UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) MARCH 3, 1998
- -------------------------------------------------------------------------------
EQUITABLE RESOURCES, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 1-3551 25-0464690
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
420 BOULEVARD OF THE ALLIES, PITTSBURGH, PENNSYLVANIA 15219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (412) 261-3000
-------------------
NONE
(Former name or former address, if changed since last report)
<PAGE>
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) A press release announcing earnings for the fourth quarter and
year ended December 31, 1997 is filed as Exhibit 99 to this
report.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereto duly authorized.
EQUITABLE RESOURCES, INC.
(Registrant)
By /s/ Jeffrey C. Swoveland
Jeffrey C. Swoveland
Vice President - Finance and Treasurer
and Interim Chief Financial Officer
March 3, 1998
<PAGE>
EXHIBIT INDEX
Exhibit No. Department Description Sequential Page No.
99 Press release announcing earnings for the 4
fourth quarter and year ended
December 31, 1997
Contact: DIANE WUYCHECK - MEDIA
(412) 553-5911
OR
ROBERT ATKINSON - ANALYSTS
(412) 553-5768
Release Date: FEBRUARY 25, 1998
ERI REPORTS 1997 BASIC EPS OF $2.17 VS. $1.69
COMPANY POSTS FOURTH QUARTER EPS OF $1.16 VS. $.66
GAINS FROM ASSET SALES BOOST NET INCOME
PITTSBURGH - Equitable Resources, Inc. (ERI) today reported 1997 net
income of $78.1 million, or $2.17 basic earnings per share, compared to $59.4
million, or $1.69 basic earnings per share for 1996. Income from continuing
operations, excluding nonrecurring items, was $61.9 million, or $1.73 earnings
per share for 1997 compared to $54.9 million, or $1.56 earnings per share for
1996. Operating results in 1997 benefited primarily from increased prices for
produced natural gas and lower exploration expense for the company's exploration
and production (E&P) business unit. Those benefits were partially offset by
lower gas and oil production volumes and lower throughput by the company's
utilities segment.
Fourth quarter 1997 net income was $42.5 million, or $1.16 basic
earnings per share compared to $23.4 million, or $.66 basic earnings per share
for the fourth quarter 1996. Separate nonrecurring gains contributed to the
results of both quarters. Income from continuing operations for the fourth
quarter 1997, excluding nonrecurring gains, was $26.6 million, or $.72 earnings
per share, compared to $19.0 million, or $.53 earnings per share in 1996.
Fourth quarter 1997 income includes an after-tax gain of $15.9 million,
or $.44 earnings per share from completion of a portion of the sale of the
company's western oil and gas production properties and the sale of its contract
drilling division. The full-year 1997 results combine that gain with a
previously reported after-tax gain of $15.4 million, or $.43 earnings per share,
from the first portion of those property sales. The fourth quarter and full year
1996 results included a nonrecurring gain from the curtailment of the company's
defined benefit pension plan for non-utility employees.
--more--
<PAGE>
Operating results for the fourth quarter 1997 improved over the
comparable period in 1996 primarily because of higher earnings contributed by
the company's E&P business.
ERI SUPPLY & LOGISTICS
ERI's Supply & Logistics segment explores for, produces and delivers
natural gas and oil and is engaged in the transportation and storage of natural
gas, production of natural gas liquids and bulk trading of natural gas and
electricity.
Supply & Logistics' 1997 results benefited from the asset sales
described above as well as higher revenues from produced natural gas, lower
exploration expense, and increased marketed natural gas sales.
"We've made significant progress in our exploration and production
strategy by concentrating on development opportunities in Appalachia, where we
already maintain a competitive and technical advantage, and by focusing our
exploration efforts on the high growth areas of the Gulf Coast area," said
Donald I. Moritz, ERI's chief executive officer.
ERI's natural gas production equaled 54.6 billion cubic feet (Bcf) in
1997, compared to 57.3 Bcf in 1996. Oil production declined to 1.5 million
barrels, compared to 1.7 million barrels sold in 1996. The company's production
declined primarily as a result of the sale of its western E&P properties. ERI
was able to offset all of the subtracted daily production after the sale with
equivalent daily production added by the completion of a major gas and oil
property acquisition off Louisiana's Gulf coast. The E&P group has targeted this
area for new drilling and major well workovers during 1998.
The selling prices for Supply & Logistics' natural gas and oil
production improved 17 percent, averaging $2.24 per million cubic feet (Mcf) and
$17.22 per barrel, respectively, in 1997, compared to $1.91 per Mcf and $14.78
per barrel in 1996.
Supply & Logistics' lower exploration expense was attributable to the
shift from nonstrategic areas of exploration interest and to the phenomenal
drilling success rate that ERI had in 1997, resulting in lower dry hole cost.
The 97 percent success rate related to the 170 wells spudded during the year,
including a 100 percent success standard on the 7 company operated wells drilled
in the Gulf of Mexico. The E&P group had averaged a 91 percent drilling success
rate for the period 1994 through 1996.
--more--
<PAGE>
ERI UTILITIES
The company's Utilities segment includes both the natural gas
distribution division and the Appalachian natural gas gathering, transmission
and storage operations.
The 1997 operating results for this segment were negatively impacted by
the previously announced, one-time after-tax charge of $8.5 million in the June
quarter to recognize the impairment of the company's interest in a natural gas
storage project and a portion of the September quarter's nonrecurring
restructuring charge related to the evaluation and reduction of corporate office
and non-core business functions. The segment's natural gas sales were affected
by a shift from sales to transportation arrangements by many of its commercial
and industrial customers who now buy their gas supply from non-utility
suppliers, including ERI Services. Also, retail gas sales were lower as a result
of weather in Equitable's principal service territory for the crucial first
quarter that was 12 percent warmer than the first three months of 1996. Margins
on gas sales improved in the fourth quarter following the Pennsylvania Public
Utility Commission's approval of a $15.8 million annual base-rate increase that
took effect October 15, 1997.
"Favorable regulatory treatment and preparing for deregulation and
customer choice in our residential natural gas program were key events for this
business segment in 1997, " according to Mr. Moritz. "The base-rate increase,
our first since 1992, applies to fixed customer charges and lessens the
temperature effect on margins, raising the non-temperature sensitive revenues to
46 percent from 36 percent for Equitable Gas. In addition, Equitable Gas is one
of the first local distribution companies in the nation to offer all its
customers the ability to choose their gas supplier," he added.
ERI SERVICES
ERI Services posted an operating loss for 1997, primarily due to delays
in constructing energy service projects as well as the expenditure of more than
$7 million in market research, development and other costs associated with the
completion of the start-up of this newer segment.
"We have had a longer developmental period than originally anticipated
for this new business. However, we are well-positioned in our energy services
business, particularly with the addition of NORESCO and the established,
competitive expertise in both the private and public sectors it provides," said
Mr. Moritz.
--more--
<PAGE>
OUTLOOK
The company said that 1998 to date has presented challenges to earnings
growth this year. Retail gas sales have declined due to weather in the company's
distribution service territory that has been 21 percent warmer than normal, a
variance that is being reflected across most of the United States. The lack of
demand created by warmer weather nationwide has also put downward pressure on
wellhead prices for natural gas. In addition, two successive winter storms have
caused intermittent natural gas production curtailments in the company's
Appalachian Basin producing area. Equitable said the company is reexamining its
current business plan to find ways to offset the weather's impact on first
quarter 1998 operating results.
Equitable Resources is a fully-integrated energy exploration,
distribution, marketing and energy services company. It offers customized energy
(natural gas, natural gas liquids, crude oil and electricity) solutions to
wholesale and retail customers with innovative products and services from its
three business segments described above.
Equitable Resources, Inc., is traded under the ticker symbol EQT.
Portions of this document contain information that would be considered
forward looking statements. The company notes that a variety of factors could
cause the company's actual results to differ materially from the anticipated
results or other expectations expressed in the company's forward looking
statements. The risks and uncertainties that may affect the operations,
performance, development and results of the company's business include, but are
not limited to the following: weather conditions, the pace of deregulation of
retail natural gas and electricity markets, the timing and extent of changes in
commodity prices for gas and oil, changes in interest rates, the timing and
extent of the company's success in acquiring gas and oil properties and in
discovering, developing and producing reserves, and the impact of competitive
factors on profit margins in various markets in which the company competes.
# # # #
FINANCIAL TABLES FOLLOW
EQUITABLE RESOURCES' RECENT NEWS RELEASES ARE AVAILABLE FREE OF
CHARGE BY FAX THROUGH COMPANY NEWS ON CALL AT 1-800-758-5804, EXT. 289250,
OR ON THE INTERNET AT HTTP://WWW.ERI2000.COM
<PAGE>
<TABLE>
<CAPTION>
EQUITABLE RESOURCES, INC AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
(Thousands Except Per Share Amounts)
Three Months Ended Year Ended
December 31, December 31,
------------------------------------------------------------
1997 1996 1997 1996
----------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Operating Revenues.................................. $ 689,578 $ 472,743 $ 2,151,015 $ 1,861,799
Cost of Sales....................................... 540,201 338,620 1,636,332 1,373,406
----------- ------------ ------------- ------------
Net Operating Revenues.............................. 149,377 134,123 514,683 488,393
Impairment of Assets and Nonrecurring Items (B)..... - (7,370) 23,725 (7,370)
Operating Expenses.................................. 94,310 94,951 378,520 366,975
----------- ------------ ------------- ------------
Operating Income.................................... 55,067 46,542 112,438 128,788
Other Income..(C)................................... 26,674 (1,106) 57,442 2,998
Interest Charges.................................... 11,825 11,102 45,678 41,825
----------- ------------ ------------- ------------
Income Before Income Taxes.......................... 69,916 34,334 124,202 89,961
Income Taxes........................................ 27,373 10,922 46,145 30,582
----------- ------------ ------------- ------------
Net Income.......................................... $ 42,543 $ 23,412 $ 78,057 $ 59,379
=========== ============ ============= ============
Average Common Shares Outstanding................... 36,800 35,335 36,003 35,188
=========== ============ ============= ============
Earnings Per Share - Basic.......................... $ 1.16 $ 0.66 $ 2.17 $ 1.69
=========== ============ ============= ============
Earnings Per Share - Assuming Dilution.............. $ 1.15 $ 0.66 $ 2.16 $ 1.69
=========== ============ ============= ============
<FN>
Notes:
(A) Due to the seasonal nature of the business and the volatility of gas and
oil commodity prices, the interim statements for the three-month periods
are not indicative of results for a full year.
(B) Includes $10.7 million in 1997 for costs related to evaluation and
reduction of corporate office and non-core business functions recorded in
the third quarter and $13.0 million in 1997 for costs related to Avoca gas
storage project recorded in the second quarter. A gain of $7.4 million
related to the curtailment of the Company's defined benefit pension plan
for non-utility employees was recorded in the fourth quarter of 1996.
(C) Includes $52 million gain on sale of western oil and gas properties and
contract drilling operations of which $25.6 million and $26.6 million were
recorded in the third and fourth quarters of 1997, respectively.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Equitable Resources, Inc., and Subsidiaries
Segment Reporting Information
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Supply Intersegment
and Logistics Utilities Services Eliminations Consolidated
---------------------------------------------------------------------------------
Thousands
<S> <C> <C> <C> <C> <C>
Operating Revenues:
Residential retail gas sales - 294,308 - - 294,308
Commercial retail gas sales - 32,113 - - 32,113
Industrial and utility gas sales - 41,312 - (20,540) 20,772
Transportation of gas 8,777 58,255 - (2,035) 64,997
Storage of gas 4,199 8,414 - (223) 12,390
Produced natural gas 122,335 - - (26,763) 95,572
Marketed natural gas 1,235,855 23,162 291,591 (174,203) 1,376,405
Crude oil 26,022 - - - 26,022
Natural gas liquids 100,740 - - - 100,740
Marketed Electricity 36,974 - - - 36,974
Energy Service Contracting - - 51,754 - 51,754
Other 38,318 10,331 1,660 (11,341) 38,968
- ----------------------------------------------------------------------------------------------------------------------------------
Total revenues 1,573,220 467,895 345,005 (235,105) 2,151,015
Cost of Energy Purchased 1,328,474 217,733 284,792 (232,351) 1,598,648
Energy Service Contract Costs - - 37,684 - 37,684
- ----------------------------------------------------------------------------------------------------------------------------------
Net operating revenues 244,746 250,162 22,529 (2,754) 514,683
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Production 31,777 - - - 31,777
Exploration 8,857 - - - 8,857
Gas processing 11,218 - - - 11,218
Other 64,840 147,271 30,150 (2,735) 239,526
Depreciation, depletion and amortization 57,731 27,261 2,150 - 87,142
Impairment of assets and other
nonrecurring items 1,200 22,325 200 - 23,725
- ----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 175,623 196,857 32,500 (2,735) 402,245
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Income (Loss) 69,123 53,305 (9,971) (19) 112,438
==================================================================================================================================
Sales Quantity:
Residential retail gas sales - MMcf - 28,503 - - 28,503
Commercial retail gas sales - 3,186 - - 3,186
Industrial and utility gas sales - 14,995 - (7,052) 7,943
Transportation deliveries 113,133 81,922 - (44,174) 150,881
Produced natural gas sales 54,588 - - (446) 54,142
Marketed natural gas sales 500,578 8,627 94,346 (69,552) 533,999
Oil - thousands of barrels 1,511 - 1,511
Natural gas liquids - thousands of gallons 285,842 - 285,842
Average Selling Price:
Residential retail gas sales - per Mcf 10.326
Commercial retail gas sales 10.079
Industrial and utility gas sales 2.755
Produced natural gas sales 2.241
Marketed natural gas sales 2.469
Oil - per barrel 17.222
Natural gas liquids - per gallon 0.352
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Equitable Resources, Inc., and Subsidiaries
Segment Reporting Information
- ------------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Supply Intersegment
and Logistics Utilities Services Eliminations Consolidated
---------------------------------------------------------------------------------
(Thousands)
<S> <C> <C> <C> <C> <C>
Operating Revenues:
Residential retail gas sales - 271,636 - - 271,636
Commercial retail gas sales - 68,408 1,922 - 70,330
Industrial and utility gas sales - 80,833 - (15,867) 64,966
Transportation of gas 7,670 38,167 - (600) 45,237
Storage of gas 1,099 7,305 - (233) 8,171
Produced natural gas 109,400 - - (28,238) 81,162
Marketed natural gas 1,019,220 31,172 161,609 (77,551) 1,134,450
Crude oil 25,520 - - - 25,520
Natural gas liquids 100,628 - - - 100,628
Marketed Electricity 15,167 - - - 15,167
Energy Service Contracting - - 8,804 - 8,804
Other 39,957 9,920 - (14,149) 35,728
- ----------------------------------------------------------------------------------------------------------------------------------
Total revenues 1,318,661 507,441 172,335 (136,638) 1,861,799
Cost of Energy Purchased 1,092,939 246,323 159,985 (131,091) 1,368,156
Energy Service Contract Costs - - 5,250 - 5,250
- ----------------------------------------------------------------------------------------------------------------------------------
Net operating revenues 225,722 261,118 7,100 (5,547) 488,393
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Production 31,746 - - - 31,746
Exploration 15,615 - - - 15,615
Gas processing 10,484 - - - 10,484
Other 65,815 147,242 19,329 (5,637) 226,749
Depreciation, depletion and amortization 55,415 26,608 358 - 82,381
Impairment of assets and other
nonrecurring items (5,363) (1,962) (45) - (7,370)
- ----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 173,712 171,888 19,642 (5,637) 359,605
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Income (Loss) 52,010 89,230 (12,542) 90 128,788
==================================================================================================================================
Sales Quantity:
Residential retail gas sales - MMcf - 30,549 - - 30,549
Commercial retail gas sales - 10,505 - - 10,505
Industrial and utility gas sales - 26,647 - (5,434) 21,213
Transportation deliveries 120,363 70,345 - (36,624) 154,084
Produced natural gas sales 57,295 - - (14,862) 42,433
Marketed natural gas sales 446,736 10,110 55,915 (34,147) 478,614
Oil - thousands of barrels 1,727 - - - 1,727
Natural gas liquids - thousands of gallons 280,579 - - - 280,579
Average Selling Price:
Residential retail gas sales - per Mcf 8.892
Commercial retail gas sales 6.512
Industrial and utility gas sales 3.033
Produced natural gas sales 1.909
Marketed natural gas sales 2.281
Oil - per barrel 14.777
Natural gas liquids - per gallon 0.359
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Equitable Resources, Inc., and Subsidiaries
Segment Reporting Information
- ------------------------------------------------------------------------------------------------------------------------------------
Three Months Ended December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Supply Intersegment
and Logistics Utilities Services Eliminations Consolidated
---------------------------------------------------------------------------------
Thousands
<S> <C> <C> <C> <C> <C>
Operating Revenues:
Residential retail gas sales - 89,147 - - 89,147
Commercial retail gas sales - 8,489 - - 8,489
Industrial and utility gas sales - 5,820 - (3,937) 1,883
Transportation of gas 4,071 20,149 - (608) 23,612
Storage of gas 1,853 2,457 - (58) 4,252
Produced natural gas 35,478 - - (9,487) 25,991
Marketed natural gas 441,933 7,564 65,233 (58,993) 455,737
Crude oil 5,445 - - - 5,445
Natural gas liquids 23,808 - - - 23,808
Marketed Electricity 18,166 - - - 18,166
Energy Service Contracting - - 23,298 - 23,298
Other 7,539 2,196 909 (894) 9,750
- ----------------------------------------------------------------------------------------------------------------------------------
Total revenues 538,293 135,822 89,440 (73,977) 689,578
Cost of Energy Purchased 473,739 58,474 63,912 (73,261) 522,864
Energy Service Contract Costs - - 17,337 - 17,337
- ----------------------------------------------------------------------------------------------------------------------------------
Net operating revenues 64,554 77,348 8,191 (716) 149,377
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Production 6,210 - - - 6,210
Exploration 2,252 - - - 2,252
Gas processing 2,680 - - - 2,680
Other 12,283 36,692 9,437 (689) 57,723
Depreciation, depletion and amortization 18,022 6,896 527 - 25,445
Impairment of assets and other
nonrecurring items - - - - -
- ----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 41,447 43,588 9,964 (689) 94,310
- ----------------------------------------------------------------------------------------------------------------------------------
Operating Income (Loss) 23,107 33,760 (1,773) (27) 55,067
==================================================================================================================================
Sales Quantity:
Residential retail gas sales - MMcf - 9,255 - - 9,255
Commercial retail gas sales - 907 - - 907
Industrial and utility gas sales - 1,669 - (1,174) 495
Transportation deliveries 30,226 19,863 - (11,296) 38,793
Produced natural gas sales 14,300 - - (120) 14,180
Marketed natural gas sales 148,297 2,350 18,904 (18,332) 151,219
Oil - thousands of barrels 318 - - - 318
Natural gas liquids - thousands of gallons 67,490 - - - 67,490
Average Selling Price:
Residential retail gas sales - per Mcf 9.632
Commercial retail gas sales 9.359
Industrial and utility gas sales 3.487
Produced natural gas sales 2.481
Marketed natural gas sales 2.980
Oil - per barrel 17.123
Natural gas liquids - per gallon 0.353
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Equitable Resources, Inc., and Subsidiaries
Segment Reporting Information
- ------------------------------------------------------------------------------------------------------------------------------------
Three Months Ended December 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Supply Intersegment
and Logistics Utilities Services Eliminations Consolidated
---------------------------------------------------------------------------------
Thousands
<S> <C> <C> <C> <C> <C>
Operating Revenues:
Residential retail gas sales - 87,107 - - 87,107
Commercial retail gas sales - 10,975 - - 10,975
Industrial and utility gas sales - 18,295 - (8,141) 10,154
Transportation of gas 1,514 15,384 - (438) 16,460
Storage of gas 584 1,869 - (59) 2,394
Produced natural gas 28,380 - - (5,732) 22,648
Marketed natural gas 206,477 8,371 97,229 (46,151) 265,926
Crude oil 4,970 - - - 4,970
Natural gas liquids 34,084 - - - 34,084
Marketed Electricity 2,466 - - - 2,466
Energy Service Contracting - - 8,804 - 8,804
Other 7,663 2,700 - (3,608) 6,755
- --------------------------------------------------------------------------------------------------------------------------------
Total revenues 286,138 144,701 106,033 (64,129) 472,743
Cost of Energy Purchased 227,641 72,568 95,840 (62,679) 333,370
Energy Service Contract Costs - - 5,250 - 5,250
- --------------------------------------------------------------------------------------------------------------------------------
Net operating revenues 58,497 72,133 4,943 (1,450) 134,123
- --------------------------------------------------------------------------------------------------------------------------------
Operating Expenses:
Production 8,017 - - - 8,017
Exploration 3,557 - - - 3,557
Gas processing 2,798 - - - 2,798
Other 18,841 38,273 5,117 (1,570) 60,661
Depreciation, depletion and amortization 12,761 6,833 324 - 19,918
Impairment of assets and other
nonrecurring items (5,363) (1,962) (45) - (7,370)
- --------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 40,611 43,144 5,396 (1,570) 87,581
- --------------------------------------------------------------------------------------------------------------------------------
Operating Income (Loss) 17,886 28,989 (453) 120 46,542
================================================================================================================================
Sales Quantity:
Residential retail gas sales - MMcf - 9,161 - - 9,161
Commercial retail gas sales - 1,179 - - 1,179
Industrial and utility gas sales - 5,504 - (2,788) 2,716
Transportation deliveries 28,505 19,564 - (11,970) 36,099
Produced natural gas sales 13,510 - - (3,716) 9,794
Marketed natural gas sales 84,962 3,492 30,507 (19,075) 99,886
Oil - thousands of barrels 415 - - - 415
Natural gas liquids - thousands of gallons 78,394 - - - 78,394
Average Selling Price:
Residential retail gas sales - per Mcf 9.508
Commercial retail gas sales 9.309
Industrial and utility gas sales 3.324
Produced natural gas sales 2.101
Marketed natural gas sales 2.430
Oil - per barrel 11.976
Natural gas liquids - per gallon 0.435
</TABLE>
