consolidated financial statements
include the accounts of Equitable Resources, Inc., and Subsidiaries (the
"Company" or "Companies"). All subsidiaries are 100% owned.
(2) PROPERTIES, DEPRECIATION AND DEPLETION: The cost of property additions,
replacements and improvements capitalized includes labor, material and overhead.
The cost of property retired, plus removal costs less salvage, is charged to
accumulated depreciation.
Depreciation for financial reporting purposes is provided on the
straight-line method at composite rates based on estimated service lives, except
for most gas and oil production properties as explained below.
Depreciation rates are based on periodic studies.
The Company uses the successful efforts method of accounting for
exploration and production activities. Under this method, the cost of productive
wells and development dry holes, as well as productive acreage, are capitalized
and depleted on the unit-of-production method.
(3) ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION: The Federal Energy
Regulatory Commission (FERC) prescribes a formula to be used for computing
overhead allowances for funds used during construction (AFC). AFC applicable to
equity funds capitalized is included in other income and amounted to $1.0
million in 1995, $.9 million in 1994 and $1.0 million in 1993. AFC applicable to
borrowed funds, as well as other interest capitalized for the nonregulated
companies, is applied as a reduction of interest charges and amounted to $2.5
million in 1995, $2.1 million in 1994 and $1.8 million in 1993.
(4) INVENTORIES: Inventories are stated at cost which is below market. Gas
stored underground--current inventory is stated at cost under the average cost
method. Material and supplies are stated generally at average cost.
(5) INCOME TAXES: The Companies file a consolidated federal income tax
return. The current provision for income taxes represents amounts paid or
payable. Deferred income tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities.
Where deferred tax liabilities will be passed through to customers in regulated
rates, the Companies establish a corresponding regulatory asset for the increase
in future revenues that will result when the temporary differences reverse.
Investment tax credits realized in prior years were deferred and are being
amortized over the estimated service lives of the related properties where
required by ratemaking rules.
<PAGE>
A. Summary of Significant Accounting Policies (Continued)
(6) DEFERRED PURCHASED GAS COST: Where permitted by regulatory authority
under purchased gas adjustment clauses or similar tariff provisions, the Company
defers the difference between purchased gas cost, less refunds, and the billing
of such cost and amortizes the deferral over subsequent periods in which
billings either recover or repay such amounts.
(7) REGULATORY ASSETS: Certain costs, which will be passed through to
customers under ratemaking rules for regulated operations, are deferred by the
Company as regulatory assets. The amounts deferred relate primarily to the
accounting for income taxes.
(8) DERIVATIVE FINANCIAL INSTRUMENTS: The Company uses exchange-traded
natural gas and crude oil futures contracts and options and over-the-counter
(OTC) natural gas and crude oil swap agreements and options to hedge exposures
to energy price changes. Exchange-traded instruments are generally settled with
off-setting positions but may be settled by delivery of commodities. OTC
arrangements require settlement in cash. The margin accounts for exchange-traded
futures contracts, which reflect daily settlements as market values change, are
recorded in other current assets.Premiums on all options contracts are initially
recorded in other current assets based on the amount exchanged. The Company
sells options to reduce the overall cost of hedging. Unrealized losses on sold
options are deferred to the extent of unamortized premiums. The fair values of
swap agreements are generally recognized only when settled. Changes in market
value of derivative financial instruments which qualify as hedges of firm
commitments or anticipated transactions are deferred and recognized in net
operating revenues when hedged transactions occur. Cash flows from derivatives
accounted for as hedges are considered operating activities. The Company also
uses exchange-traded natural gas futures contracts for speculative trading
purposes. Realized and unrealized gains and losses on these contracts are
recorded in other income in the period in which the changes occur.
(9) STOCK OPTIONS: The Company follows Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" and related
interpretations in accounting for stock options. No compensation expense is
recognized on stock options because the exercise price equals the market
price of the underlying stock on the date of grant.
(10) USE OF ESTIMATES: The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
(11) CASH FLOWS: The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents.
<PAGE>
B. Impairment of Assets
In 1995, the Company evaluated the carrying value of long-lived assets for
impairment of value pursuant to the methodology prescribed in Statement of
Financial Accounting Standards No. 121 "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of." Primarily as a
result of the sustained decrease in gas and oil prices, the Company recognized a
write-down in the carrying value of assets of $121.1 million which decreased net
income by $74.2 million. The write-down includes $73.9 million for exploration
and production properties, $21.2 million for intrastate transmission facilities
included in the energy marketing segment, $20.8 million for information systems
and other assets reflected in the natural gas distribution segment and $5.2
million for storage development projects and other assets reflected in the
natural gas transmission segment. The fair value of the assets was determined
based upon estimated future net cash flows or an evaluation of recoverability of
amounts invested.
C. Direct Billing Settlements
Kentucky West Virginia Gas Company received FERC approval of settlement
agreements with all customers for the direct billing to recover the higher
Natural Gas Policy Act (NGPA) prices, which the FERC had denied on natural gas
produced from exploration and production properties between 1978 and 1983. The
portion of the settlement with Equitable Gas Division has been subject to
Pennsylvania Public Utility Commission (PUC) review. The PUC approved Equitable
Gas Company's collection of $18.8 million in September 1995 and $7.8 million in
September 1994 and 1993 related to the direct billing settlement. The 1995
amount includes $11.0 million for accelerated collection of amounts that would
have otherwise been subject to approval by the PUC, and recognized in income, in
later years. As a result of the PUC approvals, net income for 1995 includes
approximately $11.3 million and net income for 1994 and 1993 includes
approximately $4.7 million related to the settlement. Approximately $18 million
from the settlement remains to be recovered in future gas costs filings with the
PUC over the next three years.
In November 1995, Kentucky West Virginia Gas Company received $13.8 million
from Columbia Gas Transmission Company (Columbia) as settlement, in Columbia's
bankruptcy proceeding, of Kentucky West's claim for $19 million related to the
direct billing settlements. Net income for 1995 includes $8.9 million related to
the settlement.
D. Columbia Gas Transmission Bankruptcy Settlement
In addition to the direct billing settlement described above, the Company
had various claims against Columbia for abrogation of contracts to purchase gas
from the Company and collection of FERC Order 636 transition costs. In November
1995, the Company received $31.2 million in Columbia's bankruptcy settlement
related to these items which increased net income for 1995 by $20.2 million.
<PAGE>
E. Income Taxes
The following table summarizes the source and tax effects of temporary
differences between financial reporting and tax bases of assets and liabilities:
December 31,
1995 1994
(Thousands)
Deferred tax liabilities (assets):
Exploration and development costs
expensed for income tax reporting........ $ 59,321 $ 141,479
Tax depreciation in excess of
book depreciation ....................... 257,642 255,683
Regulatory temporary differences........... 33,815 37,319
Deferred purchased gas cost................ 1,308 6,397
Alternative minimum tax.................... (74,829) (82,925)
Investment tax credit...................... (8,438) (9,306)
Other...................................... (4,587) (17,606)
--------- ---------
Total (including amounts classified as
current liabilities of $(1,505) for 1995
and $4,444 for 1994)................... $ 264,232 $ 331,041
========= =========
As of December 31, 1995 and 1994, $76.1 million and $76.2 million,
respectively, of the net deferred tax liabilities are related to rate-regulated
operations and have been deferred as regulatory assets.
Income tax expense (benefit) is summarized as follows:
Years Ended December 31,
1995 1994 1993
(Thousands)
Current:
Federal........................ $ 36,681 $ 11,196 $ 15,577
State.......................... 8,360 2,640 3,687
Deferred:
Federal........................ (56,953) (6,848) (2,758)
State.......................... (17,395) 1,789 3,514
------- -------- -------
Total........................ $(29,307) $ 8,777 $ 20,020
======== ========= ========
<PAGE>
E. Income Taxes (Continued)
Provisions for income taxes are less than amounts computed at the federal
statutory rate of 35% on pretax income. The reasons for the difference are
summarized as follows:
Years Ended December 31,
1995 1994 1993
(Thousands)
Tax at statutory rate........... $ (9,716) $ 24,327 $ 32,716
State income taxes.............. (5,866) 3,069 4,332
Increase in federal income tax rate - - 5,070
Nonconventional fuels tax credit (13,114) (16,442) (20,600)
Other........................... (611) (2,177) (1,498)
-------- -------- --------
Income tax expense (benefit)... $(29,307) $ 8,777 $ 20,020
======== ======== ========
Effective tax (benefit) rate.... (105.6)% 12.6% 21.4%
====== ==== ====
In August 1993, the Omnibus Budget Reconciliation Act of 1993 (Act) was
signed into law. One of the provisions of the Act was to raise the maximum
corporate income tax rate from 34% to 35%. The effect of this tax rate change
increased deferred tax liabilities by approximately $11 million and increased
regulatory assets by approximately $6 million.
The consolidated federal income tax liability of the Companies has been
settled through 1992.
The Company has available $74.8 million of alternative minimum tax credit
carryforward which has no expiration date. In addition, the Company has net
operating loss carryforwards for federal income tax purposes of $11.0 million
which begin to expire in 2006. The net operating loss carryforwards apply to
Louisiana Intrastate Gas.
Amortization of deferred investment tax credits amounted to $1.1 million
for 1995 and 1994, and $1.4 million for 1993.
F. Employee Pension Benefits
The Companies have several trusteed retirement plans covering substantially
all employees. The Companies' annual contributions to the plans are based on a
25-year funding level. Plans covering union members generally provide benefits
of stated amounts for each year of service. Plans covering salaried employees
use a benefit formula which is based upon employee compensation and years of
service to determine benefits to be provided. Plan assets consist principally of
equity and debt securities.
<PAGE>
F. Employee Pension Benefits (Continued)
The following table sets forth the plans' funded status and amounts
recognized in the Company's consolidated balance sheets:
December 31,
1995 1994
(Thousands)
Actuarial present value of benefit obligations:
Vested benefit obligation.................. $ 127,758 $ 120,763
========== ==========
Accumulated benefit obligation............. $ 131,405 $ 123,877
========== ==========
Market value of plan assets................. $ 159,607 $ 143,121
Projected benefit obligation................ 146,078 134,111
---------- ----------
Excess of plan assets over projected
benefit obligation......................... 13,529 9,010
Unrecognized net asset...................... (2,208) (2,905)
Unrecognized net gain....................... (20,194) (15,606)
Unrecognized prior service cost............. 9,864 9,512
---------- ----------
Prepaid pension cost recognized in
the consolidated balance sheets............ $ 991 $ 11
========== ==========
At year-end the discount rate used in determining the actuarial present
value of benefit obligations was 7 1/2% for 1995, 8 1/4% for 1994 and 7 1/4% for
1993. The assumed rate of increase in compensation levels was 4 1/2% for all
three years.
The Companies' pension cost, using a 9% average rate of return on plan
assets, comprised the following:
Years Ended December 31,
1995 1994 1993
(Thousands)
Service cost benefits earned
during the period.............. $ 3,452 $ 3,916 $ 2,806
Interest cost on projected benefit
obligation..................... 11,165 10,752 10,472
Actual loss (return) on assets.. (34,054) 2,757 (17,224)
Net amortization and deferral... 19,806 (14,680) 5,486
-------- -------- --------
Net periodic pension cost...... $ 369 $ 2,745 $ 1,540
======== ======== ========
<PAGE>
G. Other Postretirement Benefits
In addition to providing pension benefits, the Companies provide certain
health care and life insurance benefits for retired employees and their
dependents. Substantially all employees are eligible for these benefits upon
retirement from the Companies. The Company's transition obligation is being
amortized through 2012. In determining the accumulated postretirement benefit
obligation at December 31, 1995, the Company used a beginning inflation factor
of 10% decreasing gradually to 4 3/4% after 14 years and a discount rate of 7
1/2%. At December 31, 1994, the beginning inflation factor was 10 1/2%
decreasing gradually to 4 3/4% after 15 years and the discount rate was 8 1/4%.
The following summarizes the status of the Company's accrued postretirement
benefit costs (OPEBS):
December 31,
1995 1994
(Thousands)
Accumulated postretirement benefit obligation:
Retired employees....................... $ 31,555 $ 21,269
Active employees:
Fully eligible........................ 10,902 9,158
Other................................. 14,728 13,459
--------- ---------
Total obligation .................... 57,185 43,886
Trust assets ............................. 2,632 -
--------- ---------
Obligation in excess of trust assets...... 54,553 43,886
Unrecognized net gain (loss) ............. (6,298) 5,160
Unrecognized transition obligation........ (39,195) (41,501)
--------- ---------
Accrued postretirement benefit cost $ 9,060 $7,545
========= =========
The net periodic cost for postretirement health care and life insurance
benefits includes the following:
Years Ended December 31,
1995 1994 1993
(Thousands)
Service cost.......................... $ 993 $ 1,049 $ 1,065
Interest cost......................... 4,200 3,423 3,936
Amortization of transition obligation. 2,306 2,305 2,306
--------- -------- ---------
Periodic cost....................... $ 7,499 $ 6,777 $ 7,307
========= ======== =========
As of December 31, 1995 and 1994, $4.0 million and $3.5 million,
respectively, of the accrued OPEBS related to rate-regulated operations have
been deferred as regulatory assets. Rate recovery has begun in several
jurisdictions which require the Company to place agreed upon accrual amounts in
trust when collected in rates until such time as they are applied to retiree
benefits or returned to ratepayers. Trust assets consist principally of equity
and debt securities.
<PAGE>
G. Other Postretirement Benefits (Continued)
An increase of one percent in the assumed medical cost inflation rate would
increase the accumulated postretirement benefit obligation by 5% and would
increase the periodic cost by 4%.
H. Common Stock
(1) COMMON STOCK ISSUANCE
On September 29, 1993, the Company issued 3 million shares of common stock
at a price of $38.50 per share. Net proceeds after underwriters' commissions and
other issuance costs were approximately $111.6 million. The proceeds were used
to repay a portion of the short-term debt incurred to purchase the stock of
Louisiana Intrastate Gas Company as described in Note Q.
(2)LONG-TERM INCENTIVE PLAN
The Equitable Resources, Inc. Long-Term Incentive Plan provides for the
granting of shares of common stock to officers and key employees of the Company.
These grants may be made in the form of stock options, restricted stock, stock
appreciation rights and other types of stock-based or performance-based awards
as determined by the Compensation Committee of the Board of Directors at the
time of each grant. Stock awarded under the Plan, or purchased through the
exercise of options, and the value of stock appreciation units, are restricted
and subject to forfeiture should an optionee terminate employment prior to
specified vesting dates. The maximum number of shares which could have been
granted under the Plan during 1994 was 763,500 shares. In each subsequent year,
an additional number of shares equal to 1% of the total outstanding shares as of
the preceding December 31 will be available for grant. In no case may the number
of shares granted under the Plan exceed 1,725,500 shares. No awards may be made
under the Plan after May 27, 1999. In May 1994, 363,400 stock options were
granted to purchase common stock at $33.81 per share, which was the mean of the
high and the low trading prices of the common stock on the date of grant. These
options expire five years from the date of grant. In July 1995, 739,000 stock
options were granted to purchase common stock at $28.563 per share, which was
the mean of the high and the low trading price on the date of grant. These
options expire ten years from the date of grant but contain vesting provisions
which are based upon Company performance. At December 31, 1995, 1,725,500 shares
of common stock were reserved for issuance under the Plan.
<PAGE>
H. Common Stock (Continued)
(3) KEY EMPLOYEE RESTRICTED STOCK OPTION PLAN
The Equitable Resources, Inc., Key Employee Restricted Stock Option and
Stock Appreciation Rights Incentive Compensation Plan is nonqualified and
provided for the granting of restricted stock awards or options to purchase
common stock of the Company at prices ranging from 75% to 100% of market value
on the date of grant. Options expire five years from the date of grant. Stock
awarded under the Plan or purchased through the exercise of options, and the
value of certain stock appreciation units, are restricted and subject to risk of
forfeiture should an optionee terminate employment prior to specified vesting
dates. The following schedule summarizes the stock option activity:
Years Ended December 31,
1995 1994 1993
Options outstanding January 1........... 241,818 253,068 139,725
Granted................................. - - 148,543
Exercised............................... (54,100) (7,650) (33,325)
Canceled, forfeited, surrendered
or expired............................. (43,593) (3,600) (1,875)
-------- ------ --------
Options outstanding December 31......... 144,125 241,818 253,068
======== ======= ========
Average price of options
exercised during the year.............. $20.01 $22.48 $18.97
At December 31:
Prices of options outstanding.......... $20.13 $18.81 $17.50
to to to
$36.50 $36.50 $36.50
Average option price................... $31.57 $29.82 $29.69
Shares reserved for issuance .......... 610,226 663,699 671,349
No future grants may be made under the Plan which was replaced by the
Long-Term Incentive Plan effective May 27, 1994 as described above.
<PAGE>
H. Common Stock (Continued)
(4)NON-EMPLOYEE DIRECTORS' STOCK INCENTIVE PLAN
The Equitable Resources, Inc. Non-Employee Directors' Stock Incentive Plan
provides for the granting of up to 80,000 shares of common stock in the form of
stock option grants and restricted stock awards to non-employee directors of the
Company. Each Director received 450 shares of restricted stock on February 3,
1994. On June 1, 1994 and 1995, each director was granted an option for 500
shares of common stock at $34.625 and $29.875 per share, respectively. On the
first business day of June, in each year from 1996 through 1998, each Director
will be granted an option for 500 additional shares of common stock. The
exercise price for each share is 100% of the mean of the high and the low
trading prices of the common stock on the date of grant. Each option is
exercisable upon the earlier of three years from the date of grant or a
Director's retirement, disability or death. No option may be exercised more than
five years after date of grant. At December 31, 1995, 76,400 shares of common
stock were reserved for issuance under the Plan.
(5)EMPLOYEE STOCK PURCHASE PLAN
In October 1995, the Company implemented an Employee Stock Purchase Plan,
subject to shareholder approval at the annual meeting to be held in May 1996.
The Plan provides for employees to purchase shares of the Company's common stock
at a 10 percent discount through payroll deductions.
(6)DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
Pursuant to this Plan, stockholders may reinvest dividends and make
limited additional cash investments to purchase shares of common stock. Shares
issued through the Plan may be acquired on the open market or by issuance of
previously unissued shares. At December 31, 1995, 141,714 shares of common stock
were reserved for issuance under the Plan.
(7)STOCK REPURCHASE PROGRAM
In 1995, the Board of Directors of the Company authorized the
repurchase of up to one million shares of outstanding common stock. Through
December 31, 1995, no shares have been repurchased.
<PAGE>
I. Short-Term Loans
Maximum lines of credit available to the Company were $500 million during
1995, $325 million during 1994 and $360 million during 1993. The Company is not
required to maintain compensating bank balances. Commitment fees averaging
one-tenth of one percent were paid to maintain credit availability. In January
1995, the Company established a five-year revolving Credit Agreement with a
group of banks providing $500 million of available credit. The agreement
requires a facility fee of one-tenth of one percent.
At December 31, 1995, short-term loans consisted of $135.0 million of
commercial paper at a weighted average annual interest rate of 5.68%; and at
December 31, 1994, $256.0 million of commercial paper and $13.3 million of bank
loans, at a weighted average annual interest rate of 5.94%. The maximum amount
of outstanding short-term loans was $314.6 million in 1995, $269.3 million in
1994 and $339.0 million in 1993. The average daily total of short-term loans
outstanding was approximately $214.2 million during 1995, $204.6 million during
1994 and $174.9 million during 1993; weighted average annual interest rates
applicable thereto were 6.0% in 1995, 4.4% in 1994 and 3.3% in 1993.
J. Long-Term Debt
The Company filed a shelf registration with the Securities and Exchange
Commission effective June 9, 1994 to issue $100 million of Medium-Term
Notes--Series C to be used to retire short-term loans. As of December 31, 1995,
$18 million of Series C Notes have been issued.
The 9 1/2% Convertible Subordinated Debentures are convertible at any time
into common stock at a conversion price of $11.06 per share. During 1995, 1994
and 1993, $1,611,000, $345,000 and $564,000 of these debentures were converted
into 145,635 shares, 31,187 shares and 50,983 shares of common stock,
respectively. At December 31, 1995, 64,096 shares of common stock were reserved
for conversions.
Interest expense on long-term debt amounted to $36.5 million in 1995,
$35.5 million in 1994 and $33.2 million in 1993. Aggregate maturities of
long-term debt will be $75.0 million in 1996, none in 1997, $5.0 million in
1998, $78.8 million in 1999, and $3.8 million in 2000. The 1996 maturities will
be retired with proceeds from issuance of long-term debt.
<PAGE>
K. Derivative Financial Instruments
The Company is exposed to risk from fluctuations in energy prices in the
normal course of business. The Company uses exchange-traded natural gas and
crude oil futures contracts and options and over-the-counter (OTC) natural gas
and crude oil swap agreements and options to hedge exposures to energy price
changes, primarily relating to its gas marketing operations. The Company also
trades in energy futures. Exchange-traded energy futures contracts are
commitments to either purchase or sell a designated commodity, generally natural
gas or crude oil, at a future date for a specified price. These instruments are
generally settled with off-setting positions, but may be settled by delivery of
commodities. OTC arrangements require settlement in cash. The exchange-traded
contracts used by the Company cover one-month periods from one to eighteen
months in the future. The OTC agreements cover one-month periods for up to five
years in the future. Initial margin requirements are met in cash or other
instruments, and changes in contract values are settled daily. Energy futures
contracts have minimal credit risk because futures exchanges are the
counterparties. The Company manages the credit risk of the other financial
instruments by limiting dealings to those counterparties who meet the Company's
criteria for credit and liquidity strength.
The following table summarizes the outstanding derivative financial
instruments:
Notional Unrealized
Quantity Deferred
Purchase Sale Gain/(Loss)
-------- ------ ------------
(Bcf Equivalent) ($ Millions)
DECEMBER 31, 1995
Exchange traded
Futures................. 4.8 1.9 $ .4
Options................. 18.2 11.4 (1.4)
------ ------ ------
Total................. 23.0 13.3 $ (1.0)
====== ====== ======
OTC
Swaps................... 27.3 52.8 $ (.3)
Options................. 13.5 21.1 1.0
------ ------ ------
Total................. 40.8 73.9 $ .7
====== ====== ======
DECEMBER 31, 1994
Exchange traded
Futures................. 10.8 3.7 $ (1.5)
Options................. .5 .4 .1
------ ------ ------
Total................. 11.3 4.1 $ (1.4)
====== ====== ======
<PAGE>
K. Derivative Financial Instruments (Continued)
Deferred realized gains (losses) from hedging firm commitments and
anticipated transactions were $(2.8) million and $(.5) million at December 31,
1995 and 1994, respectively. These amounts are included in other current assets
and recognized in earnings when the future transactions occur.
At December 31, 1995 and 1994, there were no outstanding energy futures
contracts held for trading purposes. During 1995 and 1994, the average fair
value of traded contracts was $(40,000) and $30,000, respectively. Trading
activity resulted in a net loss of $1.9 million for 1995 and a net gain of $1.5
million for 1994. The value of these financial instruments is subject to
fluctuations in market prices for natural gas. Exposure to this risk is managed
by maintaining open positions within defined trading limits.
L. Fair Value of Financial Instruments
The carrying value of cash and cash equivalents as well as short-term
loans approximates fair value due to the short maturity of the instruments.
The estimated fair value of long-term debt, including the portion due
within one year, at December 31, 1995 and 1994 would be $465.1 million and
$430.2 million, respectively. The fair value was estimated based on the quoted
market prices as well as the discounted values using a current discount rate
reflective of the remaining maturity.
The Company's 8 1/4% Debentures and 7 1/2% Debentures may not be redeemed
prior to maturity. The 9.9% Debentures require payment of premiums for early
redemption, exclusive of annual sinking fund requirements.
The derivative financial instruments described in Note K are reflected in
other current assets at fair value of $(3.3) million and $(1.5) million at
December 31, 1995 and 1994, respectively.
M. Concentrations of Credit Risk
Revenues and related accounts receivable from exploration and production
operations are generated primarily from the sale of produced natural gas to
utility and industrial customers located mainly in the Appalachian area; the
sale of produced oil to refinery customers in the Rocky Mountain and Appalachian
areas; and the sale of produced natural gas liquids to a refinery customer in
Kentucky.
Energy marketing operating revenues and related accounts receivable are
generated from the nationwide marketing of natural gas to brokers and large
volume utility and industrial customers; and the sale of produced natural gas
liquids and intrastate transportation of natural gas in Louisiana.
M. Concentrations of Credit Risk (Continued)
Natural gas distribution operating revenues and related accounts
receivable are generated from state-regulated utility natural gas sales and
transportation to more than 266,000 residential, commercial and industrial
customers located in southwest Pennsylvania and parts of West Virginia and
Kentucky. Under state regulations, the utility is required to provide continuous
gas service to residential customers during the winter heating season.
Natural gas transmission operating revenues and related accounts
receivable are generated from FERC-regulated interstate pipeline transportation
and storage service for the affiliated utility, Equitable Gas, as well as other
utility and end-user customers located in nine mid-Atlantic and northeastern
states.
The Company is not aware of any significant credit risks which have not
been recognized in provisions for doubtful accounts.
N. Financial Information by Business Segment
The Company reports it operations in four segments. Exploration and
production activities comprise the exploration, development, production and sale
of natural gas and oil, extraction and sale of natural gas liquids and contract
drilling. Energy marketing activities comprise marketing of natural gas and
electricity, extraction and sale of natural gas liquids, intrastate
transportation, cogeneration development and central facility plant operations.
Natural gas distribution activities comprise the operations of the Company's
state-regulated local distribution company. Natural gas transmission activities
comprise gas transportation, gathering, storage and marketing activities
involving the Company's three FERC-regulated gas pipelines.
<PAGE>
N. Financial Information by Business Segment (Continued)
The following table sets forth financial information for each of the
business segments:
Years Ended December 31,
1995 1994 1993
(Thousands)
OPERATING REVENUES:
Exploration and production......... $ 234,865 $ 195,795 $ 202,422
Energy marketing................... 889,303 890,778 599,624
Natural gas distribution........... 381,050 390,475 335,149
Natural gas transmission........... 118,861 116,769 188,882
Sales between segments............. (198,089) (196,537) (231,283)
---------- ---------- ----------
Total............................ $1,425,990 $1,397,280 $1,094,794
========== ========== ==========
OPERATING INCOME (LOSS):
Exploration and production......... $ (13,823) $ 30,843 $ 42,453
Energy marketing................... (18,845) 4,089 11,700
Natural gas distribution........... 23,521 43,180 45,714
Natural gas transmission........... 31,099 32,136 30,630
---------- ---------- ----------
Total............................ $ 21,952 $ 110,248 $ 130,497
========== ========== ==========
IDENTIFIABLE ASSETS:
Exploration and production......... $ 596,478 $ 724,144 $ 699,322
Energy marketing................... 465,262 396,166 386,040
Natural gas distribution........... 685,912 690,068 660,889
Natural gas transmission........... 268,993 297,140 302,102
Eliminations....................... (54,837) (88,396) (101,446)
---------- ---------- ----------
Total............................ $1,961,808 $2,019,122 $1,946,907
========== ========== ==========
DEPRECIATION AND DEPLETION:
Exploration and production......... $ 66,893 57,196 $ 47,645
Energy marketing................... 11,551 11,702 5,778
Natural gas distribution........... 16,442 15,196 14,624
Natural gas transmission........... 9,739 9,253 8,847
---------- ---------- ----------
Total............................ $ 104,625 $ 93,347 $ 76,894
========== ========== ==========
CAPITAL EXPENDITURES:
Exploration and production......... $ 44,786 $ 84,460 $ 101,203
Energy marketing................... 24,164 15,765 195,042
Natural gas distribution........... 42,195 32,712 26,077
Natural gas transmission........... 6,967 13,237 17,089
---------- ---------- ----------
Total............................ $ 118,112 $ 146,174 $ 339,411
========== ========== ==========
<PAGE>
O. Sale Of Property
In October 1995, the Company sold most of its gas and oil properties in
the northern Appalachian basin areas of New York, Pennsylvania and West
Virginia. The properties comprised less than four percent of the exploration and
production segment's total gas and oil production and reserves. The Company
previously operated the majority of these properties with its working interest
averaging approximately 25 percent. Proceeds from the sale were approximately
$17.3 million.
P. Deferred Revenue
In November 1995, the Company sold an interest in certain Appalachian gas
properties, the production from which qualifies for nonconventional fuels tax
credit. The Company retained an interest in the properties that will increase
based on performance. As such, the proceeds of $133.5 million were recorded as
deferred revenues and will be recognized in income as financial targets are met.
Q. Acquisitions
In July 1995, the Company acquired all of the outstanding stock of
Independent Energy Corporation (IEC) in exchange for 232,564 shares of the
Company's common stock held in treasury. IEC is engaged in the development,
construction, operation and ownership of private power and cogeneration
projects. The acquisition is being accounted for as a pooling of interests. The
effect on the Company's financial statements is not material.
On June 30, 1993, the Company purchased the outstanding common stock of
Louisiana Intrastate Gas Company (LIG) for $191 million. LIG owns a 1,900 mile
intrastate pipeline system in Louisiana, four natural gas processing plants and
is also engaged in gas marketing. The purchase was funded initially with
short-term debt, a portion of which was repaid with the proceeds from the
issuance of common stock as described in Note H to the consolidated financial
statements. Under terms of the purchase agreement, the seller, and/or the
previous owner of LIG, have indemnified the Company against any losses resulting
from claims of liability under the gas purchase contracts and substantially all
environmental liabilities attributable to operation of LIG prior to June 30,
1993.
On July 8, 1993, the Company purchased all of the outstanding stock of
Hershey Oil Corporation (Hershey) for approximately $18 million. Hershey's
assets consist primarily of approximately 68 billion cubic feet of proved
natural gas reserves and 17,000 net undeveloped acres in Alberta, Canada.
The 1993 acquisitions were accounted for under the purchase method and are
included in the energy marketing segment and exploration and production segment,
respectively. Had the purchases occurred as of the beginning of 1993, unaudited
proforma consolidated results for the Company would have been: revenues of
$1,119 million; net income of $74.0 million; and earnings per share of $2.29.
<PAGE>
R. Commitments and Contingencies
Rent expense was $9.9 million in 1995, $9.7 million in 1994 and $9.8
million in 1993. Long-term leases are principally for division operating
headquarters and warehouse buildings and computer hardware and have renewal
options ranging to 18 years from December 31, 1995. Future minimum rentals for
all noncancelable long-term leases at December 31, 1995 are as follows: 1996,
$5.6 million; 1997, $5.2 million; 1998, $3.9 million; 1999, $3.0 million; 2000,
$2.2 million and $15.0 million thereafter for a total of $34.9 million.
The Company has annual commitments of approximately $35 million for demand
charges under existing long-term contracts with pipeline suppliers for periods
extending up to 17 years at December 31, 1995, which relate to gas distribution
operations. However, substantially all of these costs are recoverable in
customer rates.
The Company is subject to federal, state and local environmental laws and
regulations. These laws and regulations, which are constantly changing, can
require expenditures for remediation and may in certain instances result in
assessment of fines. The Company has established procedures for on-going
evaluation of its operations to identify potential environmental exposures and
assure compliance with regulatory policies and procedures. The estimated costs
associated with identified situations that require remedial action are accrued.
However, certain of these costs are deferred as regulatory assets when
recoverable through regulated rates. On-going expenditures for compliance with
environmental laws and regulations, including investments in plant and
facilities to meet environmental requirements, have not been material.
Management believes that any such required expenditures will not be
significantly different in either their nature or amount in the future and does
not know of any environmental liabilities that will have a material effect on
the Company's financial position or results of operations.
<PAGE>
S. Interim Financial Information (Unaudited)
The following quarterly summary of operating results reflects variations
due primarily to the seasonal nature of the Company's business:
March June September December
31 30 30 31
(Thousands except per share amounts)
1995
Operating revenues $ 404,691 $ 316,534 $ 270,992 $ 433,773
Operating income (loss) 48,312 5,032 14,458 (45,850)
Net income (loss) 27,754 (1,162) 1,684 (26,728)
Earnings (loss) per share $.80 $(.03) $.05 $(.76)
1994
Operating revenues $ 439,538 $ 316,122 $ 297,712 $ 343,908
Operating income 60,979 10,054 12,847 26,368
Net income 36,359 6,057 2,381 15,932
Earnings per share $1.05 $.18 $.07 $.46
T. Natural Gas and Oil Producing Activities
The supplementary information summarized below presents the results of
natural gas and oil activities for the exploration and production segment in
accordance with Statement of Financial Accounting Standards No. 69,
"Disclosures About Oil and Gas Producing Activities."
The information presented excludes data associated with natural gas
reserves related to rate-regulated operations. These reserves (proved developed)
are less than 5% of total Company proved reserves for the years presented.
<PAGE>
T. Natural Gas and Oil Producing Activities (Continued)
(1)PRODUCTION COSTS
The following table presents the costs incurred relating to natural gas
and oil production activities:
1995 1994 1993
(Thousands)
At December 31:
Capitalized costs.............. $ 803,124 $ 909,443 $ 836,638
Accumulated depreciation
and depletion................ 311,524 304,835 256,508
--------- --------- ---------
Net capitalized costs........... $ 491,600 $ 604,608 $ 580,130
========= ========= =========
Costs incurred :
Property acquisition........... $ 222 $ 8,335 $ 29,345
Exploration.................... 14,844 22,783 13,928
Development.................... 31,802 60,690 62,336
(2) RESULTS OF OPERATIONS FOR PRODUCING ACTIVITIES
The following table presents the results of operations related to natural
gas and oil production, including the effect in 1995 of impairment of assets as
described in Note B:
1995 1994 1993
(Thousands)
Revenues:
Affiliated..................... $ 20,619 $ 16,564 $ 15,467
Nonaffiliated ................. 114,247 136,029 140,380
Production costs................ 31,626 33,891 33,620
Exploration expenses............ 13,312 16,634 13,559
Depreciation and depletion...... 62,212 52,505 43,841
Impairment of assets............ 65,563 - -
Income tax expense (benefit).... (27,992) 3,602 5,039
--------- --------- ---------
Results of operations from
producing activities
(excluding corporate
overhead) $ (9,855) $ 45,961 $ 59,788
========== ========== ==========
<PAGE>
T. Natural Gas and Oil Producing Activities (Continued)
(3) RESERVE INFORMATION (UNAUDITED)
The information presented below represents estimates of proved gas and oil
reserves prepared by Company engineers. Proved developed reserves represent only
those reserves expected to be recovered from existing wells and support
equipment. Proved undeveloped reserves represent proved reserves expected to be
recovered from new wells after substantial development costs are incurred.
Substantially all reserves are located in the United States.
NATURAL GAS 1995 1994 1993
(Millions of Cubic Feet)
Proved developed and undeveloped reserves:
Beginning of year.................... 874,964 822,583 720,032
Revision of previous estimates....... 16,999 18,663 9,399
Purchase (sale) of natural gas
in place - net (a) (31,729) 6,307 86,113
Extensions, discoveries and other additions 50,521 89,918 60,589
Production........................... (64,984) (62,507) (53,550)
-------- -------- --------
End of year (b)...................... 845,771 874,964 822,583
======== ======== ========
Proved developed reserves:
Beginning of year.................... 771,635 759,282 665,194
End of year (c)...................... 739,249 771,635 759,282
(a) Includes purchases in Canada of 68,000 MMcf in 1993.
(b) Includes proved reserves in Canada of 70,000 MMcf in 1995,
67,000 MMcf in 1994and 70,000 MMcf in 1993.
(c) Includes proved developed reserves in Canada of 46,000 MMcf
in 1995, 43,000 MMcf in 1994 and 46,000 MMcf in 1993.
<PAGE>
T. Natural Gas and Oil Producing Activities (Continued)
OIL 1995 1994 1993
(Thousands of Barrels)
Proved developed and undeveloped reserves:
Beginning of year.................... 18,283 16,468 20,023
Revision of previous estimates....... (356) 2,601 (4,876)
Purchase (sale) of oil in place
- net (a) (1,071) (169) 418
Extensions, discoveries and other additions 3,278 1,369 3,015
Production........................... (1,933) (1,986) (2,112)
------- ------ ------
End of year (b)...................... 18,201 18,283 16,468
======= ====== ======
Proved developed reserves:
Beginning of year.................... 18,110 16,442 18,540
End of year (c)...................... 16,834 18,110 16,442
(a) Includes purchases in Canada of 68,000 barrels in 1993.
(b) Includes proved reserves in Canada of 91,000 barrels in 1995,
75,000 barrels in 1994 and 65,000 barrels in 1993.
(c) Includes proved developed reserves in Canada of 64,000
barrels in 1995, 50,000 barrels in 1994 and 39,000 barrels in 1993.
<PAGE>
T. Natural Gas and Oil Producing Activities (Continued)
(4) STANDARD MEASURE OF DISCOUNTED FUTURE CASH FLOW (UNAUDITED)
Management cautions that the standard measure of discounted future cash
flows should not be viewed as an indication of the fair market value of gas and
oil producing properties, nor of the future cash flows expected to be generated
therefrom. The information presented does not give recognition to future changes
in estimated reserves, selling prices or costs and has been discounted at an
arbitrary rate of 10%. Estimated future net cash flows from natural gas and oil
reserves based on selling prices and costs at year-end price levels are as
follows:
1995 1994 1993
(Thousands)
Future cash inflows................. $ 2,279,509 $ 1,983,757 $ 2,140,151
Future production costs............. (635,540) (562,841) (598,707)
Future development costs............ (51,081) (46,985) (24,579)
Future income tax expenses.......... (539,106) (361,486) (434,362)
------------ ----------- -----------
Future net cash flow................ 1,053,782 1,012,445 1,082,503
10% annual discount for estimated
timing of cash flows.............. (535,921) (471,778) (515,023)
------------ ----------- -----------
Standardized measure of discounted
future net cash flows (a)......... $ 517,861 $ 540,667 $ 567,480
============ =========== ===========
(a) Includes $11,293,000 in 1995, $10,043,000 in 1994 and $31,267,000 in
1993 related to Canada.
Summary of changes in the standardized measure of discounted future net
cash flows:
1995 1994 1993
(Thousands)
Sales and transfers of gas
and oil produced - net............ $ (103,240) $ (118,702) $ (122,227)
Net changes in prices, production
and development costs............. 54,806 (135,742) (80,256)
Extensions, discoveries, and
improved recovery, less related costs 65,603 74,900 90,035
Development costs incurred.......... 18,620 16,037 18,482
Purchase (sale) of minerals in place - net (22,990) 9,627
62,843
Revisions of previous quantity estimates 5,278 19,189 (14,910)
Accretion of discount............... 64,875 72,058 69,284
Net change in income taxes.......... (97,808) 45,012 (8,584)
Other .............................. (7,950) (9,192) 4,491
------------ ----------- -----------
Net increase (decrease)............. (22,806) (26,813) 19,158
Beginning of year................... 540,667 567,480 548,322
------------ ----------- -----------
End of year......................... $ 517,861 $ 540,667 $ 567,480
============ =========== ===========
<PAGE>
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
(a) 1. Financial statements
The financial statements listed in the accompanying index to
financial statements (see below) are filed as part of this annual
report.
2. Financial Statement Schedule
The financial statement schedule listed in the accompanying index to
financial statements and financial schedule (see below) is filed as
part of this annual report.
3. Exhibits
The exhibits listed on the accompanying index to exhibits (pages 35
through 38) are filed as part of this annual report.
(b) Reports on Form 8-K filed during the quarter ended December 31,
1995.
None
(c) Each management contract and compensatory arrangement in which any
director or any named executive officer participates has been marked
with an asterisk (*) in the Index to Exhibits.
<PAGE>
EQUITABLE RESOURCES, INC.
INDEX TO FINANCIAL STATEMENTS COVERED
BY REPORT OF INDEPENDENT AUDITORS
(ITEM 14 (A))
1. The following consolidated financial statements of Equitable Resources,
Inc. and Subsidiaries are included in Item 8:
PAGE REFERENCE
Statements of Consolidated Income
for each of the three years in
the period ended December 31, 1995 4
Statements of Consolidated Cash Flows
for each of the three years in the
period ended December 31, 1995 5
Consolidated Balance Sheets
December 31, 1995 and 1994 6 & 7
Statements of Common Stockholders'
Equity for each of the three years in the
period ended December 31, 1995 8
Long-term Debt, December 31, 1995 and 1994 9
Notes to Consolidated Financial Statements 10 thru 31
2. Schedule for the Years Ended December 31,
1995, 1994 and 1993 included in Part IV:
II - Valuation and Qualifying
Accounts and Reserves 34
All other schedules are omitted since the subject matter thereof is either
not present or is not present in amounts sufficient to require submission
of the schedules.
<PAGE>
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE THREE YEARS ENDED DECEMBER 31, 1995
Column A Column B Column C Column D Column E
- -------------------------------------------------------------------------------
Balance At Additions Charged Balance
Beginning To Costs At End
Description Of Period and Expenses Deductions Of Period
- -------------------------------------------------------------------------------
(Thousands)
1995
Accumulated Provision
for Doubtful Accounts $ 10,890 $ 10,810 $11,161(A) $ 10,539
1994
Accumulated Provision
for Doubtful Accounts $ 10,106 $ 10,010 $ 9,226(A) $ 10,890
1993
Accumulated Provision
for Doubtful Accounts $ 9,503 $ 9,352 $ 8,749(A) $ 10,106
Note:
(A) Customer accounts written off, less recoveries.
<PAGE>
INDEX TO EXHIBITS
EXHIBITS DESCRIPTION METHOD OF FILING
- -------------- -------------------------------- ===============================
3.01 Restated Articles of Filed as Exhibit 3.01 to Form
Incorporation of the Company 10-K for the year ended
dated May 21, 1993 (effective December 31, 1993
May 27, 1993)
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
3.02 By-Laws of the Company Filed as Exhibit 3.02 to form
(amended through December 16, 10-K for the year ended
1994) December 31, 1994
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
4.01 (a) Indenture dated as of April 1, Filed as Exhibit 4.01
1983 between the Company and (Revised) to Post-Effective
Pittsburgh National Bank Amendment No. 1 to
relating to Debt Securities Registration Statement
(Registration No. 2-80575)
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
4.01 (b) Instrument appointing Bankers Filed as Exhibit 4.01 (b) to
Trust Company as successor Form 10-K for the year ended
trustee to Pittsburgh National December 31, 1993
Bank
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
4.01 (c) Resolution adopted June 26, Filed as Exhibit 4.01 (c) to
1986 by the Finance Committee Form 10-K for the year ended
of the Board of Directors of December 31, 1993
the Company establishing the
term of the $75,000,000 of
debentures, 8 1/4% Series due
July 1, 1996
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
4.01 (d) Resolutions adopted June 22, Filed as Exhibit 4.01 (d) to
1987 by the Finance Committee Form 10-K for the year ended
of the Board of Directors of December 31, 1993
the Company establishing the
terms of the 75,000 units
(debentures with warrants)
issued July 1, 1987
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
4.01 (e) Resolution adopted April 6, Filed as Exhibit 4.01 (e) to
1988 by the Ad Hoc Finance Form 10-K for the year ended
Committee of the Board of December 31, 1993
Directors of the Company
establishing the terms and
provisions of the 9.9%
Debentures issued April 14,
1988
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
4.01 (f) Supplemental indenture dated Filed as Exhibit 4.3 to Form
March 15, 1991 with Bankers S-3 (Registration Statement
Trust Company eliminating 33-39505) filed August 21,
limitations on liens and 1991
additional funded debt
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
4.01 (g) Resolution adopted August 19, Filed as Exhibit 4.05 to Form
1991 by the Ad Hoc Finance 10-K for the year ended
Committee of the Board of December 31, 1991
Directors of the Company
Addenda Nos. 1 thru 27,
establishing the terms and
provisions of the Series A
Medium-Term Notes
- -------------- -------------------------------- ===============================
4.01 (h) Resolutions adopted July 6, Filed as Exhibit 4.05 to Form
1992 and February 19, 1993 by 10-K for the year ended
the Ad Hoc Finance Committee December 31, 1992
of the Board of Directors of
the Company and Addenda Nos. 1
thru 8, establishing the terms
and provisions of the Series B
Medium-Term Notes
- -------------- -------------------------------- ===============================
<PAGE>
- -------------- -------------------------------- ===============================
4.01 (i) Resolution adopted July 14, Filed as Exhibit 4.01 (i) to
1994 by the Ad Hoc Finance Form 10-K for the year ended
Committee of the Board of December 31, 1995
Directors of the Company and
Addenda Nos. 1 and 2,
establishing the terms and
provisions of the Series C
Medium-Term Notes
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.01 Equitable Resources, Inc. Key Filed as Exhibit 10.01 to
Employee Restricted Stock Form 10-K for the year ended
Option and Stock Appreciation December 31, 1994
Rights Incentive Compensation
Plan (as amended through March
17, 1989)
- -------------- -------------------------------- ===============================
* 10.02 Employment Agreement dated as Filed as Exhibit 10.02 to Form
of March 18, 1988 and restated 10-K for the year ended
as of March 15, 1996, with December 31, 1995
Frederick H. Abrew
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.03 Employment Agreement dated as Filed as Exhibit 10.03 to Form
of March 18, 1988 and restated 10-K for the year ended
as of March 15, 1996, with December 31, 1995
Augustine A. Mazzei, Jr.
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.04 (a) Agreement dated December 15, Filed as Exhibit 10.04 (a) to
1989 with Barbara B. Sullivan Form 10-K for the year ended
for deferred payment of 1990 December 31, 1994
director fees
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.04 (b) Agreement dated December 21, Filed as Exhibit 10.04 (b)
1990 with Barbara B. Sullivan to Form 10-K for the year
for deferred payment of 1991 ended December 31, 1995
director fees
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.04 (c) Agreement dated December 13, Filed as Exhibit 10.16 to
1991 with Barbara B. Sullivan Form 10-K for the year ended
for deferred payment of 1992 December 31, 1991
director fees
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.04 (d) Agreement dated December 16, Filed as Exhibit 10.04 (e) to
1994 with Barbara B. Sullivan Form 10-K for the year ended
for deferred payment of 1995 December 31, 1994
director fees
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.04 (e) Agreement dated December 15, Filed as Exhibit 10.04 (e) to
1995 with Barbara B. Sullivan Form 10-K for the year ended
for deferred payment of 1996 December 31, 1995
director fees
- -------------- -------------------------------- ===============================
* 10.05 Supplemental Executive Filed as Exhibit 10.05 to Form
Retirement Plan (as amended 10-K for the year ended
and restated through October December 31, 1995
20, 1995)
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.06 Retirement Program for the Filed as Exhibit 10.06 to
Board of Directors of Form 10-K for the year ended
Equitable Resources, Inc. (as December 31, 1994
amended through August 1, 1989)
- -------------- -------------------------------- ===============================
* 10.07 Supplemental Pension Plan (as Filed as Exhibit 10.07 to
amended and restated through Form 10-K for the year ended
December 16, 1994) December 31, 1994
- -------------- -------------------------------- ===============================
<PAGE>
- -------------- -------------------------------- ===============================
* 10.08 Policy to Grant Supplemental Filed as Exhibit 10.08 to
Deferred Compensation Benefits Form 10-K for the year ended
in Selected Instances to a December 31, 1994
Select Group of Management or
Highly Compensated Employees
(as amended and restated
through August 1, 1989)
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.09 Equitable Resources, Inc. and Filed as Exhibit 10.22 to
Subsidiaries Short-Term Form 10-K for the year ended
Incentive Compensation Plan as December 31, 1992
amended February 17, 1993
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.10 (a) Agreement dated December 31, Filed as Exhibit 10.10 (a) to
1987 with Malcolm M. Prine for Form 10-K for the year ended
deferred payment of 1988 December 31, 1993
director fees
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.10 (b) Agreement dated December 30, Filed as Exhibit 10.10 (b) to
1988 with Malcolm M. Prine for Form 10-K for the year ended
deferred payment of 1989 December 31, 1993
director fees
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
10.11 Trust Agreement with Filed as Exhibit 10.12 to
Pittsburgh National Bank to Form 10-K for the year ended
act as Trustee for December 31, 1994
Supplemental Pension Plan,
Supplemental Deferred
Compensation Benefits,
Retirement Program for Board
of Directors, and Supplemental
Executive Retirement Plan
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.12 Equitable Resources, Inc. Filed as Exhibit 10.13 to
Non-Employee Directors' Stock Form 10-K for the year ended
Incentive Plan December 31, 1994
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.13 Equitable Resources, Inc. Filed as Exhibit 10.14 to
Long-Term Incentive Plan Form 10-K for the year ended
December 31, 1994
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.14 (a) Agreement dated December 31, Filed as Exhibit 10.15 to
1994 with Donald I. Moritz for Form 10-K for the year ended
consulting services December 31, 1994
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.14 (b) Letter agreement dated Filed as Exhibit 10.14 (b) to
December 15, 1995 amending Form 10-K for the year ended
agreement with Donald I. December 31, 1995
Moritz for consulting services
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.15 Change in Control Agreement Filed as Exhibit 10.15 to Form
executed with certain key 10-K for the year ended
employees December 31, 1995
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
* 10.16 Equitable Resources, Inc. and Filed as Exhibit 10.16 to Form
Subsidiaries Deferred 10-K for the year ended
Compensation Plan December 31, 1995
- -------------- -------------------------------- ===============================
11.01 Statement re Computation of Filed as Exhibit 11.01 to Form
Earnings Per Share 10-K for the year ended
December 31, 1995
- -------------- -------------------------------- ===============================
<PAGE>
- -------------- -------------------------------- ===============================
21 Schedule of Subsidiaries Filed as Exhibit 21 to Form
10-K for the year ended
December 31, 1995
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
23.01 Consent of Independent Auditors Filed herewith as Exhibit
23.01
- -------------- -------------------------------- ===============================
99.01 (a) Equitable Resources, Inc. Filed as Exhibit 99.01 (a) to
Employees Savings Plan Form Form 10-K for the year
11-K Annual Report for the ended December 31, 1995
year ended October 31, 1995
- -------------- -------------------------------- ===============================
- -------------- -------------------------------- ===============================
99.01 (b) Equitable Resources, Inc. Filed as Exhibit 99.01 (a) to
Employees Savings Plan Form Form 10-K for the year ended
11-K Annual Report for the December 31, 1995
period ended December 31, 1995
- -------------- -------------------------------- ===============================
99.02 Equitable Resources, Inc. Filed as Exhibit 99.02 to Form
Employees Stock Purchase Plan 10-K for the year ended
Form 11-K Annual Report December 31, 1995
- -------------- -------------------------------- ===============================
The Company agrees to furnish to the Commission, upon request, copies of
instruments with respect to long-term debt which have not previously been filed.
Exhibit 23.01
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference of our report dated February
13, 1996, with respect to the consolidated financial statements and schedule of
Equitable Resources, Inc. included in this Annual Report on Form 10-K and Form
10-K/A No. 1 for the year ended December 31, 1995 ("the 1995 Equitable Annual
Report") in the Prospectus part of the following Registration Statements:
Registration Statement No. 33-52151 on Form S-8 pertaining to the
1994 Equitable Resources, Inc. Long-Term Incentive Plan;
Registration Statement No. 33-52137 on Form S-8 pertaining to the
1994 Equitable Resources, Inc. Non-Employee Directors' Stock
Incentive Plan;
Registration Statement on Form S-8 filed on March 22, 1996,
pertaining to the Equitable Resources, Inc. Employee Stock
Purchase Plan;
Post-Effective Amendment No. 2 to Registration Statement No.
2-69010 on Form S-8 pertaining to the Equitable Resources, Inc.
Key Employee Restricted Stock Option and Stock Appreciation
Rights Incentive Compensation Plan;
Post-Effective Amendment No. 1 to Registration Statement No.
33-00252 on Form S-8 pertaining to the Equitable Resources, Inc.
Employee Savings Plan;
Post-Effective Amendment No. 1 to Registration Statement No.
33-10508 on Form S-8 pertaining to the Equitable Resources, Inc.
Key Employee Restricted Stock Option and Stock Appreciation
Rights Incentive Compensation Plan;
Registration Statement No. 33-53703 on Form S-3 pertaining to the
registration of $100,000,000 Medium Term Notes, Series C of
Equitable Resources, Inc.
We also consent to the incorporation by reference of our report dated
March 8, 1996 with respect to the financial statements and schedules of the
Equitable Resources, Inc. Employee Savings Plan included in the Annual Report
(Form 11-K) for the year ended October 31, 1995, included in Exhibit 99.01(a) to
the 1995 Equitable Annual Report into Post-Effective Amendment No. 1 to
Registration Statement No. 33-00252 on Form S-8 pertaining to the Equitable
Resources, Inc. Employee Savings Plan.
We also consent to the incorporation by reference of our report dated
March 8, 1996 with respect to the financial statements and schedules of the
Equitable Resources, Inc. Employee Savings Plan included in the Transition
Period Report (Form 11-K) for the two-month period ended December 31, 1995,
included in Exhibit 99.01(b) to the 1995 Equitable Annual Report into
Post-Effective Amendment No. 1 to Registration Statement No. 33-00252 on Form
S-8 pertaining to the Equitable Resources, Inc. Employee Savings Plan.
We also consent to the incorporation by reference of our report dated
March 8, 1996 with respect to the financial statements of the Equitable
Resources, Inc. Employee Stock Purchase Plan included in the Annual Report (Form
11-K) for the three-month period ended December 31, 1995, included in Exhibit
99.02 to the 1995 Equitable Annual Report into the Registration Statement on
Form S-8 filed on March 22, 1996, pertaining to the Equitable Resources, Inc.
Employee Stock Purchase Plan.
By /s/ Ernst & Young LLP
-----------------------------------
Ernst & Young LLP
Pittsburgh, Pennsylvania
April 26, 1996
