<PAGE> 1
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)
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FEBRUARY 16, 2000
EQUITABLE RESOURCES, INC.
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(Exact name of registrant as specified in its charter)
PENNSYLVANIA 1-3551 25-0464690
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
ONE OXFORD CENTRE, SUITE 3300, 301 GRANT STREET, PITTSBURGH, PENNSYLVANIA 15219
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (412) 553-5700
----------------------------
NONE
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(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 5. OTHER EVENTS
On February 16, 2000, Equitable Resources, Inc. (the Registrant; NYSE:
EQT) reported 1999 earnings of $2.01 per diluted share compared to
$0.68 per diluted share in 1998 calculated before the impact of
restructuring.
Copies of the press release and related financial tables detailing full
year and fourth quarter 1999 results are included as Exhibit 99 to this
report.
ITEM 7. FINANCIAL STATEMENTS
(c) EXHIBITS.
Exhibit
Number Description
------ -----------
Exhibit 99 Equitable Resources, Inc., press release and
financial tables announcing fourth quarter and
full year earnings for 1999.
2
<PAGE> 3
SIGNATURES
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, hereunto duly authorized.
EQUITABLE RESOURCES, INC.
-------------------------------------
(Registrant)
By /s/ David L. Porges
-------------------------------------
David L. Porges
Executive Vice President and
Chief Financial Officer
February 18, 2000
- -----------------------------
<PAGE> 4
EXHIBIT INDEX
Exhibit No. Document Description Sequential Page No.
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99 Equitable Resources, Inc. press release 5
and financial tables announcing fourth
quarter and full year 1999 earnings.
<PAGE> 1
Exhibit 99
EQUITABLE RESOURCES CONTINUES DRAMATIC IMPROVEMENT
o 1999 EPS IMPROVES 196% TO $2.01 PER SHARE
o GROWTH PLATFORM SET WITH HIGH RETURN AND LOW RISK STRATEGY
PITTSBURGH, FEBRUARY 16, 2000 - Equitable Resources (NYSE: EQT) today
reported a 196% increase in full year 1999 earnings per share along with net
income that rose 178% during the same period. The company reported 1999 earnings
of $2.01 per diluted share compared to $0.68 per diluted share in 1998
calculated before the impact of restructuring. Net income for 1999 was $69.1
million, compared with 1998's after-tax income from continuing operations before
restructuring charges of $24.9 million.
In the fourth quarter of 1999, the company posted net income of $26.4
million, or 79 cents per diluted share compared to an after tax loss from
continuing operations before restructuring charges of $4.1 million, or 11 cents
per diluted share in the fourth-quarter of 1998.
"Our aggressive turnaround plans during the past year to improve
overall performance have resulted in our becoming a much more productive company
and positions us for our goal of accelerated earnings per share growth in the
range of 20 to 30 percent per annum during the next two years," said Murry S.
Gerber, Equitable's president and chief executive officer. "Through an intense
period of change we have refocused our strategy to create a growth-oriented
energy company with a higher return, lower risk profile. The acquisitions of
Carnegie Natural Gas and the Appalachian Properties of Statoil are tangible
indications of our commitment to grow."
RESULTS BY BUSINESS
EQUITABLE UTILITIES
Equitable Utilities had earnings before interest and taxes (EBIT) of
$80.6 million for 1999, compared with $32.2 million for 1998. Results for the
1999 period include a benefit of $3.9 million from the recognition of the
settlement of Equitrans' 1997 rate case, as well as process improvement charges
of $3.0 million for further reorganization of the utility segment. Results for
1998 include a pretax charge of $14.7 million related to restructuring
initiatives begun in the fourth quarter and a $5.6 million charge related to an
Equitrans rate reserve. The improved results for 1999 can be attributed to
higher net revenues, due principally to colder weather during the heating season
and increased revenues from energy marketing activities. Heating degree days for
1999 were 5,485, a 14% increase over 4,808 for 1998. Depreciation expense for
1999 includes $11.6 million related to the recovery of stranded costs, with an
offsetting amount included in revenues. These costs will be fully recovered by
July of 2000.
Equitable Utilities had fourth quarter 1999 EBIT of $26.6 million,
compared to a $0.9 million loss in 1998. Fourth quarter 1999 operating income
was $26.6 million, up 93% from $13.8 million in 1998 excluding the previously
mentioned restructuring charge.
Net operating revenues increased 19% to $61.2 million for fourth
quarter 1999, compared with $51.6 million in the same period last year. The
increase is due primarily to an 18% increase in LDC throughput resulting from
colder weather and increased revenues from energy marketing activities.
<PAGE> 2
Heating degree days for the fourth quarter of 1999 were 1,896 up 1% from 1,870
for the same period last year.
Fourth quarter operating expenses decreased 8%, to $34.7 million
compared to $37.8 million last year. The 1999 decrease reflects the ongoing
benefits of the restructuring initiatives from prior periods.
On December 15, 1999, the Company closed on its previously announced
acquisition of Carnegie Natural Gas. This acquisition is complementary to the
Company's plans to grow its core business and increase utilization and
operational efficiencies of its local distribution and interstate pipeline
operations. The acquisition of Carnegie added approximately 8,000 new customers,
670 miles of transmission and gathering pipelines and will increase throughput
approximately 13 Bcfe/year, or 27%. This acquisition will be accretive to this
unit's earnings in 2000.
EQUITABLE PRODUCTION
Equitable Production recorded earnings before interest and taxes (EBIT)
of $54.6 million for 1999, compared with a loss of $24.3 million in 1998.
Included in 1998 were $44.7 million of restructuring costs and $23 million of
dry hole expense. 1999 operating costs were $133.0 million, down 16% from $158.7
million in 1998 and adjusted for the previously mentioned restructuring costs.
Net operating revenues for 1999 increased 5% to $187.6 million, as
compared to $179.0 million for 1998 due to higher production. Production for
1999 was 72.7 Bcfe, up 7% from 68.1 Bcfe. East production declined 1% to 45.9
Bcfe from 46.2Bcfe in 1998 due to the effects of curtailment in the fourth
quarter 1999. Gulf's 1999 production was 26.8 Bcfe, up 23% from 21.9 Bcfe in
1998. East's unit LOE and G&A costs were $0.45 and $0.44, down 4% and 7%
respectively, from $0.46 and $0.47 in 1998. Gulf's unit 1999 LOE and G&A costs
were $0.26 and $0.26, down 44% in both LOE and G&A costs, from $0.46 and $0.46
in 1998.
Equitable Productions' 1999 year end reserves were 1,206 Bcfe, up 26 %
from 958.8 Bcfe in 1998. Production-East's 1999 reserves were 1.1 Tcfe, up 30%
from 844.1 Bcfe. This increase was due to the inclusion of 48.2 Bcfe associated
with the Carnegie natural Gas acquisition, 41.7 Bcfe transferred from the
Equitrans unit, and 126 Bcfe of positive reserve revisions. The Gulf of Mexico
unit's 1999 year end reserves were 138.8 Bcfe, up 21% from 114.7Bcfe in 1998.
This increase was due to a successful development drilling program.
Equitable Production reported 1999 fourth quarter EBIT of $21.3
million, compared to a loss of $59.4 million EBIT from continuing operations in
1998.
Fourth quarter 1999 net revenues grew 11%, from $45.3 million to $50.5
million, compared to the same period last year because of higher commodity
prices. Combined natural gas and oil sales decreased 9% to 17 Bcfe for fourth
quarter 1999, compared with 18.7 Bcfe in 1998. The decrease in reported Gulf
Production volumes is primarily a result of production curtailments due to
drilling activity in the fourth quarter of 1999. The Company's average sales
price for natural gas averaged $2.42 per MMBTU and crude oil averaged $18.01 per
barrel for fourth quarter 1999, compared to $2.07 per MMBTU and $11.88 per
barrel in fourth-quarter 1998.
The recent completion of Equitable's acquisition of Statoil Energy's
Appalachian production assets makes Equitable the leading Appalachian producer.
The acquisition closed February 15 and will be accretive to earnings in the
current year. This acquisition will add approximately 1.2 Tcfe of reserves and
45 to 50 Bcfe of production in the first year.
<PAGE> 3
NORESCO had earnings before interest and taxes (EBIT) of $13.4 million
for 1999, compared with $5.1 million for 1998. Results for 1998 include
restructuring charges of $2.7 million. Revenue for 1999 was $169.6 million, up
55 % from $109.5 million in 1998. The increase was due primarily to a 90%
increase in completed construction over 1998. Completed construction in 1999 was
$151.7 million vs. $79.7 million in 1998. Selling, general and administrative
(SG&A) expenses increased a modest 4% to $19.9 million in 1999, from $19.2
million in 1998. DD&A expense of $6.1 million in 1999 was $1.8 million higher
than in 1998, mostly resulting from the operation of power plant assets owned by
the company that became operational during 1999.
NORESCO posted EBIT of $1.6 million for the fourth quarter of 1999,
compared with $0.1 million in the same period in 1998. Total revenue for the
quarter improved 29%, to $46.6 million from $36.2 million, compared with fourth
quarter 1998. The increase was primarily the result of a 49% improvement in
completed construction over 1998. Completed construction in fourth quarter 1999
was $42.2 million compared to $28.4 million in 1998. SG&A expenses in fourth
quarter 1999 increased $0.5 million to $6.1 million in 1999, a 10% increase over
SG&A expense in fourth quarter 1998. DD&A expense of $2.0 million in fourth
quarter 1999 was $1.0 million higher than in fourth quarter 1998, primarily due
to the operation of power plant assets owned by the Company which became
operational during 1999.
NORESCO, as part of its strategy, is expecting more growth from larger
infrastructure projects than its traditional business line of performance
contracting. Consequently, increases in future construction backlog will depend
on the successful execution of construction contracts as they relate to these
larger projects.
NORESCO provides energy services and products to a wide range of
commercial, industrial, institutional and governmental clients that are designed
to reduce its clients' operating costs and improve their productivity. NORESCO
also manages the Company's facilities management division, which develops and
operates private power, co-generation and central plant facilities in the United
States and selected international markets. ERI Services is a specialized
business unit, operating independently and providing energy savings
performance-contracting services exclusively to the Federal Government.
Equitable Resources is an integrated energy company, with emphasis on
Appalachian area natural-gas production, natural-gas transmission and
distribution and leading-edge energy-management services for customers
throughout the United States. The Company also has exploration and production
interests in the Gulf of Mexico and energy-service management projects in
selected international markets.
DISCLOSURES IN THIS RELEASE INCLUDE FORWARD-LOOKING STATEMENTS RELATED TO
PROJECTED COMPANY PLANS AND EXPECTED RESULTS OF OPERATIONS. 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 NATURAL GAS AND CRUDE OIL, CHANGES
IN INTEREST RATES, AVAILABILITY OF FINANCING, THE TIMING AND EXTENT OF THE
COMPANY'S SUCCESS IN ACQUIRING NATURAL GAS AND CRUDE-OIL PROPERTIES AND IN
DISCOVERING, DEVELOPING AND PRODUCING RESERVES, DELAYS IN OBTAINING NECESSARY
GOVERNMENTAL APPROVALS, THE IMPACT OF COMPETITIVE FACTORS ON PROFIT MARGINS IN
VARIOUS MARKETS IN WHICH THE COMPANY COMPETES, AND THE SUCCESSFUL INTEGRATION
OF ACQUIRED COMPANIES.
###
FINANCIAL TABLES TO FOLLOW
<PAGE> 4
EQUITABLE RESOURCES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME (UNAUDITED)
(Thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31, December 31,
1999 1998 1999 1998
----------------------------- ------------------------------
<S> <C> <C> <C> <C>
Operating revenues $ 261,449 $ 248,444 $ 1,062,738 $ 870,628
Cost of sales 139,947 142,887 610,659 471,609
----------- ----------- ----------- -----------
Net operating revenues 121,502 105,557 452,079 399,019
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Operation and maintenance 19,257 23,496 80,879 82,744
Exploration 947 24,128 9,288 27,211
Production 6,806 8,187 26,206 30,289
Selling, general and administrative 22,501 27,193 92,229 103,563
Depreciation, depletion and amortization 23,138 24,405 100,722 85,170
Restructuring Charges -- 81,840 -- 81,840
----------- ----------- ----------- -----------
Total operating expenses 72,649 189,249 309,324 410,817
----------- ----------- ----------- -----------
Operating income 48,853 (83,692) 142,755 (11,798)
Equity in nonconsolidated subsidiaries 557 790 2,863 2,667
----------- ----------- ----------- -----------
EARNINGS FROM CONTINUING OPERATIONS,
BEFORE INTEREST & TAXES 49,410 (82,902) 145,618 (9,131)
Interest charges 10,345 12,483 37,132 40,302
----------- ----------- ----------- -----------
Income before income taxes 39,065 (95,385) 108,486 (49,433)
Income taxes 12,644 (39,371) 39,356 (22,381)
----------- ----------- ----------- -----------
NET INCOME FROM CONTINUING OPERATIONS 26,421 (56,014) 69,130 (27,052)
Loss from discontinued operations - net of tax -- (4,200) (8,804)
Loss from early extinguishment of debt -- (8,263) -- (8,263)
----------- ----------- ----------- -----------
NET INCOME $ 26,421 $ (68,477) $ 69,130 $ (44,119)
=========== =========== =========== ===========
EARNINGS (LOSS) PER SHARE OF COMMON STOCK:
Basic:
Weighted average common shares outstanding 33,020 36,611 34,044 36,833
Continuing operations $ 0.80 $ (1.53) $ 2.03 $ (0.73)
Discontinued operations -- (0.11) -- (0.24)
Extraordinary loss on extinguishment debt -- (0.23) -- (0.22)
----------- ----------- ----------- -----------
Net income $ 0.80 $ (1.87) $ 2.03 $ (1.19)
=========== =========== =========== ===========
Diluted:
Weighted average common shares outstanding 33,461 36,611 34,337 36,833
Continuing operations $ 0.79 $ (1.53) $ 2.01 $ (0.73)
Discontinued operations -- (0.11) -- (0.24)
Extraordinary loss on extinguishment of debt -- (0.23) -- (0.22)
----------- ----------- ----------- -----------
Net income $ 0.79 $ (1.87) $ 2.01 $ (1.19)
=========== =========== =========== ===========
</TABLE>
(A) Due to the seasonal nature of the Company's natural gas distribution and
energy marketing businesses, 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.
<PAGE> 5
<TABLE>
<CAPTION>
Equitable Utilities
Operational and Financial Report
Three Months Ending Year Ending
December 31, December 31,
1999 1998 1999 1998
---------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONAL DATA
Heating degree days (normal annual heating degree days = 5964) 1,896 1,870 5,485 4,808
Residential sales and transportation volume (MMcf) 7,845 7,160 25,431 22,641
Commercial and industrial volume (MMcf) 7,077 5,514 22,209 19,165
--------- --------- --------- ---------
Total throughput (MMcf) - Distribution 14,922 12,674 47,640 41,806
Total throughput (MMbtu) - Pipeline 18,777 18,388 76,727 67,590
Total throughput (MMbtu) - Marketing 31,473 34,422 181,453 134,455
FINANCIAL DATA (THOUSANDS)
Utility Revenues $ 91,308 $ 84,786 $ 324,869 $ 322,057
Marketing Revenues 103,785 98,400 487,005 329,966
--------- --------- --------- ---------
Total Revenues 195,093 183,186 811,874 652,023
Purchased Gas Costs 130,525 128,307 573,101 449,096
Revenue Related Taxes 3,366 3,243 10,873 11,587
--------- --------- --------- ---------
Net Revenues 61,202 51,636 227,900 191,340
Operating and maintenance expense 15,831 19,801 67,923 68,749
Selling, general and administrative expense 11,390 12,580 43,740 55,153
Depreciation, depletion and amortization 7,431 5,413 35,596 20,570
Restructuring Charges 14,693 14,693
--------- --------- --------- ---------
Total Expenses 34,652 52,487 147,259 159,165
--------- --------- --------- ---------
Earnings from continuing operations,
before interest and taxes $ 26,550 $ (851) $ 80,641 $ 32,175
========= ========= ========= =========
Capital expenditures $ 7,753 $ 4,615 $ 25,258 $ 20,860
VALUE DRIVERS
Operating Expenses/Net Revenues (%) 56.62% 73.19% 64.62% 75.51%
Earnings Before Interest and Taxes
Distribution $ 20,258 $ 7,398 $ 54,704 $ 30,385
Pipeline $ 6,506 $ (6,545) $ 22,354 $ 8,663
Marketing $ (214) $ (1,704) $ 3,583 $ (6,873)
Net Revenues - Distribution
Residential $ 28,416 $ 26,502 $ 97,846 $ 90,589
Commercial & Industrial $ 11,901 $ 10,709 $ 39,899 $ 35,863
O&M and SG&A (excluding other taxes)/Customer - Distribution $ 59.17 $ 97.99 $ 254.85 $ 311.94
Total Physical + Financial Unit Margin/Mmbtu - Marketing $ 0.0408 $ 0.0830 $ 0.0513 $ 0.0471
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
EQUITABLE PRODUCTION
OPERATIONAL AND FINANCIAL REPORT
Three Months Ending Year Ending
December 31, December 31,
1999 1998 1999 1998
---------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONAL DATA
Gas sales (MMcf) - East 10,278 10,337 40,763 40,649
Gas sales (MMcf) - Gulf 5,017 7,068 23,100 18,902
Oil production (000s BBls) - East 110 109 445 502
Oil production (000s BBls) - Gulf 182 106 625 494
Liquids production (000s Gals.) - East 11,865 16,139 59,062 61,878
Liquids production (000s Gals.) - Gulf 416 1,590 7,010 5,259
Produced gas and oil (MMcfe)- East 11,560 11,924 45,896 46,244
Produced gas and oil (MMcfe)- Gulf 6,107 7,706 26,849 21,866
Effective gas price - East (per MMBtu) $ 2.32 $ 2.04 $ 2.13 $ 2.14
Effective gas price - Gulf (per MMBtu) $ 2.65 $ 2.10 $ 2.22 $ 2.17
Effective oil price - East (per Bbl) $ 17.38 $ 9.33 $ 14.33 $ 11.22
Effective oil price - Gulf (per Bbl) $ 18.39 $ 14.48 $ 16.38 $ 15.99
Effective liquids price - East (per gallon) $ 0.44 $ 0.25 $ 0.30 $ 0.25
Effective liquids price - Gulf (per gallon) $ 0.44 $ 0.11 $ 0.26 $ 0.16
FINANCIAL DATA (THOUSANDS)
Total operating revenues $56,189 $ 50,507 $211,821 $ 200,479
Cost of energy purchased 5,699 5,183 24,188 21,494
------- --------- -------- ---------
Net operating revenue/gross margin 50,490 45,324 187,633 178,985
------- --------- -------- ---------
Operating and maintenance expense 3,426 3,692 12,956 13,991
Lease operating expense 6,807 8,187 26,206 30,289
Selling, general and administrative expenses 4,729 6,658 26,003 30,783
Dry hole cost 138 22,986 2,455 23,101
Exploration expenses 809 1,142 6,833 4,110
Depreciation, depletion and amortization 13,307 17,430 58,565 56,380
Restructuring -- 44,675 -- 44,675
------- --------- -------- ---------
Total operating expenses 29,216 104,770 133,018 203,329
------- --------- -------- ---------
Earnings from continuing operations,
before interest and taxes $21,274 $ (59,446) $ 54,615 $ (24,344)
======= ========= ======== =========
Capital expenditures (a) $14,669 $ 31,133 $ 69,699 $ 126,752
VALUE DRIVERS
LOE/Mcfe Sales - East $ 0.456 $ 0.474 $ 0.445 $ 0.463
LOE/Mcfe Sales - Gulf $ 0.298 $ 0.386 $ 0.256 $ 0.461
----------------------------------------------------------
G&A/Mcfe Sales - East $ 0.266 $ 0.441 $ 0.438 $ 0.473
G&A/Mcfe Sales- Gulf $ 0.299 $ 0.235 $ 0.260 $ 0.463
----------------------------------------------------------
Depletion/Mcfe Produced- East $ 0.394 $ 0.439 $ 0.418 $ 0.445
Depletion/Mcfe Produced- Gulf $ 1.044 $ 1.273 $ 1.090 $ 1.216
</TABLE>
(a) - Capital expenditures include $2,455
of dry hole expense at 12/31/99 and $23,101
of dry hole expense at 12/31/98
<PAGE> 7
<TABLE>
<CAPTION>
NORESCO
OPERATIONAL AND FINANCIAL REPORT
Three Months Ending Year Ending
December 31, December 31,
1999 1998 1999 1998
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONAL DATA (Thousands $)
Construction backlog, end of period $ 57,299 $ 80,935 $ 57,299 $ 80,935
Construction completed $ 42,247 $ 28,413 $151,743 $ 79,720
FINANCIAL DATA (THOUSANDS $)
Total revenue $ 46,563 $ 36,184 $169,633 $109,493
Contract costs 37,431 27,588 133,088 80,800
-------- -------- -------- --------
Gross profit margin 9,132 8,596 36,545 28,693
-------- -------- -------- --------
Selling, general and administrative expenses 6,072 5,535 19,889 19,218
Amortization of goodwill 937 887 3,746 3,748
Depreciation and depletion 1,059 140 2,332 552
Restructuring Charges -- 2,716 -- 2,716
-------- -------- -------- --------
Total expenses 8,068 9,278 25,967 26,234
Equity earnings of non-consolidated subsidiaries 557 790 2,863 2,667
-------- -------- -------- --------
Earnings from continuing operations,
before interest and taxes $ 1,621 $ 108 $ 13,441 $ 5,126
======== ======== ======== ========
Capital expenditures $ 1,376 $ 862 $ 6,041 $ 11,102
VALUE DRIVERS
Gross profit margin 19.6% 23.8% 21.5% 26.2%
SG&A as a % of revenue 13.0% 15.3% 11.7% 17.6%
Development expenses as a % of revenue 6.3% 6.6% 2.6% 3.3%
</TABLE>
